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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 |
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| For the Quarterly Period Ended |
| or |
¨ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE |
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| For the transition period from ____________ to ____________ |
Commission | Registrant; State of Incorporation; | I.R.S. Employer |
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1-5324 | EVERSOURCE ENERGY | 04-2147929 |
0-00404 | THE CONNECTICUT LIGHT AND POWER COMPANY | 06-0303850 |
1-02301 | NSTAR ELECTRIC COMPANY | 04-1278810 |
1-6392 | PUBLIC SERVICE COMPANY OF NEW HAMPSHIRE | 02-0181050 |
0-7624 | WESTERN MASSACHUSETTS ELECTRIC COMPANY | 04-1961130 |
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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 |
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| x | ¨ |
Indicate by check mark whether the registrants have submitted electronically and posted on its corporate Web sites, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrants were required to submit and post such files).
| Yes | No |
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| x | ¨ |
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 |
| Non-accelerated |
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Eversource Energy | x |
| ¨ |
| ¨ |
The Connecticut Light and Power Company | ¨ |
| ¨ |
| x |
NSTAR Electric Company | ¨ |
| ¨ |
| x |
Public Service Company of New Hampshire | ¨ |
| ¨ |
| x |
Western Massachusetts Electric Company | ¨ |
| ¨ |
| x |
Indicate by check mark whether the registrants are shell companies (as defined in Rule 12b-2 of the Exchange Act):
| Yes | No |
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Eversource Energy | ¨ | x |
The Connecticut Light and Power Company | ¨ | x |
NSTAR Electric Company | ¨ | x |
Public Service Company of New Hampshire | ¨ | x |
Western Massachusetts Electric Company | ¨ | x |
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 |
Eversource Energy |
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The Connecticut Light and Power Company | 6,035,205 shares |
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NSTAR Electric Company | 100 shares |
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Public Service Company of New Hampshire | 301 shares |
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Western Massachusetts Electric Company | 434,653 shares |
Eversource Energy holds all of the 6,035,205 shares, 100 shares, 301 shares, and 434,653 shares of the outstanding common stock of The Connecticut Light and Power Company, NSTAR Electric Company, Public Service Company of New Hampshire and Western Massachusetts Electric Company, respectively.
NSTAR Electric Company, 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.
Eversource Energy, The Connecticut Light and Power Company, NSTAR Electric Company, Public Service Company of New Hampshire, and Western Massachusetts Electric Company each separately file this combined Form 10-Q. Information contained herein relating to any individual registrant is filed by such registrant on its own behalf. Each registrant makes no representation as to information relating to the other registrants.
GLOSSARY OF TERMS
The following is a glossary of abbreviations or acronyms that are found in this report: | |
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Current or former Eversource Energy companies, segments or investments: | |
Eversource, ES or the Company | Eversource Energy and subsidiaries |
Eversource parent or ES parent | Eversource Energy, a public utility holding company |
ES parent and other companies | ES parent and other companies are comprised of Eversource parent, Eversource Service and other subsidiaries, which primarily includes our unregulated businesses, HWP Company, The Rocky River Realty Company (a real estate subsidiary), and the consolidated operations of CYAPC and YAEC |
CL&P | The Connecticut Light and Power Company |
NSTAR Electric | NSTAR Electric Company |
PSNH | Public Service Company of New Hampshire |
WMECO | Western Massachusetts Electric Company |
NSTAR Gas | NSTAR Gas Company |
Yankee Gas | Yankee Gas Services Company |
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NPT | Northern Pass Transmission LLC |
Eversource Service | Eversource Energy Service Company |
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CYAPC | Connecticut Yankee Atomic Power Company |
MYAPC | Maine Yankee Atomic Power Company |
YAEC | Yankee Atomic Electric Company |
Yankee Companies | CYAPC, YAEC and MYAPC |
Regulated companies | The Eversource Regulated companies are comprised of the electric distribution and transmission businesses of CL&P, NSTAR Electric, PSNH, and WMECO, the natural gas distribution businesses of Yankee Gas and NSTAR Gas, the generation activities of PSNH and WMECO, and NPT |
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Regulators: |
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DEEP | Connecticut Department of Energy and Environmental Protection |
DOE | U.S. Department of Energy |
DOER | Massachusetts Department of Energy Resources |
DPU | Massachusetts Department of Public Utilities |
EPA | U.S. Environmental Protection Agency |
FERC | Federal Energy Regulatory Commission |
ISO-NE | ISO New England, Inc., the New England Independent System Operator |
MA DEP | Massachusetts Department of Environmental Protection |
NHPUC | New Hampshire Public Utilities Commission |
PURA | Connecticut Public Utilities Regulatory Authority |
SEC | U.S. Securities and Exchange Commission |
SJC | Supreme Judicial Court of Massachusetts |
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Other Terms and Abbreviations: |
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ADIT | Accumulated Deferred Income Taxes |
AFUDC | Allowance For Funds Used During Construction |
AOCI | Accumulated Other Comprehensive Income/(Loss) |
ARO | Asset Retirement Obligation |
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 |
CO2 | Carbon dioxide |
CPSL | Capital Projects Scheduling List |
CTA | Competitive Transition Assessment |
CWIP | Construction Work in Progress |
EDC | Electric distribution company |
EPS | Earnings Per Share |
ERISA | Employee Retirement Income Security Act of 1974 |
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ESOP | Employee Stock Ownership Plan |
ESPP | Employee Share Purchase Plan |
Eversource 2015 Form 10-K | The Eversource Energy and Subsidiaries 2015 combined Annual Report on Form 10-K as filed with the SEC |
FERC ALJ | FERC Administrative Law Judge |
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 |
i
GSRP | Greater Springfield Reliability Project |
GWh | Gigawatt-Hours |
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 |
IPP | Independent Power Producers |
ISO-NE Tariff | ISO-NE FERC Transmission, Markets and Services Tariff |
kV | Kilovolt |
kVa | Kilovolt-ampere |
kW | Kilowatt (equal to one thousand watts) |
kWh | Kilowatt-Hours (the basic unit of electricity energy equal to one kilowatt of power supplied for one hour) |
LBR | Lost Base Revenue |
LNG | Liquefied natural gas |
LRS | Supplier of last resort service |
MGP | Manufactured Gas Plant |
MMBtu | One million British thermal units |
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 |
NOx | Nitrogen oxides |
PAM | Pension and PBOP Rate Adjustment Mechanism |
PBOP | Postretirement Benefits Other Than Pension |
PBOP Plan | Postretirement Benefits Other Than Pension Plan that provides certain retiree benefits, primarily medical, dental and life insurance |
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 |
RNS | Regional Network Service |
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 Plans and non-qualified defined benefit retirement plans |
SIP | Simplified Incentive Plan |
SO2 | Sulfur dioxide |
SS | Standard service |
TCAM | Transmission Cost Adjustment Mechanism |
TSA | Transmission Service Agreement |
UI | The United Illuminating Company |
ii
EVERSOURCE ENERGY AND SUBSIDIARIES
THE CONNECTICUT LIGHT AND POWER COMPANY
NSTAR ELECTRIC COMPANY AND SUBSIDIARY
PUBLIC SERVICE COMPANY OF NEW HAMPSHIRE AND SUBSIDIARY
WESTERN MASSACHUSETTS ELECTRIC COMPANY
TABLE OF CONTENTS
iii
PART II – OTHER INFORMATION | ||
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ITEM 1. | Legal Proceedings |
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ITEM 1A. | Risk Factors |
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ITEM 2. | Unregistered Sales of Equity Securities and Use of Proceeds |
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ITEM 6. | Exhibits |
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SIGNATURES |
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iiiiv
EVERSOURCE ENERGY AND SUBSIDIARIES | EVERSOURCE ENERGY AND SUBSIDIARIES |
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| EVERSOURCE ENERGY AND SUBSIDIARIES |
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CONDENSED CONSOLIDATED BALANCE SHEETS | CONDENSED CONSOLIDATED BALANCE SHEETS |
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| CONDENSED CONSOLIDATED BALANCE SHEETS |
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(Unaudited) | (Unaudited) |
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| September 30, |
| December 31, |
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| March 31, |
| December 31, | ||||
(Thousands of Dollars) | (Thousands of Dollars) | 2015 |
| 2014 | (Thousands of Dollars) | 2016 |
| 2015 | ||||||
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ASSETS | ASSETS |
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| ASSETS |
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Current Assets: | Current Assets: |
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| Current Assets: |
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| Cash and Cash Equivalents | $ | 35,781 |
| $ | 38,703 | ||||||||
| Receivables, Net |
| 928,064 |
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| 856,346 | Cash and Cash Equivalents | $ | 50,966 |
| $ | 23,947 | ||
| Unbilled Revenues |
| 197,920 |
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| 211,758 | Receivables, Net |
| 890,977 |
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| 775,480 | ||
| Taxes Receivable |
| 12,247 |
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| 337,307 | Unbilled Revenues |
| 192,084 |
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| 202,647 | ||
| Fuel, Materials and Supplies |
| 302,225 |
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| 349,664 | Taxes Receivable |
| 44,171 |
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| 305,359 | ||
| Regulatory Assets |
| 653,892 |
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| 672,493 | Fuel, Materials, Supplies and Inventory |
| 359,225 |
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| 336,476 | ||
| Marketable Securities |
| 119,702 |
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| 124,173 | Regulatory Assets |
| 919,311 |
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| 845,843 | ||
| Prepayments and Other Current Assets |
| 117,857 |
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| 102,021 | Prepayments and Other Current Assets |
| 133,813 |
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| 129,034 | ||
Total Current Assets | Total Current Assets |
| 2,367,688 |
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| 2,692,465 | Total Current Assets |
| 2,590,547 |
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| 2,618,786 | ||
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Property, Plant and Equipment, Net | Property, Plant and Equipment, Net |
| 19,406,025 |
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| 18,647,041 | Property, Plant and Equipment, Net |
| 20,096,693 |
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| 19,892,441 | ||
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Deferred Debits and Other Assets: | Deferred Debits and Other Assets: |
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| Deferred Debits and Other Assets: |
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| Regulatory Assets |
| 3,951,752 |
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| 4,054,086 | Regulatory Assets |
| 3,703,486 |
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| 3,737,960 | ||
| Goodwill |
| 3,519,401 |
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| 3,519,401 | Goodwill |
| 3,519,401 |
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| 3,519,401 | ||
| Marketable Securities |
| 476,778 |
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| 515,025 | Marketable Securities |
| 502,948 |
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| 516,478 | ||
| Other Long-Term Assets |
| 324,382 |
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| 349,957 | Other Long-Term Assets |
| 299,400 |
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| 295,243 | ||
Total Deferred Debits and Other Assets | Total Deferred Debits and Other Assets |
| 8,272,313 |
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| 8,438,469 | Total Deferred Debits and Other Assets |
| 8,025,235 |
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| 8,069,082 | ||
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Total Assets | Total Assets | $ | 30,046,026 |
| $ | 29,777,975 | Total Assets | $ | 30,712,475 |
| $ | 30,580,309 | ||
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LIABILITIES AND CAPITALIZATION | LIABILITIES AND CAPITALIZATION |
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| LIABILITIES AND CAPITALIZATION |
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Current Liabilities: | Current Liabilities: |
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| Current Liabilities: |
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| Notes Payable | $ | 1,015,500 |
| $ | 956,825 | Notes Payable | $ | 769,500 |
| $ | 1,160,953 | ||
| Long-Term Debt - Current Portion |
| 228,883 |
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| 245,583 | Long-Term Debt - Current Portion |
| 378,883 |
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| 228,883 | ||
| Accounts Payable |
| 610,753 |
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| 868,231 | Accounts Payable |
| 646,440 |
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| 813,646 | ||
| Obligations to Third Party Suppliers |
| 157,798 |
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| 115,632 | Obligations to Third Party Suppliers |
| 135,978 |
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| 128,564 | ||
| Regulatory Liabilities |
| 226,061 |
| 235,022 | Renewable Portfolio Standards Compliance Obligations |
| 170,021 |
| 130,354 | ||||
| Accumulated Deferred Income Taxes |
| 169,272 |
| 160,288 | Regulatory Liabilities |
| 111,414 |
| 107,759 | ||||
| Other Current Liabilities |
| 563,426 |
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| 552,800 | Other Current Liabilities |
| 381,678 |
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| 419,631 | ||
Total Current Liabilities | Total Current Liabilities |
| 2,971,693 |
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| 3,134,381 | Total Current Liabilities |
| 2,593,914 |
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| 2,989,790 | ||
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Deferred Credits and Other Liabilities: | Deferred Credits and Other Liabilities: |
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| Deferred Credits and Other Liabilities: |
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| Accumulated Deferred Income Taxes |
| 4,612,828 |
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| 4,467,473 | Accumulated Deferred Income Taxes |
| 5,284,255 |
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| 5,147,678 | ||
| Regulatory Liabilities |
| 517,595 |
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| 515,144 | Regulatory Liabilities |
| 526,452 |
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| 513,595 | ||
| Derivative Liabilities |
| 365,692 |
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| 409,632 | Derivative Liabilities |
| 344,458 |
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| 337,102 | ||
| Accrued Pension, SERP and PBOP |
| 1,498,346 |
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| 1,638,558 | Accrued Pension, SERP and PBOP |
| 1,355,422 |
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| 1,407,288 | ||
| Other Long-Term Liabilities |
| 872,376 |
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| 874,387 | Other Long-Term Liabilities |
| 869,220 |
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| 871,499 | ||
Total Deferred Credits and Other Liabilities | Total Deferred Credits and Other Liabilities |
| 7,866,837 |
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| 7,905,194 | Total Deferred Credits and Other Liabilities |
| 8,379,807 |
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| 8,277,162 | ||
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Capitalization: | Capitalization: |
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| Long-Term Debt |
| 8,757,498 |
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| 8,606,017 | Long-Term Debt |
| 9,144,687 |
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| 8,805,574 | ||
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| Noncontrolling Interest - Preferred Stock of Subsidiaries |
| 155,568 |
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| 155,568 | Noncontrolling Interest - Preferred Stock of Subsidiaries |
| 155,568 |
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| 155,568 | ||
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| Equity: |
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| Equity: |
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| Common Shareholders' Equity: |
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| Common Shareholders' Equity: |
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| Common Shares |
| 1,669,313 |
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| 1,666,796 |
| Common Shares |
| 1,669,392 |
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| 1,669,313 | |
| Capital Surplus, Paid In |
| 6,260,663 |
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| 6,235,834 |
| Capital Surplus, Paid In |
| 6,243,908 |
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| 6,262,368 | |
| Retained Earnings |
| 2,747,977 |
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| 2,448,661 |
| Retained Earnings |
| 2,900,351 |
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| 2,797,355 | |
| Accumulated Other Comprehensive Loss |
| (73,546) |
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| (74,009) |
| Accumulated Other Comprehensive Loss |
| (65,175) |
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| (66,844) | |
| Treasury Stock |
| (309,977) |
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| (300,467) |
| Treasury Stock |
| (309,977) |
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| (309,977) | |
| Common Shareholders' Equity |
| 10,294,430 |
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| 9,976,815 | Common Shareholders' Equity |
| 10,438,499 |
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| 10,352,215 | ||
Total Capitalization | Total Capitalization |
| 19,207,496 |
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| 18,738,400 | Total Capitalization |
| 19,738,754 |
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| 19,313,357 | ||
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Total Liabilities and Capitalization | Total Liabilities and Capitalization | $ | 30,046,026 |
| $ | 29,777,975 | Total Liabilities and Capitalization | $ | 30,712,475 |
| $ | 30,580,309 | ||
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The accompanying notes are an integral part of these unaudited condensed consolidated financial statements. | The accompanying notes are an integral part of these unaudited condensed consolidated financial statements. |
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| The accompanying notes are an integral part of these unaudited condensed consolidated financial statements. |
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1
EVERSOURCE ENERGY AND SUBSIDIARIES |
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CONDENSED CONSOLIDATED STATEMENTS OF INCOME |
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(Unaudited) |
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| For the Three Months Ended September 30, |
| For the Nine Months Ended September 30, | ||||||||
(Thousands of Dollars, Except Share Information) | 2015 |
| 2014 |
| 2015 |
| 2014 | |||||||
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Operating Revenues | $ | 1,933,105 |
| $ | 1,892,532 |
| $ | 6,263,597 |
| $ | 5,860,736 | |||
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Operating Expenses: |
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| Purchased Power, Fuel and Transmission |
| 702,640 |
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| 716,631 |
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| 2,549,807 |
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| 2,318,993 | ||
| Operations and Maintenance |
| 327,283 |
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| 344,092 |
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| 977,306 |
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| 1,069,015 | ||
| Depreciation |
| 167,884 |
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| 153,210 |
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| 495,389 |
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| 456,224 | ||
| Amortization of Regulatory (Liabilities)/Assets, Net |
| (16,851) |
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| (22,531) |
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| 42,587 |
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| 31,826 | ||
| Energy Efficiency Programs |
| 132,107 |
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| 118,693 |
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| 380,559 |
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| 360,228 | ||
| Taxes Other Than Income Taxes |
| 150,804 |
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| 141,527 |
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| 439,221 |
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| 421,862 | ||
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| Total Operating Expenses |
| 1,463,867 |
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| 1,451,622 |
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| 4,884,869 |
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| 4,658,148 |
Operating Income |
| 469,238 |
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| 440,910 |
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| 1,378,728 |
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| 1,202,588 | |||
Interest Expense |
| 92,534 |
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| 89,738 |
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| 279,635 |
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| 272,208 | |||
Other Income, Net |
| 5,241 |
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| 11,860 |
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| 23,866 |
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| 19,054 | |||
Income Before Income Tax Expense |
| 381,945 |
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| 363,032 |
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| 1,122,959 |
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| 949,434 | |||
Income Tax Expense |
| 144,146 |
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| 126,539 |
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| 420,640 |
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| 345,858 | |||
Net Income |
| 237,799 |
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| 236,493 |
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| 702,319 |
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| 603,576 | |||
Net Income Attributable to Noncontrolling Interests |
| 1,879 |
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| 1,879 |
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| 5,639 |
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| 5,639 | |||
Net Income Attributable to Common Shareholders | $ | 235,920 |
| $ | 234,614 |
| $ | 696,680 |
| $ | 597,937 | |||
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Basic Earnings Per Common Share | $ | 0.74 |
| $ | 0.74 |
| $ | 2.20 |
| $ | 1.89 | |||
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Diluted Earnings Per Common Share | $ | 0.74 |
| $ | 0.74 |
| $ | 2.19 |
| $ | 1.89 | |||
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Dividends Declared Per Common Share | $ | 0.42 |
| $ | 0.39 |
| $ | 1.25 |
| $ | 1.18 | |||
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Weighted Average Common Shares Outstanding: |
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|
|
|
|
|
|
|
|
| |||
| Basic |
| 317,452,212 |
|
| 316,340,691 |
|
| 317,296,107 |
|
| 315,941,904 | ||
| Diluted |
| 318,405,269 |
|
| 317,554,925 |
|
| 318,396,042 |
|
| 317,186,490 | ||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements. |
| |||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME |
|
|
|
|
|
| ||||||||
(Unaudited) |
|
|
|
|
|
|
|
|
| |||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Income | $ | 237,799 |
| $ | 236,493 |
| $ | 702,319 |
| $ | 603,576 | |||
Other Comprehensive Income, Net of Tax: |
|
|
|
|
|
|
|
|
|
|
| |||
| Qualified Cash Flow Hedging Instruments |
| 526 |
|
| 509 |
|
| 1,544 |
|
| 1,528 | ||
| Changes in Unrealized (Losses)/Gains on Other Securities |
| (2,803) |
|
| (216) |
|
| (3,919) |
|
| 242 | ||
| Changes in Funded Status of Pension, SERP and PBOP |
| 764 |
|
| 1,042 |
|
| 2,838 |
|
| 4,089 | ||
Other Comprehensive Income, Net of Tax |
| (1,513) |
|
| 1,335 |
|
| 463 |
|
| 5,859 | |||
Comprehensive Income Attributable to Noncontrolling Interests |
| (1,879) |
|
| (1,879) |
|
| (5,639) |
|
| (5,639) | |||
Comprehensive Income Attributable to Common Shareholders | $ | 234,407 |
| $ | 235,949 |
| $ | 697,143 |
| $ | 603,796 | |||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements. |
EVERSOURCE ENERGY AND SUBSIDIARIES |
|
|
|
|
| |||
CONDENSED CONSOLIDATED STATEMENTS OF INCOME |
|
|
| |||||
(Unaudited) |
|
|
|
|
| |||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| For the Three Months Ended March 31, | ||||
(Thousands of Dollars, Except Share Information) | 2016 |
| 2015 | |||||
|
|
|
|
|
|
|
|
|
Operating Revenues | $ | 2,055,635 |
| $ | 2,513,431 | |||
|
|
|
|
|
|
|
|
|
Operating Expenses: |
|
|
|
|
| |||
| Purchased Power, Fuel and Transmission |
| 754,859 |
|
| 1,162,049 | ||
| Operations and Maintenance |
| 320,136 |
|
| 333,382 | ||
| Depreciation |
| 173,986 |
|
| 163,837 | ||
| Amortization of Regulatory Assets, Net |
| 20,997 |
|
| 60,604 | ||
| Energy Efficiency Programs |
| 137,175 |
|
| 146,603 | ||
| Taxes Other Than Income Taxes |
| 159,946 |
|
| 149,481 | ||
|
|
| Total Operating Expenses |
| 1,567,099 |
|
| 2,015,956 |
Operating Income |
| 488,536 |
|
| 497,475 | |||
Interest Expense |
| 98,212 |
|
| 94,843 | |||
Other Income, Net |
| 2,011 |
|
| 5,727 | |||
Income Before Income Tax Expense |
| 392,335 |
|
| 408,359 | |||
Income Tax Expense |
| 146,302 |
|
| 153,226 | |||
Net Income |
| 246,033 |
|
| 255,133 | |||
Net Income Attributable to Noncontrolling Interests |
| 1,880 |
|
| 1,879 | |||
Net Income Attributable to Common Shareholders | $ | 244,153 |
| $ | 253,254 | |||
|
|
|
|
|
|
|
|
|
Basic and Diluted Earnings Per Common Share | $ | 0.77 |
| $ | 0.80 | |||
|
|
|
|
|
|
|
|
|
Dividends Declared Per Common Share | $ | 0.45 |
| $ | 0.42 | |||
|
|
|
|
|
|
|
|
|
Weighted Average Common Shares Outstanding: |
|
|
|
|
| |||
| Basic |
| 317,517,141 |
|
| 317,090,841 | ||
| Diluted |
| 318,481,050 |
|
| 318,491,188 | ||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements. | ||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME | ||||||||
(Unaudited) |
|
|
| |||||
|
|
|
|
|
|
|
|
|
Net Income | $ | 246,033 |
| $ | 255,133 | |||
Other Comprehensive Income, Net of Tax: |
|
|
|
|
| |||
| Qualified Cash Flow Hedging Instruments |
| 534 |
|
| 509 | ||
| Changes in Unrealized Gains on Marketable Securities |
| 264 |
|
| 132 | ||
| Changes in Funded Status of Pension, SERP and PBOP Benefit Plans |
| 871 |
|
| 954 | ||
Other Comprehensive Income, Net of Tax |
| 1,669 |
|
| 1,595 | |||
Comprehensive Income Attributable to Noncontrolling Interests |
| (1,880) |
|
| (1,879) | |||
Comprehensive Income Attributable to Common Shareholders | $ | 245,822 |
| $ | 254,849 | |||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements. |
2
EVERSOURCE ENERGY AND SUBSIDIARIES | |||||||
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS | |||||||
(Unaudited) |
|
|
|
|
| ||
| |||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| For the Nine Months Ended September 30, | ||||
(Thousands of Dollars) | 2015 |
| 2014 | ||||
|
|
|
|
|
|
|
|
Operating Activities: |
|
|
|
|
| ||
| Net Income | $ | 702,319 |
| $ | 603,576 | |
| Adjustments to Reconcile Net Income to Net Cash Flows Provided by Operating Activities: |
|
|
|
|
| |
|
| Depreciation |
| 495,389 |
|
| 456,224 |
|
| Deferred Income Taxes |
| 153,353 |
|
| 64,755 |
|
| Pension, SERP and PBOP Expense |
| 71,802 |
|
| 74,296 |
|
| Pension and PBOP Contributions |
| (162,880) |
|
| (74,681) |
|
| Regulatory Overrecoveries, Net |
| 31,874 |
|
| 290,111 |
|
| Amortization of Regulatory Assets, Net |
| 42,587 |
|
| 31,826 |
|
| Proceeds from DOE Damages Claim, Net |
| - |
|
| 132,138 |
|
| Other |
| (49,548) |
|
| (17,096) |
| Changes in Current Assets and Liabilities: |
|
|
|
|
| |
|
| Receivables and Unbilled Revenues, Net |
| (148,442) |
|
| (66,463) |
|
| Fuel, Materials and Supplies |
| 47,380 |
|
| (27,147) |
|
| Taxes Receivable/Accrued, Net |
| 383,047 |
|
| 26,533 |
|
| Accounts Payable |
| (233,660) |
|
| (69,448) |
|
| Other Current Assets and Liabilities, Net |
| 8,370 |
|
| (20,607) |
Net Cash Flows Provided by Operating Activities |
| 1,341,591 |
|
| 1,404,017 | ||
|
|
|
|
|
|
|
|
Investing Activities: |
|
|
|
|
| ||
| Investments in Property, Plant and Equipment |
| (1,177,285) |
|
| (1,117,493) | |
| Proceeds from Sales of Marketable Securities |
| 556,582 |
|
| 388,352 | |
| Purchases of Marketable Securities |
| (535,044) |
|
| (389,406) | |
| Other Investing Activities |
| (2,769) |
|
| (4,669) | |
Net Cash Flows Used in Investing Activities |
| (1,158,516) |
|
| (1,123,216) | ||
|
|
|
|
|
|
|
|
Financing Activities: |
|
|
|
|
| ||
| Cash Dividends on Common Shares |
| (397,363) |
|
| (356,080) | |
| Cash Dividends on Preferred Stock |
| (5,639) |
|
| (5,639) | |
| (Decrease)/Increase in Notes Payable |
| (387,575) |
|
| 6,000 | |
| Issuance of Long-Term Debt |
| 825,000 |
|
| 650,000 | |
| Retirements of Long-Term Debt |
| (216,700) |
|
| (576,650) | |
| Other Financing Activities |
| (3,720) |
|
| (90) | |
Net Cash Flows Used in Financing Activities |
| (185,997) |
|
| (282,459) | ||
Net Decrease in Cash and Cash Equivalents |
| (2,922) |
|
| (1,658) | ||
Cash and Cash Equivalents - Beginning of Period |
| 38,703 |
|
| 43,364 | ||
Cash and Cash Equivalents - End of Period | $ | 35,781 |
| $ | 41,706 | ||
|
|
|
|
|
|
|
|
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements. | |||||||
|
|
|
|
|
|
|
|
EVERSOURCE ENERGY AND SUBSIDIARIES | |||||||
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS | |||||||
(Unaudited) |
|
|
|
|
| ||
| |||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| For the Three Months Ended March 31, | ||||
(Thousands of Dollars) | 2016 |
| 2015 | ||||
|
|
|
|
|
|
|
|
Operating Activities: |
|
|
|
|
| ||
| Net Income | $ | 246,033 |
| $ | 255,133 | |
| Adjustments to Reconcile Net Income to Net Cash Flows Provided by Operating Activities: |
|
|
|
|
| |
|
| Depreciation |
| 173,986 |
|
| 163,837 |
|
| Deferred Income Taxes |
| 141,132 |
|
| 148,193 |
|
| Pension, SERP and PBOP Expense |
| 11,583 |
|
| 26,495 |
|
| Pension and PBOP Contributions |
| (30,383) |
|
| (26,659) |
|
| Regulatory Underrecoveries, Net |
| (82,772) |
|
| (110,748) |
|
| Amortization of Regulatory Assets, Net |
| 20,997 |
|
| 60,604 |
|
| Other |
| (16,532) |
|
| (11,891) |
| Changes in Current Assets and Liabilities: |
|
|
|
|
| |
|
| Receivables and Unbilled Revenues, Net |
| (133,965) |
|
| (328,299) |
|
| Fuel, Materials, Supplies and Inventory |
| (22,748) |
|
| 68,172 |
|
| Taxes Receivable/Accrued, Net |
| 279,106 |
|
| 272,021 |
|
| Accounts Payable |
| (76,317) |
|
| (59,496) |
|
| Other Current Assets and Liabilities, Net |
| (10,156) |
|
| 34,179 |
Net Cash Flows Provided by Operating Activities |
| 499,964 |
|
| 491,541 | ||
|
|
|
|
|
|
|
|
Investing Activities: |
|
|
|
|
| ||
| Investments in Property, Plant and Equipment |
| (431,472) |
|
| (362,586) | |
| Proceeds from Sales of Marketable Securities |
| 136,805 |
|
| 114,730 | |
| Purchases of Marketable Securities |
| (135,427) |
|
| (116,735) | |
| Other Investing Activities |
| 5,494 |
|
| 66 | |
Net Cash Flows Used in Investing Activities |
| (424,600) |
|
| (364,525) | ||
|
|
|
|
|
|
|
|
Financing Activities: |
|
|
|
|
| ||
| Cash Dividends on Common Shares |
| (141,157) |
|
| (132,433) | |
| Cash Dividends on Preferred Stock |
| (1,880) |
|
| (1,879) | |
| Decrease in Notes Payable |
| (391,453) |
|
| (399,575) | |
| Issuance of Long-Term Debt |
| 500,000 |
|
| 450,000 | |
| Other Financing Activities |
| (13,855) |
|
| (10,805) | |
Net Cash Flows Used in Financing Activities |
| (48,345) |
|
| (94,692) | ||
Net Increase in Cash and Cash Equivalents |
| 27,019 |
|
| 32,324 | ||
Cash and Cash Equivalents - Beginning of Period |
| 23,947 |
|
| 38,703 | ||
Cash and Cash Equivalents - End of Period | $ | 50,966 |
| $ | 71,027 | ||
|
|
|
|
|
|
|
|
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements. | |||||||
|
|
|
|
|
|
|
|
3
THE CONNECTICUT LIGHT AND POWER COMPANY | THE CONNECTICUT LIGHT AND POWER COMPANY |
|
|
|
| THE CONNECTICUT LIGHT AND POWER COMPANY |
|
|
|
| ||||
CONDENSED BALANCE SHEETS | CONDENSED BALANCE SHEETS |
|
|
|
| CONDENSED BALANCE SHEETS |
|
|
|
| ||||
(Unaudited) | (Unaudited) |
|
|
|
| (Unaudited) |
|
|
|
| ||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| September 30, |
| December 31, |
|
| March 31, |
| December 31, | ||||
(Thousands of Dollars) | (Thousands of Dollars) | 2015 |
| 2014 | (Thousands of Dollars) | 2016 |
| 2015 | ||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ASSETS | ASSETS |
|
|
|
|
| ASSETS |
|
|
|
|
| ||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current Assets: | Current Assets: |
|
|
|
|
| Current Assets: |
|
|
|
|
| ||
| Cash | $ | 13,407 |
| $ | 2,356 | ||||||||
| Receivables, Net |
| 425,955 |
|
| 355,140 | Cash | $ | 16,482 |
| $ | 1,057 | ||
| Accounts Receivable from Affiliated Companies |
| 28,266 |
|
| 16,757 | Receivables, Net |
| 379,758 |
|
| 352,536 | ||
| Unbilled Revenues |
| 96,301 |
|
| 102,137 | Accounts Receivable from Affiliated Companies |
| 21,377 |
|
| 21,214 | ||
| Taxes Receivable |
| - |
|
| 116,148 | Unbilled Revenues |
| 93,853 |
|
| 99,879 | ||
| Regulatory Assets |
| 243,293 |
| 220,344 | Taxes Receivable |
| 4,650 |
|
| 137,643 | |||
| Materials and Supplies |
| 44,306 |
|
| 46,664 | Regulatory Assets |
| 324,559 |
| 268,318 | |||
| Prepaid Property Taxes |
| 52,351 |
|
| 15,597 | Materials and Supplies |
| 48,083 |
|
| 43,124 | ||
| Prepayments and Other Current Assets |
| 16,239 |
|
| 22,225 | Prepayments and Other Current Assets |
| 49,753 |
|
| 32,234 | ||
Total Current Assets | Total Current Assets |
| 920,118 |
|
| 897,368 | Total Current Assets |
| 938,515 |
|
| 956,005 | ||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Property, Plant and Equipment, Net | Property, Plant and Equipment, Net |
| 7,008,603 |
|
| 6,809,664 | Property, Plant and Equipment, Net |
| 7,231,214 |
|
| 7,156,809 | ||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deferred Debits and Other Assets: | Deferred Debits and Other Assets: |
|
|
|
|
| Deferred Debits and Other Assets: |
|
|
|
|
| ||
| Regulatory Assets |
| 1,420,974 |
|
| 1,475,508 | Regulatory Assets |
| 1,379,484 |
|
| 1,369,028 | ||
| Other Long-Term Assets |
| 145,031 |
|
| 177,568 | Other Long-Term Assets |
| 113,017 |
|
| 111,115 | ||
Total Deferred Debits and Other Assets | Total Deferred Debits and Other Assets |
| 1,566,005 |
|
| 1,653,076 | Total Deferred Debits and Other Assets |
| 1,492,501 |
|
| 1,480,143 | ||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Assets | Total Assets | $ | 9,494,726 |
| $ | 9,360,108 | Total Assets | $ | 9,662,230 |
| $ | 9,592,957 | ||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND CAPITALIZATION | LIABILITIES AND CAPITALIZATION |
|
|
|
|
| LIABILITIES AND CAPITALIZATION |
|
|
|
|
| ||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current Liabilities: | Current Liabilities: |
|
|
|
|
| Current Liabilities: |
|
|
|
|
| ||
| Notes Payable to Eversource Parent | $ | - |
| $ | 133,400 | ||||||||
| Long-Term Debt - Current Portion |
| - |
|
| 162,000 | Notes Payable to Eversource Parent | $ | 115,500 |
| $ | 277,400 | ||
| Accounts Payable |
| 207,366 |
|
| 272,971 | Long-Term Debt - Current Portion |
| 150,000 |
|
| - | ||
| Accounts Payable to Affiliated Companies |
| 93,257 |
|
| 65,594 | Accounts Payable |
| 246,475 |
|
| 267,764 | ||
| Obligations to Third Party Suppliers |
| 75,659 |
|
| 73,624 | Accounts Payable to Affiliated Companies |
| 59,275 |
|
| 66,456 | ||
| Accrued Taxes |
| 47,973 |
|
| 4,091 | Obligations to Third Party Suppliers |
| 61,674 |
|
| 60,746 | ||
| Regulatory Liabilities |
| 136,393 |
| 124,722 | Regulatory Liabilities |
| 62,999 |
| 61,155 | ||||
| Derivative Liabilities |
| 91,372 |
|
| 88,459 | Derivative Liabilities |
| 92,953 |
|
| 91,820 | ||
| Other Current Liabilities |
| 124,504 |
|
| 149,329 | Other Current Liabilities |
| 118,697 |
|
| 110,631 | ||
Total Current Liabilities | Total Current Liabilities |
| 776,524 |
|
| 1,074,190 | Total Current Liabilities |
| 907,573 |
|
| 935,972 | ||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deferred Credits and Other Liabilities: | Deferred Credits and Other Liabilities: |
|
|
|
|
| Deferred Credits and Other Liabilities: |
|
|
|
|
| ||
| Accumulated Deferred Income Taxes |
| 1,636,831 |
|
| 1,642,805 | Accumulated Deferred Income Taxes |
| 1,881,725 |
|
| 1,820,865 | ||
| Regulatory Liabilities |
| 76,864 |
|
| 81,298 | Regulatory Liabilities |
| 77,744 |
|
| 74,830 | ||
| Derivative Liabilities |
| 364,691 |
|
| 406,199 | Derivative Liabilities |
| 342,698 |
|
| 336,189 | ||
| Accrued Pension, SERP and PBOP |
| 284,890 |
|
| 273,854 | Accrued Pension, SERP and PBOP |
| 267,706 |
|
| 271,056 | ||
| Other Long-Term Liabilities |
| 143,642 |
|
| 148,844 | Other Long-Term Liabilities |
| 131,953 |
|
| 133,446 | ||
Total Deferred Credits and Other Liabilities | Total Deferred Credits and Other Liabilities |
| 2,506,918 |
|
| 2,553,000 | Total Deferred Credits and Other Liabilities |
| 2,701,826 |
|
| 2,636,386 | ||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capitalization: | Capitalization: |
|
|
|
|
| Capitalization: |
|
|
|
|
| ||
| Long-Term Debt |
| 2,975,316 |
|
| 2,679,951 | Long-Term Debt |
| 2,614,324 |
|
| 2,763,682 | ||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Preferred Stock Not Subject to Mandatory Redemption |
| 116,200 |
|
| 116,200 | Preferred Stock Not Subject to Mandatory Redemption |
| 116,200 |
|
| 116,200 | ||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Common Stockholder's Equity: |
|
|
|
|
| Common Stockholder's Equity: |
|
|
|
|
| ||
| Common Stock |
| 60,352 |
|
| 60,352 |
| Common Stock |
| 60,352 |
|
| 60,352 | |
| Capital Surplus, Paid In |
| 1,910,651 |
|
| 1,804,869 |
| Capital Surplus, Paid In |
| 2,056,376 |
|
| 1,910,663 | |
| Retained Earnings |
| 1,149,500 |
|
| 1,072,477 |
| Retained Earnings |
| 1,206,035 |
|
| 1,170,278 | |
| Accumulated Other Comprehensive Loss |
| (735) |
|
| (931) |
| Accumulated Other Comprehensive Loss |
| (456) |
|
| (576) | |
| Common Stockholder's Equity |
| 3,119,768 |
|
| 2,936,767 | Common Stockholder's Equity |
| 3,322,307 |
|
| 3,140,717 | ||
Total Capitalization | Total Capitalization |
| 6,211,284 |
|
| 5,732,918 | Total Capitalization |
| 6,052,831 |
|
| 6,020,599 | ||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Liabilities and Capitalization | Total Liabilities and Capitalization | $ | 9,494,726 |
| $ | 9,360,108 | Total Liabilities and Capitalization | $ | 9,662,230 |
| $ | 9,592,957 | ||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The accompanying notes are an integral part of these unaudited condensed financial statements. | The accompanying notes are an integral part of these unaudited condensed financial statements. |
|
| The accompanying notes are an integral part of these unaudited condensed financial statements. |
|
|
4
THE CONNECTICUT LIGHT AND POWER COMPANY |
|
|
|
|
|
|
|
|
| ||||
CONDENSED STATEMENTS OF INCOME |
|
|
|
|
|
|
|
|
| ||||
(Unaudited) |
|
|
|
|
|
|
|
|
|
|
| ||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| For the Three Months Ended September 30, |
| For the Nine Months Ended September 30, | ||||||||
(Thousands of Dollars) | 2015 |
| 2014 |
| 2015 |
| 2014 | ||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating Revenues | $ | 704,262 |
| $ | 695,642 |
| $ | 2,175,733 |
| $ | 2,017,580 | ||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating Expenses: |
|
|
|
|
|
|
|
|
|
|
| ||
| Purchased Power and Transmission |
| 274,762 |
|
| 255,787 |
|
| 861,562 |
|
| 736,952 | |
| Operations and Maintenance |
| 122,280 |
|
| 127,285 |
|
| 358,324 |
|
| 368,562 | |
| Depreciation |
| 54,809 |
|
| 46,886 |
|
| 159,903 |
|
| 139,598 | |
| Amortization of Regulatory (Liabilities)/Assets, Net |
| (22,859) |
|
| 13,098 |
|
| 17,917 |
|
| 62,644 | |
| Energy Efficiency Programs |
| 42,590 |
|
| 41,399 |
|
| 119,360 |
|
| 119,389 | |
| Taxes Other Than Income Taxes |
| 71,563 |
|
| 64,994 |
|
| 201,743 |
|
| 194,105 | |
|
| Total Operating Expenses |
| 543,145 |
|
| 549,449 |
|
| 1,718,809 |
|
| 1,621,250 |
Operating Income |
| 161,117 |
|
| 146,193 |
|
| 456,924 |
|
| 396,330 | ||
Interest Expense |
| 36,716 |
|
| 38,735 |
|
| 109,463 |
|
| 110,448 | ||
Other Income, Net |
| 2,356 |
|
| 6,456 |
|
| 8,576 |
|
| 10,658 | ||
Income Before Income Tax Expense |
| 126,757 |
|
| 113,914 |
|
| 356,037 |
|
| 296,540 | ||
Income Tax Expense |
| 46,569 |
|
| 30,038 |
|
| 127,845 |
|
| 95,980 | ||
Net Income | $ | 80,188 |
| $ | 83,876 |
| $ | 228,192 |
| $ | 200,560 | ||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The accompanying notes are an integral part of these unaudited condensed financial statements. |
|
|
|
|
|
| |||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CONDENSED STATEMENTS OF COMPREHENSIVE INCOME |
|
|
|
|
|
|
|
|
| ||||
(Unaudited) |
|
|
|
|
|
|
|
|
| ||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Income | $ | 80,188 |
| $ | 83,876 |
| $ | 228,192 |
| $ | 200,560 | ||
Other Comprehensive Income, Net of Tax: |
|
|
|
|
|
|
|
|
|
|
| ||
| Qualified Cash Flow Hedging Instruments |
| 111 |
|
| 111 |
|
| 333 |
|
| 333 | |
| Changes in Unrealized (Losses)/Gains on Other Securities |
| (98) |
|
| (7) |
|
| (137) |
|
| 8 | |
Other Comprehensive Income, Net of Tax |
| 13 |
|
| 104 |
|
| 196 |
|
| 341 | ||
Comprehensive Income | $ | 80,201 |
| $ | 83,980 |
| $ | 228,388 |
| $ | 200,901 | ||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The accompanying notes are an integral part of these unaudited condensed financial statements. |
|
|
|
|
|
|
THE CONNECTICUT LIGHT AND POWER COMPANY |
|
|
| ||||
CONDENSED STATEMENTS OF INCOME |
|
|
| ||||
(Unaudited) |
|
|
|
|
| ||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| For the Three Months Ended March 31, | ||||
(Thousands of Dollars) | 2016 |
| 2015 | ||||
|
|
|
|
|
|
|
|
Operating Revenues | $ | 735,317 |
| $ | 804,917 | ||
|
|
|
|
|
|
|
|
Operating Expenses: |
|
|
|
|
| ||
| Purchased Power and Transmission |
| 272,600 |
|
| 333,619 | |
| Operations and Maintenance |
| 110,843 |
|
| 117,357 | |
| Depreciation |
| 56,969 |
|
| 52,902 | |
| Amortization of Regulatory Assets, Net |
| 9,878 |
|
| 48,306 | |
| Energy Efficiency Programs |
| 38,090 |
|
| 42,807 | |
| Taxes Other Than Income Taxes |
| 75,465 |
|
| 68,080 | |
|
| Total Operating Expenses |
| 563,845 |
|
| 663,071 |
Operating Income |
| 171,472 |
|
| 141,846 | ||
Interest Expense |
| 36,498 |
|
| 36,624 | ||
Other Income, Net |
| 936 |
|
| 2,159 | ||
Income Before Income Tax Expense |
| 135,910 |
|
| 107,381 | ||
Income Tax Expense |
| 48,863 |
|
| 38,147 | ||
Net Income | $ | 87,047 |
| $ | 69,234 | ||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The accompanying notes are an integral part of these unaudited condensed financial statements. | |||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CONDENSED STATEMENTS OF COMPREHENSIVE INCOME |
|
|
| ||||
(Unaudited) |
|
|
| ||||
|
|
|
|
|
|
|
|
Net Income | $ | 87,047 |
| $ | 69,234 | ||
Other Comprehensive Income, Net of Tax: |
|
|
|
|
| ||
| Qualified Cash Flow Hedging Instruments |
| 111 |
|
| 111 | |
| Changes in Unrealized Gains on Marketable Securities |
| 9 |
|
| 4 | |
Other Comprehensive Income, Net of Tax |
| 120 |
|
| 115 | ||
Comprehensive Income | $ | 87,167 |
| $ | 69,349 | ||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The accompanying notes are an integral part of these unaudited condensed financial statements. |
5
THE CONNECTICUT LIGHT AND POWER COMPANY | |||||||
CONDENSED STATEMENTS OF CASH FLOWS | |||||||
(Unaudited) | |||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| For the Nine Months Ended September 30, | ||||
(Thousands of Dollars) | 2015 |
| 2014 | ||||
|
|
|
|
|
|
|
|
Operating Activities: |
|
|
|
|
| ||
| Net Income | $ | 228,192 |
| $ | 200,560 | |
| Adjustments to Reconcile Net Income to Net Cash Flows Provided by Operating Activities: |
|
|
|
|
| |
| Depreciation |
| 159,903 |
|
| 139,598 | |
|
| Deferred Income Taxes |
| (11,011) |
|
| (14,400) |
|
| Pension, SERP and PBOP Expense, Net of PBOP Contributions |
| 10,654 |
|
| 8,050 |
|
| Regulatory Overrecoveries, Net |
| 12,504 |
|
| 62,929 |
|
| Amortization of Regulatory Assets, Net |
| 17,917 |
|
| 62,644 |
|
| Proceeds from DOE Damages Claim |
| - |
|
| 68,610 |
|
| Other |
| (13,048) |
|
| (11,290) |
| Changes in Current Assets and Liabilities: |
|
|
|
|
| |
|
| Receivables and Unbilled Revenues, Net |
| (91,842) |
|
| (87,922) |
|
| Taxes Receivable/Accrued, Net |
| 160,031 |
|
| 39,805 |
|
| Accounts Payable |
| (20,485) |
|
| 16,984 |
|
| Other Current Assets and Liabilities, Net |
| (31,044) |
|
| (2,575) |
Net Cash Flows Provided by Operating Activities |
| 421,771 |
|
| 482,993 | ||
|
|
|
|
|
|
|
|
Investing Activities: |
|
|
|
|
| ||
| Investments in Property, Plant and Equipment |
| (359,339) |
|
| (371,660) | |
| Other Investing Activities |
| (740) |
|
| (4,539) | |
Net Cash Flows Used in Investing Activities |
| (360,079) |
|
| (376,199) | ||
|
|
|
|
|
|
|
|
Financing Activities: |
|
|
|
|
| ||
| Cash Dividends on Common Stock |
| (147,000) |
|
| (128,400) | |
| Cash Dividends on Preferred Stock |
| (4,169) |
|
| (4,169) | |
| Issuance of Long-Term Debt |
| 300,000 |
|
| 250,000 | |
| Retirements of Long-Term Debt |
| (162,000) |
|
| (150,000) | |
| Decrease in Notes Payable to Eversource Parent |
| (133,400) |
|
| (181,900) | |
| Capital Contribution from Eversource Parent |
| 105,000 |
|
| 120,000 | |
| Other Financing Activities |
| (9,072) |
|
| (3,268) | |
Net Cash Flows Used in Financing Activities |
| (50,641) |
|
| (97,737) | ||
Net Increase in Cash |
| 11,051 |
|
| 9,057 | ||
Cash - Beginning of Period |
| 2,356 |
|
| 7,237 | ||
Cash - End of Period | $ | 13,407 |
| $ | 16,294 | ||
|
|
|
|
|
|
|
|
The accompanying notes are an integral part of these unaudited condensed financial statements. |
THE CONNECTICUT LIGHT AND POWER COMPANY | |||||||
CONDENSED STATEMENTS OF CASH FLOWS | |||||||
(Unaudited) | |||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| For the Three Months Ended March 31, | ||||
(Thousands of Dollars) | 2016 |
| 2015 | ||||
|
|
|
|
|
|
|
|
Operating Activities: |
|
|
|
|
| ||
| Net Income | $ | 87,047 |
| $ | 69,234 | |
| Adjustments to Reconcile Net Income to Net Cash Flows Provided by Operating Activities: |
|
|
|
|
| |
| Depreciation |
| 56,969 |
|
| 52,902 | |
|
| Deferred Income Taxes |
| 58,363 |
|
| 19,340 |
|
| Regulatory Underrecoveries, Net |
| (70,195) |
|
| (67,393) |
|
| Amortization of Regulatory Assets, Net |
| 9,878 |
|
| 48,306 |
|
| Other |
| 2,216 |
|
| 6,205 |
| Changes in Current Assets and Liabilities: |
|
|
|
|
| |
|
| Receivables and Unbilled Revenues, Net |
| (37,501) |
|
| (124,969) |
|
| Taxes Receivable/Accrued, Net |
| 141,951 |
|
| 158,163 |
|
| Accounts Payable |
| (5,040) |
|
| (20,194) |
|
| Other Current Assets and Liabilities, Net |
| (22,533) |
|
| (7,727) |
Net Cash Flows Provided by Operating Activities |
| 221,155 |
|
| 133,867 | ||
|
|
|
|
|
|
|
|
Investing Activities: |
|
|
|
|
| ||
| Investments in Property, Plant and Equipment |
| (147,131) |
|
| (127,631) | |
| Proceeds from the Sale of Property, Plant and Equipment |
| 9,047 |
|
| - | |
| Other Investing Activities |
| 49 |
|
| 1,981 | |
Net Cash Flows Used in Investing Activities |
| (138,035) |
|
| (125,650) | ||
|
|
|
|
|
|
|
|
Financing Activities: |
|
|
|
|
| ||
| Cash Dividends on Common Stock |
| (49,900) |
|
| (49,000) | |
| Cash Dividends on Preferred Stock |
| (1,390) |
|
| (1,390) | |
| (Decrease)/Increase in Notes Payable to Eversource Parent |
| (161,900) |
|
| 56,700 | |
| Capital Contribution from Eversource Parent |
| 145,700 |
|
| - | |
| Other Financing Activities |
| (205) |
|
| (65) | |
Net Cash Flows (Used in)/Provided by Financing Activities |
| (67,695) |
|
| 6,245 | ||
Net Increase in Cash |
| 15,425 |
|
| 14,462 | ||
Cash - Beginning of Period |
| 1,057 |
|
| 2,356 | ||
Cash - End of Period | $ | 16,482 |
| $ | 16,818 | ||
|
|
|
|
|
|
|
|
The accompanying notes are an integral part of these unaudited condensed financial statements. |
6
NSTAR ELECTRIC COMPANY AND SUBSIDIARY | NSTAR ELECTRIC COMPANY AND SUBSIDIARY |
|
|
|
| NSTAR ELECTRIC COMPANY AND SUBSIDIARY |
|
|
|
| ||||
CONDENSED CONSOLIDATED BALANCE SHEETS | CONDENSED CONSOLIDATED BALANCE SHEETS |
|
|
|
| CONDENSED CONSOLIDATED BALANCE SHEETS |
|
|
|
| ||||
(Unaudited) | (Unaudited) |
|
|
|
| (Unaudited) |
|
|
|
| ||||
|
|
|
|
|
|
|
|
|
|
|
|
| ||
|
|
|
|
|
|
|
|
|
|
|
|
| ||
|
|
| September 30, |
| December 31, |
|
| March 31, |
| December 31, | ||||
(Thousands of Dollars) | (Thousands of Dollars) | 2015 |
| 2014 | (Thousands of Dollars) | 2016 |
| 2015 | ||||||
|
|
|
|
|
|
|
|
|
|
|
|
| ||
ASSETS | ASSETS |
|
|
|
| ASSETS |
|
|
|
| ||||
|
|
|
|
|
|
|
|
|
|
|
|
| ||
Current Assets: | Current Assets: |
|
|
|
| Current Assets: |
|
|
|
| ||||
| Cash and Cash Equivalents | $ | 2,809 |
| $ | 12,773 | Cash and Cash Equivalents | $ | 3,504 |
| $ | 3,346 | ||
| Receivables, Net |
| 303,969 |
| 234,481 | Receivables, Net |
| 256,760 |
| 229,936 | ||||
| Accounts Receivable from Affiliated Companies |
| 17,229 |
| 40,353 | Accounts Receivable from Affiliated Companies |
| 2,990 |
| 4,034 | ||||
| Unbilled Revenues |
| 43,288 |
| 29,741 | Unbilled Revenues |
| 28,596 |
| 29,464 | ||||
| Taxes Receivable |
| - |
| 144,601 | Taxes Receivable |
| 33,234 |
| 70,236 | ||||
| Materials and Supplies |
| 52,315 |
| 74,179 | Materials, Supplies and Inventory |
| 115,809 |
| 75,487 | ||||
| Regulatory Assets |
| 223,520 |
| 198,710 | Regulatory Assets |
| 361,307 |
| 348,408 | ||||
| Prepayments and Other Current Assets |
| 8,862 |
|
| 10,815 | Prepayments and Other Current Assets |
| 13,957 |
|
| 11,448 | ||
Total Current Assets | Total Current Assets |
| 651,992 |
|
| 745,653 | Total Current Assets |
| 816,157 |
|
| 772,359 | ||
|
|
|
|
|
|
|
|
|
|
|
|
| ||
Property, Plant and Equipment, Net | Property, Plant and Equipment, Net |
| 5,545,082 |
|
| 5,335,436 | Property, Plant and Equipment, Net |
| 5,700,068 |
|
| 5,655,458 | ||
|
|
|
|
|
|
|
|
|
|
|
|
| ||
Deferred Debits and Other Assets: | Deferred Debits and Other Assets: |
|
|
|
| Deferred Debits and Other Assets: |
|
|
|
| ||||
| Regulatory Assets |
| 1,179,996 |
| 1,179,100 | Regulatory Assets |
| 1,108,037 |
| 1,112,977 | ||||
| Other Long-Term Assets |
| 60,339 |
|
| 73,051 | Other Long-Term Assets |
| 58,323 |
|
| 62,467 | ||
Total Deferred Debits and Other Assets | Total Deferred Debits and Other Assets |
| 1,240,335 |
|
| 1,252,151 | Total Deferred Debits and Other Assets |
| 1,166,360 |
|
| 1,175,444 | ||
|
|
|
|
|
|
|
|
|
|
|
|
| ||
Total Assets | Total Assets | $ | 7,437,409 |
| $ | 7,333,240 | Total Assets | $ | 7,682,585 |
| $ | 7,603,261 | ||
|
|
|
|
|
|
|
|
|
|
|
|
| ||
LIABILITIES AND CAPITALIZATION | LIABILITIES AND CAPITALIZATION |
|
|
|
| LIABILITIES AND CAPITALIZATION |
|
|
|
| ||||
|
|
|
|
|
|
|
|
|
|
|
|
| ||
Current Liabilities: | Current Liabilities: |
|
|
|
| Current Liabilities: |
|
|
|
| ||||
| Notes Payable | $ | 258,500 |
| $ | 302,000 | Notes Payable | $ | 148,500 |
| $ | 62,500 | ||
| Long-Term Debt - Current Portion |
| 200,000 |
| 4,700 | Long-Term Debt - Current Portion |
| 200,000 |
| 200,000 | ||||
| Accounts Payable |
| 172,521 |
| 217,311 | Accounts Payable |
| 189,594 |
| 228,250 | ||||
| Accounts Payable to Affiliated Companies |
| 25,515 |
| 63,517 | Accounts Payable to Affiliated Companies |
| 66,673 |
| 38,648 | ||||
| Obligations to Third Party Suppliers |
| 70,607 |
| 34,824 | Obligations to Third Party Suppliers |
| 62,588 |
| 56,718 | ||||
| Renewable Portfolio Standards Compliance Obligations |
| 67,828 |
| 35,698 | Renewable Portfolio Standards Compliance Obligations |
| 132,386 |
| 104,847 | ||||
| Accrued Taxes |
| 66,474 |
| 4,191 | Regulatory Liabilities |
| 4,997 |
| 3,281 | ||||
| Accumulated Deferred Income Taxes |
| 92,183 |
| 55,136 | Other Current Liabilities |
| 58,776 |
|
| 72,007 | |||
| Regulatory Liabilities |
| 12,319 |
| 49,611 | |||||||||
| Other Current Liabilities |
| 88,905 |
|
| 111,800 | ||||||||
Total Current Liabilities | Total Current Liabilities |
| 1,054,852 |
|
| 878,788 | Total Current Liabilities |
| 863,514 |
|
| 766,251 | ||
|
|
|
|
|
|
|
|
|
|
|
|
| ||
Deferred Credits and Other Liabilities: | Deferred Credits and Other Liabilities: |
|
|
|
| Deferred Credits and Other Liabilities: |
|
|
|
| ||||
| Accumulated Deferred Income Taxes |
| 1,546,801 |
| 1,527,667 | Accumulated Deferred Income Taxes |
| 1,793,183 |
| 1,760,339 | ||||
| Regulatory Liabilities |
| 267,342 |
| 262,738 | Regulatory Liabilities |
| 267,440 |
| 264,352 | ||||
| Accrued Pension, SERP and PBOP |
| 211,891 |
| 235,529 | Accrued Pension, SERP and PBOP |
| 188,974 |
| 209,153 | ||||
| Other Long-Term Liabilities |
| 122,026 |
|
| 129,279 | Other Long-Term Liabilities |
| 123,336 |
|
| 120,939 | ||
Total Deferred Credits and Other Liabilities | Total Deferred Credits and Other Liabilities |
| 2,148,060 |
|
| 2,155,213 | Total Deferred Credits and Other Liabilities |
| 2,372,933 |
|
| 2,354,783 | ||
|
|
|
|
|
|
|
|
|
|
|
|
| ||
Capitalization: | Capitalization: |
|
|
|
| Capitalization: |
|
|
|
| ||||
| Long-Term Debt |
| 1,592,727 |
|
| 1,792,712 | Long-Term Debt |
| 1,829,984 |
|
| 1,829,766 | ||
|
|
|
|
|
|
|
|
|
|
|
|
| ||
| Preferred Stock Not Subject to Mandatory Redemption |
| 43,000 |
|
| 43,000 | Preferred Stock Not Subject to Mandatory Redemption |
| 43,000 |
|
| 43,000 | ||
|
|
|
|
|
|
|
|
|
|
|
|
| ||
| Common Stockholder's Equity: |
|
|
|
| Common Stockholder's Equity: |
|
|
|
| ||||
| Common Stock |
| - |
| - |
| Common Stock |
| - |
| - | |||
| Capital Surplus, Paid In |
| 995,378 |
| 994,130 |
| Capital Surplus, Paid In |
| 995,378 |
| 995,378 | |||
| Retained Earnings |
| 1,603,134 |
| 1,468,955 |
| Retained Earnings |
| 1,577,241 |
| 1,613,538 | |||
| Accumulated Other Comprehensive Income |
| 258 |
|
| 442 |
| Accumulated Other Comprehensive Income |
| 535 |
|
| 545 | |
| Common Stockholder's Equity |
| 2,598,770 |
|
| 2,463,527 | Common Stockholder's Equity |
| 2,573,154 |
|
| 2,609,461 | ||
Total Capitalization | Total Capitalization |
| 4,234,497 |
|
| 4,299,239 | Total Capitalization |
| 4,446,138 |
|
| 4,482,227 | ||
|
|
|
|
|
|
|
|
|
|
|
|
| ||
Total Liabilities and Capitalization | Total Liabilities and Capitalization | $ | 7,437,409 |
| $ | 7,333,240 | Total Liabilities and Capitalization | $ | 7,682,585 |
| $ | 7,603,261 | ||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements. | The accompanying notes are an integral part of these unaudited condensed consolidated financial statements. |
|
| The accompanying notes are an integral part of these unaudited condensed consolidated financial statements. |
|
|
7
NSTAR ELECTRIC COMPANY AND SUBSIDIARY |
|
|
|
|
|
|
|
|
|
|
| ||
CONDENSED CONSOLIDATED STATEMENTS OF INCOME |
|
|
|
|
|
|
|
|
| ||||
(Unaudited) |
|
|
|
|
|
|
|
|
|
|
| ||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| For the Three Months Ended September 30, |
| For the Nine Months Ended September 30, | ||||||||
(Thousands of Dollars) | 2015 |
| 2014 |
| 2015 |
| 2014 | ||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating Revenues | $ | 750,724 |
| $ | 727,909 |
| $ | 2,134,728 |
| $ | 1,955,609 | ||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating Expenses: |
|
|
|
|
|
|
|
|
|
|
| ||
| Purchased Power and Transmission |
| 299,040 |
|
| 317,784 |
|
| 984,035 |
|
| 879,773 | |
| Operations and Maintenance |
| 83,486 |
|
| 79,705 |
|
| 228,740 |
|
| 244,610 | |
| Depreciation |
| 49,101 |
|
| 47,455 |
|
| 146,818 |
|
| 140,996 | |
| Amortization of Regulatory Assets/(Liabilities), Net |
| 2,257 |
|
| (15,063) |
|
| (10,643) |
|
| (916) | |
| Energy Efficiency Programs |
| 67,693 |
|
| 56,915 |
|
| 164,843 |
|
| 145,499 | |
| Taxes Other Than Income Taxes |
| 34,982 |
|
| 34,513 |
|
| 95,821 |
|
| 99,121 | |
|
| Total Operating Expenses |
| 536,559 |
|
| 521,309 |
|
| 1,609,614 |
|
| 1,509,083 |
Operating Income |
| 214,165 |
|
| 206,600 |
|
| 525,114 |
|
| 446,526 | ||
Interest Expense |
| 18,992 |
|
| 17,338 |
|
| 57,218 |
|
| 59,091 | ||
Other Income, Net |
| 513 |
|
| 3,287 |
|
| 3,649 |
|
| 3,011 | ||
Income Before Income Tax Expense |
| 195,686 |
|
| 192,549 |
|
| 471,545 |
|
| 390,446 | ||
Income Tax Expense |
| 77,062 |
|
| 76,975 |
|
| 187,397 |
|
| 156,655 | ||
Net Income | $ | 118,624 |
| $ | 115,574 |
| $ | 284,148 |
| $ | 233,791 | ||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements. |
|
| |||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME |
|
|
|
|
|
| |||||||
(Unaudited) |
|
|
|
|
|
|
|
|
| ||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Income | $ | 118,624 |
| $ | 115,574 |
| $ | 284,148 |
| $ | 233,791 | ||
Other Comprehensive Loss, Net of Tax: |
|
|
|
|
|
|
|
|
|
|
| ||
| Changes in Funded Status of SERP Benefit Plan |
| (2) |
|
| - |
|
| (184) |
|
| - | |
Other Comprehensive Loss, Net of Tax |
| (2) |
|
| - |
|
| (184) |
|
| - | ||
Comprehensive Income | $ | 118,622 |
| $ | 115,574 |
| $ | 283,964 |
| $ | 233,791 | ||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements. |
|
|
|
NSTAR ELECTRIC COMPANY AND SUBSIDIARY |
|
|
|
|
| ||
CONDENSED CONSOLIDATED STATEMENTS OF INCOME |
|
|
| ||||
(Unaudited) |
|
|
|
|
| ||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| For the Three Months Ended March 31, | ||||
(Thousands of Dollars) | 2016 |
| 2015 | ||||
|
|
|
|
|
|
|
|
Operating Revenues | $ | 614,216 |
| $ | 766,808 | ||
|
|
|
|
|
|
|
|
Operating Expenses: |
|
|
|
|
| ||
| Purchased Power and Transmission |
| 254,336 |
|
| 401,867 | |
| Operations and Maintenance |
| 94,696 |
|
| 75,824 | |
| Depreciation |
| 51,886 |
|
| 48,768 | |
| Amortization of Regulatory Assets/(Liabilities), Net |
| 4,683 |
|
| (5,565) | |
| Energy Efficiency Programs |
| 66,243 |
|
| 55,417 | |
| Taxes Other Than Income Taxes |
| 32,555 |
|
| 30,962 | |
|
| Total Operating Expenses |
| 504,399 |
|
| 607,273 |
Operating Income |
| 109,817 |
|
| 159,535 | ||
Interest Expense |
| 20,889 |
|
| 20,446 | ||
Other (Loss)/Income, Net |
| (334) |
|
| 602 | ||
Income Before Income Tax Expense |
| 88,594 |
|
| 139,691 | ||
Income Tax Expense |
| 34,101 |
|
| 56,130 | ||
Net Income | $ | 54,493 |
| $ | 83,561 | ||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements. | |||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME | |||||||
(Unaudited) |
|
|
| ||||
|
|
|
|
|
|
|
|
Net Income | $ | 54,493 |
| $ | 83,561 | ||
Other Comprehensive Loss, Net of Tax: |
|
|
|
|
| ||
| Changes in Funded Status of SERP Benefit Plan |
| (10) |
|
| (180) | |
Other Comprehensive Loss, Net of Tax |
| (10) |
|
| (180) | ||
Comprehensive Income | $ | 54,483 |
| $ | 83,381 | ||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements. |
8
NSTAR ELECTRIC COMPANY AND SUBSIDIARY | NSTAR ELECTRIC COMPANY AND SUBSIDIARY | NSTAR ELECTRIC COMPANY AND SUBSIDIARY | ||||||||||||
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS | CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS | CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS | ||||||||||||
(Unaudited) | (Unaudited) | (Unaudited) | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
| ||
|
|
|
|
|
|
|
|
|
|
|
|
| ||
|
|
| For the Nine Months Ended September 30, |
|
| For the Three Months Ended March 31, | ||||||||
(Thousands of Dollars) | (Thousands of Dollars) | 2015 |
| 2014 | (Thousands of Dollars) | 2016 |
| 2015 | ||||||
|
|
|
|
|
|
|
|
|
|
|
|
| ||
Operating Activities: | Operating Activities: |
|
|
|
| Operating Activities: |
|
|
|
| ||||
| Net Income | $ | 284,148 |
| $ | 233,791 | Net Income | $ | 54,493 |
| $ | 83,561 | ||
| Adjustments to Reconcile Net Income to Net Cash Flows Provided by Operating Activities: |
|
|
|
|
| Adjustments to Reconcile Net Income to Net Cash Flows Provided by Operating Activities: |
|
|
|
|
| ||
|
| Depreciation |
| 146,818 |
|
| 140,996 |
| Depreciation |
| 51,886 |
|
| 48,768 |
|
| Deferred Income Taxes |
| 54,188 |
|
| (39,399) |
| Deferred Income Taxes |
| 32,878 |
|
| 41,297 |
|
| Pension and PBOP Contributions, Net of Pension, SERP and PBOP Expense |
| (1,138) |
|
| (11,046) |
| Pension and PBOP Contributions, Net of Pension, SERP and PBOP Expense |
| (12,953) |
|
| 1,164 |
|
| Regulatory (Under)/Over Recoveries, Net |
| (48,903) |
|
| 155,357 |
| Regulatory Underrecoveries, Net |
| (16,746) |
|
| (103,142) |
|
| Amortization of Regulatory Liabilities, Net |
| (10,643) |
|
| (916) |
| Amortization of Regulatory Assets/(Liabilities), Net |
| 4,683 |
|
| (5,565) |
|
| Proceeds from DOE Damages Claim |
| - |
|
| 30,193 |
| Bad Debt Expense |
| 6,875 |
|
| 8,049 |
|
| Other |
| (34,223) |
|
| (41,601) |
| Other |
| (10,120) |
|
| (21,885) |
| Changes in Current Assets and Liabilities: |
|
|
|
|
| Changes in Current Assets and Liabilities: |
|
|
|
|
| ||
|
| Receivables and Unbilled Revenues, Net |
| (107,711) |
|
| (47,770) |
| Receivables and Unbilled Revenues, Net |
| (30,176) |
|
| (90,465) |
|
| Materials and Supplies |
| 21,863 |
|
| (20,837) |
| Materials, Supplies and Inventory |
| (40,322) |
|
| (13,504) |
|
| Taxes Receivable/Accrued, Net |
| 207,516 |
|
| 60,252 |
| Taxes Receivable/Accrued, Net |
| 33,938 |
|
| 96,319 |
|
| Accounts Payable |
| (41,447) |
|
| (40,594) |
| Accounts Payable |
| (26,838) |
|
| 29,210 |
|
| Accounts Receivable from/Payable to Affiliates, Net |
| (14,878) |
|
| 66,758 |
| Accounts Receivable from/Payable to Affiliates, Net |
| 29,069 |
|
| 96,368 |
|
| Other Current Assets and Liabilities, Net |
| 46,671 |
|
| 32,340 |
| Other Current Assets and Liabilities, Net |
| 19,600 |
|
| 51,157 |
Net Cash Flows Provided by Operating Activities | Net Cash Flows Provided by Operating Activities |
| 502,261 |
|
| 517,524 | Net Cash Flows Provided by Operating Activities |
| 96,267 |
|
| 221,332 | ||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investing Activities: | Investing Activities: |
|
|
|
|
| Investing Activities: |
|
|
|
|
| ||
| Investments in Property, Plant and Equipment |
| (314,055) |
|
| (309,248) | Investments in Property, Plant and Equipment |
| (91,319) |
|
| (79,776) | ||
| Other Investing Activities |
| - |
|
| 53 | ||||||||
Net Cash Flows Used in Investing Activities | Net Cash Flows Used in Investing Activities |
| (314,055) |
|
| (309,248) | Net Cash Flows Used in Investing Activities |
| (91,319) |
|
| (79,723) | ||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Financing Activities: | Financing Activities: |
|
|
|
|
| Financing Activities: |
|
|
|
|
| ||
| Cash Dividends on Common Stock |
| (148,500) |
|
| (253,000) | Cash Dividends on Common Stock |
| (90,300) |
|
| (49,500) | ||
| Cash Dividends on Preferred Stock |
| (1,470) |
|
| (1,470) | Cash Dividends on Preferred Stock |
| (490) |
|
| (490) | ||
| (Decrease)/Increase in Notes Payable |
| (43,500) |
|
| 56,000 | Increase/(Decrease) in Notes Payable |
| 86,000 |
|
| (86,500) | ||
| Issuance of Long-Term Debt |
| - |
|
| 300,000 | Other Financing Activities |
| - |
|
| 5 | ||
| Retirements of Long-Term Debt |
| (4,700) |
|
| (301,650) | ||||||||
| Other Financing Activities |
| - |
|
| (5,137) | ||||||||
Net Cash Flows Used in Financing Activities | Net Cash Flows Used in Financing Activities |
| (198,170) |
|
| (205,257) | Net Cash Flows Used in Financing Activities |
| (4,790) |
|
| (136,485) | ||
Net (Decrease)/Increase in Cash and Cash Equivalents |
| (9,964) |
|
| 3,019 | |||||||||
Increase in Cash and Cash Equivalents | Increase in Cash and Cash Equivalents |
| 158 |
|
| 5,124 | ||||||||
Cash and Cash Equivalents - Beginning of Period | Cash and Cash Equivalents - Beginning of Period |
| 12,773 |
|
| 8,021 | Cash and Cash Equivalents - Beginning of Period |
| 3,346 |
|
| 12,773 | ||
Cash and Cash Equivalents - End of Period | Cash and Cash Equivalents - End of Period | $ | 2,809 |
| $ | 11,040 | Cash and Cash Equivalents - End of Period | $ | 3,504 |
| $ | 17,897 | ||
|
|
|
|
|
|
|
|
|
|
|
|
| ||
|
|
|
|
|
|
|
|
|
|
|
|
| ||
|
|
|
|
|
|
|
|
|
|
|
|
| ||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements. | The accompanying notes are an integral part of these unaudited condensed consolidated financial statements. | The accompanying notes are an integral part of these unaudited condensed consolidated financial statements. |
9
PUBLIC SERVICE COMPANY OF NEW HAMPSHIRE AND SUBSIDIARY | PUBLIC SERVICE COMPANY OF NEW HAMPSHIRE AND SUBSIDIARY |
|
|
|
| PUBLIC SERVICE COMPANY OF NEW HAMPSHIRE AND SUBSIDIARY |
|
|
|
| ||||
CONDENSED CONSOLIDATED BALANCE SHEETS | CONDENSED CONSOLIDATED BALANCE SHEETS |
|
|
|
| CONDENSED CONSOLIDATED BALANCE SHEETS |
|
|
|
| ||||
(Unaudited) | (Unaudited) |
|
|
|
| (Unaudited) |
|
|
|
| ||||
|
|
|
|
|
|
|
|
|
|
|
|
| ||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| September 30, |
| December 31, |
|
| March 31, |
| December 31, | ||||
(Thousands of Dollars) | (Thousands of Dollars) | 2015 |
| 2014 | (Thousands of Dollars) | 2016 |
| 2015 | ||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ASSETS | ASSETS |
|
|
|
|
| ASSETS |
|
|
|
|
| ||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current Assets: | Current Assets: |
|
|
|
|
| Current Assets: |
|
|
|
|
| ||
| Cash | $ | 3,580 |
| $ | 1,733 | ||||||||
| Cash | $ | 2,103 |
| $ | 489 | Receivables, Net |
| 89,138 |
| 77,546 | |||
| Receivables, Net |
| 91,700 |
| 80,151 | Accounts Receivable from Affiliated Companies |
| 7,667 |
| 2,352 | ||||
| Accounts Receivable from Affiliated Companies |
| 14,630 |
| 3,194 | Unbilled Revenues |
| 36,497 |
| 38,207 | ||||
| Unbilled Revenues |
| 34,932 |
| 40,181 | Taxes Receivable |
| - |
| 43,128 | ||||
| Fuel, Materials and Supplies |
| 143,983 |
| 148,139 | Fuel, Materials, Supplies and Inventory |
| 149,965 |
| 156,868 | ||||
| Regulatory Assets |
| 89,513 |
| 111,705 | Regulatory Assets |
| 101,633 |
| 104,971 | ||||
| Prepayments and Other Current Assets |
| 22,125 |
|
| 42,392 | Prepayments and Other Current Assets |
| 5,963 |
|
| 24,302 | ||
Total Current Assets | Total Current Assets |
| 398,986 |
|
| 426,251 | Total Current Assets |
| 394,443 |
|
| 449,107 | ||
|
|
|
|
|
|
|
|
|
|
|
|
| ||
Property, Plant and Equipment, Net | Property, Plant and Equipment, Net |
| 2,768,206 |
|
| 2,635,844 | Property, Plant and Equipment, Net |
| 2,881,435 |
|
| 2,855,363 | ||
|
|
|
|
|
|
|
|
|
|
|
|
| ||
Deferred Debits and Other Assets: | Deferred Debits and Other Assets: |
|
|
|
| Deferred Debits and Other Assets: |
|
|
|
| ||||
| Regulatory Assets |
| 272,360 |
| 293,115 | Regulatory Assets |
| 245,760 |
| 257,873 | ||||
| Other Long-Term Assets |
| 35,075 |
|
| 39,228 | Other Long-Term Assets |
| 34,703 |
|
| 34,176 | ||
Total Deferred Debits and Other Assets | Total Deferred Debits and Other Assets |
| 307,435 |
|
| 332,343 | Total Deferred Debits and Other Assets |
| 280,463 |
|
| 292,049 | ||
|
|
|
|
|
|
|
|
|
|
|
|
| ||
Total Assets | Total Assets | $ | 3,474,627 |
| $ | 3,394,438 | Total Assets | $ | 3,556,341 |
| $ | 3,596,519 | ||
|
|
|
|
|
|
|
|
|
|
|
|
| ||
LIABILITIES AND CAPITALIZATION | LIABILITIES AND CAPITALIZATION |
|
|
|
|
| LIABILITIES AND CAPITALIZATION |
|
|
|
|
| ||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current Liabilities: | Current Liabilities: |
|
|
|
|
| Current Liabilities: |
|
|
|
|
| ||
| Notes Payable to Eversource Parent | $ | 137,300 |
| $ | 90,500 | Notes Payable to Eversource Parent | $ | 157,100 |
| $ | 231,300 | ||
| Accounts Payable |
| 76,330 |
| 93,349 | Accounts Payable |
| 64,717 |
| 87,925 | ||||
| Accounts Payable to Affiliated Companies |
| 25,239 |
| 33,734 | Accounts Payable to Affiliated Companies |
| 29,814 |
| 24,214 | ||||
| Regulatory Liabilities |
| 11,338 |
| 16,044 | Accrued Taxes |
| 21,231 |
| 4,648 | ||||
| Accumulated Deferred Income Taxes |
| 34,699 |
| 36,164 | Regulatory Liabilities |
| 4,723 |
| 6,898 | ||||
| Other Current Liabilities |
| 47,589 |
|
| 38,969 | Other Current Liabilities |
| 43,132 |
|
| 39,273 | ||
Total Current Liabilities | Total Current Liabilities |
| 332,495 |
|
| 308,760 | Total Current Liabilities |
| 320,717 |
|
| 394,258 | ||
|
|
|
|
|
|
|
|
|
|
|
|
| ||
Deferred Credits and Other Liabilities: | Deferred Credits and Other Liabilities: |
|
|
|
| Deferred Credits and Other Liabilities: |
|
|
|
| ||||
| Accumulated Deferred Income Taxes |
| 629,055 |
| 587,292 | Accumulated Deferred Income Taxes |
| 723,110 |
| 705,894 | ||||
| Regulatory Liabilities |
| 49,680 |
| 51,372 | Regulatory Liabilities |
| 47,930 |
| 47,851 | ||||
| Accrued Pension, SERP and PBOP |
| 97,167 |
| 93,243 | Accrued Pension, SERP and PBOP |
| 77,218 |
| 89,579 | ||||
| Other Long-Term Liabilities |
| 48,543 |
|
| 50,155 | Other Long-Term Liabilities |
| 50,453 |
|
| 50,746 | ||
Total Deferred Credits and Other Liabilities | Total Deferred Credits and Other Liabilities |
| 824,445 |
|
| 782,062 | Total Deferred Credits and Other Liabilities |
| 898,711 |
|
| 894,070 | ||
|
|
|
|
|
|
|
|
|
|
|
|
| ||
Capitalization: | Capitalization: |
|
|
|
| Capitalization: |
|
|
|
| ||||
| Long-Term Debt |
| 1,076,336 |
|
| 1,076,286 | Long-Term Debt |
| 1,071,275 |
|
| 1,071,017 | ||
|
|
|
|
|
|
|
|
|
|
|
|
| ||
| Common Stockholder's Equity: |
|
|
|
| Common Stockholder's Equity: |
|
|
|
| ||||
| Common Stock |
| - |
| - |
| Common Stock |
| - |
| - | |||
| Capital Surplus, Paid In |
| 748,634 |
| 748,240 |
| Capital Surplus, Paid In |
| 760,134 |
| 748,634 | |||
| Retained Earnings |
| 499,450 |
| 486,459 |
| Retained Earnings |
| 511,559 |
| 494,901 | |||
| Accumulated Other Comprehensive Loss |
| (6,733) |
|
| (7,369) |
| Accumulated Other Comprehensive Loss |
| (6,055) |
|
| (6,361) | |
| Common Stockholder's Equity |
| 1,241,351 |
|
| 1,227,330 | Common Stockholder's Equity |
| 1,265,638 |
|
| 1,237,174 | ||
Total Capitalization | Total Capitalization |
| 2,317,687 |
|
| 2,303,616 | Total Capitalization |
| 2,336,913 |
|
| 2,308,191 | ||
|
|
|
|
|
|
|
|
|
|
|
|
| ||
Total Liabilities and Capitalization | Total Liabilities and Capitalization | $ | 3,474,627 |
| $ | 3,394,438 | Total Liabilities and Capitalization | $ | 3,556,341 |
| $ | 3,596,519 | ||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements. | The accompanying notes are an integral part of these unaudited condensed consolidated financial statements. |
| The accompanying notes are an integral part of these unaudited condensed consolidated financial statements. |
| ||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
10
PUBLIC SERVICE COMPANY OF NEW HAMPSHIRE AND SUBSIDIARY |
|
|
|
|
|
| |||||||
CONDENSED CONSOLIDATED STATEMENTS OF INCOME |
|
|
|
|
|
|
|
|
| ||||
(Unaudited) |
|
|
|
|
|
|
|
|
|
|
| ||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| For the Three Months Ended September 30, |
| For the Nine Months Ended September 30, | ||||||||
(Thousands of Dollars) | 2015 |
| 2014 |
| 2015 |
| 2014 | ||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating Revenues | $ | 234,364 |
| $ | 223,664 |
| $ | 761,086 |
| $ | 735,123 | ||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating Expenses: |
|
|
|
|
|
|
|
|
|
|
| ||
| Purchased Power, Fuel and Transmission |
| 53,017 |
|
| 64,397 |
|
| 200,533 |
|
| 247,992 | |
| Operations and Maintenance |
| 65,190 |
|
| 65,563 |
|
| 200,085 |
|
| 198,025 | |
| Depreciation |
| 26,592 |
|
| 24,568 |
|
| 77,989 |
|
| 73,247 | |
| Amortization of Regulatory Assets/(Liabilities), Net |
| 1,967 |
|
| (9,734) |
|
| 29,148 |
|
| (17,565) | |
| Energy Efficiency Programs |
| 3,873 |
|
| 3,766 |
|
| 11,001 |
|
| 10,897 | |
| Taxes Other Than Income Taxes |
| 20,104 |
|
| 18,702 |
|
| 61,435 |
|
| 53,051 | |
|
| Total Operating Expenses |
| 170,743 |
|
| 167,262 |
|
| 580,191 |
|
| 565,647 |
Operating Income |
| 63,621 |
|
| 56,402 |
|
| 180,895 |
|
| 169,476 | ||
Interest Expense |
| 11,647 |
|
| 11,024 |
|
| 34,582 |
|
| 33,995 | ||
Other Income, Net |
| 685 |
|
| 461 |
|
| 2,313 |
|
| 1,673 | ||
Income Before Income Tax Expense |
| 52,659 |
|
| 45,839 |
|
| 148,626 |
|
| 137,154 | ||
Income Tax Expense |
| 20,158 |
|
| 17,603 |
|
| 56,135 |
|
| 52,199 | ||
Net Income | $ | 32,501 |
| $ | 28,236 |
| $ | 92,491 |
| $ | 84,955 | ||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements. |
|
|
| ||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME |
|
|
|
|
|
| |||||||
(Unaudited) |
|
|
|
|
|
|
|
|
| ||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Income | $ | 32,501 |
| $ | 28,236 |
| $ | 92,491 |
| $ | 84,955 | ||
Other Comprehensive Income, Net of Tax: |
|
|
|
|
|
|
|
|
|
|
| ||
| Qualified Cash Flow Hedging Instruments |
| 291 |
|
| 290 |
|
| 872 |
|
| 871 | |
| Changes in Unrealized (Losses)/Gains on Other Securities |
| (169) |
|
| (13) |
|
| (236) |
|
| 14 | |
Other Comprehensive Income, Net of Tax |
| 122 |
|
| 277 |
|
| 636 |
|
| 885 | ||
Comprehensive Income | $ | 32,623 |
| $ | 28,513 |
| $ | 93,127 |
| $ | 85,840 | ||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements. |
|
|
|
PUBLIC SERVICE COMPANY OF NEW HAMPSHIRE AND SUBSIDIARY | |||||||
CONDENSED CONSOLIDATED STATEMENTS OF INCOME |
|
|
| ||||
(Unaudited) |
|
|
|
|
| ||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| For the Three Months Ended March 31, | ||||
(Thousands of Dollars) | 2016 |
| 2015 | ||||
|
|
|
|
|
|
|
|
Operating Revenues | $ | 242,290 |
| $ | 284,847 | ||
|
|
|
|
|
|
|
|
Operating Expenses: |
|
|
|
|
| ||
| Purchased Power, Fuel and Transmission |
| 50,214 |
|
| 99,579 | |
| Operations and Maintenance |
| 59,213 |
|
| 58,428 | |
| Depreciation |
| 28,235 |
|
| 25,646 | |
| Amortization of Regulatory Assets, Net |
| 8,518 |
|
| 15,132 | |
| Energy Efficiency Programs |
| 3,620 |
|
| 3,772 | |
| Taxes Other Than Income Taxes |
| 21,795 |
|
| 19,079 | |
|
| Total Operating Expenses |
| 171,595 |
|
| 221,636 |
Operating Income |
| 70,695 |
|
| 63,211 | ||
Interest Expense |
| 12,461 |
|
| 11,272 | ||
Other Income, Net |
| 150 |
|
| 382 | ||
Income Before Income Tax Expense |
| 58,384 |
|
| 52,321 | ||
Income Tax Expense |
| 22,326 |
|
| 20,276 | ||
Net Income | $ | 36,058 |
| $ | 32,045 | ||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements. | |||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME | |||||||
(Unaudited) |
|
|
| ||||
|
|
|
|
|
|
|
|
Net Income | $ | 36,058 |
| $ | 32,045 | ||
Other Comprehensive Income, Net of Tax: |
|
|
|
|
| ||
| Qualified Cash Flow Hedging Instruments |
| 290 |
|
| 291 | |
| Changes in Unrealized Gains on Marketable Securities |
| 16 |
|
| 8 | |
Other Comprehensive Income, Net of Tax |
| 306 |
|
| 299 | ||
Comprehensive Income | $ | 36,364 |
| $ | 32,344 | ||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements. |
11
PUBLIC SERVICE COMPANY OF NEW HAMPSHIRE AND SUBSIDIARY | |||||||
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS | |||||||
(Unaudited) | |||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| For the Nine Months Ended September 30, | ||||
(Thousands of Dollars) | 2015 |
| 2014 | ||||
|
|
|
|
|
|
|
|
Operating Activities: |
|
|
|
|
| ||
| Net Income | $ | 92,491 |
| $ | 84,955 | |
| Adjustments to Reconcile Net Income to Net Cash Flows Provided by Operating Activities: |
|
|
|
|
| |
|
| Depreciation |
| 77,989 |
|
| 73,247 |
|
| Deferred Income Taxes |
| 42,563 |
|
| 67,827 |
|
| Regulatory Overrecoveries, Net |
| 2,639 |
|
| 16,813 |
|
| Amortization of Regulatory Assets/(Liabilities), Net |
| 29,148 |
|
| (17,565) |
|
| Proceeds from DOE Damages Claim |
| - |
|
| 14,453 |
|
| Other |
| 10,894 |
|
| 10,834 |
| Changes in Current Assets and Liabilities: |
|
|
|
|
| |
|
| Receivables and Unbilled Revenues, Net |
| (25,126) |
|
| (7,467) |
|
| Fuel, Materials and Supplies |
| 4,156 |
|
| (17,350) |
|
| Taxes Receivable/Accrued, Net |
| 9,026 |
|
| (24,108) |
|
| Accounts Payable |
| (20,058) |
|
| (9,297) |
|
| Other Current Assets and Liabilities, Net |
| 20,141 |
|
| 13,470 |
Net Cash Flows Provided by Operating Activities |
| 243,863 |
|
| 205,812 | ||
|
|
|
|
|
|
|
|
Investing Activities: |
|
|
|
|
| ||
| Investments in Property, Plant and Equipment |
| (209,522) |
|
| (170,127) | |
| Other Investing Activities |
| 241 |
|
| (148) | |
Net Cash Flows Used in Investing Activities |
| (209,281) |
|
| (170,275) | ||
|
|
|
|
|
|
|
|
Financing Activities: |
|
|
|
|
| ||
| Cash Dividends on Common Stock |
| (79,500) |
|
| (49,500) | |
| Increase in Notes Payable to Eversource Parent |
| 46,800 |
|
| 66,800 | |
| Retirements of Long-Term Debt |
| - |
|
| (50,000) | |
| Other Financing Activities |
| (268) |
|
| (217) | |
Net Cash Flows Used in Financing Activities |
| (32,968) |
|
| (32,917) | ||
Net Increase in Cash |
| 1,614 |
|
| 2,620 | ||
Cash - Beginning of Period |
| 489 |
|
| 130 | ||
Cash - End of Period | $ | 2,103 |
| $ | 2,750 | ||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements. |
PUBLIC SERVICE COMPANY OF NEW HAMPSHIRE AND SUBSIDIARY | |||||||
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS | |||||||
(Unaudited) | |||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| For the Three Months Ended March 31, | ||||
(Thousands of Dollars) | 2016 |
| 2015 | ||||
|
|
|
|
|
|
|
|
Operating Activities: |
|
|
|
|
| ||
| Net Income | $ | 36,058 |
| $ | 32,045 | |
| Adjustments to Reconcile Net Income to Net Cash Flows Provided by Operating Activities: |
|
|
|
|
| |
|
| Depreciation |
| 28,235 |
|
| 25,646 |
|
| Deferred Income Taxes |
| 21,181 |
|
| 38,767 |
|
| Regulatory Underrecoveries, Net |
| (2,291) |
|
| (288) |
|
| Amortization of Regulatory Assets, Net |
| 8,518 |
|
| 15,132 |
|
| Other |
| (9,166) |
|
| 2,999 |
| Changes in Current Assets and Liabilities: |
|
|
|
|
| |
|
| Receivables and Unbilled Revenues, Net |
| (17,207) |
|
| (31,556) |
|
| Fuel, Materials, Supplies and Inventory |
| 6,903 |
|
| 34,572 |
|
| Taxes Receivable/Accrued, Net |
| 57,935 |
|
| (16,576) |
|
| Accounts Payable |
| 2,100 |
|
| (4,285) |
|
| Other Current Assets and Liabilities, Net |
| 24,021 |
|
| 17,468 |
Net Cash Flows Provided by Operating Activities |
| 156,287 |
|
| 113,924 | ||
|
|
|
|
|
|
|
|
Investing Activities: |
|
|
|
|
| ||
| Investments in Property, Plant and Equipment |
| (72,338) |
|
| (71,905) | |
| Other Investing Activities |
| 84 |
|
| (2,277) | |
Net Cash Flows Used in Investing Activities |
| (72,254) |
|
| (74,182) | ||
|
|
|
|
|
|
|
|
Financing Activities: |
|
|
|
|
| ||
| Cash Dividends on Common Stock |
| (19,400) |
|
| (26,500) | |
| Decrease in Notes Payable to Eversource Parent |
| (74,200) |
|
| (8,500) | |
| Capital Contribution from Eversource Parent |
| 11,500 |
|
| - | |
| Other Financing Activities |
| (86) |
|
| (82) | |
Net Cash Flows Used in Financing Activities |
| (82,186) |
|
| (35,082) | ||
Net Increase in Cash |
| 1,847 |
|
| 4,660 | ||
Cash - Beginning of Period |
| 1,733 |
|
| 489 | ||
Cash - End of Period | $ | 3,580 |
| $ | 5,149 | ||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements. |
12
WESTERN MASSACHUSETTS ELECTRIC COMPANY | WESTERN MASSACHUSETTS ELECTRIC COMPANY |
|
|
|
| WESTERN MASSACHUSETTS ELECTRIC COMPANY |
|
|
|
| ||||
CONDENSED BALANCE SHEETS | CONDENSED BALANCE SHEETS |
|
|
|
| CONDENSED BALANCE SHEETS |
|
|
|
| ||||
(Unaudited) | (Unaudited) |
|
|
|
| (Unaudited) |
|
|
|
| ||||
|
|
|
|
|
|
|
|
|
|
|
|
| ||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| September 30, |
| December 31, |
|
| March 31, |
| December 31, | ||||
(Thousands of Dollars) | (Thousands of Dollars) | 2015 |
| 2014 | (Thousands of Dollars) | 2016 |
| 2015 | ||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ASSETS | ASSETS |
|
|
|
|
| ASSETS |
|
|
|
|
| ||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current Assets: | Current Assets: |
|
|
|
|
| Current Assets: |
|
|
|
|
| ||
| Cash | $ | 658 |
| $ | - | Cash | $ | 2,269 |
| $ | 834 | ||
| Receivables, Net |
| 62,889 |
| 51,066 | Receivables, Net |
| 59,324 |
| 50,912 | ||||
| Accounts Receivable from Affiliated Companies |
| 24,221 |
| 7,851 | Accounts Receivable from Affiliated Companies |
| 8,612 |
| 18,633 | ||||
| Unbilled Revenues |
| 14,517 |
| 15,146 | Unbilled Revenues |
| 13,753 |
| 15,065 | ||||
| Taxes Receivable |
| 49 |
| 18,126 | Taxes Receivable |
| 6,431 |
| 33,407 | ||||
| Regulatory Assets |
| 48,805 |
| 51,923 | Regulatory Assets |
| 61,363 |
| 56,166 | ||||
| Marketable Securities |
| 40,459 |
| 28,658 | Prepayments and Other Current Assets |
| 8,396 |
|
| 7,882 | |||
| Prepayments and Other Current Assets |
| 6,983 |
|
| 7,607 | ||||||||
Total Current Assets | Total Current Assets |
| 198,581 |
|
| 180,377 | Total Current Assets |
| 160,148 |
|
| 182,899 | ||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Property, Plant and Equipment, Net | Property, Plant and Equipment, Net |
| 1,531,705 |
|
| 1,461,321 | Property, Plant and Equipment, Net |
| 1,590,524 |
|
| 1,575,306 | ||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deferred Debits and Other Assets: | Deferred Debits and Other Assets: |
|
|
|
|
| Deferred Debits and Other Assets: |
|
|
|
|
| ||
| Regulatory Assets |
| 133,697 |
| 146,307 | |||||||||
| Marketable Securities |
| 17,888 |
| 29,452 | Regulatory Assets |
| 131,432 |
| 135,010 | ||||
| Other Long-Term Assets |
| 26,709 |
|
| 22,018 | Other Long-Term Assets |
| 26,148 |
|
| 24,875 | ||
Total Deferred Debits and Other Assets | Total Deferred Debits and Other Assets |
| 178,294 |
|
| 197,777 | Total Deferred Debits and Other Assets |
| 157,580 |
|
| 159,885 | ||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Assets | Total Assets | $ | 1,908,580 |
| $ | 1,839,475 | Total Assets | $ | 1,908,252 |
| $ | 1,918,090 | ||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND CAPITALIZATION | LIABILITIES AND CAPITALIZATION |
|
|
|
|
| LIABILITIES AND CAPITALIZATION |
|
|
|
|
| ||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current Liabilities: | Current Liabilities: |
|
|
|
|
| Current Liabilities: |
|
|
|
|
| ||
| Notes Payable to Eversource Parent | $ | 126,200 |
| $ | 21,400 | ||||||||
| Long-Term Debt - Current Portion |
| - |
|
| 50,000 | Notes Payable to Eversource Parent | $ | 143,500 |
| $ | 143,400 | ||
| Accounts Payable |
| 33,960 |
|
| 53,732 | Accounts Payable |
| 34,240 |
|
| 58,364 | ||
| Accounts Payable to Affiliated Companies |
| 21,496 |
|
| 14,328 | Accounts Payable to Affiliated Companies |
| 16,740 |
|
| 19,896 | ||
| Regulatory Liabilities |
| 24,267 |
| 22,486 | Renewable Portfolio Standards Compliance Obligations |
| 11,899 |
| 6,395 | ||||
| Accumulated Deferred Income Taxes |
| 13,403 |
| 18,089 | Regulatory Liabilities |
| 9,760 |
| 13,122 | ||||
| Other Current Liabilities |
| 28,961 |
|
| 24,080 | Other Current Liabilities |
| 18,404 |
|
| 23,532 | ||
Total Current Liabilities | Total Current Liabilities |
| 248,287 |
|
| 204,115 | Total Current Liabilities |
| 234,543 |
|
| 264,709 | ||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deferred Credits and Other Liabilities: | Deferred Credits and Other Liabilities: |
|
|
|
|
| Deferred Credits and Other Liabilities: |
|
|
|
|
| ||
| Accumulated Deferred Income Taxes |
| 422,753 |
|
| 416,822 | Accumulated Deferred Income Taxes |
| 480,250 |
|
| 470,539 | ||
| Regulatory Liabilities |
| 11,926 |
|
| 10,835 | Regulatory Liabilities |
| 13,775 |
|
| 11,597 | ||
| Accrued Pension, SERP and PBOP |
| 18,320 |
| 17,705 | Accrued Pension, SERP and PBOP |
| 17,897 |
| 19,515 | ||||
| Other Long-Term Liabilities |
| 36,849 |
|
| 33,747 | Other Long-Term Liabilities |
| 39,566 |
|
| 36,819 | ||
Total Deferred Credits and Other Liabilities | Total Deferred Credits and Other Liabilities |
| 489,848 |
|
| 479,109 | Total Deferred Credits and Other Liabilities |
| 551,488 |
|
| 538,470 | ||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capitalization: | Capitalization: |
|
|
|
|
| Capitalization: |
|
|
|
|
| ||
| Long-Term Debt |
| 577,781 |
|
| 578,471 | Long-Term Debt |
| 517,200 |
|
| 517,329 | ||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Common Stockholder's Equity: |
|
|
|
|
| Common Stockholder's Equity: |
|
|
|
|
| ||
| Common Stock |
| 10,866 |
|
| 10,866 |
| Common Stock |
| 10,866 |
|
| 10,866 | |
| Capital Surplus, Paid In |
| 391,398 |
|
| 391,256 |
| Capital Surplus, Paid In |
| 391,398 |
|
| 391,398 | |
| Retained Earnings |
| 193,344 |
|
| 178,834 |
| Retained Earnings |
| 205,467 |
|
| 198,140 | |
| Accumulated Other Comprehensive Loss |
| (2,944) |
|
| (3,176) |
| Accumulated Other Comprehensive Loss |
| (2,710) |
|
| (2,822) | |
| Common Stockholder's Equity |
| 592,664 |
|
| 577,780 | Common Stockholder's Equity |
| 605,021 |
|
| 597,582 | ||
Total Capitalization | Total Capitalization |
| 1,170,445 |
|
| 1,156,251 | Total Capitalization |
| 1,122,221 |
|
| 1,114,911 | ||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Liabilities and Capitalization | Total Liabilities and Capitalization | $ | 1,908,580 |
| $ | 1,839,475 | Total Liabilities and Capitalization | $ | 1,908,252 |
| $ | 1,918,090 | ||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The accompanying notes are an integral part of these unaudited condensed financial statements. | The accompanying notes are an integral part of these unaudited condensed financial statements. |
|
| The accompanying notes are an integral part of these unaudited condensed financial statements. |
|
|
13
WESTERN MASSACHUSETTS ELECTRIC COMPANY |
|
|
|
|
|
|
|
|
| ||||
CONDENSED STATEMENTS OF INCOME |
|
|
|
|
|
|
|
|
|
|
| ||
(Unaudited) |
|
|
|
|
|
|
|
|
|
|
| ||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| For the Three Months Ended September 30, |
| For the Nine Months Ended September 30, | ||||||||
(Thousands of Dollars) | 2015 |
| 2014 |
| 2015 |
| 2014 | ||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating Revenues | $ | 125,093 |
| $ | 118,145 |
| $ | 403,151 |
| $ | 363,843 | ||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating Expenses: |
|
|
|
|
|
|
|
|
|
|
| ||
| Purchased Power and Transmission |
| 36,465 |
|
| 43,926 |
|
| 149,182 |
|
| 130,977 | |
| Operations and Maintenance |
| 21,762 |
|
| 20,820 |
|
| 61,651 |
|
| 67,085 | |
| Depreciation |
| 11,196 |
|
| 10,506 |
|
| 32,420 |
|
| 31,144 | |
| Amortization of Regulatory Assets/(Liabilities), Net |
| 3,930 |
|
| (8,519) |
|
| 11,194 |
|
| (7,778) | |
| Energy Efficiency Programs |
| 12,107 |
|
| 10,983 |
|
| 32,701 |
|
| 33,096 | |
| Taxes Other Than Income Taxes |
| 9,599 |
|
| 9,200 |
|
| 28,430 |
|
| 25,679 | |
|
| Total Operating Expenses |
| 95,059 |
|
| 86,916 |
|
| 315,578 |
|
| 280,203 |
Operating Income |
| 30,034 |
|
| 31,229 |
|
| 87,573 |
|
| 83,640 | ||
Interest Expense |
| 5,901 |
|
| 6,576 |
|
| 19,014 |
|
| 18,929 | ||
Other Income, Net |
| 587 |
|
| 502 |
|
| 2,406 |
|
| 1,670 | ||
Income Before Income Tax Expense |
| 24,720 |
|
| 25,155 |
|
| 70,965 |
|
| 66,381 | ||
Income Tax Expense |
| 9,749 |
|
| 10,490 |
|
| 28,555 |
|
| 26,596 | ||
Net Income | $ | 14,971 |
| $ | 14,665 |
| $ | 42,410 |
| $ | 39,785 | ||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The accompanying notes are an integral part of these unaudited condensed financial statements. |
|
|
|
|
|
| |||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CONDENSED STATEMENTS OF COMPREHENSIVE INCOME |
|
|
|
|
|
|
|
|
| ||||
(Unaudited) |
|
|
|
|
|
|
|
|
|
|
| ||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Income | $ | 14,971 |
| $ | 14,665 |
| $ | 42,410 |
| $ | 39,785 | ||
Other Comprehensive Income, Net of Tax: |
|
|
|
|
|
|
|
|
|
|
| ||
| Qualified Cash Flow Hedging Instruments |
| 101 |
|
| 85 |
|
| 270 |
|
| 254 | |
| Changes in Unrealized (Losses)/Gains on Other Securities |
| (27) |
|
| (2) |
|
| (38) |
|
| 2 | |
Other Comprehensive Income, Net of Tax |
| 74 |
|
| 83 |
|
| 232 |
|
| 256 | ||
Comprehensive Income | $ | 15,045 |
| $ | 14,748 |
| $ | 42,642 |
| $ | 40,041 | ||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The accompanying notes are an integral part of these unaudited condensed financial statements. |
|
|
|
|
|
|
WESTERN MASSACHUSETTS ELECTRIC COMPANY |
|
|
| ||||
CONDENSED STATEMENTS OF INCOME |
|
|
|
|
| ||
(Unaudited) |
|
|
|
|
| ||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| For the Three Months Ended March 31, | ||||
(Thousands of Dollars) | 2016 |
| 2015 | ||||
|
|
|
|
|
|
|
|
Operating Revenues | $ | 128,095 |
| $ | 152,864 | ||
|
|
|
|
|
|
|
|
Operating Expenses: |
|
|
|
|
| ||
| Purchased Power and Transmission |
| 39,563 |
|
| 69,661 | |
| Operations and Maintenance |
| 21,805 |
|
| 19,784 | |
| Depreciation |
| 11,371 |
|
| 10,375 | |
| Amortization of Regulatory Assets, Net |
| 1,212 |
|
| 3,927 | |
| Energy Efficiency Programs |
| 10,856 |
|
| 11,075 | |
| Taxes Other Than Income Taxes |
| 10,232 |
|
| 9,437 | |
|
| Total Operating Expenses |
| 95,039 |
|
| 124,259 |
Operating Income |
| 33,056 |
|
| 28,605 | ||
Interest Expense |
| 6,004 |
|
| 6,823 | ||
Other (Loss)/Income, Net |
| (149) |
|
| 575 | ||
Income Before Income Tax Expense |
| 26,903 |
|
| 22,357 | ||
Income Tax Expense |
| 10,076 |
|
| 9,113 | ||
Net Income | $ | 16,827 |
| $ | 13,244 | ||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The accompanying notes are an integral part of these unaudited condensed financial statements. | |||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CONDENSED STATEMENTS OF COMPREHENSIVE INCOME |
|
|
| ||||
(Unaudited) |
|
|
|
|
| ||
|
|
|
|
|
|
|
|
Net Income | $ | 16,827 |
| $ | 13,244 | ||
Other Comprehensive Income, Net of Tax: |
|
|
|
|
| ||
| Qualified Cash Flow Hedging Instruments |
| 109 |
|
| 85 | |
| Changes in Unrealized Gains on Marketable Securities |
| 3 |
|
| 1 | |
Other Comprehensive Income, Net of Tax |
| 112 |
|
| 86 | ||
Comprehensive Income | $ | 16,939 |
| $ | 13,330 | ||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The accompanying notes are an integral part of these unaudited condensed financial statements. |
14
WESTERN MASSACHUSETTS ELECTRIC COMPANY | WESTERN MASSACHUSETTS ELECTRIC COMPANY | WESTERN MASSACHUSETTS ELECTRIC COMPANY | ||||||||||||
CONDENSED STATEMENTS OF CASH FLOWS | CONDENSED STATEMENTS OF CASH FLOWS | CONDENSED STATEMENTS OF CASH FLOWS | ||||||||||||
(Unaudited) | (Unaudited) | (Unaudited) | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
| ||
|
|
|
|
|
|
|
|
|
|
|
|
| ||
|
|
| For the Nine Months Ended September 30, |
|
| For the Three Months Ended March 31, | ||||||||
(Thousands of Dollars) | (Thousands of Dollars) | 2015 |
| 2014 | (Thousands of Dollars) | 2016 |
| 2015 | ||||||
|
|
|
|
|
|
|
|
|
|
|
|
| ||
Operating Activities: | Operating Activities: |
|
|
|
| Operating Activities: |
|
|
|
| ||||
| Net Income | $ | 42,410 |
| $ | 39,785 | Net Income | $ | 16,827 |
| $ | 13,244 | ||
| Adjustments to Reconcile Net Income to Net Cash Flows Provided by Operating Activities: |
|
|
|
| Adjustments to Reconcile Net Income to Net Cash Flows Provided by/(Used in) Operating Activities: |
|
|
|
| ||||
|
| Depreciation |
| 32,420 |
| 31,144 |
| Depreciation |
| 11,371 |
| 10,375 | ||
|
| Deferred Income Taxes |
| 5,531 |
| 13,479 |
| Deferred Income Taxes |
| 9,921 |
| 12,759 | ||
|
| Regulatory Overrecoveries, Net |
| 4,024 |
| 33,630 |
| Regulatory Underrecoveries, Net |
| (6,100) |
| (14,442) | ||
|
| Amortization of Regulatory Assets/(Liabilities), Net |
| 11,194 |
| (7,778) |
| Amortization of Regulatory Assets, Net |
| 1,212 |
| 3,927 | ||
|
| Proceeds from DOE Damages Claim |
| - |
| 18,883 |
| Other |
| (541) |
| (1,197) | ||
|
| Other |
| (4,500) |
| 615 | Changes in Current Assets and Liabilities: |
|
|
|
| |||
| Changes in Current Assets and Liabilities: |
|
|
|
|
| Receivables and Unbilled Revenues, Net |
| 2,197 |
| (26,298) | |||
|
| Receivables and Unbilled Revenues, Net |
| (32,664) |
| 36,075 |
| Taxes Receivable/Accrued, Net |
| 26,976 |
| 64 | ||
|
| Taxes Receivable/Accrued, Net |
| 24,064 |
| (15,831) |
| Accounts Payable |
| (11,011) |
| 85 | ||
|
| Accounts Payable |
| (14,018) |
| (12,847) |
| Other Current Assets and Liabilities, Net |
| (136) |
|
| 65 | |
|
| Other Current Assets and Liabilities, Net |
| (463) |
|
| (16,551) | |||||||
Net Cash Flows Provided by Operating Activities |
| 67,998 |
|
| 120,604 | |||||||||
Net Cash Flows Provided by/(Used in) Operating Activities | Net Cash Flows Provided by/(Used in) Operating Activities |
| 50,716 |
|
| (1,418) | ||||||||
|
|
|
|
|
|
|
|
|
|
|
|
| ||
Investing Activities: | Investing Activities: |
|
|
|
| Investing Activities: |
|
|
|
| ||||
| Investments in Property, Plant and Equipment |
| (93,705) |
| (82,546) | Investments in Property, Plant and Equipment |
| (39,891) |
| (35,899) | ||||
| Proceeds from Sales of Marketable Securities |
| 71,110 |
| 58,788 | Proceeds from Sales of Marketable Securities |
| 479 |
| 23,249 | ||||
| Purchases of Marketable Securities |
| (71,625) |
|
| (59,280) | Purchases of Marketable Securities |
| (466) |
|
| (23,442) | ||
Net Cash Flows Used in Investing Activities | Net Cash Flows Used in Investing Activities |
| (94,220) |
|
| (83,038) | Net Cash Flows Used in Investing Activities |
| (39,878) |
|
| (36,092) | ||
|
|
|
|
|
|
|
|
|
|
|
|
| ||
Financing Activities: | Financing Activities: |
|
|
|
| Financing Activities: |
|
|
|
| ||||
| Cash Dividends on Common Stock |
| (27,900) |
| (49,000) | Cash Dividends on Common Stock |
| (9,500) |
| (9,300) | ||||
| Increase in Notes Payable to Eversource Parent |
| 104,800 |
| 13,200 | Increase in Notes Payable to Eversource Parent |
| 100 |
| 49,100 | ||||
| Retirements of Long-Term Debt |
| (50,000) |
| - | Other Financing Activities |
| (3) |
|
| (245) | |||
| Other Financing Activities |
| (20) |
|
| (29) | ||||||||
Net Cash Flows Provided by/(Used in) Financing Activities |
| 26,880 |
|
| (35,829) | |||||||||
Net Cash Flows (Used in)/Provided by Financing Activities | Net Cash Flows (Used in)/Provided by Financing Activities |
| (9,403) |
|
| 39,555 | ||||||||
Net Increase in Cash | Net Increase in Cash |
| 658 |
| 1,737 | Net Increase in Cash |
| 1,435 |
| 2,045 | ||||
Cash - Beginning of Period | Cash - Beginning of Period |
| - |
|
| - | Cash - Beginning of Period |
| 834 |
|
| - | ||
Cash - End of Period | Cash - End of Period | $ | 658 |
| $ | 1,737 | Cash - End of Period | $ | 2,269 |
| $ | 2,045 | ||
|
|
|
|
|
|
|
|
|
|
|
|
| ||
|
|
|
|
|
|
|
|
|
|
|
|
| ||
The accompanying notes are an integral part of these unaudited condensed financial statements. | The accompanying notes are an integral part of these unaudited condensed financial statements. | The accompanying notes are an integral part of these unaudited condensed financial statements. |
15
EVERSOURCE ENERGY AND SUBSIDIARIES
THE CONNECTICUT LIGHT AND POWER COMPANY
NSTAR ELECTRIC COMPANY AND SUBSIDIARY
PUBLIC SERVICE COMPANY OF NEW HAMPSHIRE AND SUBSIDIARY
WESTERN MASSACHUSETTS ELECTRIC COMPANY
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.
Basis of Presentation
Eversource Energy is a public utility holding company primarily engaged, through its wholly owned regulated utility subsidiaries, in the energy delivery business. Eversource Energy's wholly owned regulated utility subsidiaries consist of CL&P, NSTAR Electric, PSNH, WMECO, Yankee Gas and NSTAR Gas. Eversource provides energy delivery service to approximately 3.6 million electric and natural gas customers through these six regulated utilities in Connecticut, Massachusetts and New Hampshire.
On April 30, 2015, the Company's legal name was changed from Northeast Utilities to Eversource Energy. CL&P, NSTAR Electric, PSNH and WMECO are each doing business as Eversource Energy.
The unaudited condensed consolidated financial statements of Eversource, NSTAR Electric and PSNH include the accounts of each of their respective subsidiaries. Intercompany transactions have been eliminated in consolidation. The accompanying unaudited condensed consolidated financial statements of Eversource, NSTAR Electric and PSNH and the unaudited condensed financial statements of CL&P and WMECO are herein collectively referred to as the "financial statements."
The combined notes to the financial statements have been prepared pursuant to the rules and regulations of the SEC. Certain information and footnote disclosures included in annual financial statements prepared in accordance with GAAP have been omitted pursuant to such rules and regulations. The accompanying financial statements should be read in conjunction with the entirety of this combined Quarterly Report on Form 10-Q the first and second quarter 2015 combined Quarterly Report on Form 10-Q and the 20142015 combined Annual Report on Form 10-K of Eversource, CL&P, NSTAR Electric, PSNH and WMECO, which werewas filed with the SEC. The preparation of the financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent liabilities as of the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
The financial statements contain, in the opinion of management, all adjustments (including normal, recurring adjustments) necessary to present fairly Eversource's, CL&P's, NSTAR Electric's, PSNH's and WMECO's financial position as of September 30, 2015March 31, 2016 and December 31, 2014,2015, and the results of operations, and comprehensive income for the three and nine months ended September 30, 2015 and 2014, and the cash flows for the ninethree months ended September 30, 2015March 31, 2016 and 2014.2015. The results of operations, and comprehensive income for the three and nine months ended September 30, 2015 and 2014 and the cash flows for the ninethree months ended September 30,March 31, 2016 and 2015 and 2014 are not necessarily indicative of the results expected for a full year.
Eversource consolidates CYAPC and YAEC because CL&P's, NSTAR Electric's, PSNH's and WMECO's combined ownership interest in each of these entities is greater than 50 percent. Intercompany transactions between CL&P, NSTAR Electric, PSNH and WMECO and the CYAPC and YAEC companies have been eliminated in consolidation of the Eversource financial statements.
Access Northeast is a natural gas pipeline and storage project (the "Project") being developed jointly by Eversource, Spectra Energy Corp and National Grid. Access Northeast will enhance the Algonquin and Maritimes & Northeast pipeline systems using existing routes. Eversource and Spectra Energy Corp each own a 40 percent interest in the Project, with the remaining 20 percent interest owned by National Grid. The total projected cost for both the pipeline and the LNG storage is expected to be approximately $3 billion, to be funded in proportion to ownership interest (approximately $1.2 billion by Eversource), with anticipated in-service dates commencing in November 2018. Eversource’s cumulative equity investment in the Project as of March 31, 2016 of $14.4 million is presented in Other Long-Term Assets.
Eversource's utility subsidiaries' distribution (including generation) and transmission businesses are subject to rate-regulation that is based on cost recovery and meets the criteria for application of accounting guidance for entities with rate-regulated operations, which considers the effect of regulation on the differences in the timing of the recognition of certain revenues and expenses from those of other businesses and industries. See Note 2, "Regulatory Accounting," for further information.
Certain reclassifications of prior period data were made in the accompanying financial statements to conform to the current period presentation.presentation and as a result of the adoption of new accounting guidance. See Note 1B,"Summary of Significant Accounting Policies – Accounting Standards," for further information.
B.
Accounting Standards
Accounting Standards Issued but not Yet Effective: In May 2014, the Financial Accounting Standards Board (FASB) issued an Accounting Standards Update (ASU) 2014-09,Revenue from Contracts with Customers, which amends existing revenue recognition guidance and is required to be applied retrospectively (either to each reporting period presented or cumulatively at the date of initial application). In August 2015, the FASB issued ASU 2015-14,Revenue from Contracts with Customers – Deferral of the Effective Date, as a resultwhich defers the effective date of which ASU 2014-09 is required to be applied in the first quarter of 2018, with 2017 application permitted. The guidance continues to be interpreted on an industry specific level. The Company is reviewingevaluating the requirements and potential impacts of ASU 2014-09 and will implement the standard in the first quarter of 2018. The ASU is not currently expected to have a material impact on the financial statements of Eversource, CL&P, NSTAR Electric, PSNH or WMECO.
16
In January 2016, the FASB issued ASU 2016-01,Financial Instruments - Overall: Recognition and Measurement of Financial Assets and Liabilities, which is required to be implemented in the first quarter of 2018. The Company is reviewing the requirements of the ASU. The ASU will remove the available-for-sale designation for equity securities, whereby changes in fair value are recorded in other comprehensive income in shareholders' equity, and will require changes in fair value of all equity securities to be recorded in earnings beginning on January 1, 2018, with the unrealized gain or loss on available-for-sale equity securities as of that date reclassified to retained earnings as a cumulative effect of adoption. The fair value of available-for-sale equity securities subject to this guidance as of March 31, 2016 was approximately $52 million. The remaining available-for-sale equity securities included in marketable securities on the balance sheet are held in nuclear decommissioning trusts and are subject to regulatory accounting treatment and will not be impacted by this guidance. Implementation of the ASU for other financial instruments is not expected to have a material impact on the financial statements of Eversource, CL&P, NSTAR Electric, PSNH or WMECO.
In February 2016, the FASB issued ASU 2016-02,Leases, which changes existing lease accounting guidance and is required to be applied in the first quarter of 2019, with earlier application permitted. The ASU is required to be implemented for leases beginning on the date of initial application. For prior periods presented, leases are required to be recognized and measured using a modified retrospective approach. The Company is reviewing the requirements of ASU 2016-02.
Recently Adopted Accounting Standards: In February 2015, the FASB issued ASU 2015-02,Consolidation: Amendments to the Consolidation Analysis. As required, the Company implemented this guidance as of January 1, 2016, which had no effect on the financial position or results of operations of Eversource, CL&P, NSTAR Electric, PSNH or WMECO.
In April 2015, the FASB issued ASU 2015-03,2015-05,Simplifying the Presentation of Debt Issuance CostsIntangibles – Goodwill and Other – Internal-Use Software: Customer's Accounting for Fees Paid in a Cloud Computing Arrangement, that changeseffective for annual periods, including interim periods, beginning after December 15, 2015. The ASU amends existing guidance on intangibles and internal-use software and may be applied prospectively or retrospectively. On January 1, 2016, Eversource adopted the balance sheet presentation of debt issuance costs. Under the standard, issuance costs related to debt will be presented on the balance sheet as a direct deduction from the carrying amount of the debt liability rather than as a deferred cost as required by current guidance. The new accounting guidance is effective for interim and annual periods beginning in the first quarter of 2016 with early adoption permitted. Upon adoption,prospectively, which did not have an entity must apply the new guidance retrospectively to all prior periods presented in the financial statements. The Company intends to adopt the new guidance at December 31, 2015.
16
Management does not expect the adoption of this standard to have a material effectimpact on the financial statements of Eversource, CL&P, NSTAR Electric, PSNH or WMECO.
In March 2016, the FASB issued ASU 2016-09,Compensation - Stock Compensation: Improvements to Employee Share-Based Payment Accounting. The ASU is intended to simplify some aspects of the accounting for share-based payment transactions. The ASU is required to be implemented in the first quarter of 2017, with early adoption permitted. The Company implemented this guidance in the first quarter of 2016. Beginning in the first quarter of 2016, the excess tax benefit associated with the distribution of stock compensation awards, previously recognized in Capital Surplus, Paid In in Common Shareholders' Equity on the balance sheet, are recognized in income tax expense in the income statement. The implementation reduced income tax expense by $2.5 million for the three months ended March 31, 2016. Also, beginning in 2016, in the statement of cash flows, the excess tax benefits are presented as an operating activity rather than a financing activity, and in both periods presented, cash paid to satisfy the statutory income tax withholding obligation previously reflected within operating activities in 2015 is now treated as a financing activity. The cash payments to satisfy this obligation for the three months ended March 31, 2016 and 2015 were $9.1 million and $9.7 million, respectively, and are included in Other Financing Activities on the statements of cash flows.
C.
Provision for Uncollectible Accounts
Eversource, including CL&P, NSTAR Electric, PSNH and WMECO, presents its receivables at estimated net realizable value by maintaining a provision for uncollectible accounts. This provision is determined based upon a variety of judgments and factors, including the application of an estimated uncollectible percentage to each receivable aging category. The estimate is based upon historical collection and write-off experience and management's assessment of collectability from customers. Management continuously assesses the collectability of receivables and adjusts collectability estimates based on actual experience. Receivable balances are written off against the provision for uncollectible accounts when the customer accounts are terminated and these balances are deemed to be uncollectible.
The PURA allows CL&P and Yankee Gas to accelerate the recovery of accounts receivable balances attributable to qualified customers under financial or medical duress (uncollectible hardship accounts receivable) outstanding for greater than 180 days and 90 days, respectively. The DPU allows WMECO and NSTAR Gas to also recover in rates amounts associated with certain uncollectible hardship accounts receivable. UncollectibleCertain of NSTAR Electric's uncollectible hardship accounts receivable are expected to be recovered in future rates, similar to WMECO and NSTAR Gas. These uncollectible customer account balances, which are expected to be recovered in rates, are included in Regulatory Assets or Other Long-Term Assets.Assets on the balance sheets.
The total provision for uncollectible accounts and for uncollectible hardship accounts, which is included in the total provision, are included in Receivables, Net on the balance sheets, and were as follows:
|
|
| Total Provision for Uncollectible Accounts |
| Uncollectible Hardship |
|
| Total Provision for Uncollectible Accounts |
| Uncollectible Hardship | ||||||||||||||||
(Millions of Dollars) | (Millions of Dollars) |
| As of September 30, 2015 |
| As of December 31, 2014 |
| As of September 30, 2015 |
| As of December 31, 2014 | (Millions of Dollars) |
| As of March 31, 2016 |
| As of December 31, 2015 |
| As of March 31, 2016 |
| As of December 31, 2015 | ||||||||
Eversource | Eversource |
| $ | 185.8 |
| $ | 175.3 |
| $ | 86.6 |
| $ | 91.5 | Eversource |
| $ | 197.6 |
| $ | 190.7 |
| $ | 118.9 |
| $ | 118.5 |
CL&P | CL&P |
|
| 79.5 |
| 84.3 |
|
| 64.9 |
|
| 74.0 | CL&P |
|
| 84.9 |
| 79.5 |
|
| 71.3 |
|
| 68.1 | ||
NSTAR Electric | NSTAR Electric |
|
| 46.4 |
| 40.7 |
|
| - |
|
| - | NSTAR Electric |
|
| 51.5 |
| 52.6 |
|
| 22.7 |
|
| 25.3 | ||
PSNH | PSNH |
|
| 9.4 |
| 7.7 |
|
| - |
|
| - | PSNH |
|
| 9.1 |
| 8.7 |
|
| - |
|
| - | ||
WMECO | WMECO |
|
| 13.2 |
| 9.9 |
|
| 7.7 |
|
| 6.2 | WMECO |
|
| 13.6 |
| 14.0 |
|
| 7.1 |
|
| 7.4 |
D.
Fair Value Measurements
Fair value measurement guidance is applied to derivative contracts that are not elected or designated as "normal purchases or normal sales" (normal) and to the marketable securities held in trusts. Fair value measurement guidance is also applied to valuations of the investments used to calculate the funded status of pension and PBOP plans, andthe nonrecurring fair value measurements of nonfinancial assets such as goodwill and AROs, and is also used to estimate the estimated fair value of preferred stock and long-term debt.
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Fair Value Hierarchy: In measuring fair value, Eversource uses observable market data when available in order to minimize 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. Eversource evaluates the classification of assets and liabilities measured at fair value on a quarterly basis, and Eversource'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 Eversource's fair value measurements are described in Note 4, "Derivative Instruments," Note 5, "Marketable Securities," and Note 9, "Fair Value of Financial Instruments," to the financial statements.
E.
Other Income, Net
Items included within Other Income, Net on the statements of income primarily consist of investment income/(loss), interest income, AFUDC related to equity funds, and equity in earnings.earnings of equity method investees. Investment income/(loss) primarily relates to debt and equity securities held in trust. For further information, see Note 5, "Marketable Securities," to the financial statements.
F.
Other Taxes
Gross receipts taxes levied by the state of Connecticut are collected by CL&P and Yankee Gas from their respective customers. These gross receipts taxes are shown separately with collections in Operating Revenues and with payments in Taxes Other Than Income Taxes on the statements of income as follows:
| For the Three Months Ended |
| For the Nine Months Ended | For the Three Months Ended | ||||||||||||
(Millions of Dollars) | September 30, 2015 |
| September 30, 2014 |
| September 30, 2015 |
| September 30, 2014 | March 31, 2016 |
| March 31, 2015 | ||||||
Eversource | $ | 37.8 |
| $ | 35.0 |
| $ | 112.9 |
| $ | 114.6 | $ | 42.2 |
| $ | 41.9 |
CL&P |
| 35.5 |
| 32.5 |
| 98.0 |
| 99.0 |
| 36.0 |
| 33.0 |
Certain sales taxes are collected byAs agents for state and local governments, Eversource's companies that serve customers in Connecticut and Massachusetts as agents for state and local governments andcollect certain sales taxes that are recorded on a net basis with no impact on the statements of income.
17
G. Supplemental Cash Flow Information | |||||
Non-cash investing activities include plant additions included in Accounts Payable as follows: | |||||
| |||||
(Millions of Dollars) | As of September 30, 2015 |
| As of September 30, 2014 | ||
Eversource | $ | 160.7 |
|
| 128.9 |
CL&P |
| 46.0 |
|
| 52.2 |
NSTAR Electric |
| 31.2 |
|
| 18.1 |
PSNH |
| 33.8 |
|
| 21.0 |
WMECO |
| 15.5 |
|
| 10.0 |
H.
Severance Benefits
Eversource recorded severance benefit expense of $1 million and $0.7 million for the three months ended September 30, 2015 and 2014, respectively, and $2.6 million and $6.5 million for the nine months ended September 30, 2015 and 2014, respectively, in connection with reorganizational and cost saving initiatives, and, in 2014, the partial outsourcing of information technology functions. As of September 30, 2015 and December 31, 2014, the severance accrual totaled $7.1 million and $10.4 million, respectively, and was included in Other Current Liabilities on the balance sheets.
I.
Income Taxes
Income tax expense is estimated for each of the jurisdictions in which Eversource operates and is recorded on the quarter using an estimated annualized effective tax rate. This process to record income tax expense involves estimating current and deferred income tax expense or benefit and the impact of temporary differences resulting from differing treatment of items for financial reporting and income tax return reporting purposes. Such differences are the result of timing of the deduction for expenses, as well as any impact of permanent differences, non-tax deductible expenses, or other items that directly impact the income tax return as a result of a regulatory activity (flow-through items). The temporary differences and flow-through items result in deferred tax assets and liabilities that are included in the balance sheets.
Part of the annual process in making adjustments to these estimates is reconciling the provision for income taxes made during the income tax estimation process to what was filed in the income tax return (return to provision). In the third quarter of 2015, Eversource and CL&P recorded an $8 million and $4.2 million charge, respectively, as a result of reconciling and adjusting its 2014 provision for income taxes to what was filed on its 2014 income tax return. Concurrently, Eversource and CL&P recorded a reversal of state tax reserves in the third quarter of 2015, which resulted in a $5.9 million and $2.2 million benefit, respectively.
G. Supplemental Cash Flow Information | ||||||||
Non-cash investing activities include plant additions included in Accounts Payable as follows: | ||||||||
|
|
|
|
|
|
|
|
|
(Millions of Dollars) | As of March 31, 2016 |
| As of March 31, 2015 | |||||
Eversource | $ | 125.6 |
| $ | 110.4 | |||
CL&P |
| 52.6 |
|
| 42.3 | |||
NSTAR Electric |
| 11.7 |
|
| 21.9 | |||
PSNH |
| 26.8 |
|
| 21.7 | |||
WMECO |
| 10.7 |
|
| 8.3 |
2.
REGULATORY ACCOUNTING
Eversource's Regulated companies are subject to rate-regulation that is based on cost recovery and meets the criteria for application of accounting guidance for rate-regulated operations, which considerconsiders the effect of regulation on the timing of the recognition of certain revenues and expenses. The Regulated companies' financial statements reflect the effects of the rate-making process. The rates charged to the customers of Eversource's Regulated companies are designed to collect each company's costs to provide service, including a return on investment.
Management believes it is probable that each of the Regulated companies will recover their respective investments in long-lived assets, including regulatory assets. If management were to determine that it could no longer apply the accounting guidance applicable to rate-regulated enterprises to any of the Regulated companies' operations, or thatif management could not conclude it is probable that costs would be recovered from customers in future rates, the costs would be charged to net income in the period in which the determination is made.
18
Regulatory Assets: The components of regulatory assets arewere as follows:
| As of September 30, 2015 |
| As of December 31, 2014 | As of March 31, 2016 |
| As of December 31, 2015 | ||||
(Millions of Dollars) | Eversource |
| Eversource | Eversource |
| Eversource | ||||
Benefit Costs | $ | 1,941.8 |
| $ | 2,016.0 | $ | 1,796.2 |
| $ | 1,828.2 |
Derivative Liabilities |
| 412.8 |
|
| 425.5 |
| 389.6 |
|
| 388.0 |
Income Taxes, Net |
| 635.8 |
|
| 635.3 |
| 646.6 |
|
| 650.9 |
Storm Restoration Costs |
| 461.3 |
|
| 502.8 |
| 450.5 |
|
| 436.9 |
Goodwill-related |
| 490.0 |
|
| 505.4 |
| 479.8 |
|
| 484.9 |
Regulatory Tracker Mechanisms |
| 373.1 |
|
| 350.5 |
| 604.4 |
|
| 526.5 |
Contractual Obligations - Yankee Companies |
| 142.0 |
|
| 123.8 |
| 130.4 |
|
| 134.4 |
Other Regulatory Assets |
| 148.9 |
|
| 167.3 |
| 125.3 |
|
| 134.0 |
Total Regulatory Assets |
| 4,605.7 |
|
| 4,726.6 |
| 4,622.8 |
|
| 4,583.8 |
Less: Current Portion |
| 653.9 |
|
| 672.5 |
| 919.3 |
|
| 845.8 |
Total Long-Term Regulatory Assets | $ | 3,951.8 |
| $ | 4,054.1 | $ | 3,703.5 |
| $ | 3,738.0 |
18
|
| As of September 30, 2015 |
| As of December 31, 2014 |
| As of March 31, 2016 |
| As of December 31, 2015 | ||||||||||||||||||||||||||||||||||||||||
|
|
|
|
| NSTAR |
|
|
|
|
|
|
|
|
|
| NSTAR |
|
|
|
|
|
|
|
|
|
| NSTAR |
|
|
|
|
|
|
|
|
|
| NSTAR |
|
|
|
|
|
| ||||
(Millions of Dollars) | (Millions of Dollars) | CL&P |
| Electric |
| PSNH |
| WMECO |
| CL&P |
| Electric |
| PSNH |
| WMECO | (Millions of Dollars) | CL&P |
| Electric |
| PSNH |
| WMECO |
| CL&P |
| Electric |
| PSNH |
| WMECO | ||||||||||||||||
Benefit Costs | Benefit Costs | $ | 434.8 |
| $ | 486.8 |
| $ | 171.1 |
| $ | 84.2 |
| $ | 445.4 |
| $ | 515.9 |
| $ | 174.3 |
| $ | 85.0 | Benefit Costs | $ | 406.3 |
| $ | 471.4 |
| $ | 161.5 |
| $ | 83.4 |
| $ | 413.6 |
| $ | 479.9 |
| $ | 164.2 |
| $ | 84.9 |
Derivative Liabilities | Derivative Liabilities |
| 406.9 |
|
| 1.4 |
|
| - |
|
| - |
|
| 410.9 |
|
| 4.5 |
|
| - |
|
| - | Derivative Liabilities |
| 385.1 |
|
| 3.9 |
|
| - |
|
| - |
|
| 380.8 |
|
| 1.3 |
|
| - |
|
| - |
Income Taxes, Net | Income Taxes, Net |
| 435.7 |
|
| 83.5 |
|
| 34.2 |
|
| 30.5 |
|
| 437.7 |
|
| 83.7 |
|
| 38.0 |
|
| 35.5 | Income Taxes, Net |
| 444.3 |
|
| 85.7 |
|
| 29.9 |
|
| 31.3 |
|
| 444.4 |
|
| 85.7 |
|
| 34.5 |
|
| 31.8 |
Storm Restoration Costs | Storm Restoration Costs |
| 286.5 |
|
| 113.5 |
|
| 36.3 |
|
| 25.0 |
|
| 319.6 |
|
| 103.7 |
|
| 47.7 |
|
| 31.8 | Storm Restoration Costs |
| 284.2 |
|
| 118.3 |
|
| 26.6 |
|
| 21.4 |
|
| 271.4 |
|
| 110.9 |
|
| 31.5 |
|
| 23.1 |
Goodwill-related | Goodwill-related |
| - |
|
| 420.7 |
|
| - |
|
| - |
|
| - |
|
| 433.9 |
|
| - |
|
| - | Goodwill-related |
| - |
|
| 411.9 |
|
| - |
|
| - |
|
| - |
|
| 416.3 |
|
| - |
|
| - |
Regulatory Tracker Mechanisms | Regulatory Tracker Mechanisms |
| 16.0 |
|
| 228.0 |
|
| 85.4 |
|
| 30.1 |
|
| 16.1 |
|
| 141.4 |
|
| 103.5 |
|
| 33.0 | Regulatory Tracker Mechanisms |
| 104.3 |
|
| 325.9 |
|
| 98.1 |
|
| 45.3 |
|
| 45.1 |
|
| 311.0 |
|
| 101.2 |
|
| 40.1 |
Other Regulatory Assets | Other Regulatory Assets |
| 84.4 |
|
| 69.6 |
|
| 34.9 |
|
| 12.7 |
|
| 66.1 |
|
| 94.7 |
|
| 41.3 |
|
| 12.9 | Other Regulatory Assets |
| 79.9 |
|
| 52.2 |
|
| 31.3 |
|
| 11.4 |
|
| 82.0 |
|
| 56.3 |
|
| 31.5 |
|
| 11.3 |
Total Regulatory Assets | Total Regulatory Assets |
| 1,664.3 |
|
| 1,403.5 |
|
| 361.9 |
|
| 182.5 |
|
| 1,695.8 |
|
| 1,377.8 |
|
| 404.8 |
|
| 198.2 | Total Regulatory Assets |
| 1,704.1 |
|
| 1,469.3 |
|
| 347.4 |
|
| 192.8 |
|
| 1,637.3 |
|
| 1,461.4 |
|
| 362.9 |
|
| 191.2 |
Less: Current Portion | Less: Current Portion |
| 243.3 |
|
| 223.5 |
|
| 89.5 |
|
| 48.8 |
|
| 220.3 |
|
| 198.7 |
|
| 111.7 |
|
| 51.9 | Less: Current Portion |
| 324.6 |
|
| 361.3 |
|
| 101.6 |
|
| 61.4 |
|
| 268.3 |
|
| 348.4 |
|
| 105.0 |
|
| 56.2 |
Total Long-Term Regulatory Assets | Total Long-Term Regulatory Assets | $ | 1,421.0 |
| $ | 1,180.0 |
| $ | 272.4 |
| $ | 133.7 |
| $ | 1,475.5 |
| $ | 1,179.1 |
| $ | 293.1 |
| $ | 146.3 | Total Long-Term Regulatory Assets | $ | 1,379.5 |
| $ | 1,108.0 |
| $ | 245.8 |
| $ | 131.4 |
| $ | 1,369.0 |
| $ | 1,113.0 |
| $ | 257.9 |
| $ | 135.0 |
Regulatory Costs in Other Long-Term Assets: The Regulated companies had $59.4$76.1 million ($2.4(including $2.8 million for CL&P, $21.1$33 million for NSTAR Electric, $3.2$5.4 million for PSNH and $16.2$18 million for WMECO) and $60.5$75.3 million ($1.3(including $3.1 million for CL&P, $33.2$35.4 million for NSTAR Electric, $0.9$4.8 million for PSNH, and $11$16.7 million for WMECO) of additional regulatory costs as of September 30, 2015March 31, 2016 and December 31, 2014,2015, respectively, that were included in Other Long-Term Assets on the balance sheets. These amounts represent incurred costs for which recovery has not yet been specifically approved by the applicable regulatory agency. However, based on regulatory policies or past precedent on similar costs, management believes it is probable that these costs will ultimately be approved and recovered from customers in rates. The NSTAR Electric balance as of September 30, 2015 and December 31, 2014 primarily related to costs deferred in connection with the basic service bad debt adder. See below, within the"2015 Regulatory Developments" section of this footnote for further information.
Regulatory Liabilities: The components of regulatory liabilities arewere as follows:
| As of September 30, 2015 |
| As of December 31, 2014 | As of March 31, 2016 |
| As of December 31, 2015 | ||||
(Millions of Dollars) | Eversource |
| Eversource | Eversource |
| Eversource | ||||
Cost of Removal | $ | 433.7 |
| $ | 439.9 | $ | 444.7 |
| $ | 437.1 |
Regulatory Tracker Mechanisms |
| 215.9 |
| 192.3 |
| 101.1 |
| 99.7 | ||
AFUDC - Transmission |
| 66.2 |
| 67.1 | ||||||
AFUDC – Transmission |
| 65.9 |
| 66.1 | ||||||
Other Regulatory Liabilities |
| 27.9 |
|
| 50.8 |
| 26.2 |
|
| 18.5 |
Total Regulatory Liabilities |
| 743.7 |
| 750.1 |
| 637.9 |
| 621.4 | ||
Less: Current Portion |
| 226.1 |
|
| 235.0 |
| 111.4 |
|
| 107.8 |
Total Long-Term Regulatory Liabilities | $ | 517.6 |
| $ | 515.1 | $ | 526.5 |
| $ | 513.6 |
|
| As of September 30, 2015 |
| As of December 31, 2014 | ||||||||||||||||||||
|
|
|
| NSTAR |
|
|
|
|
|
|
| NSTAR |
|
|
|
| ||||||||
(Millions of Dollars) | CL&P |
| Electric |
| PSNH |
| WMECO |
| CL&P |
| Electric |
| PSNH |
| WMECO | |||||||||
Cost of Removal | $ | 17.2 |
| $ | 257.7 |
| $ | 49.1 |
| $ | 2.0 |
| $ | 19.7 |
| $ | 258.3 |
| $ | 50.3 |
| $ | 1.1 | |
Regulatory Tracker Mechanisms |
| 131.1 |
|
| 13.0 |
|
| 8.6 |
|
| 24.2 |
|
| 122.6 |
|
| 20.7 |
|
| 14.2 |
|
| 22.3 | |
AFUDC - Transmission |
| 51.8 |
|
| 5.4 |
|
| - |
|
| 9.0 |
|
| 53.6 |
|
| 4.4 |
|
| - |
|
| 9.1 | |
Other Regulatory Liabilities |
| 13.2 |
|
| 3.5 |
|
| 3.3 |
|
| 1.0 |
|
| 10.1 |
|
| 28.9 |
|
| 2.9 |
|
| 0.8 | |
Total Regulatory Liabilities |
| 213.3 |
|
| 279.6 |
|
| 61.0 |
|
| 36.2 |
|
| 206.0 |
|
| 312.3 |
|
| 67.4 |
|
| 33.3 | |
Less: Current Portion |
| 136.4 |
|
| 12.3 |
|
| 11.3 |
|
| 24.3 |
|
| 124.7 |
|
| 49.6 |
|
| 16.0 |
|
| 22.5 | |
Total Long-Term Regulatory Liabilities | $ | 76.9 |
| $ | 267.3 |
| $ | 49.7 |
| $ | 11.9 |
| $ | 81.3 |
| $ | 262.7 |
| $ | 51.4 |
| $ | 10.8 |
2015 Regulatory Developments:
FERC ROE Complaints: As a result of the March 3, 2015 FERC order in the pending ROE complaint proceedings described in Note 8C, "Commitments and Contingencies – FERC ROE Complaints," in 2015, Eversource recognized a pre-tax charge to earnings (excluding interest) of $20 million, of which $12.5 million was recorded at CL&P, $2.4 million at NSTAR Electric, $1 million at PSNH, and $4.1 million at WMECO. The pre-tax charge was recorded as a regulatory liability and as a reduction to Operating Revenues.
NSTAR Electric and NSTAR Gas 2014 Comprehensive Settlement Agreement: On March 2, 2015, the DPU approved the comprehensive settlement agreement between NSTAR Electric, NSTAR Gas and the Massachusetts Attorney General (the "Settlement") as filed with the DPU on December 31, 2014. The Settlement resolved the outstanding NSTAR Electric CPSL program filings for 2006 through 2011, the NSTAR Electric and NSTAR Gas PAM and energy efficiency-related customer billing adjustments reported in 2012, and the recovery of LBR related to NSTAR Electric's energy efficiency programs for 2009 through 2011 (11 dockets in total). In 2015, as a result of the DPU order, NSTAR Electric and NSTAR Gas commenced refunding a combined $44.7 million to customers, which was recorded as a regulatory liability. NSTAR Electric recognized a $21.7 million pre-tax benefit in the first quarter of 2015 as a result of the approval of the Settlement.
NSTAR Electric Basic Service Bad Debt Adder: On January 7, 2015, the DPU issued an order concluding that NSTAR Electric had removed energy-related bad debt costs from base distribution rates effective January 1, 2006. As a result of the DPU order, NSTAR Electric increased its regulatory assets and reduced operations and maintenance expense by $24.2 million in the first quarter of 2015, resulting in after-tax earnings of $14.5 million. On May 5, 2015, NSTAR Electric filed for recovery of the energy-related bad debt costs regulatory asset from customers beginning July 1, 2015. On June 24, 2015, the DPU delayed the effective date of NSTAR Electric’s proposed rate increase from July 1, 2015 to November 1, 2015 to allow for the DPU staff to review the reconciliations. NSTAR Electric requested recovery from customers effective January 1, 2016 in briefs filed with the DPU in October 2015. On October 27, 2015, the DPU delayed the effective date of the rate increase from November 1, 2015 to December 1, 2015 to allow the DPU staff additional time to review the reconciliations. NSTAR Electric expects a decision from the DPU in the fourth quarter of 2015.
|
| As of March 31, 2016 |
| As of December 31, 2015 | ||||||||||||||||||||
|
|
|
| NSTAR |
|
|
|
|
|
|
| NSTAR |
|
|
|
| ||||||||
(Millions of Dollars) | CL&P |
| Electric |
| PSNH |
| WMECO |
| CL&P |
| Electric |
| PSNH |
| WMECO | |||||||||
Cost of Removal | $ | 26.7 |
| $ | 260.2 |
| $ | 47.3 |
| $ | 3.7 |
| $ | 24.1 |
| $ | 257.4 |
| $ | 47.2 |
| $ | 2.8 | |
Regulatory Tracker Mechanisms |
| 49.7 |
|
| 4.5 |
|
| 2.6 |
|
| 10.9 |
|
| 56.2 |
|
| 3.3 |
|
| 3.4 |
|
| 12.9 | |
AFUDC – Transmission |
| 51.2 |
|
| 5.8 |
|
| - |
|
| 8.9 |
|
| 51.5 |
|
| 5.7 |
|
| - |
|
| 8.9 | |
Other Regulatory Liabilities |
| 13.1 |
|
| 1.9 |
|
| 2.7 |
|
| 0.1 |
|
| 4.2 |
|
| 1.3 |
|
| 4.2 |
|
| 0.1 | |
Total Regulatory Liabilities |
| 140.7 |
|
| 272.4 |
|
| 52.6 |
|
| 23.6 |
|
| 136.0 |
|
| 267.7 |
|
| 54.8 |
|
| 24.7 | |
Less: Current Portion |
| 63.0 |
|
| 5.0 |
|
| 4.7 |
|
| 9.8 |
|
| 61.2 |
|
| 3.3 |
|
| 6.9 |
|
| 13.1 | |
Total Long-Term Regulatory Liabilities | $ | 77.7 |
| $ | 267.4 |
| $ | 47.9 |
| $ | 13.8 |
| $ | 74.8 |
| $ | 264.4 |
| $ | 47.9 |
| $ | 11.6 |
19
CL&P Distribution Rates: On July 2, 2015, PURA issued a final order that allows for an increase to rate base of approximately $163 million associated with ADIT, including a regulatory asset to recover the incremental revenue requirement for the period December 1, 2014 through November 30, 2015 over a subsequent two-year period. The rate base increase provided an increase to total allowed annual revenue requirements of $18.4 million beginning December 1, 2014. Of that amount, $15.3 million has been recorded as a regulatory asset through September 30, 2015, with a corresponding increase in Operating Revenues.
3.
PROPERTY, PLANT AND EQUIPMENT AND ACCUMULATED DEPRECIATION
The following tables summarize the investments in utility property, plant and equipment by asset category:
|
| As of September 30, 2015 |
| As of December 31, 2014 |
| As of March 31, 2016 |
| As of December 31, 2015 | ||||
(Millions of Dollars) | (Millions of Dollars) | Eversource |
| Eversource | (Millions of Dollars) | Eversource |
| Eversource | ||||
Distribution - Electric | $ | 12,821.6 |
| $ | 12,495.2 | |||||||
Distribution – Electric | Distribution – Electric | $ | 13,227.4 |
| $ | 13,054.8 | ||||||
Distribution - Natural Gas | Distribution - Natural Gas |
| 2,657.5 |
| 2,595.4 | Distribution - Natural Gas |
| 2,759.1 |
| 2,727.2 | ||
Transmission |
| 7,260.6 |
| 6,930.7 | ||||||||
Transmission – Electric | Transmission – Electric |
| 7,725.3 |
| 7,691.9 | |||||||
Generation | Generation |
| 1,180.0 |
|
| 1,170.9 | Generation |
| 1,210.3 |
|
| 1,194.1 |
Electric and Natural Gas Utility | Electric and Natural Gas Utility |
| 23,919.7 |
| 23,192.2 | Electric and Natural Gas Utility |
| 24,922.1 |
| 24,668.0 | ||
Other(1) | Other(1) |
| 555.3 |
|
| 551.3 | Other(1) |
| 575.5 |
|
| 558.6 |
Property, Plant and Equipment, Gross | Property, Plant and Equipment, Gross |
| 24,475.0 |
| 23,743.5 | Property, Plant and Equipment, Gross |
| 25,497.6 |
| 25,226.6 | ||
Less: Accumulated Depreciation | Less: Accumulated Depreciation |
|
|
|
| Less: Accumulated Depreciation |
|
|
|
| ||
| Electric and Natural Gas Utility |
| (6,041.5) |
| (5,777.8) | Electric and Natural Gas Utility |
| (6,249.0) |
| (6,141.1) | ||
| Other |
| (247.6) |
|
| (231.8) | Other |
| (264.8) |
|
| (255.6) |
Total Accumulated Depreciation | Total Accumulated Depreciation |
| (6,289.1) |
|
| (6,009.6) | Total Accumulated Depreciation |
| (6,513.8) |
|
| (6,396.7) |
Property, Plant and Equipment, Net | Property, Plant and Equipment, Net |
| 18,185.9 |
| 17,733.9 | Property, Plant and Equipment, Net |
| 18,983.8 |
| 18,829.9 | ||
Construction Work in Progress | Construction Work in Progress |
| 1,220.1 |
|
| 913.1 | Construction Work in Progress |
| 1,112.9 |
|
| 1,062.5 |
Total Property, Plant and Equipment, Net | Total Property, Plant and Equipment, Net | $ | 19,406.0 |
| $ | 18,647.0 | Total Property, Plant and Equipment, Net | $ | 20,096.7 |
| $ | 19,892.4 |
(1)
These assets are primarily comprised of building improvements, computer software, hardware and equipment and telecommunications assets at Eversource Service and Eversource's unregulated companies.Service.
| As of September 30, 2015 |
| As of December 31, 2014 | ||||||||||||||||||||
|
|
|
| NSTAR |
|
|
|
|
|
|
|
|
|
| NSTAR |
|
|
|
|
|
| ||
(Millions of Dollars) | CL&P |
| Electric |
| PSNH |
| WMECO |
| CL&P |
| Electric |
| PSNH |
| WMECO | ||||||||
Distribution | $ | 5,289.6 |
| $ | 5,001.9 |
| $ | 1,772.0 |
| $ | 798.1 |
| $ | 5,158.8 |
| $ | 4,895.5 |
| $ | 1,696.7 |
| $ | 784.2 |
Transmission |
| 3,480.5 |
|
| 1,995.3 |
|
| 839.9 |
|
| 896.7 |
|
| 3,274.0 |
|
| 1,928.5 |
|
| 789.7 |
|
| 891.0 |
Generation |
| - |
|
| - |
|
| 1,145.5 |
|
| 34.5 |
|
| - |
|
| - |
|
| 1,136.5 |
|
| 34.4 |
Property, Plant and |
| 8,770.1 |
|
| 6,997.2 |
|
| 3,757.4 |
|
| 1,729.3 |
|
| 8,432.8 |
|
| 6,824.0 |
|
| 3,622.9 |
|
| 1,709.6 |
Less: Accumulated Depreciation |
| (2,007.9) |
|
| (1,857.9) |
|
| (1,149.6) |
|
| (302.6) |
|
| (1,928.0) |
|
| (1,761.4) |
|
| (1,090.0) |
|
| (297.4) |
Property, Plant and Equipment, Net |
| 6,762.2 |
|
| 5,139.3 |
|
| 2,607.8 |
|
| 1,426.7 |
|
| 6,504.8 |
|
| 5,062.6 |
|
| 2,532.9 |
|
| 1,412.2 |
Construction Work in Progress |
| 246.4 |
|
| 405.8 |
|
| 160.4 |
|
| 105.0 |
|
| 304.9 |
|
| 272.8 |
|
| 102.9 |
|
| 49.1 |
Total Property, Plant and | $ | 7,008.6 |
| $ | 5,545.1 |
| $ | 2,768.2 |
| $ | 1,531.7 |
| $ | 6,809.7 |
| $ | 5,335.4 |
| $ | 2,635.8 |
| $ | 1,461.3 |
| As of March 31, 2016 |
| As of December 31, 2015 | ||||||||||||||||||||
|
|
|
| NSTAR |
|
|
|
|
|
|
|
|
|
| NSTAR |
|
|
|
|
|
| ||
(Millions of Dollars) | CL&P |
| Electric |
| PSNH |
| WMECO |
| CL&P |
| Electric |
| PSNH |
| WMECO | ||||||||
Distribution | $ | 5,429.5 |
| $ | 5,176.1 |
| $ | 1,839.5 |
| $ | 822.2 |
| $ | 5,377.2 |
| $ | 5,100.5 |
| $ | 1,804.8 |
| $ | 812.3 |
Transmission |
| 3,631.3 |
|
| 2,137.7 |
|
| 936.1 |
|
| 971.0 |
|
| 3,618.0 |
|
| 2,131.3 |
|
| 928.2 |
|
| 964.9 |
Generation |
| - |
|
| - |
|
| 1,174.3 |
|
| 36.0 |
|
| - |
|
| - |
|
| 1,158.1 |
|
| 36.0 |
Property, Plant and |
| 9,060.8 |
|
| 7,313.8 |
|
| 3,949.9 |
|
| 1,829.2 |
|
| 8,995.2 |
|
| 7,231.8 |
|
| 3,891.1 |
|
| 1,813.2 |
Less: Accumulated Depreciation |
| (2,073.7) |
|
| (1,924.4) |
|
| (1,192.0) |
|
| (317.0) |
|
| (2,041.9) |
|
| (1,886.8) |
|
| (1,171.0) |
|
| (307.0) |
Property, Plant and Equipment, Net |
| 6,987.1 |
|
| 5,389.4 |
|
| 2,757.9 |
|
| 1,512.2 |
|
| 6,953.3 |
|
| 5,345.0 |
|
| 2,720.1 |
|
| 1,506.2 |
Construction Work in Progress |
| 244.1 |
|
| 310.7 |
|
| 123.5 |
|
| 78.3 |
|
| 203.5 |
|
| 310.5 |
|
| 135.3 |
|
| 69.1 |
Total Property, Plant and | $ | 7,231.2 |
| $ | 5,700.1 |
| $ | 2,881.4 |
| $ | 1,590.5 |
| $ | 7,156.8 |
| $ | 5,655.5 |
| $ | 2,855.4 |
| $ | 1,575.3 |
As of September 30, 2015,March 31, 2016, PSNH had $1.1$1.2 billion in gross generation utility plant assets and related Accumulated Depreciation of $514$531.7 million. These generation assets are the subject of a divestiture agreement entered into on June 10, 2015 between Eversource, PSNH and key New Hampshire officials whereby among other resolutions, PSNH has agreed to selldivest these generation assets.assets upon NHPUC approval. Upon completion of the sale,divestiture process, all remaining stranded costs not recovered by the sale of these assets (stranded costs) will be recovered via bonds that will be secured by a non-bypassable charge on the bills ofor other recovery mechanisms in rates billed to PSNH's customers. See Note 8E, "Commitments and Contingencies – PSNH Generation Restructuring," for further information.
4.
DERIVATIVE INSTRUMENTS
The Regulated companies purchase and procure energy and energy-related products, which are subject to price volatility, for their customers. The costs associated with supplying energy to customers are recoverable from customers in future rates. The Regulated companies manage the risks associated with the price volatility of energy and energy-related products through the use of derivative and nonderivative contracts.
Many of the derivative contracts meet the definition of, and are designated as, normal and qualify for accrual accounting under the applicable accounting guidance. The costs and benefits of derivative contracts that meet the definition of normal are recognized in Operating Expenses or Operating Revenues on the statements of income, as applicable, as electricity or natural gas is delivered.
Derivative contracts that are not designated as normal are recorded at fair value as current or long-term Derivative Assets or Derivative Liabilities on the balance sheets. For the Regulated companies, regulatory assets or regulatory liabilities are recorded to offset the fair values of derivatives, as contract settlement amounts are recovered from, or refunded to, customers in their respective energy supply rates.
20
The gross fair values of derivative assets and liabilities with the same counterparty are offset and reported as net Derivative Assets or Derivative Liabilities, with current and long-term portions, on the balance sheets. The following table presents the gross fair values of contracts, categorized by risk type, and the net amountamounts recorded as current or long-term derivative assetassets or liability:liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||
|
|
| As of September 30, 2015 |
| As of December 31, 2014 |
|
| As of March 31, 2016 |
| As of December 31, 2015 | ||||||||||||||||||||||||||||
|
|
| Commodity Supply |
|
|
| Net Amount |
| Commodity Supply |
|
|
| Net Amount |
|
| Commodity Supply |
|
|
| Net Amount |
| Commodity Supply |
|
|
| Net Amount | ||||||||||||
|
|
| and Price Risk |
|
|
| Recorded as |
| and Price Risk |
|
|
| Recorded as |
|
| and Price Risk |
|
|
|
| Recorded as |
| and Price Risk |
|
|
|
|
| Recorded as | |||||||||
(Millions of Dollars) | (Millions of Dollars) |
| Management |
| Netting(1) |
| a Derivative |
| Management |
| Netting(1) |
| a Derivative | (Millions of Dollars) |
| Management |
| Netting(1) |
| a Derivative |
| Management |
| Netting(1) |
| a Derivative | ||||||||||||
Current Derivative Assets: | Current Derivative Assets: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Current Derivative Assets: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||
Level 3: | Level 3: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Level 3: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||
| Eversource |
| $ | 16.6 |
| $ | (10.8) |
| $ | 5.8 |
| $ | 16.2 |
| $ | (6.6) |
| $ | 9.6 | Eversource |
| $ | 17.2 |
| $ | (11.0) |
| $ | 6.2 |
| $ | 16.7 |
| $ | (10.9) |
| $ | 5.8 |
| CL&P |
| 16.6 |
|
| (10.8) |
|
| 5.8 |
|
| 16.1 |
|
| (6.6) |
|
| 9.5 | CL&P |
| 16.7 |
|
| (11.0) |
|
| 5.7 |
|
| 16.7 |
|
| (10.9) |
|
| 5.8 | ||
| NSTAR Electric |
| - |
|
| - |
|
| - |
|
| 0.1 |
|
| - |
|
| 0.1 | NSTAR Electric |
| 0.5 |
|
| - |
|
| 0.5 |
|
| - |
|
| - |
|
| - | ||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||
Long-Term Derivative Assets: | Long-Term Derivative Assets: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Long-Term Derivative Assets: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||
Level 2: | Level 2: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||||||
| Eversource |
| $ | - |
| $ | - |
| $ | - |
| $ | 0.1 |
| $ | - |
| $ | 0.1 | |||||||||||||||||||
Level 3: | Level 3: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Level 3: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||
| Eversource |
| $ | 67.7 |
| $ | (22.2) |
| $ | 45.5 |
| $ | 93.5 |
| $ | (19.2) |
| $ | 74.3 | Eversource |
| 62.6 |
|
| (16.9) |
|
| 45.7 |
|
| 62.0 |
|
| (19.3) |
|
| 42.7 | |
| CL&P |
| 65.6 |
|
| (22.2) |
|
| 43.4 |
|
| 93.5 |
|
| (19.2) |
|
| 74.3 | CL&P |
| 61.8 |
|
| (16.9) |
|
| 44.9 |
|
| 60.7 |
|
| (19.3) |
|
| 41.4 | ||
| NSTAR Electric |
| 2.1 |
|
| - |
|
| 2.1 |
|
| - |
|
| - |
|
| - | NSTAR Electric |
| 0.8 |
|
| - |
|
| 0.8 |
|
| 1.3 |
|
| - |
|
| 1.3 | ||
|
|
|
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|
|
|
|
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|
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|
|
|
|
| ||
Current Derivative Liabilities: | Current Derivative Liabilities: |
|
|
|
|
|
|
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|
|
|
|
|
|
|
|
|
| Current Derivative Liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||
Level 2: | Level 2: |
|
|
|
|
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|
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|
|
|
| Level 2: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||
| Eversource |
| $ | (4.6) |
| $ | - |
| $ | (4.6) |
| $ | (9.8) |
| $ | - |
| $ | (9.8) | Eversource |
| $ | (0.9) |
| $ | 0.2 |
| $ | (0.7) |
| $ | (5.8) |
| $ | - |
| $ | (5.8) |
Level 3: | Level 3: |
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| Level 3: |
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| ||
| Eversource |
| (92.6) |
|
| - |
|
| (92.6) |
|
| (90.0) |
|
| - |
|
| (90.0) | Eversource |
| (95.1) |
|
| - |
|
| (95.1) |
|
| (92.3) |
|
| - |
|
| (92.3) | ||
| CL&P |
| (91.4) |
|
| - |
|
| (91.4) |
|
| (88.5) |
|
| - |
|
| (88.5) | CL&P |
| (93.0) |
|
| - |
|
| (93.0) |
|
| (91.8) |
|
| - |
|
| (91.8) | ||
| NSTAR Electric |
| (1.2) |
|
| - |
|
| (1.2) |
|
| (1.5) |
|
| - |
|
| (1.5) | NSTAR Electric |
| (2.1) |
|
| - |
|
| (2.1) |
|
| (0.5) |
|
| - |
|
| (0.5) | ||
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Long-Term Derivative Liabilities: | Long-Term Derivative Liabilities: |
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| Long-Term Derivative Liabilities: |
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Level 2: |
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| |||||||||||||||||||||
| Eversource |
| $ | - |
| $ | - |
| $ | - |
| $ | (0.3) |
| $ | - |
| $ | (0.3) | |||||||||||||||||||
Level 3: | Level 3: |
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| Level 3: |
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| ||
| Eversource |
| (365.7) |
|
| - |
|
| (365.7) |
|
| (409.3) |
|
| - |
|
| (409.3) | Eversource |
| $ | (344.5) |
| $ | - |
| $ | (344.5) |
| $ | (337.1) |
| $ | - |
| $ | (337.1) | |
| CL&P |
| (364.7) |
|
| - |
|
| (364.7) |
|
| (406.2) |
|
| - |
|
| (406.2) | CL&P |
| (342.7) |
|
| - |
|
| (342.7) |
|
| (336.2) |
|
| - |
|
| (336.2) | ||
| NSTAR Electric |
| (1.0) |
|
| - |
|
| (1.0) |
|
| (3.1) |
|
| - |
|
| (3.1) | NSTAR Electric |
| (1.8) |
|
| - |
|
| (1.8) |
|
| (0.9) |
|
| - |
|
| (0.9) |
(1)
Amounts represent derivative assets and liabilities that Eversource elected to record net on the balance sheets. These amounts are subject to master netting agreements or similar agreements for which the right of offset exists.
For further information on the fair value of derivative contracts, see Note 1D, "Summary of Significant Accounting Policies - Fair Value Measurements," to the financial statements.
Derivative Contracts at Fair Value with Offsetting Regulatory Amounts
Commodity Supply and Price Risk Management: As required by regulation, CL&P, along with UI, has capacity-related contracts with generation facilities. CL&P has a sharing agreement with UI, with 80 percent of the costs or benefits of each contract borne by or allocated to CL&P and 20 percent borne by or allocated to UI. The combined capacity of these contracts is 787 MW. The capacity contracts extend through 2026 and obligate both CL&P and UI to make or receive payments on a monthly basis to or from the generation facilities based on the difference between a set capacity price and the capacity market price received in the ISO-NE capacity markets. In addition, CL&P has a contract to purchase 0.1 million MWh of energy per year through 2020.
NSTAR Electric has a renewable energy contract to purchase 0.1 million MWh of energy per year through 2018 and a capacity-related contract to purchase up to 35 MW per year through 2019.
As of September 30, 2015March 31, 2016 and December 31, 2014,2015, Eversource had NYMEX financial contracts for natural gas futures in order to reduce variability associated with the purchase price of approximately 9.95.3 million and 8.89.1 million MMBtu of natural gas, respectively.
For the three months ended September 30,March 31, 2016 and 2015, and 2014, there were losses of $8.8$30.5 million and $15.7$16.6 million, respectively, deferred as regulatory costs, which reflect the current change in fair value associated with Eversource's derivative contracts. For the nine months ended September 30, 2015 and 2014, there were losses of $58.9 million and gains of $149.9 million, respectively.
Credit Risk
Certain of Eversource's derivative contracts contain credit risk contingent provisions. These provisions require Eversource to maintain investment grade credit ratings from the major rating agencies and to post collateral for contracts in a net liability position over specified credit limits. As of September 30, 2015March 31, 2016 and December 31, 2014,2015, Eversource had approximately $4.6$0.7 million and $10$5.8 million, respectively, of derivative contracts in a net liability position that were subject to credit risk contingent provisions and would have been required to post additional collateral of approximately $4.7$0.9 million and $10$5.8 million, respectively, if Eversource parent'scertain of Eversource's unsecured debt credit ratings had been downgraded to below investment grade.
21
Fair Value Measurements of Derivative Instruments
Derivative contracts classified as Level 2 in the fair value hierarchy relate to the financial contracts for natural gas futures. Prices are obtained from broker quotes and are based on actual market activity. The contracts are valued using NYMEX natural gas prices. Valuations of these contracts also incorporate discount rates using the yield curve approach.
21
The fair value of derivative contracts classified as Level 3 utilizes significant unobservable inputs. The fair value is modeled using income techniques, such as discounted cash flow valuations adjusted for assumptions relating to exit price. Significant observable inputs for valuations of these contracts include energy and energy-related product prices in future years for which quoted prices in an active market exist. Fair value measurements categorized in Level 3 of the fair value hierarchy are prepared by individuals with expertise in valuation techniques, pricing of energy and energy-related products, and accounting requirements. The future power and capacity prices for periods that are not quoted in an active market or established at auction are based on available market data and are escalated based on estimates of inflation in order to address the full time period of the contract.
Valuations of derivative contracts using a discounted cash flow methodology include assumptions regarding the timing and likelihood of scheduled payments and also reflect non-performance risk, including credit, using the default probability approach based on the counterparty's credit rating for assets and the Company's credit rating for liabilities. Valuations incorporate estimates of premiums or discounts that would be required by a market participant to arrive at an exit price, using historical market transactions adjusted for the terms of the contract.
The following is a summary of Eversource's, including CL&P's and NSTAR Electric's, Level 3 derivative contracts and the range of the significant unobservable inputs utilized in the valuations over the duration of the contracts:
|
| As of September 30, 2015 |
| As of December 31, 2014 |
| As of March 31, 2016 |
| As of December 31, 2015 | ||||||||||||||||||||||||||||
|
|
| Range |
| Period Covered |
|
| Range |
| Period Covered |
|
| Range |
| Period Covered |
|
| Range |
| Period Covered | ||||||||||||||||
Capacity Prices: | Capacity Prices: |
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| Capacity Prices: |
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Eversource | Eversource | $ | 10.30 | - | 13.13 | per kW-Month |
| 2016 - 2026 |
| $ | 5.30 | - | 12.98 | per kW-Month |
| 2016 - 2026 | Eversource | $ | 11.08 | - | 15.82 | per kW-Month |
| 2017 - 2026 |
| $ | 10.81 | - | 15.82 | per kW-Month |
| 2016 - 2026 | ||||
CL&P | CL&P | $ | 10.81 | - | 12.60 | per kW-Month |
| 2019 - 2026 |
| $ | 11.08 | - | 12.98 | per kW-Month |
| 2018 - 2026 | CL&P | $ | 11.08 | - | 12.60 | per kW-Month |
| 2020 - 2026 |
| $ | 10.81 | - | 12.60 | per kW-Month |
| 2019 - 2026 | ||||
NSTAR Electric | NSTAR Electric | $ | 10.30 | - | 13.13 | per kW-Month |
| 2016 - 2019 |
| $ | 5.30 | - | 11.10 | per kW-Month |
| 2016 - 2019 | NSTAR Electric | $ | 12.11 | - | 15.82 | per kW-Month |
| 2017 - 2018 |
| $ | 10.81 | - | 15.82 | per kW-Month |
| 2016 - 2019 | ||||
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Forward Reserve: | Forward Reserve: |
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| Forward Reserve: |
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Eversource, CL&P | Eversource, CL&P | $ | 2.00 | per kW-Month |
| 2016 - 2024 |
| $ | 5.80 | - | 9.50 | per kW-Month |
| 2015 - 2024 | Eversource, CL&P | $ | 2.00 | per kW-Month |
| 2016 - 2024 |
| $ | 2.00 | per kW-Month |
| 2016 - 2024 | ||||||||||
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REC Prices: | REC Prices: |
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| REC Prices: |
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|
Eversource, NSTAR Electric | Eversource, NSTAR Electric | $ | 45 | - | 50 |
| per REC |
| 2015 - 2018 |
| $ | 38 | - | 56 |
| per REC |
| 2015 - 2018 | Eversource, NSTAR Electric | $ | 30 | - | 35 |
| per REC |
| 2016 - 2018 |
| $ | 45 | - | 51 |
| per REC |
| 2016 - 2018 |
Exit price premiums of 65 percent through 2322 percent are also applied on these contracts and reflect the uncertainty and illiquidity premiums that would be required based on the most recent market activity available for similar type contracts.
Significant increases or decreases in future energy or capacity prices in isolation would decrease or increase, respectively, the fair value of the derivative liability. Any increases in the risk premiums would increase the fair value of the derivative liabilities.liability. Changes in these fair values are recorded as a regulatory asset or liability and woulddo not impact net income.
Valuations using significant unobservable inputs: The following table presents changes in the Level 3 category of derivative assets and derivative liabilities measured at fair value on a recurring basis. The derivative assets and liabilities are presented on a net basis.
|
| For the Three Months Ended September 30, |
| For the Three Months Ended March 31, | ||||||||||||||||||||||||||||||||
|
| 2015 |
| 2014 |
| 2016 |
| 2015 | ||||||||||||||||||||||||||||
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| NSTAR |
|
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| NSTAR |
|
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| NSTAR |
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| NSTAR | ||||||
(Millions of Dollars) | (Millions of Dollars) | Eversource |
| CL&P |
| Electric |
| Eversource |
| CL&P |
| Electric | (Millions of Dollars) | Eversource |
| CL&P |
| Electric |
| Eversource |
| CL&P |
| Electric | ||||||||||||
Derivatives, Net: | Derivatives, Net: |
|
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| Derivatives, Net: |
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|
| ||||||
Fair Value as of Beginning of Period | Fair Value as of Beginning of Period | $ | (422.4) |
| $ | (420.2) |
| $ | (2.2) |
| $ | (430.9) |
| $ | (424.6) |
| $ | (6.3) | Fair Value as of Beginning of Period | $ | (380.9) |
| $ | (380.8) |
| $ | (0.1) |
| $ | (415.4) |
| $ | (410.9) |
| $ | (4.5) |
Net Realized/Unrealized Gains/(Losses) | Net Realized/Unrealized Gains/(Losses) |
| (6.0) |
|
| (7.6) |
| 1.6 |
|
| (13.6) |
|
| (15.0) |
|
| 1.4 | Net Realized/Unrealized Gains/(Losses) |
| (28.9) |
| (24.6) |
| (4.3) |
| (12.1) |
| (12.1) |
| - | ||||||
Settlements | Settlements |
| 21.4 |
|
| 20.9 |
|
| 0.5 |
|
| 21.0 |
|
| 18.5 |
|
| 2.5 | Settlements |
| 22.1 |
|
| 20.3 |
|
| 1.8 |
|
| 20.7 |
|
| 19.7 |
|
| 1.0 |
Fair Value as of End of Period | Fair Value as of End of Period | $ | (407.0) |
| $ | (406.9) |
| $ | (0.1) |
| $ | (423.5) |
| $ | (421.1) |
| $ | (2.4) | Fair Value as of End of Period | $ | (387.7) |
| $ | (385.1) |
| $ | (2.6) |
| $ | (406.8) |
| $ | (403.3) |
| $ | (3.5) |
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| |||||||||||||||||||
|
| For the Nine Months Ended September 30, | ||||||||||||||||||||||||||||||||||
|
| 2015 |
| 2014 | ||||||||||||||||||||||||||||||||
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| NSTAR |
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| NSTAR | ||||||||||||||||||||
(Millions of Dollars) | Eversource |
| CL&P |
| Electric |
| Eversource |
| CL&P |
| Electric | |||||||||||||||||||||||||
Derivatives, Net: |
|
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| ||||||||||||||||||||
Fair Value as of Beginning of Period | $ | (415.4) |
| $ | (410.9) |
| $ | (4.5) |
| $ | (635.2) |
| $ | (630.6) |
| $ | (7.3) | |||||||||||||||||||
Net Realized/Unrealized Gains/(Losses) |
| (55.3) |
|
| (56.6) |
| 1.3 |
|
| 147.6 |
|
| 149.4 |
|
| 0.9 | ||||||||||||||||||||
Settlements |
| 63.7 |
|
| 60.6 |
|
| 3.1 |
|
| 64.1 |
|
| 60.1 |
|
| 4.0 | |||||||||||||||||||
Fair Value as of End of Period | $ | (407.0) |
| $ | (406.9) |
| $ | (0.1) |
| $ | (423.5) |
| $ | (421.1) |
| $ | (2.4) |
5.
MARKETABLE SECURITIES
Eversource maintains trusts that hold marketable securities to fund certain non-qualified executive benefits and WMECO maintains a spent nuclear fuel trust to fund WMECO's prior period spent nuclear fuel liability. These trusts hold marketable securities.benefits. These trusts are not subject to regulatory oversight by state or federal agencies. In addition, CYAPC and YAEC maintain legally restricted trusts, each of which holds marketable securities, for payingto fund the decommissioning and spent nuclear fuel removal obligations of their nuclear fuel storage facilities.
Trading Securities: Eversource has elected to record certain equity securities as trading securities, with the changes in fair values recorded in Other Income, Net on the statements of income. As of September 30, 2015March 31, 2016 and December 31, 2014,2015, these securities were classified as Level 1 in the fair value hierarchy and totaled $14.0 million and $14.2 million, respectively. For the three months ended March 31, 2016 and $85.1 million, respectively. Net losses2015, net gains on these securities of $0.5$0.2 million and $1.9 million for the
22
three months ended September 30, 2015 and 2014, respectively, and net gains of $1.6 million, and $1.9 million, respectively, for the nine months ended September 30, 2015 and 2014, respectively, were recorded in Other Income, Net on the statements of income. Dividend income is recorded in Other Income, Net when dividends are declared. In 2015, certain of the securities classified as trading securities were sold and the proceeds were re-invested in equity securities designated as available-for-sale securities.
22
Available-for-Sale Securities: The following is a summary of Eversource's and WMECO's available-for-sale securities. These securities, which are recorded at fair value and are included in current and long-term Marketable Securities on the balance sheets.
|
| As of September 30, 2015 |
| As of December 31, 2014 |
| As of March 31, 2016 |
| As of December 31, 2015 | ||||||||||||||||||||||||||||||||||||||||
|
|
|
|
| Pre-Tax |
| Pre-Tax |
|
|
|
|
|
| Pre-Tax |
| Pre-Tax |
|
|
|
|
|
| Pre-Tax |
| Pre-Tax |
|
|
|
|
|
| Pre-Tax |
| Pre-Tax |
|
| ||||||||||||
|
| Amortized |
| Unrealized |
| Unrealized |
|
|
| Amortized |
| Unrealized |
| Unrealized |
|
| ||||||||||||||||||||||||||||||||
Eversource | Eversource | Amortized |
| Unrealized |
| Unrealized |
|
|
| Amortized |
| Unrealized |
| Unrealized |
|
| ||||||||||||||||||||||||||||||||
(Millions of Dollars) | (Millions of Dollars) | Cost |
| Gains |
| Losses |
| Fair Value |
| Cost |
| Gains |
| Losses |
| Fair Value | (Millions of Dollars) | Cost |
| Gains |
| Losses |
| Fair Value |
| Cost |
| Gains |
| Losses |
| Fair Value | ||||||||||||||||
Eversource |
|
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| |||||||||||||||||||||||||||||||
| Debt Securities (1) (2) | $ | 311.6 |
| $ | 3.6 |
| $ | (0.8) |
| $ | 314.4 |
| $ | 313.0 |
| $ | 7.5 |
| $ | (0.3) |
| $ | 320.2 | ||||||||||||||||||||||||
| Equity Securities (1) |
| 220.0 |
| 53.9 |
| (6.0) |
| 267.9 |
|
| 160.6 |
| 73.3 |
| - |
| 233.9 | ||||||||||||||||||||||||||||||
WMECO |
|
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| |||||||||||||||||||||||||||||||
| Debt Securities (2) |
| 58.3 |
| - |
| - |
| 58.3 |
|
| 58.2 |
| - |
| (0.1) |
| 58.1 | ||||||||||||||||||||||||||||||
Debt Securities | Debt Securities | $ | 257.9 |
| $ | 7.0 |
| $ | (0.1) |
| $ | 264.8 |
| $ | 256.5 |
| $ | 4.5 |
| $ | (0.6) |
| $ | 260.4 | ||||||||||||||||||||||||
Equity Securities | Equity Securities |
| 214.7 |
| 42.0 |
| (3.5) |
| 253.2 |
|
| 215.3 |
| 59.2 |
| (3.4) |
| 271.1 |
(1)
AmountsEversource's debt and equity securities include CYAPC's and YAEC's marketable securities held in nuclear decommissioning trusts of $430.2$424.2 million and $450.8$436.9 million as of September 30, 2015March 31, 2016 and December 31, 2014, respectively, which are legally restricted and can only be used for the costs of decommissioning and fuel removal of the nuclear fuel storage facilities owned by these companies.2015, respectively. Unrealized gains and losses for thethese nuclear decommissioning trusts are recorded in Marketable Securities with the corresponding offset to Other Long-Term Liabilities on the balance sheets, with no impact on the statements of income.
(2)
Unrealized gains and losses on debt securities held by WMECO are recorded in Marketable Securities with the corresponding offset to Other Long-Term Assets on the balance sheets.
Unrealized Losses and Other-than-Temporary Impairment: There have been no significant unrealized losses, other-than-temporary impairments or credit losses for Eversource or WMECO.the three months ended March 31, 2016 and 2015. Factors considered in determining whether a credit loss exists include the duration and severity of the impairment, adverse conditions specifically affecting the issuer, and the payment history, ratings and rating changes of the security. For asset-backed debt securities, underlying collateral and expected future cash flows are also evaluated.
Realized Gains and Losses: Realized gains and losses on available-for-sale securities are recorded in Other Income, Net for Eversource's benefit trust Other Long-Term Assets for WMECO, and are offset in Other Long-Term Liabilities for CYAPC and YAEC. Eversource utilizes the specific identification basis method for the Eversource benefit trust, and the average cost basis method for the WMECO trust and the CYAPC and YAEC nuclear decommissioning trusts to compute the realized gains and losses on the sale of available-for-sale securities.
Contractual Maturities: As of September 30, 2015,March 31 2016, the contractual maturities of available-for-sale debt securities were as follows:
|
| Eversource |
| WMECO | |||||||||||||
|
| Amortized |
|
|
| Amortized |
|
| |||||||||
Eversource | Amortized |
|
| ||||||||||||||
(Millions of Dollars) | (Millions of Dollars) | Cost |
| Fair Value |
| Cost |
| Fair Value | Cost |
| Fair Value | ||||||
Less than one year (1) | Less than one year (1) | $ | 68.1 |
| $ | 68.1 |
| $ | 40.5 |
| $ | 40.5 | $ | 38.2 |
| $ | 38.2 |
One to five years | One to five years |
| 67.6 |
| 68.0 |
| 14.2 |
| 14.2 |
| 51.5 |
| 52.1 | ||||
Six to ten years | Six to ten years |
| 56.9 |
| 56.9 |
| 0.5 |
| 0.5 |
| 42.7 |
| 44.4 | ||||
Greater than ten years | Greater than ten years |
| 119.0 |
|
| 121.4 |
|
| 3.1 |
|
| 3.1 |
| 125.5 |
|
| 130.1 |
Total Debt Securities | Total Debt Securities | $ | 311.6 |
| $ | 314.4 |
| $ | 58.3 |
| $ | 58.3 | $ | 257.9 |
| $ | 264.8 |
(1)
Amounts in the Less than one year Eversource category include securities in the CYAPC and YAEC nuclear decommissioning trusts, which are restricted and are classified in long-term Marketable Securities on the balance sheets.
Fair Value Measurements: The following table presents the marketable securities recorded at fair value on a recurring basis by the level in which they are classified within the fair value hierarchy:
|
|
|
| Eversource |
| WMECO | ||||||||
(Millions of Dollars) | As of September 30, 2015 |
| As of December 31, 2014 |
| As of September 30, 2015 |
| As of December 31, 2014 | |||||||
Level 1: |
|
|
|
|
|
|
|
|
|
|
| |||
| Mutual Funds and Equities | $ | 282.1 |
| $ | 319.0 |
| $ | - |
| $ | - | ||
| Money Market Funds |
| 30.7 |
|
| 24.9 |
|
| 8.0 |
|
| 4.3 | ||
Total Level 1 | $ | 312.8 |
| $ | 343.9 |
| $ | 8.0 |
| $ | 4.3 | |||
Level 2: |
|
|
|
|
|
|
|
|
|
|
| |||
| U.S. Government Issued Debt Securities | $ | 41.3 |
| $ | 51.3 |
| $ | - |
| $ | - | ||
| Corporate Debt Securities |
| 57.5 |
|
| 49.1 |
|
| 12.2 |
|
| 14.7 | ||
| Asset-Backed Debt Securities |
| 27.9 |
|
| 54.1 |
|
| 7.6 |
|
| 14.5 | ||
| Municipal Bonds |
| 123.9 |
|
| 116.3 |
|
| 10.3 |
|
| 13.0 | ||
| Other Fixed Income Securities |
| 33.1 |
|
| 24.5 |
|
| 20.2 |
|
| 11.6 | ||
Total Level 2 | $ | 283.7 |
| $ | 295.3 |
| $ | 50.3 |
| $ | 53.8 | |||
Total Marketable Securities | $ | 596.5 |
| $ | 639.2 |
| $ | 58.3 |
| $ | 58.1 |
23
Eversource |
|
| |||||
(Millions of Dollars) | As of March 31, 2016 |
| As of December 31, 2015 |
| |||
Level 1: |
|
|
|
|
|
| |
| Mutual Funds and Equities | $ | 267.2 |
| $ | 285.3 |
|
| Money Market Funds |
| 32.1 |
|
| 26.9 |
|
Total Level 1 | $ | 299.3 |
| $ | 312.2 |
| |
Level 2: |
|
|
|
|
|
| |
| U.S. Government Issued Debt Securities | $ | 59.4 |
| $ | 46.6 |
|
| Corporate Debt Securities |
| 37.0 |
|
| 43.9 |
|
| Asset-Backed Debt Securities |
| 19.6 |
|
| 20.0 |
|
| Municipal Bonds |
| 108.0 |
|
| 111.4 |
|
| Other Fixed Income Securities |
| 8.7 |
|
| 11.6 |
|
Total Level 2 | $ | 232.7 |
| $ | 233.5 |
| |
Total Marketable Securities | $ | 532.0 |
| $ | 545.7 |
|
U.S. government issued debt securities are valued using market approaches that incorporate transactions for the same or similar bonds and adjustments for yields and maturity dates. Corporate debt securities are valued using a market approach, utilizing recent trades of the same or similar instrument and also incorporating yield curves, credit spreads and specific bond terms and conditions. Asset-backed debt securities include collateralized mortgage obligations, commercial mortgage backed securities, and securities collateralized by auto loans, credit card loans or receivables. Asset-backed debt securities are valued using recent trades of similar instruments, prepayment assumptions, yield curves, issuance and maturity dates, and tranche information. Municipal bonds are valued using a market approach that incorporates reported trades and benchmark yields. Other fixed income securities are valued using pricing models, quoted prices of securities with similar characteristics, and discounted cash flows.
23
6.
SHORT-TERM AND LONG-TERM DEBT
Credit Agreements and Commercial Paper Programs and Credit Agreements: On October 26, 2015, Eversource parent CL&P, PSNH, WMECO, NSTAR Gas and Yankee Gas amended and restated their joint five-year $1.45 billion revolving credit facility and extended the termination date to September 4, 2020. The facility serves to backstop Eversource parent'shas a $1.45 billion commercial paper program. The commercial paper program allowsallowing Eversource parent to issue commercial paper as a form of short-term debt. As of September 30, 2015March 31, 2016 and December 31, 2014,2015, Eversource parent had $757$621 million and approximately $1.1 billion, respectively, in short-term borrowings outstanding under the Eversource parent commercial paper program, leaving $693$829 million and $348.9$351.5 million of available borrowing capacity as of September 30, 2015March 31, 2016 and December 31, 2014,2015, respectively. The weighted-average interest rate on these borrowings as of September 30, 2015March 31, 2016 and December 31, 20142015 was 0.410.68 percent and 0.430.72 percent, respectively. As of September 30,March 31, 2016, there were intercompany loans from Eversource parent of $115.5 million to CL&P, $157.1 million to PSNH and $143.5 million to WMECO. As of December 31, 2015, there were intercompany loans from Eversource parent of $137.3$277.4 million to CL&P, $231.3 million to PSNH and $126.2$143.4 million to WMECO. As of December 31, 2014, there were intercompany loans from Eversource parent, of $133.4 millionCL&P, PSNH, WMECO, NSTAR Gas and Yankee Gas are parties to CL&P, $90.5 million to PSNH and $21.4 million to WMECO.
On October 26, 2015, NSTAR Electric amended and restated itsa five-year $450 million$1.45 billion revolving credit facility, and extended the termination date towhich terminates on September 4, 2020. The revolving credit facility serves to backstop Eversource parent's $1.45 billion commercial paper program.
NSTAR Electric'sElectric has a $450 million commercial paper program.program allowing NSTAR Electric to issue commercial paper as a form of short-term debt. As of September 30, 2015March 31, 2016 and December 31, 2014,2015, NSTAR Electric had $258.5$148.5 million and $302$62.5 million, respectively, in short-term borrowings outstanding under its commercial paper program, leaving $191.5$301.5 million and $148$387.5 million of available borrowing capacity as of September 30, 2015March 31, 2016 and December 31, 2014,2015, respectively. The weighted-average interest rate on these borrowings as of September 30, 2015March 31, 2016 and December 31, 20142015 was 0.180.38 percent and 0.270.40 percent, respectively.
On June 16, 2015, the FERC granted authorization to allow CL&P and WMECO to incur total short-term borrowings upNSTAR Electric is a party to a maximum of $600five-year $450 million and $300revolving credit facility, which terminates on September 4, 2020. The revolving credit facility serves to backstop NSTAR Electric's $450 million respectively, effective January 1, 2016 through December 31, 2017.commercial paper program.
Except as described below, amounts outstanding under the commercial paper programs are included in Notes Payable for Eversource and NSTAR Electric and are classified in current liabilities on the balance sheets as all borrowings are outstanding for no more than 364 days at one time. Intercompany loans from Eversource parent to CL&P, PSNH and WMECO are included in Notes Payable to Eversource Parent and are classified in current liabilities on thetheir respective balance sheets. Intercompany loans from Eversource parent to CL&P, PSNH and WMECO are eliminated in consolidation inon Eversource's balance sheets.
Long-Term Debt: On January 15, 2015,In March 2016, Eversource parent issued $150$250 million of 1.602.50 percent Series GI Senior Notes due to mature in 20182021 and $300$250 million of 3.153.35 percent Series HJ Senior Notes due to mature in 2025.2026. The proceeds, net of issuance costs, were used to repay short-term borrowings outstanding under the Eversource parent commercial paper program. As the debt issuances refinanced short-term debt, the short-term debt was classified as Long-Term Debt as of December 31, 2014.
On April 1, 2015, CL&P repaid at maturity the $100 million 5.00 percent 2005 Series A First and Refunding Mortgage Bonds using short-term borrowings. On April 1, 2015, CL&P also redeemed the $62 million 1996A Series 1.55 percent PCRBs that were subject to mandatory tender, using short term borrowings.
On May 20, 2015, CL&P issued $300 million of 4.15 percent 2015 Series A First and Refunding Mortgage Bonds due to mature in 2045. The proceeds, net of issuance costs, were used to repay short-term borrowings.
On August 3, 2015, WMECO repaid at maturity the $50 million 5.24 percent Series C Senior Notes using short-term borrowings.
On September 10, 2015, Yankee Gas issued $75 million of 3.35 percent 2015 Series M First Mortgage Bonds due to mature in 2025. The proceeds, net of issuance costs, were used to repay short-term borrowings.
Long-Term Debt Issuance Authorization: On April 3, 2015, the DPU authorized NSTAR Gas to issue up to $100 million in long-term debt for the period through December 31, 2015.
24
7.
PENSION BENEFITS AND POSTRETIREMENT BENEFITS OTHER THAN PENSIONS
As of December 31, 2014, Eversource Service sponsored twosponsors a defined benefit retirement plansplan (Pension Plan) that coveredcovers eligible employees, including, among others, employees of CL&P, NSTAR Electric, PSNH and WMECO. Effective January 1, 2015,In addition to the two pensionPension Plan, Eversource maintains non-qualified defined benefit retirement plans were merged into one plan, sponsored by Eversource Service. AsService (SERP Plans), which provide benefits in excess of December 31, 2014,Internal Revenue Code limitations to eligible participants consisting of current and retired employees. Eversource Service also sponsoredsponsors defined benefit postretirement plans that provide certain retiree benefits, primarily medical, dental and life insurance, to retiringretired employees that meetmet certain age and service eligibility requirements, including, among others, employees of CL&P, NSTAR Electric, PSNH and WMECO. WMECO (PBOP Plan).
Effective January 1, 2015,2016, the postretirement plans were merged into one plan, sponsoredCompany refined its method of estimating the discount rate for the service and interest cost components of Pension and PBOP expense from the yield-curve approach to the spot rate methodology, which provides a more precise measurement by Eversource Service.
Terminated Vested Lump-Sum Payout Offer: In August, 2015, Eversource made a total lump-sum payout of $149.5 million, which reducedmatching projected cash flows to the projected benefit obligation and Pension Plan assets by a corresponding amount. Therefore, the lump-sum payment option had no impactspot rates on the net Accruedyield curve. Historically, these components were estimated using the same weighted-average discount rate as for the funded status. The discount rates used to estimate the 2016 service cost were 4.89 percent and 5.14 percent for the Pension Liability reflectedand PBOP plans, respectively. The discount rates used to estimate the 2016 interest cost were 3.80 percent and 3.72 percent for the Pension and PBOP plans, respectively. The total pre-tax benefit of this change on Pension and PBOP expense, prior to the Eversource, CL&P, PSNHcapitalized portion and WMECO balance sheets as of September 30, 2015. amounts deferred and recovered through rate reconciliation mechanisms, for the three months ended March 31, 2016 was approximately $12 million and $2.5 million for the Pension and PBOP plans, respectively.
The components of net periodic benefit expense for the Pension, SERP and PBOP Plans are shown below. The net periodic benefit expense and the intercompany allocations less the capitalized portion of pension, SERP and PBOP amounts isare included in Operations and Maintenance expense on the statements of income. Capitalized pension and PBOP amounts relate to employees working on capital projects and are included in Property, Plant and Equipment, Net. Intercompany allocations are not included inNet on the CL&P, NSTAR Electric, PSNH and WMECO net periodic benefit expense amounts.balance sheets. Pension, SERP and PBOP expense reflected in the statements of cash flows for CL&P, NSTAR Electric, PSNH and WMECO does not include the intercompany allocations andor the corresponding capitalized portion, as these amounts are cash settled on a short-term basis.
|
| Pension and SERP |
| Pension and SERP | ||||||||
Eversource | For the Three Months Ended |
| For the Nine Months Ended | |||||||||
(Millions of Dollars) | September 30, 2015(1) |
| September 30, 2014 |
| September 30, 2015(1) |
| September 30, 2014 | |||||
Service Cost | $ | 22.7 |
| $ | 19.1 |
| $ | 68.7 |
| $ | 60.7 | |
Interest Cost |
| 56.9 |
|
| 56.4 |
|
| 170.3 |
|
| 169.5 | |
Expected Return on Plan Assets |
| (83.9) |
|
| (77.7) |
|
| (252.1) |
|
| (233.1) | |
Actuarial Loss |
| 36.5 |
|
| 31.7 |
|
| 111.9 |
|
| 96.5 | |
Prior Service Cost |
| 0.9 |
|
| 1.1 |
|
| 2.7 |
|
| 3.3 | |
Total Net Periodic Benefit Expense | $ | 33.1 |
| $ | 30.6 |
| $ | 101.5 |
| $ | 96.9 | |
Capitalized Pension Expense | $ | 9.8 |
| $ | 8.3 |
| $ | 31.3 |
| $ | 26.7 | |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| PBOP |
| PBOP | ||||||||
Eversource | For the Three Months Ended |
| For the Nine Months Ended | |||||||||
(Millions of Dollars) | September 30, 2015(1) |
| September 30, 2014 |
| September 30, 2015(1) |
| September 30, 2014 | |||||
Service Cost | $ | 4.1 |
| $ | 3.1 |
| $ | 10.3 |
| $ | 9.3 | |
Interest Cost |
| 11.8 |
|
| 12.4 |
|
| 30.4 |
|
| 37.1 | |
Expected Return on Plan Assets |
| (16.9) |
|
| (15.8) |
|
| (43.2) |
|
| (47.4) | |
Actuarial Loss |
| 1.7 |
|
| 3.0 |
|
| 4.5 |
|
| 9.1 | |
Prior Service Credit |
| (0.1) |
|
| (0.7) |
|
| (0.3) |
|
| (2.1) | |
Total Net Periodic Benefit Expense | $ | 0.6 |
| $ | 2.0 |
| $ | 1.7 |
| $ | 6.0 | |
Capitalized PBOP Expense/(Income) | $ | - |
| $ | 1.1 |
| $ | 0.1 |
| $ | 1.9 |
|
| Pension and SERP | ||||||||||||||||||||||
|
| For the Three Months Ended September 30, 2015 |
| For the Three Months Ended September 30, 2014 | ||||||||||||||||||||
|
|
|
|
| NSTAR |
|
|
|
|
|
|
|
|
|
| NSTAR |
|
|
|
|
|
| ||
(Millions of Dollars) | CL&P |
| Electric |
| PSNH(1) |
| WMECO |
| CL&P |
| Electric |
| PSNH |
| WMECO | |||||||||
Service Cost | $ | 6.2 |
| $ | 3.7 |
| $ | 3.1 |
| $ | 1.0 |
| $ | 5.0 |
| $ | 3.0 |
| $ | 2.3 |
| $ | 0.8 | |
Interest Cost |
| 12.9 |
|
| 10.0 |
|
| 6.1 |
|
| 2.6 |
|
| 12.5 |
|
| 10.3 |
|
| 5.7 |
|
| 2.5 | |
Expected Return on Plan Assets |
| (19.8) |
|
| (17.5) |
|
| (10.1) |
|
| (4.7) |
|
| (18.7) |
|
| (15.7) |
|
| (9.3) |
|
| (4.4) | |
Actuarial Loss |
| 8.0 |
|
| 8.7 |
|
| 2.9 |
|
| 1.6 |
|
| 8.2 |
|
| 5.9 |
|
| 2.8 |
|
| 1.7 | |
Prior Service Cost |
| 0.4 |
|
| - |
|
| 0.1 |
|
| 0.1 |
|
| 0.4 |
|
| - |
|
| 0.1 |
|
| 0.1 | |
Total Net Periodic Benefit Expense | $ | 7.7 |
| $ | 4.9 |
| $ | 2.1 |
| $ | 0.6 |
| $ | 7.4 |
| $ | 3.5 |
| $ | 1.6 |
| $ | 0.7 | |
Intercompany Allocations | $ | 5.8 |
| $ | 3.4 |
| $ | 1.6 |
| $ | 1.1 |
| $ | 6.5 |
| $ | 2.9 |
| $ | 1.8 |
| $ | 1.2 | |
Capitalized Pension Expense | $ | 4.7 |
| $ | 2.7 |
| $ | 0.8 |
| $ | 0.5 |
| $ | 4.3 |
| $ | 2.6 |
| $ | 0.7 |
| $ | 0.6 | |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Pension and SERP | ||||||||||||||||||||||
|
| For the Nine Months Ended September 30, 2015 |
| For the Nine Months Ended September 30, 2014 | ||||||||||||||||||||
|
|
|
|
| NSTAR |
|
|
|
|
|
|
|
|
|
| NSTAR |
|
|
|
|
|
| ||
(Millions of Dollars) | CL&P |
| Electric |
| PSNH(1) |
| WMECO |
| CL&P |
| Electric |
| PSNH |
| WMECO | |||||||||
Service Cost | $ | 18.4 |
| $ | 11.2 |
| $ | 9.0 |
| $ | 3.2 |
| $ | 15.2 |
| $ | 10.6 |
| $ | 7.4 |
| $ | 2.7 | |
Interest Cost |
| 38.4 |
|
| 30.2 |
|
| 18.1 |
|
| 7.8 |
|
| 38.1 |
|
| 31.0 |
|
| 18.0 |
|
| 7.8 | |
Expected Return on Plan Assets |
| (59.1) |
|
| (52.5) |
|
| (30.3) |
|
| (14.2) |
|
| (56.7) |
|
| (47.3) |
|
| (28.8) |
|
| (13.5) | |
Actuarial Loss |
| 24.2 |
|
| 27.0 |
|
| 8.8 |
|
| 4.8 |
|
| 25.5 |
|
| 17.6 |
|
| 8.9 |
|
| 5.2 | |
Prior Service Cost |
| 1.1 |
|
| 0.1 |
|
| 0.4 |
|
| 0.2 |
|
| 1.4 |
|
| - |
|
| 0.5 |
|
| 0.3 | |
Total Net Periodic Benefit Expense | $ | 23.0 |
| $ | 16.0 |
| $ | 6.0 |
| $ | 1.8 |
| $ | 23.5 |
| $ | 11.9 |
| $ | 6.0 |
| $ | 2.5 | |
Intercompany Allocations | $ | 18.0 |
| $ | 10.3 |
| $ | 5.0 |
| $ | 3.3 |
| $ | 20.8 |
| $ | 6.7 |
| $ | 6.0 |
| $ | 3.9 | |
Capitalized Pension Expense | $ | 14.1 |
| $ | 8.6 |
| $ | 2.6 |
| $ | 1.4 |
| $ | 13.6 |
| $ | 5.5 |
| $ | 2.4 |
| $ | 2.0 |
Pension and SERP | ||||||
Eversource | For the Three Months Ended | |||||
(Millions of Dollars) | March 31, 2016 | March 31, 2015(1) | ||||
Service Cost | $ | 19.4 | $ | 23.2 | ||
Interest Cost | 46.5 | 56.6 | ||||
Expected Return on Plan Assets | (79.6) | (84.3) | ||||
Actuarial Loss | 31.5 | 38.9 | ||||
Prior Service Cost | 0.9 | 0.9 | ||||
Total Net Periodic Benefit Expense | $ | 18.7 | $ | 35.3 | ||
Capitalized Pension Expense | $ | 6.1 | $ | 9.6 |
2524
|
| PBOP | ||||||||||||||||||||||
|
| For the Three Months Ended September 30, 2015 |
| For the Three Months Ended September 30, 2014 | ||||||||||||||||||||
|
|
|
|
| NSTAR |
|
|
|
|
|
|
|
|
|
| NSTAR |
|
|
|
|
|
| ||
(Millions of Dollars) | CL&P |
| Electric |
|
| PSNH(1) |
|
| WMECO |
| CL&P |
| Electric |
| PSNH |
| WMECO | |||||||
Service Cost | $ | 0.5 |
| $ | 1.3 |
| $ | 0.3 |
| $ | 0.1 |
| $ | 0.6 |
| $ | 0.8 |
| $ | 0.3 |
| $ | 0.1 | |
Interest Cost |
| 1.8 |
|
| 4.8 |
|
| 1.0 |
|
| 0.3 |
|
| 2.0 |
|
| 4.9 |
|
| 1.1 |
|
| 0.4 | |
Expected Return on Plan Assets |
| (2.8) |
|
| (6.8) |
|
| (1.5) |
|
| (0.6) |
|
| (2.6) |
|
| (6.5) |
|
| (1.4) |
|
| (0.6) | |
Actuarial Loss/(Gain) |
| 0.2 |
|
| 0.6 |
|
| 0.1 |
|
| - |
|
| 1.0 |
|
| (0.1) |
|
| 0.6 |
|
| 0.1 | |
Prior Service Credit |
| - |
|
| (0.1) |
|
| - |
|
| - |
|
| - |
|
| (0.5) |
|
| - |
|
| - | |
Total Net Periodic Benefit Expense/(Income) | $ | (0.3) |
| $ | (0.2) |
| $ | (0.1) |
| $ | (0.2) |
| $ | 1.0 |
| $ | (1.4) |
| $ | 0.6 |
| $ | 0.0 | |
Intercompany Allocations | $ | 0.4 |
| $ | 0.2 |
| $ | 0.1 |
| $ | 0.1 |
| $ | 0.9 |
| $ | 0.3 |
| $ | 0.2 |
| $ | 0.2 | |
Capitalized PBOP Expense/(Income) | $ | (0.1) |
| $ | - |
| $ | 0.1 |
| $ | - |
| $ | 0.5 |
| $ | (0.5) |
| $ | 0.2 |
| $ | - | |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| PBOP | ||||||||||||||||||||||
|
| For the Nine Months Ended September 30, 2015 |
| For the Nine Months Ended September 30, 2014 | ||||||||||||||||||||
|
|
|
|
| NSTAR |
|
|
|
|
|
|
|
|
|
|
| NSTAR |
|
|
|
|
| ||
(Millions of Dollars) | CL&P |
| Electric |
|
| PSNH(1) |
|
| WMECO |
| CL&P |
|
| Electric | PSNH |
| WMECO | |||||||
Service Cost | $ | 1.6 |
| $ | 4.0 |
| $ | 1.0 |
| $ | 0.3 |
| $ | 1.7 |
| $ | 2.3 |
| $ | 1.0 |
| $ | 0.3 | |
Interest Cost |
| 5.4 |
|
| 14.2 |
|
| 2.9 |
|
| 1.1 |
|
| 6.0 |
|
| 14.6 |
|
| 3.2 |
|
| 1.3 | |
Expected Return on Plan Assets |
| (8.3) |
|
| (20.5) |
|
| (4.4) |
|
| (1.9) |
|
| (7.9) |
|
| (19.5) |
|
| (4.1) |
|
| (1.7) | |
Actuarial Loss/(Gain) |
| 0.5 |
|
| 1.8 |
|
| 0.4 |
|
| - |
|
| 3.2 |
|
| (0.4) |
|
| 1.7 |
|
| 0.3 | |
Prior Service Credit |
| - |
|
| (0.1) |
|
| - |
|
| - |
|
| - |
|
| (1.4) |
|
| - |
|
| - | |
Total Net Periodic Benefit Expense/(Income) | $ | (0.8) |
| $ | (0.6) |
| $ | (0.1) |
| $ | (0.5) |
| $ | 3.0 |
| $ | (4.4) |
| $ | 1.8 |
| $ | 0.2 | |
Intercompany Allocations | $ | 1.4 |
| $ | 0.7 |
| $ | 0.3 |
| $ | 0.3 |
| $ | 3.1 |
| $ | 0.4 |
| $ | 0.8 |
| $ | 0.6 | |
Capitalized PBOP Expense/(Income) | $ | (0.2) |
| $ | (0.1) |
| $ | 0.2 |
| $ | (0.1) |
| $ | 1.5 |
| $ | (1.5) |
| $ | 0.6 |
| $ | 0.1 | |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) Amounts exclude approximately $0.8 million and $2.4 million for the three and nine months ended September 30, 2015, respectively, that represented amounts included in other deferred debits. |
PBOP | ||||||
Eversource | For the Three Months Ended | |||||
(Millions of Dollars) | March 31, 2016 | March 31, 2015(1) | ||||
Service Cost | $ | 3.1 | $ | 4.2 | ||
Interest Cost | 9.7 | 11.9 | ||||
Expected Return on Plan Assets | (15.7) | (16.8) | ||||
Actuarial Loss | 1.1 | 1.8 | ||||
Prior Service Credit | (0.1) | (0.1) | ||||
Total Net Periodic Benefit Expense/(Income) | $ | (1.9) | $ | 1.0 | ||
Capitalized PBOP Expense/(Income) | $ | (0.9) | $ | 0.2 |
|
| Pension and SERP | ||||||||||||||||||||||
|
| For the Three Months Ended March 31, 2016 |
| For the Three Months Ended March 31, 2015 | ||||||||||||||||||||
|
|
|
|
| NSTAR |
|
|
|
|
|
|
|
|
|
| NSTAR |
|
|
|
|
|
| ||
(Millions of Dollars) | CL&P |
| Electric |
| PSNH |
| WMECO |
| CL&P |
| Electric |
| PSNH(1) |
| WMECO | |||||||||
Service Cost | $ | 5.0 |
| $ | 3.4 |
| $ | 2.5 |
| $ | 0.9 |
| $ | 6.0 |
| $ | 3.8 |
| $ | 2.9 |
| $ | 1.1 | |
Interest Cost |
| 10.6 |
|
| ��8.3 |
|
| 5.1 |
|
| 2.1 |
|
| 12.7 |
|
| 10.2 |
|
| 5.9 |
|
| 2.5 | |
Expected Return on Plan Assets |
| (18.2) |
|
| (16.9) |
|
| (9.7) |
|
| (4.4) |
|
| (19.7) |
|
| (17.6) |
|
| (10.0) |
|
| (4.7) | |
Actuarial Loss |
| 6.7 |
|
| 8.4 |
|
| 2.5 |
|
| 1.4 |
|
| 8.2 |
|
| 9.6 |
|
| 3.0 |
|
| 1.6 | |
Prior Service Cost |
| 0.4 |
|
| - |
|
| 0.1 |
|
| 0.1 |
|
| 0.4 |
|
| - |
|
| 0.1 |
|
| 0.1 | |
Total Net Periodic Benefit Expense | $ | 4.5 |
| $ | 3.2 |
| $ | 0.5 |
| $ | 0.1 |
| $ | 7.6 |
| $ | 6.0 |
| $ | 1.9 |
| $ | 0.6 | |
Intercompany Allocations | $ | 3.3 |
| $ | 2.2 |
| $ | 1.0 |
| $ | 0.6 |
| $ | 6.4 |
| $ | 3.6 |
| $ | 1.7 |
| $ | 1.2 | |
Capitalized Pension Expense | $ | 2.7 |
| $ | 1.8 |
| $ | 0.3 |
| $ | 0.2 |
| $ | 4.3 |
| $ | 2.8 |
| $ | 0.8 |
| $ | 0.5 |
|
| PBOP | ||||||||||||||||||||||
|
| For the Three Months Ended March 31, 2016 |
| For the Three Months Ended March 31, 2015 | ||||||||||||||||||||
|
|
|
|
| NSTAR |
|
|
|
|
|
|
|
|
|
| NSTAR |
|
|
|
|
|
| ||
(Millions of Dollars) | CL&P |
| Electric |
| PSNH |
| WMECO |
| CL&P |
| Electric |
| PSNH(1) |
| WMECO | |||||||||
Service Cost | $ | 0.5 |
| $ | 0.9 |
| $ | 0.3 |
| $ | 0.1 |
| $ | 0.6 |
| $ | 1.3 |
| $ | 0.4 |
| $ | 0.1 | |
Interest Cost |
| 1.4 |
|
| 4.0 |
|
| 0.8 |
|
| 0.3 |
|
| 1.8 |
|
| 4.8 |
|
| 1.0 |
|
| 0.4 | |
Expected Return on Plan Assets |
| (2.6) |
|
| (6.4) |
|
| (1.4) |
|
| (0.6) |
|
| (2.8) |
|
| (6.8) |
|
| (1.5) |
|
| (0.6) | |
Actuarial Loss |
| 0.2 |
|
| 0.2 |
|
| 0.1 |
|
| - |
|
| 0.2 |
|
| 0.8 |
|
| 0.1 |
|
| - | |
Prior Service Credit |
| - |
|
| - |
|
| - |
|
| - |
|
| - |
|
| (0.1) |
|
| - |
|
| - | |
Total Net Periodic Benefit Income | $ | (0.5) |
| $ | (1.3) |
| $ | (0.2) |
| $ | (0.2) |
| $ | (0.2) |
| $ | - |
| $ | - |
| $ | (0.1) | |
Intercompany Allocations | $ | 0.2 |
| $ | 0.1 |
| $ | - |
| $ | - |
| $ | 0.5 |
| $ | 0.3 |
| $ | 0.1 |
| $ | 0.1 | |
Capitalized PBOP Expense/(Income) | $ | (0.2) |
| $ | (0.6) |
| $ | - |
| $ | (0.1) |
| $ | - |
| $ | 0.1 |
| $ | - |
| $ | - | |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) Amounts excluded approximately $1 million for the three months ended March 31, 2015 that represented amounts included in other deferred debits. |
8.
COMMITMENTS AND CONTINGENCIES
A.
Environmental Matters
General:Eversource, CL&P, NSTAR Electric, PSNH and WMECO are subject to environmental laws and regulations intended to mitigate or remove the effect of past operations and improve or maintain the quality of the environment. These laws and regulations require the removal or the remedy of the effect on the environment of the disposal or release of certain specified hazardous substances at current and former operating sites. Eversource, CL&P, NSTAR Electric, PSNH and WMECO have an active environmental auditing and training program and believe that they areeach believes it is substantially in compliance with all enacted laws and regulations.
The number of environmental sites and reserves related to these sitesreserves for which remediation or long-term monitoring, preliminary site work or site assessment areis being performed are as follows:
| As of September 30, 2015 |
|
| As of December 31, 2014 | As of March 31, 2016 |
|
| As of December 31, 2015 | ||||||||||||||||
|
|
|
| Reserve |
|
|
|
|
| Reserve |
|
|
| Reserve |
|
|
|
|
| Reserve | ||||
| Number of Sites |
| (in millions) |
|
| Number of Sites |
| (in millions) | Number of Sites |
| (in millions) |
|
| Number of Sites |
| (in millions) | ||||||||
Eversource |
| 64 |
| $ | 46.9 |
| 65 |
| $ | 43.3 |
| 64 |
| $ | 51.7 |
| 64 |
| $ | 51.1 | ||||
CL&P |
| 14 |
| 4.8 |
| 16 |
| 3.8 |
| 14 |
| 4.6 |
| 14 |
| 4.6 | ||||||||
NSTAR Electric |
| 14 |
| 2.2 |
|
| 13 |
| 1.1 |
| 15 |
| 2.3 |
|
| 15 |
| 2.4 | ||||||
PSNH |
| 12 |
| 3.4 |
| 13 |
| 5.2 |
| 12 |
| 4.4 |
| 12 |
| 4.5 | ||||||||
WMECO |
| 4 |
| 0.6 |
| 4 |
| 0.5 |
| 4 |
| 0.6 |
| 4 |
| 0.6 |
Included in the Eversource number of sites and reserve amounts above are former MGP sites that were operated several decades ago and manufactured gas from coal and other processes, which resulted in certain by-products remaining in the environment that may pose a potential risk to human health and the environment.environment, for which Eversource may have potential liability. The reserve balancebalances related to these former MGP sites was $41were $46.1 million and $38.8$45.5 million as of September 30, 2015March 31, 2016 and December 31, 2014,2015, respectively, and relatesrelated primarily to the natural gas business segment.
These reserve estimates are subjective in nature as they take into consideration several different remediation options at each specific site. The reliability and precision of these estimates can be affected by several factors, including new information concerning either the level of contamination at the site, the extent of Eversource,Eversource's, CL&P,&P's, NSTAR Electric, PSNH, orElectric's, PSNH's, and WMECO's responsibility for remediation or the extent of remediation required, recently enacted laws and regulations or a changechanges in thecost estimates due to certain economic factors. It is possible that new information or future developments could require a reassessment of the potential exposure to related environmental matters. As this information becomes available, management will continue to assess the potential exposure and adjust the reserves accordingly.
25
B.
Guarantees and Indemnifications
In the normal course of business, Eversource parent provides credit assurances on behalf of its subsidiaries, including CL&P, NSTAR Electric, PSNH and WMECO, in the form of guarantees in the normal course of business.guarantees.
Eversource parent issued a declining balance guaranty on behalf of a wholly-owned subsidiary to guarantee the payment of the subsidiary's capital contributions for its investment in the Access Northeast project. The guarantee will not exceed $206 million and will decreasedecreases as capital contributions are made. The guaranty will expire upon the earlier of the full performance of the guaranteed obligations or December 31, 2021.
Eversource parent issued a guaranty on behalf of its subsidiary, NPT, under which, beginning at the time the Northern Pass Transmission line goes into commercial operation, Eversource parent will guarantee the financial obligations of NPT under the TSA with HQ in an amount not to exceed $25 million. Eversource parent's obligations under the guaranty expire upon the full, final and indefeasible payment of the guaranteed obligations.
26
Eversource parent has provided a guaranty of various indemnification and other obligations as a result of the April 13, 2015 sale of substantially all of the assets of E.S. Boulos Company, an unregulated electrical contractor based in Maine and indirect subsidiary of Eversource Energy. Eversource parent has also guaranteed certain indemnification and other obligations as a result of the sales of former unregulated subsidiaries and the termination of an unregulated business, with maximum exposures either not specified or not material.
Management does not anticipate a material impact to Net Income as a result of these various guarantees and indemnifications.
The following table summarizes Eversource parent's exposure to guarantees and indemnifications of its subsidiaries, including CL&P, NSTAR Electric, PSNH and WMECO, and guarantees to external parties, as of September 30, 2015:March 31, 2016:
|
|
|
|
| Maximum Exposure |
|
|
|
|
|
|
| Maximum Exposure |
|
|
| ||
Company | Company |
| Description |
| (in millions) |
| Expiration Dates | Company |
| Description |
| (in millions) |
| Expiration Dates | ||||
On behalf of subsidiaries: | On behalf of subsidiaries: |
|
|
|
|
|
|
|
| On behalf of subsidiaries: |
|
|
|
|
|
|
| |
| Various |
| Surety Bonds(1) |
| $ | 33.2 |
| 2015 - 2016 | Eversource Gas Transmission LLC |
| Access Northeast Project Capital Contributions Guarantee |
| $ | 187.9 |
| 2021 | ||
| Eversource Service and Rocky River Realty Company |
| Lease Payments for Vehicles and Real Estate |
| $ | 12.2 |
| 2019 and 2024 | Various |
| Surety Bonds(1) |
| $ | 38.7 |
| 2016 - 2018 | ||
|
|
|
|
|
|
|
|
|
| Eversource Service and Rocky River Realty Company |
| Lease Payments for Vehicles and Real Estate |
| $ | 10.3 |
| 2019 and 2024 | |
On behalf of external parties: |
|
|
|
|
|
|
|
| ||||||||||
| Purchaser of E.S. Boulos Company and a bonding company |
| E.S. Boulos Company Indemnification |
| $ | 38.2 |
| 2016 and 2020 | ||||||||||
| Algonquin Gas Transmission, LLC |
| Access Northeast project |
|
|
|
|
|
| |||||||||
| (owner of Access Northeast assets) |
| capital contributions guarantee |
| $ | 206.0 |
|
| 2021 |
(1)
Surety bond expiration dates reflect termination dates, the majority of which will be renewed or extended. Certain surety bonds contain credit ratings triggers that would require Eversource parent to post collateral in the event that the unsecured debt credit ratings of Eversource are downgraded.
C.
Spent Nuclear Fuel Litigation - Yankee Companies
The Yankee Companies have filed separate complaints against the DOE in the Court of Federal Claims seeking monetary damages resulting from the DOE's failure to provide for a permanent facility to store spent nuclear fuel pursuant to the terms of the 1983 spent fuel and high level waste disposal contracts between the Yankee Companies and the DOE. The court had previously awarded the Yankee Companies damages for Phase I and Phase II of litigation resulting from the DOE's failure to meet its contractual obligations. Phase I covered damages incurred in the years 1998 through 2002 and Phase II covered damages incurred in the years 2001 through 2008 for CYAPC and YAEC and from 2002 through 2008 for MYAPC.
DOE Phase III Damages - In August 2013, the Yankee Companies each filed subsequent lawsuits against the DOE seeking recovery of actual damages incurred in the years 2009 through 2012. The DOE Phase III trial concluded on July 1, 2015, followed by a post-trial briefing that concluded on October 14, 2015. On March 25, 2016, the court issued its decision, awarding CYAPC, YAEC and MYAPC damages of $32.6 million, $19.6 million and $24.6 million, respectively. In total, the Yankee Companies were awarded $76.8 million of the $77.9 million in damages sought by the Yankee Companies in Phase III. Any amounts refunded to Eversource utilities, which include CL&P, NSTAR Electric, PSNH and WMECO, will ultimately be refunded to utility customers. The parties have 60 days following the final judgment date to appeal. At this time, management cannot predict the timing or amount of damages that will ultimately be awarded.
D.
FERC ROE Complaints
FERC ROE Complaints I, II and III:Three separate complaints have been filed at FERC by combinations of New England state attorneys general, state regulatory commissions, consumer advocates, consumer groups, municipal parties and other parties (the "Complainants"). In the first complaint, filed in 2011,these three separate complaints, the Complainants alleged thatchallenged the NETOs' base ROE of 11.14 percent that had been utilized since 2006 was unjust and unreasonable, asserted that the rate was excessive due to changes in the capital markets, and sought an order to reduce it prospectively from the date of the final FERC order and for the 15-month period beginning October 1, 2011 to December 31, 2012 (the "first complaint refund period"). Inperiods stipulated in the second and third complaints, filed in 2012 and 2014, the Complainants challenged the NETOs' base ROE and sought refunds for the respective 15-month periods beginning December 27, 2012 and July 31, 2014.
separate complaints. In 2014, the FERC determined that theordered a 10.57 percent base ROE should be set at 10.57 percent for the first complaint refund period and prospectively from October 16, 2014, and that a utility's total or maximum ROE shouldshall not exceed the top of the new zone of reasonableness, which was set at 11.74 percent. The FERC ordered the NETOs to provide refunds to customers for the first complaint refund period and set the new base ROE of 10.57 percent prospectively from October 16, 2014. The NETOs and the Complainants sought rehearing from FERC. In late 2014, the NETOs made a compliance filing, which was challenged by the Complainants, and the Company began refunding amountsissuing refunds to customers from the first complaint period.
On March 3, 2015, FERC issued an order denying The Company has refunded all issues raised on rehearing by the NETOs and Complainants in the first complaint. The FERC order upheld the base ROE of 10.57 percent foramounts associated with the first complaint refund period and prospectively from October 16, 2014, and upheld that the utility's total ROE (the base ROEplus anyincentive adders) for the transmission assets to which the adder applies is capped at the top of the zone of reasonableness, which is currently set at 11.74 percent. period.
As a result of theclarifying informationdevelopments in this matter, the March 2015 order related toCompany recorded reserves across the application of the ROE cap, Eversource adjustedcomplaint periods at its reserveelectric subsidiaries in the first quarter of 2015 and recognized a pre-tax charge to earnings (excluding interest) of $20 million, of which $12.5 million was recorded at CL&P, $2.4 million at NSTAR Electric, $1 million at PSNH, and $4.1 million at WMECO. The pre-tax charge was recorded as a regulatory liability and as a reduction to Operating Revenues. The NETOs and Complainants have filed appeals for the first complaint to the D.C. Circuit Court of Appeals, which have been consolidated, and briefing is scheduled to be concluded in the second quarter of 2016.Appeals. A court decision is not expected until the second half ofin late 2016.
26
For the second and third complaint proceedings, hearings were held in late June and early July 2015 and briefs were filed in July and August 2015. Thecomplaints, the state parties, municipal utilities and FERC trial staff each believe that the base ROE should be reduced.reduced to an amount lower than 10.57 percent. The NETOs believe that the Complainants' positions are without merit,merit. On March 22, 2016, the FERC ALJ issued an initial decision on the second and third FERC ROE complaints. For the existing ROEssecond complaint period, the FERC ALJ recommended a zone of reasonableness of 7.12 percent to 10.42 percent and a base ROE of 9.59 percent. For the third complaint period, the FERC ALJ recommended a zone of reasonableness of 7.04 percent to 12.19 percent and a base ROE of 10.90 percent. The FERC ALJ also affirmed that the maximum ROE for transmission incentive projects should be maintained.the top of the zone of reasonableness. The NETOs filed briefs on April 21, 2016, in which the NETOs identified corrections and requested changes that should be made to the FERC ALJ’s initial recommendation is expected by December 30, 2015, and arecommendations. A final FERC order is expected in the third quarter of 2016.late 2016 or early 2017.
D.
NSTAR Electric Basic Service Bad Debt Adder
On January 7, 2015,The Company believes that the DPU issued an order concludingrange of potential loss for the second complaint period (the 15-month period beginning December 27, 2012) is from a base ROE of 10.57 percent to a base ROE of 9.59 percent. As the FERC ALJ initial decision on the third complaint recommended a base ROE of 10.90 percent, the Company concluded there is currently no range of potential loss for that NSTAR Electric had removed energy-related bad debt costs fromcomplaint period. Given the differences between the recommended base distribution rates effective January 1, 2006. As a resultROEs in the FERC ALJ’s initial decision on the second and third complaints, as well as other factors, the Company is unable to predict the outcome of the DPUfinal FERC order NSTAR Electric increasedon these complaints. The Company does not believe any base ROE outcome within the 10.57 percent to 9.59 percent range is more likely than the base ROEs used to record the current revenues and reserves, and therefore the Company believes that the current reserves for the second complaint period are appropriate at this time.
The impact of a 10 basis point change to the existing base ROE of 10.57 percent would affect Eversource's after-tax earnings by approximately $3 million for each of the 15-month second and third complaint periods. If the Company adjusted its regulatory assets and reduced operations and maintenance expense by $24.2 millionreserves based on the recommendations in the first quarter of 2015, resulting in after-tax earnings of $14.5 million. On May 5, 2015, NSTAR Electric filedFERC ALJ initial decision (for both the base ROE and maximum ROE for recovery of the energy-related bad debt costs regulatory asset from customers beginning July 1, 2015. On June 24, 2015, the DPU delayed the effective date of NSTAR Electric’s proposed rate increase from July 1, 2015 to November 1, 2015 to allowtransmission incentive projects) for the DPU staffsecond and third complaints, then it would result in an after-tax increase of approximately $34 million and an after-tax decrease of approximately $8 million, respectively, to review the reconciliations. NSTAR Electric requested recovery from customers effective January 1,existing reserves.
FERC ROE Complaint IV: On April 29, 2016, in briefsa fourth complaint was filed with the DPU in October 2015. On October 27, 2015,FERC. At this time, the DPU delayedCompany is unable to predict the effective dateoutcome of the rate increase from November 1, 2015 to December 1, 2015 to allow the DPU staff additional time to review the reconciliations. NSTAR Electric expects a decision from the DPU in the fourth quarter of 2015.this complaint.
27
E.
PSNH Generation Restructuring
On June 10, 2015, Eversource and PSNH entered into the 2015 Public Service Company of New Hampshire Restructuring and Rate Stabilization Agreement (the Agreement) with the New Hampshire Office of Energy and Planning, certain members of the Staff of the NHPUC staff, the Office of Consumer Advocate, two State Senators, and several other parties. The Agreement was filed with the NHPUC on the same day. Under the terms of the Agreement, PSNH has agreed to divest its generation assets upon NHPUC approval. The Agreement is designed to provide a resolution of issues pertaining to PSNH's generation assets in pending regulatory proceedings before the NHPUC. When implemented, theThe Agreement providesprovided for the Clean Air Project prudence proceeding to be resolved and all remaining Clean Air Project costs to be included in rates effective January 1, 2016. As part of the Agreement, PSNH has agreed to forego recovery of $25 million of the deferred equity return related to the Clean Air Project. In addition, PSNH will not seek a general distribution rate increase effective before July 1, 2017 and will contribute $5 million to create a clean energy fund, which will not be recoverable from its customers. In the second quarter of 2015, PSNH recorded the $5 million contribution as a long-term liability and an increase to Operations and Maintenance expense on the statements of income.
Upon completion of the divestiture process, all remaining stranded costs including any remaining deferred equity return in excess of the $25 million that PSNH has agreed to forego, will be recovered via bonds that will be secured by a non-bypassable charge or through other recoveries in rates billed to PSNH'sPSNH customers.
On January 26, 2016, Advisory Staff of the NHPUC and the parties to the Agreement filed a stipulation with the NHPUC agreeing that near-term divestiture of PSNH’s generation was in the public interest and that the Agreement should be approved. Implementation of the Agreement is subject to NHPUC approval, which is expected in early 2016.
If the NHPUC approves the settlements and the sale of the plants, the Company expects the plants will be sold in the first half of 2017. The sales price of the generating assets could be less than the carrying value, but the Company believes that full recovery of PSNH's generation assets is probable through a combination of cash flows during the remaining operating period, sales proceeds upon divestiture, and recovery of stranded costs in future rates.
9.
FAIR VALUE OF FINANCIAL INSTRUMENTS
The following methods and assumptions were used to estimate the fair value of each of the following financial instruments:
Preferred Stock and Long-Term Debt: The fair value of CL&P's and NSTAR Electric's preferred stock is based upon pricing models that incorporate interest rates and other market factors, valuations or trades of similar securities and cash flow projections. The fair value of long-term debt securities is based upon pricing models that incorporate quoted market prices for those issues or similar issues adjusted for market conditions, credit ratings of the respective companies and treasury benchmark yields. The fair values provided in the tables below are classified as Level 2 within the fair value hierarchy. Carrying amounts and estimated fair values are as follows:
|
| As of September 30, 2015 |
| As of December 31, 2014 |
| As of March 31, 2016 |
| As of December 31, 2015 | ||||||||||||||||
Eversource | Eversource | Carrying |
| Fair |
| Carrying |
| Fair | Eversource | Carrying |
| Fair |
| Carrying |
| Fair | ||||||||
(Millions of Dollars) | (Millions of Dollars) | Amount |
| Value |
| Amount |
| Value | (Millions of Dollars) | Amount |
| Value |
| Amount |
| Value | ||||||||
Preferred Stock Not | Preferred Stock Not | $ | 155.6 |
| $ | 157.3 |
| $ | 155.6 |
| $ | 153.6 | Preferred Stock Not | $ | 155.6 |
| $ | 155.8 |
| $ | 155.6 |
| $ | 157.9 |
Long-Term Debt | Long-Term Debt |
| 8,986.4 |
| 9,419.6 |
| 8,851.6 |
| 9,451.2 | Long-Term Debt |
| 9,523.6 |
| 10,190.4 |
| 9,034.5 |
| 9,425.9 |
|
| As of September 30, 2015 | ||||||||||||||||||||||
|
| CL&P |
| NSTAR Electric |
| PSNH |
| WMECO | ||||||||||||||||
|
| Carrying |
| Fair |
| Carrying |
| Fair |
| Carrying |
| Fair |
| Carrying |
| Fair | ||||||||
(Millions of Dollars) | Amount |
| Value |
| Amount |
| Value |
| Amount |
| Value |
| Amount |
| Value | |||||||||
Preferred Stock Not | $ | 116.2 |
| $ | 115.4 |
| $ | 43.0 |
| $ | 41.9 |
| $ | - |
| $ | - |
| $ | - |
| $ | - | |
Long-Term Debt |
| 2,975.3 |
|
| 3,285.1 |
|
| 1,792.7 |
|
| 1,931.3 |
|
| 1,076.3 |
|
| 1,135.5 |
|
| 577.8 |
|
| 613.3 | |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| As of December 31, 2014 | ||||||||||||||||||||||
|
| CL&P |
| NSTAR Electric |
| PSNH |
| WMECO | ||||||||||||||||
|
| Carrying |
| Fair |
| Carrying |
| Fair |
| Carrying |
| Fair |
| Carrying |
| Fair | ||||||||
(Millions of Dollars) | Amount |
| Value |
| Amount |
| Value |
| Amount |
| Value |
| Amount |
| Value | |||||||||
Preferred Stock Not | $ | 116.2 |
| $ | 112.0 |
| $ | 43.0 |
| $ | 41.6 |
| $ | - |
| $ | - |
| $ | - |
| $ | - | |
Long-Term Debt |
| 2,842.0 |
|
| 3,214.5 |
|
| 1,797.4 |
|
| 1,993.5 |
|
| 1,076.3 |
|
| 1,137.9 |
|
| 628.5 |
|
| 689.4 |
27
|
| As of March 31, 2016 | ||||||||||||||||||||||
|
| CL&P |
| NSTAR Electric |
| PSNH |
| WMECO | ||||||||||||||||
|
| Carrying |
| Fair |
| Carrying |
| Fair |
| Carrying |
| Fair |
| Carrying |
| Fair | ||||||||
(Millions of Dollars) | Amount |
| Value |
| Amount |
| Value |
| Amount |
| Value |
| Amount |
| Value | |||||||||
Preferred Stock Not | $ | 116.2 |
| $ | 113.7 |
| $ | 43.0 |
| $ | 42.1 |
| $ | - |
| $ | - |
| $ | - |
| $ | - | |
Long-Term Debt |
| 2,764.3 |
|
| 3,155.9 |
|
| 2,030.0 |
|
| 2,240.7 |
|
| 1,071.3 |
|
| 1,139.5 |
|
| 517.2 |
|
| 556.8 |
|
| As of December 31, 2015 | ||||||||||||||||||||||
|
| CL&P |
| NSTAR Electric |
| PSNH |
| WMECO | ||||||||||||||||
|
| Carrying |
| Fair |
| Carrying |
| Fair |
| Carrying |
| Fair |
| Carrying |
| Fair | ||||||||
(Millions of Dollars) | Amount |
| Value |
| Amount |
| Value |
| Amount |
| Value |
| Amount |
| Value | |||||||||
Preferred Stock Not | $ | 116.2 |
| $ | 114.9 |
| $ | 43.0 |
| $ | 43.0 |
| $ | - |
| $ | - |
| $ | - |
| $ | - | |
Long-Term Debt |
| 2,763.7 |
|
| 3,031.6 |
|
| 2,029.8 |
|
| 2,182.4 |
|
| 1,071.0 |
|
| 1,121.2 |
|
| 517.3 |
|
| 551.8 |
Derivative Instruments: Derivative instruments are carried at fair value. For further information, see Note 4, "Derivative Instruments," to the financial statements.
Other Financial Instruments:Marketable Securities: Investments in marketable securities are carried at fair value. For further information, see Note 5, "Marketable Securities," to the financial statements. The carrying value of other financial instruments included in current assets and current liabilities, including cash and cash equivalents and special deposits, approximates their fair value due to the short-term nature of these instruments.
See Note 1D, "Summary of Significant Accounting Policies - Fair Value Measurements," for the fair value measurement policy and the fair value hierarchy.
28
10.
ACCUMULATED OTHER COMPREHENSIVE INCOME/(LOSS)
The changes in accumulated other comprehensive income/(loss) by component, net of tax, is as follows:
|
| For the Nine Months Ended September 30, 2015 |
| For the Nine Months Ended September 30, 2014 |
| For the Three Months Ended March 31, 2016 |
| For the Three Months Ended March 31, 2015 | ||||||||||||||||||||||||||||||||||||||||
|
| Qualified |
| Unrealized |
|
|
|
|
| Qualified |
| Unrealized |
|
|
|
|
| Qualified |
| Unrealized |
|
|
|
|
| Qualified |
| Unrealized |
|
|
|
| ||||||||||||||||
|
| Cash Flow |
| Gains/(Losses) |
| Defined |
|
|
| Cash Flow |
| Gains on |
| Defined |
|
|
| Cash Flow |
| Gains/(Losses) |
| Defined |
|
|
| Cash Flow |
| Gains on |
| Defined |
|
| ||||||||||||||||
Eversource | Eversource | Hedging |
| on Marketable |
| Benefit |
|
|
| Hedging |
| Marketable |
| Benefit |
|
| Eversource | Hedging |
| on Marketable |
| Benefit |
|
|
| Hedging |
| Marketable |
| Benefit |
|
| ||||||||||||||||
(Millions of Dollars) | (Millions of Dollars) | Instruments |
| Securities |
| Plans |
| Total |
| Instruments |
| Securities |
| Plans |
| Total | (Millions of Dollars) | Instruments |
| Securities |
| Plans |
| Total |
| Instruments |
| Securities |
| Plans |
| Total | ||||||||||||||||
Balance as of Beginning of Period | Balance as of Beginning of Period | $ | (12.4) |
| $ | 0.7 |
| $ | (62.3) |
| $ | (74.0) |
| $ | (14.4) |
| $ | 0.4 |
| $ | (32.0) |
| $ | (46.0) | Balance as of Beginning of Period | $ | (10.3) |
| $ | (1.9) |
| $ | (54.6) |
| $ | (66.8) |
| $ | (12.4) |
| $ | 0.7 |
| $ | (62.3) |
| $ | (74.0) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||
OCI Before Reclassifications | OCI Before Reclassifications |
| - |
| (3.9) |
| (0.4) |
|
| (4.3) |
|
| - |
| 0.2 |
| 1.2 |
|
| 1.4 | OCI Before Reclassifications |
| - |
| 0.2 |
| - |
|
| 0.2 |
|
| - |
| 0.1 |
| - |
|
| 0.1 | ||||||||
Amounts Reclassified from AOCI | Amounts Reclassified from AOCI |
| 1.5 |
|
| - |
|
| 3.3 |
|
| 4.8 |
|
| 1.5 |
|
| - |
|
| 2.9 |
|
| 4.4 | Amounts Reclassified from AOCI |
| 0.5 |
|
| - |
|
| 0.9 |
|
| 1.4 |
|
| 0.5 |
|
| - |
|
| 1.0 |
|
| 1.5 |
Net OCI | Net OCI |
| 1.5 |
|
| (3.9) |
|
| 2.9 |
|
| 0.5 |
|
| 1.5 |
|
| 0.2 |
|
| 4.1 |
|
| 5.8 | Net OCI |
| 0.5 |
|
| 0.2 |
|
| 0.9 |
|
| 1.6 |
|
| 0.5 |
|
| 0.1 |
|
| 1.0 |
|
| 1.6 |
Balance as of End of Period | Balance as of End of Period | $ | (10.9) |
| $ | (3.2) |
| $ | (59.4) |
| $ | (73.5) |
| $ | (12.9) |
| $ | 0.6 |
| $ | (27.9) |
| $ | (40.2) | Balance as of End of Period | $ | (9.8) |
| $ | (1.7) |
| $ | (53.7) |
| $ | (65.2) |
| $ | (11.9) |
| $ | 0.8 |
| $ | (61.3) |
| $ | (72.4) |
Eversource's qualified cash flow hedging instruments represent interest rate swap agreements on debt issuances that were settled in prior years. The settlement amount was recorded in AOCI and is being amortized into Net Income over the term of the underlying debt instrument. CL&P, PSNH and WMECO continue to amortize interest rate swaps settled in prior years from AOCI into Interest Expense over the remaining life of the associated long-term debt, whichdebt. Such interest rate swaps are not material to their respective financial statements.
The amortization expense of actuarial gains and losses on the defined benefit plans is amortized from AOCI into Operations and Maintenance expense over the average future employee service period, and is reflected in amounts reclassified from AOCI. The related tax effects of the reclassification adjustments are not material to the financial statements for the nine months ended September 30, 2015 and 2014.
11.
COMMON SHARES
The following table sets forth the Eversource parent common shares and the shares of common stock of CL&P, NSTAR Electric, PSNH and WMECO that were authorized and issued andas well as the respective per share par values:
| Shares | Shares | ||||||||||||||
|
|
|
| Authorized as of |
|
|
|
|
|
|
| Authorized as of |
|
|
|
|
| Per Share |
| September 30, 2015 and |
| Issued as of | Per Share |
| March 31, 2016 and |
| Issued as of | ||||||
| Par Value |
| December 31, 2014 |
| September 30, 2015 |
| December 31, 2014 | Par Value |
| December 31, 2015 |
| March 31, 2016 |
| December 31, 2015 | ||
Eversource | $ | 5 |
| 380,000,000 |
| 333,862,615 |
| 333,359,172 | $ | 5 |
| 380,000,000 |
| 333,878,402 |
| 333,862,615 |
CL&P | $ | 10 |
| 24,500,000 |
| 6,035,205 |
| 6,035,205 | $ | 10 |
| 24,500,000 |
| 6,035,205 |
| 6,035,205 |
NSTAR Electric | $ | 1 |
| 100,000,000 |
| 100 |
| 100 | $ | 1 |
| 100,000,000 |
| 100 |
| 100 |
PSNH | $ | 1 |
| 100,000,000 |
| 301 |
| 301 | $ | 1 |
| 100,000,000 |
| 301 |
| 301 |
WMECO | $ | 25 |
| 1,072,471 |
| 434,653 |
| 434,653 | $ | 25 |
| 1,072,471 |
| 434,653 |
| 434,653 |
As of September 30, 2015both March 31, 2016 and December 31, 2014,2015, there were 16,671,366 and 16,375,835 Eversource common shares held as treasury shares, respectively.shares. As of September 30, 2015March 31, 2016 and December 31, 2014,2015, Eversource common shares outstanding were 317,207,036 and 317,191,249, and 316,983,337, respectively. In May 2015, the Company repurchased 532,521 treasury shares at a share price of $47.94.
28
12.
COMMON SHAREHOLDERS' EQUITY AND NONCONTROLLING INTERESTS
Dividends on the preferred stock of CL&P and NSTAR Electric totaled $1.9 million for the three months ended September 30, 2015March 31, 2016 and 2014 and $5.6 million for the nine months ended September 30, 2015 and 2014.2015. These dividends were presented as Net Income Attributable to Noncontrolling Interests on the Eversource statements of income. Noncontrolling Interest – Preferred Stock of Subsidiaries on the Eversource balance sheets totaled $155.6 million as of March 31, 2016 and December 31, 2015. Common Shareholders' Equity was fully attributable to the parent and Noncontrolling Interest – Preferred Stock of Subsidiaries was fully attributable to the noncontrolling interest on the Eversource balance sheets.
13.
EARNINGS PER SHARE
Basic EPS is computed based upon the weighted average number of common shares outstanding during each period. Diluted EPS is computed on the basis of the weighted average number of common shares outstanding plus the potential dilutive effect of certain share-based compensation awards as if they were converted into common shares. The dilutive effect of unvested RSU and performance share awards and unexercised stock options is calculated using the treasury stock method. RSU and performance share awards are included in basic weighted average common shares outstanding as of the date that all necessary vesting conditions have been satisfied. For the three and nine months ended September 30,March 31, 2016 and 2015, there were 5,894 and 1,965 antidilutive share awards excluded from the computation, respectively. For the three and nine months ended September 30, 2014, there were no antidilutive share awards excluded from the computation.
The following table sets forth the components of basic and diluted EPS:
Eversource | For the Three Months Ended |
| For the Nine Months Ended | |||||||||
(Millions of Dollars, except share information) | September 30, 2015 |
| September 30, 2014 |
| September 30, 2015 |
| September 30, 2014 | |||||
Net Income Attributable to Common Shareholders | $ | 235.9 |
| $ | 234.6 |
| $ | 696.7 |
| $ | 597.9 | |
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted Average Common Shares Outstanding: |
|
|
|
|
|
|
|
|
|
|
| |
| Basic |
| 317,452,212 |
|
| 316,340,691 |
|
| 317,296,107 |
|
| 315,941,904 |
| Dilutive Effect |
| 953,057 |
|
| 1,214,234 |
|
| 1,099,935 |
|
| 1,244,586 |
| Diluted |
| 318,405,269 |
|
| 317,554,925 |
|
| 318,396,042 |
|
| 317,186,490 |
Basic EPS | $ | 0.74 |
| $ | 0.74 |
| $ | 2.20 |
| $ | 1.89 | |
Diluted EPS | $ | 0.74 |
| $ | 0.74 |
| $ | 2.19 |
| $ | 1.89 |
29
RSUs and performance shares are included in basic weighted average common shares outstanding as of the date that all necessary vesting conditions have been satisfied. The dilutive effect of unvested RSUs and performance shares is calculated using the treasury stock method. Assumed proceeds of these units under the treasury stock method consist of the remaining compensation cost to be recognized and a theoretical tax benefit. The theoretical tax benefit is calculated as the tax impact of the intrinsic value of the units (the difference between the market value of the average units outstanding for the period, using the average market price during the period, and the grant date market value).
The dilutive effect of stock options to purchase common shares is also calculated using the treasury stock method. Assumed proceeds for stock options consist of cash proceeds that would be received upon exercise, and a theoretical tax benefit. The theoretical tax benefit is calculated as the tax impact of the intrinsic value of the stock options (the difference between the market value of the average stock options outstanding for the period, using the average market price during the period, and the exercise price).
Eversource | For the Three Months Ended | |||||
(Millions of Dollars, except share information) | March 31, 2016 |
| March 31, 2015 | |||
Net Income Attributable to Common Shareholders | $ | 244.2 |
| $ | 253.3 | |
|
|
|
|
|
|
|
Weighted Average Common Shares Outstanding: |
|
|
|
|
| |
| Basic |
| 317,517,141 |
|
| 317,090,841 |
| Dilutive Effect |
| 963,909 |
|
| 1,400,347 |
| Diluted |
| 318,481,050 |
|
| 318,491,188 |
Basic and Diluted EPS | $ | 0.77 |
| $ | 0.80 |
14.
SEGMENT INFORMATION
Presentation: Eversource is organized betweeninto the Electric Distribution, Electric Transmission and Natural Gas Distribution reportable segments and Other based on a combination of factors, including the characteristics of each segments' products and services, the sources of operating revenues and expenses and the regulatory environment in which each segment operates. These reportable segments represent substantially all of Eversource's total consolidated revenues. Revenues from the sale of electricity and natural gas primarily are derived from residential, commercial and industrial customers and are not dependent on any single customer. The Electric Distribution reportable segment includes the generation activities of PSNH and WMECO.
The remainder of Eversource's operations is presented as Other in the tables below and primarily consists of 1) the equity in earnings of Eversource parent from its subsidiaries and intercompany interest income, both of which are eliminated in consolidation, and interest expense related to the debt of Eversource parent, 2) the revenues and expenses of Eversource Service, most of which are eliminated in consolidation, 3) the operations of CYAPC and YAEC, 4) the results of Eversource Gas Transmission LLC and 5) the results of other unregulated subsidiaries, which are not part of its core business.
Cash flows used for investments in plant included in the segment information below are cash capital expenditures that do not include amounts incurred but not paid, cost of removal, AFUDC related to equity funds, and the capitalized portions of pension expense.
Eversource's reportable segments are determined based upon the level at which Eversource's chief operating decision maker assesses performance and makes decisions about the allocation of company resources. Each of Eversource's subsidiaries, including CL&P, NSTAR Electric, PSNH and WMECO, has one reportable segment. Eversource's operating segments and reporting units are consistent with its reportable business segments.
Eversource's segment information is as follows:
|
| For the Three Months Ended September 30, 2015 |
| For the Three Months Ended March 31, 2016 | ||||||||||||||||||||||||||||||||
Eversource | Eversource | Electric |
| Natural Gas |
| Electric |
|
|
|
|
|
| Eversource | Electric |
| Natural Gas |
| Electric |
|
|
|
|
|
| ||||||||||||
(Millions of Dollars) | (Millions of Dollars) | Distribution |
| Distribution |
| Transmission |
| Other |
| Eliminations |
| Total | (Millions of Dollars) | Distribution |
| Distribution |
| Transmission |
| Other |
| Eliminations |
| Total | ||||||||||||
Operating Revenues | Operating Revenues | $ | 1,543.7 |
| $ | 106.2 |
| $ | 270.4 |
| $ | 211.6 |
| $ | (198.8) |
| $ | 1,933.1 | Operating Revenues | $ | 1,436.1 |
| $ | 342.6 |
| $ | 283.3 |
| $ | 214.2 |
| $ | (220.6) |
| $ | 2,055.6 |
Depreciation and Amortization | Depreciation and Amortization |
| (84.5) |
| (17.5) |
| (42.4) |
| (7.1) |
| 0.5 |
| (151.0) | Depreciation and Amortization |
| (127.7) |
| (15.8) |
| (45.1) |
| (6.9) |
| 0.5 |
| (195.0) | ||||||||||
Other Operating Expenses | Other Operating Expenses |
| (1,140.8) |
|
| (92.7) |
|
| (78.3) |
|
| (199.6) |
|
| 198.5 |
|
| (1,312.9) | Other Operating Expenses |
| (1,088.9) |
|
| (233.5) |
|
| (73.0) |
|
| (197.3) |
|
| 220.6 |
|
| (1,372.1) |
Operating Income | Operating Income |
| 318.4 |
|
| (4.0) |
|
| 149.7 |
|
| 4.9 |
|
| 0.2 |
|
| 469.2 | Operating Income |
| 219.5 |
|
| 93.3 |
|
| 165.2 |
|
| 10.0 |
|
| 0.5 |
|
| 488.5 |
Interest Expense | Interest Expense |
| (47.4) |
| (9.2) |
| (25.9) |
| (11.2) |
| 1.2 |
| (92.5) | Interest Expense |
| (48.0) |
| (10.1) |
| (28.0) |
| (14.1) |
| 2.0 |
| (98.2) | ||||||||||
Other Income, Net |
| 1.9 |
| (0.2) |
| 3.8 |
| 241.9 |
| (242.2) |
| 5.2 | ||||||||||||||||||||||||
Net Income Attributable to Common Shareholders | $ | 167.5 |
| $ | (3.7) |
| $ | 78.0 |
| $ | 234.9 |
| $ | (240.8) |
| $ | 235.9 | |||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||
|
| For the Nine Months Ended September 30, 2015 | ||||||||||||||||||||||||||||||||||
Eversource | Electric |
| Natural Gas |
| Electric |
|
|
|
|
|
| |||||||||||||||||||||||||
(Millions of Dollars) | Distribution |
| Distribution |
| Transmission |
| Other |
| Eliminations |
| Total | |||||||||||||||||||||||||
Operating Revenues | $ | 4,686.5 |
| $ | 799.6 |
| $ | 787.2 |
| $ | 655.2 |
| $ | (664.9) |
| $ | 6,263.6 | |||||||||||||||||||
Depreciation and Amortization |
| (342.1) |
| (53.4) |
| (122.6) |
| (21.5) |
| 1.6 |
| (538.0) | ||||||||||||||||||||||||
Other Operating Expenses |
| (3,535.7) |
|
| (631.5) |
|
| (225.5) |
|
| (619.4) |
|
| 665.2 |
|
| (4,346.9) | |||||||||||||||||||
Operating Income |
| 808.7 |
|
| 114.7 |
|
| 439.1 |
|
| 14.3 |
|
| 1.9 |
|
| 1,378.7 | |||||||||||||||||||
Interest Expense |
| (140.6) |
| (27.2) |
| (79.8) |
| (35.4) |
| 3.4 |
| (279.6) | ||||||||||||||||||||||||
Other Income, Net |
| 9.6 |
| (0.1) |
| 11.9 |
| 777.0 |
| (774.5) |
| 23.9 | ||||||||||||||||||||||||
Other Income/(Loss), Net | Other Income/(Loss), Net |
| - |
| (0.3) |
| 2.6 |
| 305.5 |
| (305.8) |
| 2.0 | |||||||||||||||||||||||
Net Income Attributable to Common Shareholders | Net Income Attributable to Common Shareholders | $ | 418.9 |
| $ | 57.3 |
| $ | 225.0 |
| $ | 764.7 |
| $ | (769.2) |
| $ | 696.7 | Net Income Attributable to Common Shareholders | $ | 108.4 |
| $ | 50.9 |
| $ | 85.7 |
| $ | 302.5 |
| $ | (303.3) |
| $ | 244.2 |
Cash Flows Used for Investments in Plant | Cash Flows Used for Investments in Plant | $ | 506.5 |
| $ | 120.0 |
| $ | 493.9 |
| $ | 56.9 |
| $ | - |
| $ | 1,177.3 | Cash Flows Used for Investments in Plant | $ | 184.2 |
| $ | 52.1 |
| $ | 172.4 |
| $ | 22.8 |
| $ | - |
| $ | 431.5 |
|
| For the Three Months Ended September 30, 2014 | ||||||||||||||||
Eversource | Electric |
| Natural Gas |
| Electric |
|
|
|
|
|
|
|
|
| ||||
(Millions of Dollars) | Distribution |
| Distribution |
| Transmission |
| Other |
| Eliminations |
| Total | |||||||
Operating Revenues | $ | 1,502.6 |
| $ | 109.2 |
| $ | 262.5 |
| $ | 211.2 |
| $ | (193.0) |
| $ | 1,892.5 | |
Depreciation and Amortization |
| (71.7) |
|
| (16.4) |
|
| (37.4) |
|
| (13.8) |
|
| 8.6 |
|
| (130.7) | |
Other Operating Expenses |
| (1,141.5) |
|
| (98.4) |
|
| (74.2) |
|
| (192.4) |
|
| 185.6 |
|
| (1,320.9) | |
Operating Income/(Loss) |
| 289.4 |
|
| (5.6) |
|
| 150.9 |
|
| 5.0 |
|
| 1.2 |
|
| 440.9 | |
Interest Expense |
| (49.2) |
|
| (8.5) |
|
| (24.5) |
|
| (8.6) |
|
| 1.0 |
|
| (89.8) | |
Other Income, Net |
| 9.3 |
|
| 0.1 |
|
| 2.7 |
|
| 226.4 |
|
| (226.6) |
|
| 11.9 | |
Net Income/Loss) Attributable to Common Shareholders | $ | 153.4 |
| $ | (9.9) |
| $ | 88.1 |
| $ | 228.3 |
| $ | (225.3) |
| $ | 234.6 | |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
29
|
| For the Three Months Ended March 31, 2015 | ||||||||||||||||
Eversource | Electric |
| Natural Gas |
| Electric |
|
|
|
|
|
|
|
|
| ||||
(Millions of Dollars) | Distribution |
| Distribution |
| Transmission |
| Other |
| Eliminations |
| Total | |||||||
Operating Revenues | $ | 1,760.1 |
| $ | 507.4 |
| $ | 249.0 |
| $ | 240.0 |
| $ | (243.1) |
| $ | 2,513.4 | |
Depreciation and Amortization |
| (159.1) |
|
| (18.2) |
|
| (40.4) |
|
| (7.2) |
|
| 0.5 |
|
| (224.4) | |
Other Operating Expenses |
| (1,342.8) |
|
| (388.5) |
|
| (74.1) |
|
| (229.2) |
|
| 243.1 |
|
| (1,791.5) | |
Operating Income |
| 258.2 |
|
| 100.7 |
|
| 134.5 |
|
| 3.6 |
|
| 0.5 |
|
| 497.5 | |
Interest Expense |
| (47.6) |
|
| (9.0) |
|
| (27.6) |
|
| (11.8) |
|
| 1.2 |
|
| (94.8) | |
Other Income/(Loss), Net |
| 2.2 |
|
| (0.2) |
|
| 2.9 |
|
| 314.9 |
|
| (314.1) |
|
| 5.7 | |
Net Income Attributable to Common Shareholders | $ | 130.6 |
| $ | 55.6 |
| $ | 66.6 |
| $ | 312.9 |
| $ | (312.4) |
| $ | 253.3 | |
Cash Flows Used for Investments in Plant | $ | 172.5 |
| $ | 30.0 |
| $ | 150.0 |
| $ | 10.1 |
| $ | - |
| $ | 362.6 | |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The following table summarizes Eversource's segmented total assets: | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Eversource | Electric |
| Natural Gas |
| Electric |
|
|
|
|
|
|
|
|
| ||||
(Millions of Dollars) | Distribution |
| Distribution |
| Transmission |
| Other |
| Eliminations |
| Total | |||||||
As of March 31, 2016 | $ | 17,999.8 |
| $ | 3,134.1 |
| $ | 8,127.2 |
| $ | 13,335.6 |
| $ | (11,884.2) |
| $ | 30,712.5 | |
As of December 31, 2015 |
| 17,981.3 |
|
| 3,104.5 |
|
| 8,019.3 |
|
| 13,256.7 |
|
| (11,781.5) |
|
| 30,580.3 |
30
|
| For the Nine Months Ended September 30, 2014 | ||||||||||||||||
Eversource | Electric |
| Natural Gas |
| Electric |
|
|
|
|
|
|
|
|
| ||||
(Millions of Dollars) | Distribution |
| Distribution |
| Transmission |
| Other |
| Eliminations |
| Total | |||||||
Operating Revenues | $ | 4,350.4 |
| $ | 737.5 |
| $ | 721.4 |
| $ | 568.1 |
| $ | (516.7) |
| $ | 5,860.7 | |
Depreciation and Amortization |
| (309.9) |
|
| (51.1) |
|
| (111.4) |
|
| (28.3) |
|
| 12.7 |
|
| (488.0) | |
Other Operating Expenses |
| (3,343.9) |
|
| (586.2) |
|
| (211.5) |
|
| (534.1) |
|
| 505.6 |
|
| (4,170.1) | |
Operating Income |
| 696.6 |
|
| 100.2 |
|
| 398.5 |
|
| 5.7 |
|
| 1.6 |
|
| 1,202.6 | |
Interest Expense |
| (143.8) |
|
| (25.6) |
|
| (78.8) |
|
| (27.2) |
|
| 3.2 |
|
| (272.2) | |
Other Income, Net |
| 13.6 |
|
| 0.2 |
|
| 6.9 |
|
| 657.9 |
|
| (659.5) |
|
| 19.1 | |
Net Income Attributable to Common Shareholders | $ | 349.1 |
| $ | 44.2 |
| $ | 206.8 |
| $ | 653.4 |
| $ | (655.6) |
| $ | 597.9 | |
Cash Flows Used for Investments in Plant | $ | 480.1 |
| $ | 120.6 |
| $ | 469.9 |
| $ | 46.9 |
| $ | - |
| $ | 1,117.5 | |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The following table summarizes Eversource's segmented total assets: | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Eversource | Electric |
| Natural Gas |
| Electric |
|
|
|
|
|
|
|
|
| ||||
(Millions of Dollars) | Distribution |
| Distribution |
| Transmission |
| Other |
| Eliminations |
| Total | |||||||
As of September 30, 2015 | $ | 17,836.8 |
| $ | 2,986.0 |
| $ | 7,773.7 |
| $ | 12,750.0 |
| $ | (11,300.5) |
| $ | 30,046.0 | |
As of December 31, 2014 |
| 17,563.4 |
|
| 3,030.9 |
|
| 7,625.6 |
|
| 12,682.5 |
|
| (11,124.4) |
|
| 29,778.0 |
31
EVERSOURCE ENERGY AND SUBSIDIARIES
Management's Discussion and Analysis of Financial Condition and Results of Operations
The following discussion and analysis should be read in conjunction with our unaudited condensed consolidated financial statements and related combined notes included in this combined Quarterly Report on Form 10-Q as well as the First and Second Quarter 2015 Quarterly Reports on Form 10-Q, and the 2014combined Annual Report on Form 10-K. References in this Form 10-Q to "Eversource," the "Company," "we," "us," and "our" refer to Eversource Energy and its consolidated subsidiaries. All per share amounts are reported on a diluted basis. The unaudited condensed consolidated financial statements of Eversource, NSTAR Electric and PSNH and the unaudited condensed financial statements of CL&P and WMECO are herein collectively referred to as the "financial statements."
Refer to the Glossary of Terms included in this combined Quarterly Report on Form 10-Q for abbreviations and acronyms used throughout thisManagement's Discussion and Analysis of Financial Condition and Results of Operations.
The only common equity securities that are publicly traded are common shares of Eversource. The earnings and EPS of each business discussed below do not represent a direct legal interest in the assets and liabilities of such business but rather represent a direct interest in our assets and liabilities as a whole. EPS by business is a financial measure not recognized under GAAP that is calculated by dividing the Net Income Attributable to Common Shareholders of each business by the weighted average diluted Eversource common shares outstanding for the period. The discussiontabular presentations below also includesinclude non-GAAP financial measures referencing our thirdfirst quarter and first nine months of 2015 and 2014 earnings and EPS excluding certain integration costs incurred by Eversource parent and our regulated companies.parent. We use these non-GAAP financial measures to evaluate and to provide details of earnings by business and to more fully compare and explain our thirdfirst quarter and first nine months of 2015 and 2014 results without including the impact of these items. Due to the nature and significance of these items on Net Income Attributable to Common Shareholders, we believe that the non-GAAP presentation is more representative of our financial performance and provides additional and useful information to readers of this report in analyzing historical and future performance by business. These non-GAAP financial measures should not be considered as an alternative to reported Net Income Attributable to Common Shareholders or EPS determined in accordance with GAAP as an indicator of operating performance.
Reconciliations of the above non-GAAP financial measures to the most directly comparable GAAP measures of consolidated diluted EPS and Net Income Attributable to Common Shareholders are included under "Financial Condition and Business Analysis – Overview – Consolidated" and "Financial Condition and Business Analysis – Overview – Regulated Companies" in thisManagement's Discussion and Analysis of Financial Condition and Results of Operations, herein.
Forward-Looking Statements:From time to time we make statements concerning our expectations, beliefs, plans, objectives, goals, strategies, assumptions of future events, future financial performance or growth and other statements that are not historical facts. These statements are "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. You can generally identify our forward-looking statements through the use of words or phrases such as "estimate," "expect," "anticipate," "intend," "plan," "project," "believe," "forecast," "should," "could," and other similar expressions. Forward-looking statements are based on the current expectations, estimates, assumptions or projections of management and are not guarantees of future performance. These expectations, estimates, assumptions or projections may vary materially from actual results. Accordingly, any such statements are qualified in their entirety by reference to, and are accompanied by, the following important factors that could cause our actual results to differ materially from those contained in our forward-looking statements, including, but not limited to:
·
cyber breaches, acts of war or terrorism, or grid disturbances,
·
actions or inaction of local, state and federal regulatory, public policy and taxing bodies,
·
changes in business and economic conditions, including their impact on interest rates, bad debt expense, and demand for our products and services, which could include disruptive technology related to our current or future business model,
·
changes in economic conditions, including impact on interest rates, tax policies, and customer demand and payment ability,
·
fluctuations in weather patterns,
·
changes in laws, regulations or regulatory policy,
·
changes in levels or timing of capital expenditures,
·
disruptions in the capital markets or other events that make our access to necessary capital more difficult or costly,
·
developments in legal or public policy doctrines,
·
technological developments,
·
changes in accounting standards and financial reporting regulations,
·
actions of rating agencies, and
·
other presently unknown or unforeseen factors.
Other risk factors are detailed in our reports filed with the SEC and updated as necessary, and we encourage you to consult such disclosures.
All such factors are difficult to predict, contain uncertainties that may materially affect our actual results and are beyond our control. You should not place undue reliance on the forward-looking statements, each speaks only as of the date on which such statement is made, and we undertake no obligation to update any forward-looking statement or statements to reflect events or circumstances after the date on which such statement is made or to reflect the occurrence of unanticipated events. New factors emerge from time to time and it is not possible for us to predict all of such factors, nor can we assess the impact of each such factor on the business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements. For more information, see Item 1A,, Risk Factors, included in this combined Quarterly Report on Form 10-Q and in Eversource's 2014Eversource’s 2015 combined Annual Report on Form 10-K. This combined Quarterly Report on Form 10-Q and Eversource's 2014Eversource’s 2015 combined Annual Report on Form 10-K also describesdescribe material contingencies and critical accounting policies in the
32
accompanyingManagement's Discussion and Analysis of Financial Condition and Results of OperationsandCombined Notes to Condensed Consolidated Financial Statements (Unaudited). We encourage you to review these items.
31
Financial Condition and Business Analysis
Executive Summary
The following items in this executive summary are explained in more detail in this combined Quarterly Report on Form 10-Q:
Results:
·
We earned $235.9$244.2 million, or $0.74 per share, in the third quarter of 2015 and $696.7 million, or $2.19$0.77 per share in the first nine monthsquarter of 2015,2016, compared with $234.6$253.3 million, or $0.74 per share, in the third quarter of 2014 and $597.9 million, or $1.89$0.80 per share in the first nine months of 2014. Excluding integration costs, we earned $237.6 million, or $0.75 per share, in the third quarter of 2015 and $704.5 million, or $2.21 per share, in the first nine months of 2015, compared with $237.6 million, or $0.75 per share, in the third quarter of 2014 and $611.3 million, or $1.93 per share, in the first nine months of 2014.2015.
·
Our electric distribution segment, which includes generation, earned $167.7$108.4 million, or $0.53 per share, in the third quarter of 2015 and $419.8 million, or $1.32$0.34 per share in the first nine monthsquarter of 2015,2016, compared with earnings of $153.4$130.6 million, or $0.48 per share, in the third quarter of 2014 and $349.1 million, or $1.10$0.41 per share in the first nine monthsquarter of 2014.2015. Our electric transmission segment earned $78$85.7 million, or $0.24 per share, in the third quarter of 2015 and $225 million, or $0.70$0.27 per share in the first nine monthsquarter of 2015,2016, compared with $88.1$66.6 million, or $0.28 per share, in the third quarter of 2014 and $206.8 million, or $0.65$0.21 per share in the first nine monthsquarter of 2014.2015. Our natural gas distribution segment had a net loss of $3.5earned $50.9 million, or $0.01$0.16 per share in the thirdfirst quarter of 2015 and earnings of $57.52016, compared with $55.6 million, or $0.18 per share in the first nine months of 2015, compared with a net loss of $9.9 million, or $0.03 per share, in the third quarter of 2014 and earnings of $44.2 million, or $0.14 per share, in the first nine months of 2014. These third quarter and first nine months 2015 results exclude $0.4 million and $1.1 million, respectively, of after-tax integration costs.
·
Eversource parent and other companies had a net loss of $4.6 million, or $0.01 per share, in the third quarter of 2015 and earnings of $2.2 million, or $0.01 per share, in the first nine months of 2015, compared with earnings of $6 million, or $0.02 per share, and $11.2 million, or $0.04 per share, in the third quarter and the first nine months of 2014, respectively. Third quarter and the first nine months of 2015 results exclude $1.3 million, or $0.01 per share, and $6.7 million, or $0.02 per share, respectively, of after-tax integration costs. Third quarter and the first nine months of 2014 results exclude $3 million, or $0.01 per share, and $13.4 million, or $0.04 per share, respectively, of after-tax integration costs.2015.
Liquidity:
·
Cash flows provided by operating activities totaled $1.3 billion$500 million in the first nine monthsquarter of 2015,2016, compared with $1.4 billion$491.5 million in the first nine monthsquarter of 2014.2015. Investments in property, plant and equipment totaled $1.2 billion$431.5 million in the first nine monthsquarter of 2015,2016, compared with $1.1 billion$362.6 million in the first nine monthsquarter of 2014.2015. Cash and cash equivalents totaled $35.8$51 million as of September 30, 2015,March 31, 2016, compared with $38.7$23.9 million as of December 31, 2014.2015.
·
In March 2016, Eversource parent issued $250 million of 2.50 percent Series I Senior Notes, due to mature in 2021, and $250 million of 3.35 percent Series J Senior Notes, due to mature in 2026. The proceeds, net of issuance costs, were used to repay short-term borrowings
under the Eversource parent commercial paper program.
·
On September 1, 2015,May 4, 2016, our Board of Trustees approved a common share dividend payment of $0.4175$0.445 per share, which was paidpayable on SeptemberJune 30, 20152016 to shareholders of record as of September 14, 2015.May 31, 2016.
Strategic, Legislative, Regulatory, Policy and Other Items:
·
On July 21, 2015,March 22, 2016, the DOEFERC ALJ issued an initial decision on the draft Environmental Impact Statement (EIS)second and third FERC ROE complaints. The FERC ALJ recommended a base ROE of 9.59 percent and a zone of reasonableness of 7.12 percent to 10.42 percent and a base ROE of 10.90 percent and a zone of reasonableness of 7.04 percent to 12.19 percent for Northern Pass representingthe second and third complaints, respectively. The FERC ALJ also affirmed that the maximum ROE for transmission incentive projects should be 10.42 percent for the second complaint and 12.19 percent for the third complaint. A final FERC order is expected in late 2016 or early 2017. We did not adjust our ROEs or reserves and believe that the current ROEs and reserves are appropriate at this time.
·
On April 29, 2016, a key milestone infourth complaint was filed with the permitting process. On August 18, 2015,FERC. At this time, we are unable to predict the revised route was announced including burying 52 milesoutcome of the route underground in and around the White Mountain National Forest region. As a result, the NPT project estimate has increased from $1.4 billion to $1.6 billion. On October 19, 2015, NPT filed the New Hampshire Site Evaluation Committee (NH SEC) application. this complaint.
Overview
Consolidated: ABelow is a summary of our earnings by business, which also reconciles the non-GAAP financial measuresmeasure of consolidated non-GAAP earnings and EPS, as well as EPS by business to the most directly comparable GAAP measuresmeasure of diluted EPS, for the first quarters of 2016 and 2015. Also included in the summary for the first quarter of 2015 is a reconciliation of the non-GAAP financial measure of consolidated non-GAAP earnings to the most directly comparable GAAP measure of consolidated Net Income Attributable to Common Shareholders and diluted EPS, for the third quarter and first nine months of 2015 and 2014, is as follows:Shareholders.
|
| For the Three Months Ended September 30, |
| For the Nine Months Ended September 30, | ||||||||||||||||||||
(Millions of Dollars, Except |
| 2015 |
| 2014 |
| 2015 |
| 2014 | ||||||||||||||||
Per Share Amounts) |
| Amount |
| Per Share |
| Amount |
| Per Share |
| Amount |
| Per Share |
| Amount |
| Per Share | ||||||||
Net Income Attributable to |
| $ | 235.9 |
| $ | 0.74 |
| $ | 234.6 |
| $ | 0.74 |
| $ | 696.7 |
| $ | 2.19 |
| $ | 597.9 |
| $ | 1.89 |
|
| $ | 242.2 |
| $ | 0.76 |
| $ | 231.6 |
| $ | 0.73 |
| $ | 702.3 |
| $ | 2.20 |
| $ | 600.1 |
| $ | 1.89 |
ES Parent and Other Companies |
|
| (4.6) |
|
| (0.01) |
|
| 6.0 |
|
| 0.02 |
|
| 2.2 |
|
| 0.01 |
|
| 11.2 |
|
| 0.04 |
Non-GAAP Earnings |
|
| 237.6 |
|
| 0.75 |
|
| 237.6 |
|
| 0.75 |
|
| 704.5 |
|
| 2.21 |
|
| 611.3 |
|
| 1.93 |
Integration Costs (after-tax) |
|
| (1.7) |
|
| (0.01) |
|
| (3.0) |
|
| (0.01) |
|
| (7.8) |
|
| (0.02) |
|
| (13.4) |
|
| (0.04) |
Net Income Attributable to |
| $ | 235.9 |
| $ | 0.74 |
| $ | 234.6 |
| $ | 0.74 |
| $ | 696.7 |
| $ | 2.19 |
| $ | 597.9 |
| $ | 1.89 |
|
| For the Three Months Ended March 31, | |||||||||||
|
| 2016 |
| 2015 | |||||||||
(Millions of Dollars, Except Per Share Amounts) |
| Amount |
| Per Share |
| Amount |
| Per Share | |||||
Net Income Attributable to Common Shareholders (GAAP) |
| $ | 244.2 |
| $ | 0.77 |
| $ | 253.3 |
| $ | 0.80 | |
|
| $ | 245.0 |
| $ | 0.77 |
| $ | 252.8 |
| $ | 0.80 | |
Eversource Parent and Other Companies |
|
| (0.8) |
|
| - |
|
| 4.5 |
|
| 0.01 | |
Non-GAAP Earnings |
|
| N/A |
|
| N/A |
|
| 257.3 |
|
| 0.81 | |
Integration Costs (after-tax)(1) |
|
| N/A |
|
| N/A |
|
| (4.0) |
|
| (0.01) | |
Net Income Attributable to Common Shareholders (GAAP) |
| $ | 244.2 |
| $ | 0.77 |
| $ | 253.3 |
| $ | 0.80 | |
(1) The first quarter 2015 integration costs were associated with our branding efforts and severance costs. |
3332
The 2015 and 2014 integration costs are costs associated with our branding efforts and severance costs. The branding costs are not recoverable in rates charged to our customers.
Regulated Companies: Our Regulated companies consist of the electric distribution, electric transmission, and natural gas distribution segments. Generation activities of PSNH and WMECO are included in our electric distribution segment. A summary of our segment earnings and EPS for the third quarterfirst quarters of 2016 and first nine months of 2015 and 2014 is as follows:
|
| For the Three Months Ended September 30, |
| For the Nine Months Ended September 30, | ||||||||||||||||||||
(Millions of Dollars, Except |
| 2015 |
| 2014 |
| 2015 |
| 2014 | ||||||||||||||||
Per Share Amounts) |
| Amount |
| Per Share |
| Amount |
| Per Share |
| Amount |
| Per Share |
| Amount |
| Per Share | ||||||||
Electric Distribution |
| $ | 167.7 |
| $ | 0.53 |
| $ | 153.4 |
| $ | 0.48 |
| $ | 419.8 |
| $ | 1.32 |
| $ | 349.1 |
| $ | 1.10 |
Transmission |
|
| 78.0 |
|
| 0.24 |
|
| 88.1 |
|
| 0.28 |
|
| 225.0 |
|
| 0.70 |
|
| 206.8 |
|
| 0.65 |
Natural Gas Distribution |
|
| (3.5) |
|
| (0.01) |
|
| (9.9) |
|
| (0.03) |
|
| 57.5 |
|
| 0.18 |
|
| 44.2 |
|
| 0.14 |
Non-GAAP Earnings |
|
| 242.2 |
|
| 0.76 |
|
| 231.6 |
|
| 0.73 |
|
| 702.3 |
|
| 2.20 |
|
| 600.1 |
|
| 1.89 |
Integration Costs (after-tax) |
|
| (0.4) |
|
| - |
|
| - |
|
| - |
|
| (1.1) |
|
| - |
|
| - |
|
| - |
Net Income - Regulated Companies |
| $ | 241.8 |
| $ | 0.76 |
| $ | 231.6 |
| $ | 0.73 |
| $ | 701.2 |
| $ | 2.20 |
| $ | 600.1 |
| $ | 1.89 |
|
| For the Three Months Ended March 31, | |||||||||||
|
| 2016 |
| 2015 | |||||||||
(Millions of Dollars, Except Per Share Amounts) |
| Amount |
| Per Share |
| Amount |
| Per Share | |||||
Electric Distribution |
| $ | 108.4 |
| $ | 0.34 |
| $ | 130.6 |
| $ | 0.41 | |
Electric Transmission |
|
| 85.7 |
|
| 0.27 |
|
| 66.6 |
|
| 0.21 | |
Natural Gas Distribution |
|
| 50.9 |
|
| 0.16 |
|
| 55.6 |
|
| 0.18 | |
Net Income - Regulated Companies |
| $ | 245.0 |
| $ | 0.77 |
| $ | 252.8 |
| $ | 0.80 |
The third quarter and first nine months 2015 Regulated companies' integration costs include costs incurred for severance in connection with reorganizational and cost saving initiatives.
Excluding integration costs, ourOur electric distribution segment earnings increased $14.3decreased $22.2 million in the thirdfirst quarter of 2015,2016, as compared to the thirdfirst quarter of 2014,2015, due primarily to the impactabsence in 2016 of the December 1, 2014 CL&P base distribution rate increase, higherresolution of NSTAR Electric's basic service bad debt adder mechanism ($14.5 million), the absence in 2016 of the favorable impact associated with the NSTAR Electric and NSTAR Gas Comprehensive Settlement Agreement ($13 million), lower retail sales volumes at NSTAR Electric and PSNH an increaseas a result of the warmer than normal weather in the recoveryfirst quarter of LBR at NSTAR Electric related2016, as compared to 2015 energy efficiency programs, an increasethe much colder than normal temperatures in CL&P’s revenues through an adjustment to rate base associated with the accumulated deferred income taxes (ADIT) order, and a decrease in operations and maintenance costs primarily attributable to lower employee-related expenses. Partially offsetting these favorable earnings impacts werefirst quarter of 2015, higher depreciation expense and higher property taxes.
Excluding integration costs, our electric distribution segmenttax expense. These unfavorable earnings increased $70.7 million in the first nine months of 2015, as compared to the first nine months of 2014, due primarily to the impact of the December 1, 2014 CL&P base distribution rate increase, the $27.5 million favorable earnings impact related to the resolution of NSTAR Electric’s basic service bad debt adder, the settlement with the Massachusetts Attorney General on eleven open dockets covering the CPSL program filings and the recovery of LBR related to 2009 through 2011 energy efficiency programs at NSTAR Electric,impacts were partially offset by a decrease in operations and maintenance costs primarily attributable to lower employee-related expenses an increase in the recovery of LBR at NSTAR Electric related to 2015 energy efficiency programs, higher retail sales volumes at NSTAR Electric and PSNH, and the impact of increased CL&P distribution revenues from the ADIT order. Partially offsetting these favorable earnings impacts were higher depreciation expense, higher property taxes andprimarily as a $5 million contributionresult of increases to create a clean energy fund in connection with the PSNH divestiture agreement.rate base.
Our electric transmission segment earnings decreased $10.1increased $19.1 million in the thirdfirst quarter of 2015,2016, as compared to the thirdfirst quarter of 2014,2015, due primarily to the absence in 2016 of favorable state income tax benefitsreserve charges of $12.4 million recorded in 2015 associated with the third quarter of 2014, partially offset byFERC ROE complaint proceedings and a higher transmission rate base as a result of an increased investment in our transmission infrastructure.
Our transmission segment earnings increased $18.2 million in the first nine months of 2015, as compared to the first nine months of 2014, due primarily to the result of lower reserves associated with the FERC ROE complaint proceedings of $12.4 million recorded in 2015, as compared to $32.1 million recorded in 2014, and a higher transmission rate base as a result of an increased investment in our transmission infrastructure. These favorable earnings impacts were partially offset by the absence of favorable state income tax benefits recorded in 2014.
Our natural gas distribution segment results improved by $6.4 million in the third quarter of 2015, as compared to the third quarter of 2014, due primarily to favorable income tax benefits recorded in the third quarter of 2015, partially offset by higher depreciation expense and higher property taxes.
Our natural gas distribution segment earnings increased $13.3decreased $4.7 million in the first nine months of 2015, as compared to the first nine months of 2014, due primarily to higher firm natural gas sales volumes and peak demand revenues resulting from colder weather in the first quarter of 2015,2016, as compared to the first quarter of 2014, additional2015, due primarily to lower firm natural gas heating customers,sales volumes driven by the warmer than normal weather in the first quarter of 2016, as compared to the much colder than normal temperatures in the first quarter of 2015. Partially offsetting this unfavorable earnings impact was a decrease in operations and maintenance costs primarily attributable to lower employee-related expenses and favorable income tax benefits recorded in 2015. These favorable earnings impacts were partially offset by higher depreciation expense and higher property taxes.
Eversource Parent and Other Companies: Excluding the impact of integration costs, Eversource parent and other companies had a net loss of $4.6 million and earnings of $2.2 million in the third quarter and first nine months of 2015, respectively, compared with earnings of $6 million and $11.2 million in the third quarter and first nine months of 2014, respectively. The earnings decrease in the first nine months of 2015 was due primarily to a higherNSTAR Gas base distribution rate increase effective tax rate at Eversource parent in 2015, as compared to 2014, higher interest expense at Eversource parent as a result of new debt issuances in January 2015, a bad debt charge recorded in the third quarter of 2015 at Eversource's unregulated business, and the absence of earnings from Eversource's unregulated electrical contracting business, which was sold in April 2015.
341, 2016.
Electric and Natural Gas Sales Volumes: Weather, fluctuations in energy supply costs, conservation measures (including utility-sponsored energy efficiency programs), and economic conditions affect customer energy usage. Industrial sales volumes are less sensitive to temperature variations than residential and commercial sales volumes. In our service territories, weather impacts electric sales volumes during the summer and both electric and natural gas sales volumes during the winter; however, natural gas sales volumes are more sensitive to temperature variations than are electric sales volumes. Customer heating or cooling usage may not directly correlate with historical levels or with the level of degree-days that occur.
Fluctuations in retail electric sales volumes at NSTAR Electric and PSNH impact earnings ("Traditional" in the table below). For CL&P and WMECO, fluctuations in retail electric sales volumes do not impact earnings due to their respective regulatory commission approved distribution revenue decoupling mechanisms ("Decoupled" in the table below). These distribution revenues are decoupled from their customer sales volumes, which breaks the relationship between sales volumes and revenues recognized. CL&P and WMECO reconcile their annual base distribution rate recovery amounts to their respective pre-established levels of baseline distribution delivery service revenues of $1.059 billion and $132.4 million, respectively. Any difference between the allowed level of distribution revenue and the actual amount incurred during a 12-month period is adjusted through rates in the following period.
A summary of our retail electric GWh sales volumes and percentage changes, as well as percentage changes in CL&P, NSTAR Electric, PSNH and WMECO retail electric GWh sales volumes, is as follows:
| For the Three Months Ended September 30, 2015 Compared to 2014 | ||||||||||||
| Eversource |
| CL&P |
| NSTAR Electric |
| PSNH |
| WMECO | ||||
| Sales Volumes (GWh) |
| Percentage |
| Percentage |
| Percentage |
| Percentage |
| Percentage | ||
Electric | 2015 |
| 2014 |
| Increase/(Decrease) |
| Increase/(Decrease) |
| Increase/(Decrease) |
| Increase |
| Increase |
Residential | 6,077 |
| 5,656 |
| 7.4 % |
| 8.9 % |
| 6.7 % |
| 5.3 % |
| 5.8 % |
Commercial | 7,613 |
| 7,382 |
| 3.1 % |
| 3.2 % |
| 3.0 % |
| 3.3 % |
| 3.5 % |
Industrial | 1,516 |
| 1,517 |
| (0.1)% |
| (0.2)% |
| (2.3)% |
| 1.2 % |
| 2.3 % |
Total | 15,206 |
| 14,555 |
| 4.5 % |
| 5.4 % |
| 3.9 % |
| 3.7 % |
| 4.2 % |
| For the Nine Months Ended September 30, 2015 Compared to 2014 | ||||||||||||
| Eversource |
| CL&P |
| NSTAR Electric |
| PSNH |
| WMECO | ||||
| Sales Volumes (GWh) |
| Percentage |
| Percentage |
| Percentage |
| Percentage |
| Percentage | ||
Electric | 2015 |
| 2014 |
| Increase/(Decrease) |
| Increase/(Decrease) |
| Increase/(Decrease) |
| Increase/(Decrease) |
| Increase/(Decrease) |
Residential | 16,814 |
| 16,306 |
| 3.1 % |
| 3.7 % |
| 3.0 % |
| 2.4 % |
| 1.2 % |
Commercial | 21,139 |
| 20,838 |
| 1.4 % |
| 1.0 % |
| 1.8 % |
| 1.3 % |
| 1.4 % |
Industrial | 4,221 |
| 4,295 |
| (1.7)% |
| (1.3)% |
| (3.1)% |
| (1.2)% |
| (1.6)% |
Total | 42,174 |
| 41,439 |
| 1.8 % |
| 2.0 % |
| 1.9 % |
| 1.3 % |
| 0.8 % |
A summary of our firm natural gas sales volumes in million cubic feet and percentage changes is as follows:
| For the Three Months Ended |
| For the Nine Months Ended | For the Three Months Ended March 31, 2016 Compared to 2015 | ||||||||||||
| September 30, 2015 Compared to 2014 |
| September 30, 2015 Compared to 2014 | Sales Volumes (GWh) |
| Percentage | ||||||||||
| Sales (million cubic feet) |
| Percentage |
| Sales (million cubic feet) |
| Percentage | |||||||||
Firm Natural Gas | 2015 |
| 2014 |
| Decrease |
| 2015 |
| 2014 |
| Increase/(Decrease) | |||||
Electric | 2016 |
| 2015 |
| Decrease | |||||||||||
Traditional: |
|
|
|
|
| |||||||||||
Residential | 2,485 |
| 2,487 |
| (0.1)% |
| 29,101 |
| 27,468 |
| 5.9 % | 2,404 |
| 2,746 |
| (12.5)% |
Commercial | 4,502 |
| 4,565 |
| (1.4)% |
| 32,889 |
| 31,032 |
| 6.0 % | 3,990 |
| 4,140 |
| (3.6)% |
Industrial | 4,150 |
| 4,276 |
| (3.0)% |
| 16,499 |
| 16,669 |
| (1.0)% | 600 |
| 614 |
| (2.3)% |
Total | 11,137 |
| 11,328 |
| (1.7)% |
| 78,489 |
| 75,169 |
| 4.4 % | |||||
Total, Net of Special Contracts(1) | 10,022 |
| 10,200 |
| (1.7)% |
| 75,106 |
| 71,645 |
| 4.8 % | |||||
Total – Traditional | 6,994 |
| 7,500 |
| (6.7)% | |||||||||||
|
|
|
|
|
| |||||||||||
Decoupled: |
|
|
|
|
| |||||||||||
Residential | 2,943 |
| 3,470 |
| (15.2)% | |||||||||||
Commercial | 2,618 |
| 2,792 |
| (6.2)% | |||||||||||
Industrial | 664 |
| 686 |
| (3.2)% | |||||||||||
Total – Decoupled | 6,225 |
| 6,948 |
| (10.4)% | |||||||||||
Total Sales Volumes | 13,219 |
| 14,448 |
| (8.5)% |
33
| For the Three Months Ended March 31, 2016 Compared to 2015 | ||||
| Sales Volumes (million cubic feet) |
| Percentage | ||
Firm Natural Gas | 2016 |
| 2015 |
| Decrease |
Traditional: |
|
|
|
|
|
Residential | 6,642 |
| 8,987 |
| (26.1)% |
Commercial | 8,089 |
| 10,097 |
| (19.9)% |
Industrial | 4,466 |
| 5,191 |
| (14.0)% |
Total – Traditional | 19,197 |
| 24,275 |
| (20.9)% |
|
|
|
|
|
|
Decoupled: |
|
|
|
|
|
Residential | 9,309 |
| 12,467 |
| (25.3)% |
Commercial | 8,988 |
| 11,354 |
| (20.8)% |
Industrial | 1,854 |
| 2,476 |
| (25.1)% |
Total – Decoupled | 20,151 |
| 26,297 |
| (23.4)% |
Total Sales Volumes | 39,348 |
| 50,572 |
| (22.2)% |
Total, Net of Special Contracts (1) | 38,136 |
| 49,381 |
| (22.8)% |
(1)
Special contracts are unique to the traditional natural gas distribution customers who take service under such an arrangement and generally specify the amount of distribution revenue to be paid to Yankee Gas regardless of the customers' usage.
Weather, fluctuations in energy supply costs, conservation measures (including utility-sponsored energy efficiency programs), and economic conditions affect customer energy usage. Industrial sales are less sensitive to temperature variations than residential and commercial sales. In our service territories, weather impacts electric sales during the summer and both electric and natural gas sales during the winter; however, natural gas sales are more sensitive to temperature variations than electric sales. Customer heating or cooling usage may not directly correlate with historical levels or with the level of degree-days that occur.
For CL&P (effective December 1, 2014) and WMECO, fluctuations in retailRetail electric sales volumes do not impact earnings due to their respective regulatory commission approved revenue decoupling mechanisms. Distribution revenues are decoupled from their customer sales volumes, which breaks the relationship between sales volumes and revenues recognized. CL&P and WMECO reconcile their annual base distribution rate recovery to pre-established levels of baseline distribution delivery service revenues. Any difference between the allowed level of distribution revenue and the actual amount incurred during a 12-month period is adjusted through rates in the following period. Priorfirst quarter of 2016 at our electric utilities with a traditional rate structure (NSTAR Electric and PSNH) were significantly lower, as compared to December 1, 2014, CL&P earnedthe first quarter of 2015, due primarily to the impact of warmer than normal weather in the first quarter of 2016 throughout those service territories, as compared to the much colder than normal temperatures in the first quarter of 2015. First quarter 2016 heating degree days were 24.8 percent lower in the Boston metropolitan area, and 24.4 percent lower in New Hampshire, as compared to the same period in 2015.
On January 28, 2016, Eversource received approval of a three-year energy efficiency plan in Massachusetts, which includes recovery of LBR at NSTAR Electric until it is operating under a decoupled rate structure. NSTAR Electric earns LBR related to reductions in sales volume as a result of successful energy efficiency programs. LBR wasis recovered from retail customers through the FMCC. Effective December 1, 2014, CL&P no longer earns LBR due to its revenue decoupling mechanism. NSTAR Electric continues to recognize LBR through December 31, 2015 in accordance with the 2012 DPU-approved comprehensive merger settlement agreement with the Massachusetts Attorney General. For the first nine months of 2015 and 2014,current rates. NSTAR Electric recognized LBR of $46.7$12.9 million and $28.2 million, respectively. NSTAR Electric has filed for approval of a three-year energy efficiency plan with the DPU, which includes recovery of LBR until it is operating under a decoupled rate structure. For further information, see "Regulatory Developments and Rate Matters - Massachusetts - Energy Efficiency Plan" in thisManagement's Discussion and Analysis of Financial Conditions and Results of Operations.
For the third quarter of 2015, our consolidated retail electric sales volumes were higher, as compared to the same period in 2014, due primarily to warmer weather in 2015. Cooling degree days in the third quarter of 2015 were 25 percent higher in Connecticut and western Massachusetts, 29 percent higher in the Boston metropolitan area, and 59 percent higher in New Hampshire, as compared to the third quarter of 2014. Weather-normalized Eversource consolidated retail electric sales volumes increased 1.6 percent in the third quarter of 2015, as compared to the third quarter of 2014. The increase was due primarily to improved economic conditions, partially offset by an increase in conservation efforts primarily by our residential customers, resulting from company-sponsored energy efficiency programs.
For the first nine months of 2015, our consolidated retail electric sales volumes were higher, as compared to the same period in 2014, due primarily to the impact of colder winter weather experienced in the first quarter of 2015 and the warmer weather in the third quarter of 2015 throughout our service territories. The first nine months of 2015 heating degree days were 1.2 percent higher in Connecticut and western Massachusetts, 6.6 percent higher in the Boston metropolitan area, and 2.2 percent lower in New Hampshire, as2016, compared to the first nine months of 2014. Weather-normalized Eversource consolidated retail electric sales volumes were relatively unchanged$12.5 million in the first nine monthsquarter of 2015, as compared to the first nine months of 2014. Improved economic conditions were offset by an increase in conservation efforts primarily by our residential customers, resulting from company-sponsored energy efficiency programs.
352015.
Our firm natural gas sales volumes are subject to many of the same influences as our retail electric sales.sales volumes. In addition, they have benefited from customer growth in both of our natural gas distribution companies. In the third quarter and first nine months of 2015,2016, consolidated firm natural gas sales volumes were much lower, as compared to the third quarter of 2014, and higher as compared to the first nine months of 2014. Third quarter 20152015. The 2016 firm natural gas sales volumes were negatively impacted by warmer than normal weather whenin the first quarter of 2016, as compared to the third quarter of 2014. First nine months 2015 firm natural gas sales volumes were favorably impacted bymuch colder winter weather experienced throughout our natural gas service territoriesthan normal temperatures in the first quarter of 2015, throughout our natural gas service territories. First quarter 2016 heating degree days were 24.2 percent lower in Connecticut, as compared to the same period in 2014. The third quarter and first nine months of 2015 weather-normalized Eversource consolidated firm natural gas sales volumes increased compared to the same periods in 2014 due primarily to residential and commercial customer growth and improved economic conditions, partially offset by customer conservation efforts resulting from company-sponsored energy efficiency programs. 2015.
Liquidity
Consolidated: Cash and cash equivalents totaled $35.8$51 million as of September 30, 2015,March 31, 2016, compared with $38.7$23.9 million as of December 31, 2014.2015.
On August 3, 2015, WMECO repaid at maturity the $50Long-Term Debt Issuances: In March 2016, Eversource parent issued $250 million 5.24of 2.50 percent Series CI Senior Notes, using short-term borrowings.
On September 2, 2015, NSTAR Gas priced $100 million of 4.35 percent Series O First Mortgage Bonds due to mature in 2045. The transaction is scheduled to close on December 8, 2015.
On September 10, 2015, Yankee Gas issued $752021, and $250 million of 3.35 percent 2015 Series M First Mortgage BondsJ Senior Notes, due to mature in 2025.2026. The proceeds, net of issuance costs, were used to repay short-term borrowings.borrowings under the Eversource parent commercial paper program.
On October 26, 2015,Commercial Paper Programs and Credit Agreements: Eversource parent CL&P, PSNH, WMECO, NSTAR Gas and Yankee Gas amended and restated their joint five-year $1.45 billion revolving credit facility and extended the termination date to September 4, 2020. The facility serves to backstop Eversource parent'shas a $1.45 billion commercial paper program. The commercial paper program allowsallowing Eversource parent to issue commercial paper as a form of short-term debt. As of September 30, 2015March 31, 2016 and December 31, 2014,2015, Eversource parent had $757$621 million and approximately $1.1 billion, respectively, in short-term borrowings outstanding under the Eversource parent commercial paper program, leaving $693$829 million and $348.9$351.5 million of available borrowing capacity as of September 30, 2015March 31, 2016 and December 31, 2014,2015, respectively. The weighted-average interest rate on these borrowings as of September 30, 2015March 31, 2016 and December 31, 20142015 was 0.410.68 percent and 0.430.72 percent, respectively. As of September 30,March 31, 2016, there were intercompany loans from Eversource parent of $115.5 million to CL&P, $157.1 million to PSNH and $143.5 million to WMECO. As of December 31, 2015, there were intercompany loans from Eversource parent of $137.3$277.4 million to CL&P, $231.3 million to PSNH and $126.2$143.4 million to WMECO. As of December 31, 2014, there were intercompany loans from Eversource parent, of $133.4 millionCL&P, PSNH, WMECO, NSTAR Gas and Yankee Gas are parties to CL&P, $90.5 million to PSNH and $21.4 million to WMECO.
On October 26, 2015, NSTAR Electric amended and restated itsa five-year $450 million$1.45 billion revolving credit facility, and extended the termination date towhich terminates on September 4, 2020. The revolving credit facility serves to backstop Eversource parent's $1.45 billion commercial paper program.
NSTAR Electric'sElectric has a $450 million commercial paper program.program allowing NSTAR Electric to issue commercial paper as a form of short-term debt. As of September 30, 2015March 31, 2016 and December 31, 2014,2015, NSTAR Electric had $258.5$148.5 million and $302$62.5 million, respectively, in short-term borrowings outstanding under its commercial paper program, leaving $191.5$301.5 million and $148$387.5 million of available borrowing capacity as of September 30, 2015March 31, 2016 and December 31, 2014,2015, respectively. The weighted-average interest rate on these borrowings as of September 30, 2015March 31, 2016 and December 31, 20142015 was 0.180.38 percent and 0.270.40 percent, respectively. NSTAR Electric is party to a five-year $450 million revolving credit facility, which terminates on September 4, 2020. The revolving credit facility serves to backstop NSTAR Electric's $450 million commercial paper program.
34
Cash Flows:Cash flows provided by operating activities totaled $1.3 billion$500 million in the first nine monthsquarter of 2015,2016, compared with $1.4 billion$491.5 million in the first nine monthsquarter of 2014.2015. The decreaseincrease in operating cash flows was due primarily to timing and collections related to accounts receivable and the timing of regulatory recoveries, resulting from both increased purchased power and congestion costsprimarily at NSTAR Electric, WMECO and CL&P, and the timing of collections and payments related to our working capital items, including accounts receivable and accounts payable. Accounts receivable increased due primarily to increases in both CL&P’s and NSTAR Electric’s basic service rates effective January 1, 2015, and the increase in CL&P's base distribution rates effective December 1, 2014. Also contributing toresulting from the decrease in operating cash flows was the absence of the receipt of approximately $132 million in DOE Phase II Damages proceeds received in 2014 from the Yankee Companies andpurchased power costs as well as an increase of approximately $88$34.4 million in Pension and PBOP Plan cash contributionsincome tax refunds received in the first nine monthsquarter of 2015,2016, as compared to the same period in 2014.2015. Partially offsetting these increases was an unfavorable cash flow impacts were net income tax refunds of approximately $105 million received in the first nine months of 2015 primarilyimpact related to the extension of the accelerated depreciation deduction, as compared to income tax payments of approximately $256 millionchanges in the first nine months of 2014. fuel inventory at PSNH.
In the first nine months of 2015, we paid cash dividends on common shares of $397.4 million, compared with $356.1 million in the first nine months of 2014. On September 1, 2015,February 3, 2016, our Board of Trustees approved a common share dividend payment of $0.4175$0.445 per share, which was paid on September 30, 2015March 31, 2016 to shareholders of record as of September 14, 2015.March 2, 2016. This cash dividend of $141.2 million, compared with $132.5 million, or $0.4175 per share in the first quarter of 2015, represented an increase of 6.6 percent. On May 4, 2016, our Board of Trustees approved a common share dividend payment of $0.445 per share, payable on June 30, 2016 to shareholders of record as of May 31, 2016.
In the first nine monthsquarter of 2015,2016, CL&P, NSTAR Electric, PSNH, and WMECO paid $147$49.9 million, $148.5$90.3 million, $79.5$19.4 million, and $27.9$9.5 million, respectively, in common stock dividends to Eversourceparent.Eversource parent.
Investments in Property, Plant and Equipment on the statements of cash flows do not include amounts incurred on capital projects but not yet paid, cost of removal, AFUDC related to equity funds, and the capitalized portions of pension expense. In the first nine monthsquarter of 2015,2016, investments for Eversource, CL&P, NSTAR Electric, PSNH, and WMECO were $1.2 billion, $359.3$431.5 million, $314.1$147.1 million, $209.5$91.3 million, $72.3 million, and $93.7$39.9 million, respectively.
Business Development and Capital Expenditures
Our consolidated capital expenditures, including amounts incurred but not paid, cost of removal, AFUDC, and the capitalized portions of pension expense (all of which are non-cash factors), totaled $1.3 billion in the first nine months of 2015, compared with $1.1 billion in the first nine months of 2014. These amounts included $58.6 million and $40.9$368.5 million in the first nine monthsquarter of 20152016, compared to $310.5 million in the first quarter of 2015. These amounts included $24 million and 2014,$8.4 million in the first quarter of 2016 and 2015, respectively, related to information technology and facilities upgrades and enhancements, primarily at Eversource Service and The Rocky River Realty Company.
36Natural Gas Transmission Business:
Natural Gas Transmission BusinessAccess Northeast:
Access Northeast: Access Northeast is a natural gas pipeline and storage project (the "Project") being developed jointly by Eversource, Spectra Energy Corp and National Grid. Access Northeast will enhance the Algonquin and Maritimes & Northeast pipeline systems using existing routes and will include two new LNG storage tanks and liquefaction and vaporization facilities in Acushnet, Massachusetts that will be connected to the Algonquin natural gas pipeline. The projectProject is expected to be capable of delivering approximately one billion900 million cubic feet of additional natural gas per day to New England.England on peak demand days. Eversource and Spectra Energy Corp each own a 40 percent interest in the project,Project, with the remaining 20 percent interest owned by National Grid. The project is subject to FERC approval, and the total projectprojected cost for both the pipeline and the LNG storage is expected to be approximately $3 billion with anticipated in-service dates commencing in November 2018. The Project is subject to FERC and other federal and state regulatory approvals. On November 3,17, 2015, athe FERC accepted the Project's request was filed for FERC approval to initiate the pre-filing review process for Access Northeast.process. Upon completion of the pre-filing review, a certificate application will be filed with the FERC.
Electric Transmission Business:Business: Our consolidated electric transmission business capital expenditures increased by $62.6$13.5 million in the first nine monthsquarter of 2015,2016, as compared to the first nine monthsquarter of 2014.2015. A summary of electric transmission capital expenditures by company is as follows:
|
| For the Nine Months Ended September 30, |
| For the Three Months Ended March 31, | ||||||||
(Millions of Dollars) |
| 2015 |
| 2014 |
| 2016 |
| 2015 | ||||
CL&P |
| $ | 146.9 |
| $ | 201.5 |
| $ | 63.4 |
| $ | 42.4 |
NSTAR Electric |
|
| 158.9 |
|
| 111.1 |
|
| 31.7 |
|
| 21.4 |
PSNH |
|
| 115.2 |
|
| 76.9 |
|
| 19.6 |
|
| 28.9 |
WMECO |
|
| 72.9 |
|
| 50.1 |
|
| 18.0 |
|
| 23.8 |
NPT |
|
| 27.7 |
|
| 19.4 |
|
| 7.0 |
|
| 9.7 |
Total Electric Transmission Segment |
| $ | 521.6 |
| $ | 459.0 |
| $ | 139.7 |
| $ | 126.2 |
NEEWS:GHCC The Interstate Reliability Project (IRP) includes CL&P's construction of an approximately 40-mile, 345-kV overhead line from Lebanon, Connecticut to the Connecticut-Rhode Island border in Thompson, Connecticut where it will connect to transmission enhancements being constructed by National Grid in Rhode Island and Massachusetts. Construction has been underway in all three states since March 2014. Eversource's portion of the cost is estimated to be $218 million, and we expect to complete IRP by the end of 2015. As of September 30, 2015, CL&P had placed $190.7 million in service with minimal remaining close-out activities continuing throughout the remainder of 2015.
Through September 30, 2015, CL&P and WMECO capitalized $378.2 million and $566.9 million, respectively, in costs associated with NEEWS.
GHCC:: The Greater Hartford Central Connecticut (GHCC) solutions, which have been approved by ISO-NE, are comprised of 27 projects and are expected to cost approximately $350 million and be placed in service from 2016 through 2018. Through September 2015, we have filed siting applications for fiveMarch 31, 2016, three projects of which all have been approved byplaced in service. During the Connecticut Siting Council, allowing us to commence construction on thoseremainder of 2016, 13 additional projects in 2015. Additional siting applications are expected to be filed through the remainder of 2015 and 2016.in active construction. All GHCC projects are expected to be completed inby late 2018. As of September 30, 2015,March 31, 2016, CL&P had capitalized $25.2$66.2 million in costs associated with GHCC.
Northern Pass:Pass: Northern Pass is Eversource's planned HVDC transmission line from the Québec-New Hampshire border to Franklin, New Hampshire and an associated alternating current radial transmission line between Franklin and Deerfield, New Hampshire. Northern Pass will interconnect at the Québec-New Hampshire border with a planned HQ HVDC transmission line. On July 21, 2015, the DOE issued the draft Environmental Impact Statement (EIS) for Northern Pass representing a key milestone in the permitting process. On August 18, 2015, the revised route was announced including burying 52 miles of the route underground in and around the White Mountain National Forest region. As a result, the NPT project estimate has increased from $1.4 billion to $1.6 billion. In response to requests by the New Hampshire congressional delegation, the DOE announced that it would issue a supplement to the draft EIS. Public hearings on the draft EIS delaying public hearingswere held in March 2016. The DOE completed the comment period on April 4, 2016. On August 18, 2015, a revised route was announced with an additional 52 miles of the route underground in and around the White Mountain National Forest region. As a result, the NPT project cost estimate increased from $1.4 billion to allow$1.6 billion. Concurrently, NPT announced the DOEForward NH Plan, which is a commitment to receive comments throughallocate $200 million to projects associated with economic development, tourism, community betterment, and clean energy innovations to benefit the endstate of 2015. New Hampshire. This commitment is contingent upon the Northern Pass transmission line going into commercial operation.
35
On October 19, 2015, NPT filed theits New Hampshire Site Evaluation Committee (NH SEC) application.application, which was accepted as complete by the NH SEC on December 18, 2015, allowing the formal siting process to move forward. The project is expected to be operational in the first half of 2019.
We expect On January 28, 2016, NPT to participate inbid into the New Englandthree-state Clean Energy RFPrequest for proposal (RFP) process. For further information on the RFP process, see "Regulatory Developments and Rate Matters – General – Clean Energy Draft RFP" in thisManagement's Discussion and Analysis of Financial Conditions and Results of Operations.
On August 18, 2015, NPT also announced the Forward NH Plan, which includes a $200 million initiative to allocate funds to projects associated with economic development, community betterment, and clean energy innovations to benefit the state of New Hampshire. This initiative is contingent upon the Northern Pass transmission line going into commercial operation.
Clean Energy Connect: The Clean Energy Connect project is a planned transmission, wind and hydro generation project that we plan to co-develop with experienced renewable generation companies. On January 28, 2016, the Clean Energy Connect project was bid into the three-state Clean Energy RFP process. Should the Clean Energy Connect Project be selected in the RFP process, our investment is currently estimated to be at least $400 million, and would involve the construction of a new 25-mile, 345kV transmission line with a 600 MW capacity from western Massachusetts to eastern New York. For further information on the RFP process, see "Regulatory Developments and Rate Matters – General – Clean Energy RFP" in thisManagement's Discussion and Analysis of Financial Conditions and Results of Operations.
Greater Boston Reliability Solution: Solutions:In February 2015, ISO-NE selected Eversource’sEversource's and National Grid’sGrid's proposed Greater Boston and New Hampshire Solution (Solution) to meetsatisfy the needsrequirements identified in the Greater Boston study. The Solution consists of a portfolio of some 40 electric transmission upgrades straddling southern New Hampshire and northern Massachusetts in the Merrimack Valley and incontinuing into the greater Boston metropolitan area. We are currently pursuing the necessary regulatory approvals and have filed several siting applicationsapplication approvals in Massachusetts and New Hampshire. Construction has begun on several of the smaller projects not requiring siting approval, and construction on an additional project approved by the DPU is expected to begin in July 2016. All upgrades are expected to be completed by the end of 2019. We estimate our portion of the investment in the Solution will be approximately $544 million.million, of which approximately $66 million has been capitalized through March 31, 2016.
37Seacoast Reliability Project: On April 12, 2016, PSNH filed a siting application with the NH SEC for the Seacoast Reliability Project, a 13-mile transmission line within several New Hampshire communities, which proposes to use a combination of overhead, underground and underwater line design to help meet the growing demand for electricity in the Seacoast region. This project is expected to be completed by the end of 2018. We estimate our investment in this project will be approximately $77 million.
Distribution Business:Business: A summary of distribution capital expenditures by company for the first nine months of 2015 and 2014 is as follows:
| For the Nine Months Ended September 30, | For the Three Months Ended March 31, | ||||||||
(Millions of Dollars) | 2015 |
| 2014 | 2016 |
| 2015 | ||||
CL&P: |
|
|
|
|
|
|
|
|
|
|
Basic Business | $ | 87.8 |
| $ | 70.2 | $ | 39.1 |
| $ | 27.2 |
Aging Infrastructure |
| 120.0 |
|
| 81.1 |
| 26.5 |
|
| 34.2 |
Load Growth |
| 29.6 |
|
| 49.7 |
| 9.0 |
|
| 11.5 |
Total CL&P |
| 237.4 |
|
| 201.0 |
| 74.6 |
|
| 72.9 |
NSTAR Electric: |
|
|
|
|
|
|
|
|
|
|
Basic Business |
| 75.2 |
|
| 75.4 |
| 24.0 |
|
| 22.2 |
Aging Infrastructure |
| 69.8 |
|
| 76.0 |
| 12.5 |
|
| 13.5 |
Load Growth |
| 30.5 |
|
| 25.8 |
| 14.2 |
|
| 3.9 |
Total NSTAR Electric |
| 175.5 |
|
| 177.2 |
| 50.7 |
|
| 39.6 |
PSNH: |
|
|
|
|
|
|
|
|
|
|
Basic Business |
| 37.8 |
|
| 33.1 |
| 15.1 |
|
| 12.3 |
Aging Infrastructure |
| 33.9 |
|
| 24.2 |
| 14.4 |
|
| 9.2 |
Load Growth |
| 15.8 |
|
| 21.4 |
| 3.5 |
|
| 6.7 |
Total PSNH |
| 87.5 |
|
| 78.7 |
| 33.0 |
|
| 28.2 |
WMECO: |
|
|
|
|
|
|
|
|
|
|
Basic Business |
| 12.2 |
|
| 6.2 |
| 3.4 |
|
| 3.1 |
Aging Infrastructure |
| 13.5 |
|
| 10.2 |
| 4.4 |
|
| 4.5 |
Load Growth |
| 4.6 |
|
| 3.6 |
| 0.5 |
|
| 1.8 |
Total WMECO |
| 30.3 |
|
| 20.0 |
| 8.3 |
|
| 9.4 |
Total - Electric Distribution (excluding Generation) |
| 530.7 |
|
| 476.9 |
| 166.6 |
|
| 150.1 |
PSNH Generation |
| 15.9 |
|
| 11.3 |
| 0.4 |
|
| 2.6 |
WMECO Generation |
| - |
|
| 7.5 | |||||
Natural Gas |
| 132.8 |
|
| 138.9 | |||||
Natural Gas: |
|
|
| |||||||
Basic Business |
| 12.6 |
|
| 17.7 | |||||
Aging Infrastructure |
| 19.2 |
|
| 2.1 | |||||
Load Growth |
| 6.0 |
|
| 3.4 | |||||
Total – Natural Gas Distribution |
| 37.8 |
|
| 23.2 | |||||
Total Electric and Natural Gas Distribution Segment | $ | 679.4 |
| $ | 634.6 | $ | 204.8 |
| $ | 175.9 |
For the electric distribution business, basic business includes the purchase of meters, tools, vehicles, information technology, transformer replacements, equipment facilities, and the relocation of plant. Aging infrastructure relates to reliability and the replacement of overhead lines, plant substations, underground cable replacement, and equipment failures. Load growth includes requests for new business and capacity additions on distribution lines and substation additions and expansions. For the natural gas distribution segment, basic business addresses daily operational needs including meters, pipe relocations due to public works projects, vehicles, and tools. Aging infrastructure projects seek to improve the reliability of the system through enhancements related to cast iron and bare steel replacement of main and services, corrosion mediation, and station upgrades. Load growth reflects growth in existing service territories including new developments, installation of services, and expansion.
36
FERC Regulatory Issues
FERC ROE Complaints:Complaints I, II and III: Three separate complaints have been filed at FERC by combinations of New England state attorneys general, state regulatory commissions, consumer advocates, consumer groups, municipal parties and other parties (the(collectively the "Complainants"). In these three separate complaints, theThe Complainants challenged the NETOs' base ROE of 11.14 percent that had been utilized since 2006 and sought an order to reduce it prospectively from the date of the final FERC order andboth for the three separate 15-month complaint refund periods stipulated in the separate complaints.and prospectively. In 2014, the FERC ordered a 10.57 percent base ROE for the first complaint refund period and prospectively from October 16, 2014, and that a utility's total or maximum ROE shall not exceed the top of the new zone of reasonableness, which was set at 11.74 percent. The NETOs and the Complainants sought rehearing from FERC. In late 2014, the NETOs made a compliance filing, which was challenged by the Complainants, and in accordanceWe have refunded all amounts associated with FERC orders, the Company began issuing refunds to customers from the first complaint period.
On March 3, 2015, FERC issued an order denying all issues raised on rehearing by the NETOs and Complainants in the first complaint. The FERC order upheld the base ROE of 10.57 percent for the first complaint refund period and prospectively from October 16, 2014, and upheld that the utility's total ROE (the base ROEplus anyincentive adders) for the transmission assets to which the adder applies is capped at the top of the zone of reasonableness, which is currently set at 11.74 percent. As a result of theclarifying informationdevelopments in this matter, the March 2015 order related toCompany recorded reserves across the application of the ROE cap, Eversource adjustedcomplaint periods at its reserveelectric subsidiaries in the first quarter of 2015 and recognized an after-tax charge to earnings (excluding interest) of $12.4 million, of which $7.9 million was recorded at CL&P, $1.4 million at NSTAR Electric, $0.6 million at PSNH, and $2.5 million at WMECO. The NETOs and Complainants have filed appeals to the D.C. Circuit Court of Appeals, which have been consolidated, and briefing is scheduled to be concluded in the second quarter of 2016. A court decision is not expected until the second half of 2016.
ForOn March 22, 2016, the FERC ALJ issued an initial decision on the second and third complaints. For the second complaint proceedings, hearings were held in late Juneperiod, the FERC ALJ recommended a zone of reasonableness of 7.12 percent to 10.42 percent and early July 2015a base ROE of 9.59 percent. For the third complaint period, the FERC ALJ recommended a zone of reasonableness of 7.04 percent to 12.19 percent and briefs were filed in July and August 2015.a base ROE of 10.90 percent. The state parties, municipal utilities and FERC trial staff each believeALJ also affirmed that the basemaximum ROE for transmission incentive projects should be reduced.the top of the zone of reasonableness. The NETOs believefiled briefs on April 21, 2016, in which the NETOs identified corrections and requested changes that the Complainants' positions are without merit, and the existing ROEs should be maintained. Themade to the FERC ALJ’s initial recommendation is expected by December 30, 2015, and arecommendations. A final FERC order is expected in late 2016 or early 2017. The final FERC order will determine both the base ROE and the maximum ROE for transmission incentive projects for the two complaint periods. The final FERC order, when issued, will also establish the prospective base ROE and maximum ROE for transmission incentive projects.
We have not recorded any additional reserves to reflect the ROEs recommended in the FERC ALJ initial decision. We do not believe any ROE outcome is more likely than the ROEs used to record our current reserves (a base ROE of 10.57 percent and a maximum ROE for transmission incentive projects of 11.74 percent). We are unable to predict the outcome of the final FERC order on the second and third quartercomplaints, and therefore, we believe that our current ROEs and reserves are appropriate at this time.
The impact of 2016.a 10 basis point change to our existing base ROE of 10.57 percent would affect Eversource's after-tax earnings by approximately $3 million for each of the 15-month second and third complaint periods. If we adjusted our reserves based on the recommendations in the FERC ALJ initial decision (for both the base ROE and maximum ROE for transmission incentive projects) for the second and third complaints, then it would result in an after-tax increase of approximately $34 million and an after-tax decrease of approximately $8 million, respectively, to our existing reserves.
FERC ROE Complaint IV: On April 29, 2016, a fourth complaint was filed with the FERC. At this time, we are unable to predict the outcome of this complaint.
Regulatory Developments and Rate Matters
General:
Clean Energy RFP:Pursuant to clean energy goals established in three New England states (Connecticut, Massachusetts and Rhode Island), in November 2015, the DEEP and the Massachusetts and Rhode Island EDCs, including CL&P, NSTAR Electric and WMECO, issued a request for proposal for clean energy resources (including Class I renewable generation and large hydroelectric generation) to a wide range of potentially interested bidders. The RFP solicited offers for clean energy and the transmission to deliver that energy to the three states. In late January 2016, bidders submitted project proposals, among which were the Northern Pass and Clean Energy Connect projects, selection of which will take place between April and July 2016. The expected timeframe within which EDCs will execute contracts and submit them for regulatory commission approval from their respective state regulators is from June through October 2016 with approval expected in late 2016.
New England Natural Gas Pipeline Capacity: NSTAR Electric and WMECO have filed with the DPU seeking approval of contracts for pipeline and storage capacity. PSNH has filed for approval with the NHPUC, seeking approval of its proposed contract for natural gas pipeline capacity and storage. On March 9, 2016, the Connecticut DEEP issued a draft of its RFP for natural gas pipeline capacity and expects that the final RFP will be issued in the first half of 2016.
Electric and Natural Gas Base Distribution Rates:
The Regulated companies' distribution rates are set by their respective state regulatory commissions, and their tariffs include mechanisms for periodically adjusting their rates for the recovery of specific incurred costs. Other than as described below, for the first ninethree months of 2015,2016, changes made to the Regulated companies' rates did not have a material impact on their earnings, financial position, or cash flows. For further information, see "Financial Condition and Business Analysis – Regulatory Developments and Rate Matters" included in Item 7, "Management's Discussion and Analysis of Financial Condition and Results of Operations," of the Eversource 2014 Annual Report on2015 Form 10-K.
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General:
Clean Energy Draft RFP: In February 2015, pursuant to clean energy goals established in three New England states (Massachusetts, Connecticut and Rhode Island), CL&P, NSTAR Electric, WMECO, other electric distribution companies (EDCs), and state agencies in the three states jointly developed and issued a draft request for proposal (RFP) for clean energy resources (including Class I renewable generation and large hydroelectric). The draft RFP solicits offers for clean energy and the transmission to deliver that energy to the three states. The procurement will allow the states to identify large-scale projects that may offer the potential to meet their clean energy goals in a cost-effective manner when entered into jointly, while complying with the clean energy statutes within the three states.
The DPU and the Rhode Island Public Utilities Commission (PUC) approved the draft RFP that was jointly submitted by certain EDCs. The draft RFP encompassed the timetable and method for the solicitation and execution of any associated long-term contracts. On August 31, 2015, the DEEP issued a notice of proceeding on the Connecticut portion of the draft RFP and accepted public comment through September 30, 2015. We expect the DEEP and the Massachusetts and Rhode Island EDCs to issuethe RFP to a wide range of potentially interested bidders shortly after the DEEP approves the RFP. We expect the potential bidders will submit proposals within 75 days from the date that the RFPs are issued and that contractual agreements will be submitted for approval to the respective state regulators in 2016.
New England Natural Gas Pipeline Capacity: In 2014, the six New England states began to explore ways to address and mitigate winter natural gas price spikes and the associated impact on electric power supply costs attributable to winter pipeline capacity constraints. In Massachusetts, the DPU issued an order on October 2, 2015 determining that it has authority to allow EDCs to contract for natural gas pipeline capacity. On October 23, 2015, Eversource and National Grid issued a natural gas pipeline capacity RFP in Massachusetts with bids due November 13, 2015. On September 15, 2015, the NHPUC staff issued a report concluding that the NHPUC could approve contracts between pipelines and EDCs if they were shown to reduce electricity costs and be in the public interest. In Connecticut, the DEEP expects to provide an opportunity for public comment on a natural gas pipeline capacity RFP in the fourth quarter of 2015. While all New England states are considering how to address these pipeline constraints, it is unclear whether additional New England states will join Massachusetts and Connecticut in holding RFPs for natural gas pipeline capacity.
Electric and Natural Gas Residential Customer Rates:Effective July 1, 2015, as approved by the respective state regulatory commission, each Eversource electric and natural gas operating company’s total average residential customer billing rate decreased. For those residential customers who purchase generation supply from the respective electric utility company, the average bill decreased by 18 percent at CL&P, 20 percent at NSTAR Electric, 7 percent at PSNH, and 18 percent at WMECO and the average natural gas residential customer’s bill decreased by 10 percent at Yankee Gas and 20 percent at NSTAR Gas. The decrease was due primarily to a decrease in the electric generation and natural gas supply rates. Supply rates consist of costs that are recovered from customers in rates through regulatory commission-approved cost tracking mechanisms and therefore have no impact on earnings.
Connecticut:
CL&P Distribution Rates: On December 17, 2014, PURA granted a re-opener request to CL&P’s base distribution rate application for further review of the appropriate balance of ADIT utilized in the calculation of rate base. On July 2, 2015, PURA issued a final order that approved a settlement agreement filed on May 19, 2015 between CL&P and the PURA Prosecutorial Staff. The order allows for an increase to rate base of approximately $163 million associated with ADIT, including a regulatory asset to recover the incremental revenue requirement for the period December 1, 2014 through November 30, 2015 over a subsequent two-year period. The rate base increase provided an increase to total allowed annual revenue requirements of $18.4 million beginning December 1, 2014. Of that amount, $15.3 million has been recorded as a regulatory asset through September 30, 2015, with a corresponding increase in Operating Revenues. The remaining $3.1 million will be recorded in the fourth quarter of 2015. The aggregate amount will be collected from customers in rates over a 24-month period commencing on December 1, 2015.
Conservation and Load Management Plan: On October 1, 2015, CL&P and Yankee Gas filed for approval of the three-year electric and natural gas C&LM plan with the DEEP, which was jointly developed with other Connecticut EDCs and natural gas distribution companies. The C&LM plan, which covers the years 2016 through 2018, was built upon the continued success and momentum of the previous C&LM plans. The C&LM plan includes performance incentives totaling $24 million over the three year period related to proposed savings goals for CL&P and Yankee Gas.
Massachusetts:
NSTAR Electric and NSTAR Gas 2014 Comprehensive Settlement Agreement: On March 2, 2015, the DPU approved the comprehensive settlement agreement between NSTAR Electric, NSTAR Gas and the Massachusetts Attorney General (the"Settlement") as filed with the DPU on December 31, 2014. The Settlement resolved the outstanding NSTAR Electric CPSL program filings for 2006 through 2011, the NSTAR Electric and NSTAR Gas PAM and energy efficiency-related customer billing adjustments reported in 2012, and the recovery of LBR related to NSTAR Electric's energy efficiency programs for 2009 through 2011 (11 dockets in total). In 2015, as a result of the DPU order, NSTAR Electric and NSTAR Gas commenced refunding a combined $44.7 million to customers, which was recorded as a regulatory liability. NSTAR Electric recognized a $13 million after-tax benefit in the first quarter of 2015 as a result of the approval of the Settlement.
NSTAR Electric Basic Service Bad Debt Adder: On January 7, 2015, the DPU issued an order concluding that NSTAR Electric had removed energy-related bad debt costs from base distribution rates effective January 1, 2006. As a result of the DPU order, NSTAR Electric increased its regulatory assets and reduced operations and maintenance expense by $24.2 million in the first quarter of 2015, resulting in after-tax earnings of $14.5 million. On May 5, 2015, NSTAR Electric filed for recovery of the energy-related bad debt costs regulatory asset from customers beginning July 1, 2015. On June 24, 2015, the DPU delayed the effective date of NSTAR Electric’s proposed rate increase from July 1, 2015 to November 1, 2015 to allow for the DPU staff to review the reconciliations. NSTAR Electric requested recovery from customers effective January 1, 2016 in briefs filed with the DPU in October 2015. On October 27, 2015, the DPU delayed the effective date of the rate increase from November 1, 2015 to
3937
December 1, 2015 to allow the DPU staff additional time to review the reconciliations. We expect a decision from the DPU in the fourth quarter of 2015.
NSTAR Electric and WMECO Grid Modernization Plan: As part of the DPU’s investigation into the modernization of the electric grid, in August 2015, NSTAR Electric and WMECO filed a comprehensive ten-year plan with the DPU. The plan focuses on technologies and investments that modernize the grid with proposed investments in equipment that reduces the frequency and duration of power outages, optimizes and manages electrical demand, integrates distributed energy resources, and improves workforce and asset management. The plan includes incremental spending of approximately $430 million over the first five years, which would be recovered from customers in rates, and is pending DPU review and approval. There is currently no timeline for the DPU to take any action on this plan.
Energy Efficiency Plan: The Massachusetts EDCs and natural gas distribution companies have increased their energy efficiency savings achievements significantly since the enactment of the Green Communities Act in 2008, with electric savings almost tripling between 2008 and 2014. On October 30, 2015, NSTAR Electric, WMECO, and NSTAR Gas filed for approval of the three-year electric and natural gas energy efficiency plan with the DPU, which was jointly developed with other Massachusetts EDCs and natural gas distribution companies. As part of this plan, which covers the years 2016 through 2018, NSTAR Electric, WMECO, and NSTAR Gas are proposing to maintain aggressive savings goals. The plan includes performance incentives related to these aggressive savings goals totaling $59 million over the three year period for NSTAR Electric, WMECO and NSTAR Gas, as well as recovery of LBR resulting from incremental efficiency savings of approximately $50 million on an annual basis for NSTAR Electric.
NSTAR Gas Distribution Rates: On October 30, 2015, the DPU issued a final order in the NSTAR Gas distribution rate case, which approved an annualized base rate increase of $15.8 million effective January 1, 2016. In the final order, the DPU also approved an authorized regulatory ROE of 9.8 percent, the establishment of a revenue decoupling reconciliation mechanism, and a 52.1 percent equity component of its capital structure.
New Hampshire:
PSNHGeneration Divestiture Agreement: On June 10, 2015, Eversource and PSNH entered into the 2015 Public Service Company of New Hampshire Restructuring and Rate Stabilization Agreement (the Agreement) with the New Hampshire Office of Energy and Planning, certain members of the Staff of the NHPUC staff, the Office of Consumer Advocate, two State Senators, and several other parties. The Agreement was filed with the NHPUC on the same day. Under the terms of the Agreement, PSNH has agreed to divest its generation assets upon NHPUC approval. The Agreement is designed to provide a resolution of issues pertaining to PSNH's generation assets in pending regulatory proceedings before the NHPUC. When implemented, theThe Agreement providesprovided for the Clean Air Project prudence proceeding to be resolved and all remaining Clean Air Project costs to be included in rates effective January 1, 2016. As part of the Agreement, PSNH has agreed to forego recovery of $25 million of the deferred equity return related to the Clean Air Project. In addition, PSNH will not seek a general distribution rate increase effective before July 1, 2017 and will contribute $5 million to create a clean energy fund, which will not be recoverable from its customers. In the second quarter of 2015, PSNH recorded the $5 million contribution as a long-term liability and an increase to Operations and Maintenance expense on the statements of income.
Upon completion of the divestiture process, all remaining stranded costs including any remaining deferred equity return in excess of the $25 million that PSNH has agreed to forego, will be recovered via bonds that will be secured by a non-bypassable charge or through other recoveries in rates billed to PSNH's customers. For further information on the securitization legislation that was signed into law on July 9, 2015, see "Legislative and Policy Matters – New Hampshire" in thisManagement's Discussion and Analysis of Financial Conditions and Results of Operations.
On January 26, 2016, Advisory Staff of the NHPUC and the parties to the Agreement filed a stipulation with the NHPUC agreeing that near-term divestiture of PSNH's generation was in the public interest and that the Agreement should be approved. Implementation of the Agreement is subject to NHPUC approval, which is expected in early 2016.
We believe that full recovery of PSNH's generation assets is probable through a combination of cash flows during the remaining operating period, sales proceeds upon divestiture, and recovery of stranded costs in future rates.
Legislative and Policy Matters
New HampshireMassachusetts: : On July 9, 2015, the Governor of New Hampshire signed"AnApril 11, 2016, "An Act Relative to Electric Rate Reduction Financing" (the Act) permittingSolar Energy" became law, which raises the solar net metering cap levels by three percent for both private and public projects. Utilities may file proposals with the DPU to ensure that all distribution customers contribute to the fixed costs of maintaining distribution systems. We do not believe that this law will have a material financial impact on the Company.
New Hampshire: On May 2, 2016, "An Act Relative to Net Metering" became law, which raises the cap on net energy metering tariffs available to eligible customer generators from 50 MW to 100 MW and requires the NHPUC to issue finance ordersinitiate a proceeding to develop alternative net energy metering tariffs. We do not believe that authorizethis law will have a material financial impact on the issuance of rate reduction bonds in accordance with the PSNH divestiture agreement, or if the NHPUC orders divestiture, regarding cost recovery of the Clean Air project and divestiture of PSNH’s remaining generation plants.Company.
Critical Accounting Policies
The preparation of financial statements in conformity with GAAP requires management to make estimates, assumptions and, at times, difficult, subjective or complex judgments. Changes in these estimates, assumptions and judgments, in and of themselves, could materially impact our financial position, results of operations or cash flows. Our management communicates to and discusses with the Audit Committee of our Board of Trustees significant matters relating to critical accounting policies. Our critical accounting policies that we believed were the most critical in nature were reported in the Eversource 20142015 Form 10-K. There have been no material changes with regard to these critical accounting policies.
40
Other Matters
Accounting Standards: Standards: For information regarding new accounting standards, see Note 1B, "Summary of Significant Accounting Policies –Accounting Standards," to the financial statements.
Contractual Obligations and Commercial Commitments:Commitments: There have been no material contractual obligations identified and no material changes with regard to the contractual obligations and commercial commitments previously disclosed in the Eversource 20142015 Form 10-K.
Web Site:Site: Additional financial information is available through our website atwww.eversource.com. www.eversource.com. We make available through our website a link to the SEC's EDGAR website (http://www.sec.gov/edgar/searchedgar/companysearch.html), at which site Eversource's, CL&P's, NSTAR Electric's, PSNH's and WMECO's combined Annual Reports on Form 10-K, combined Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and any amendments to those reports may be reviewed. Information contained on the Company's website or that can be accessed through the website is not incorporated into and does not constitute a part of this combined Quarterly Report on Form 10-Q.
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RESULTS OF OPERATIONS – EVERSOURCE ENERGY AND SUBSIDIARIES
The following provides the amounts and variances in operating revenues and expense line items in the statements of income for Eversource for the three and nine months ended September 30,March 31, 2016 and 2015 and 2014 included in this Quarterly Report on Form 10-Q:
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| For the Three Months Ended September 30, |
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| For the Nine Months Ended September 30, |
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| For the Three Months Ended March 31, |
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(Millions of Dollars) | (Millions of Dollars) | 2015 |
| 2014 |
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| 2014 |
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| (Millions of Dollars) | 2016 |
| 2015 |
| (Decrease) |
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Operating Revenues | Operating Revenues | $ | 1,933.1 |
| $ | 1,892.5 |
| $ | 40.6 |
| 2.1 | % |
| $ | 6,263.6 |
| $ | 5,860.7 |
| $ | 402.9 |
| 6.9 | % | Operating Revenues | $ | 2,055.6 |
| $ | 2,513.4 |
| $ | (457.8) |
| (18.2) | % |
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Operating Expenses: | Operating Expenses: |
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| Purchased Power, Fuel and Transmission |
| 702.6 |
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| 716.6 |
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| (14.0) |
| (2.0) |
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| 2,549.8 |
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| 2,319.0 |
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| 230.8 |
| 10.0 |
| Purchased Power, Fuel and Transmission |
| 754.9 |
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| 1,162.1 |
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| (407.2) |
| (35.0) |
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| Operations and Maintenance |
| 327.3 |
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| 344.1 |
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| (16.8) |
| (4.9) |
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| 977.3 |
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| 1,069.0 |
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| (91.7) |
| (8.6) |
| Operations and Maintenance |
| 320.1 |
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| 333.4 |
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| (13.3) |
| (4.0) |
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| Depreciation |
| 167.9 |
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| 153.2 |
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| 14.7 |
| 9.6 |
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| 495.4 |
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| 456.2 |
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| 39.2 |
| 8.6 |
| Depreciation |
| 174.0 |
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| 163.8 |
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| 10.2 |
| 6.2 |
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| Amortization of Regulatory (Liabilities)/Assets, Net |
| (16.8) |
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| (22.5) |
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| 5.7 |
| 25.3 |
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| 42.6 |
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| 31.8 |
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| 10.8 |
| 34.0 |
| Amortization of Regulatory Assets, Net |
| 21.0 |
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| 60.6 |
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| (39.6) |
| (65.3) |
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| Energy Efficiency Programs |
| 132.1 |
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| 118.7 |
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| 13.4 |
| 11.3 |
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| 380.6 |
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| 360.2 |
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| 20.4 |
| 5.7 |
| Energy Efficiency Programs |
| 137.2 |
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| 146.6 |
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| (9.4) |
| (6.4) |
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| Taxes Other Than Income Taxes |
| 150.8 |
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| 141.5 |
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| 9.3 |
| 6.6 |
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| ��439.2 |
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| 421.9 |
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| 17.3 |
| 4.1 |
| Taxes Other Than Income Taxes |
| 159.9 |
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| 149.4 |
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| 10.5 |
| 7.0 |
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| Total Operating Expenses |
| 1,463.9 |
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| 1,451.6 |
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| 12.3 |
| 0.8 |
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| 4,884.9 |
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| 4,658.1 |
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| 226.8 |
| 4.9 |
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| 1,567.1 |
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| 2,015.9 |
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| (448.8) |
| (22.3) |
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Operating Income | Operating Income |
| 469.2 |
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| 440.9 |
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| 28.3 |
| 6.4 |
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| 1,378.7 |
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| 1,202.6 |
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| 176.1 |
| 14.6 |
| Operating Income |
| 488.5 |
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| 497.5 |
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| (9.0) |
| (1.8) |
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Interest Expense | Interest Expense |
| 92.5 |
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| 89.7 |
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| 2.8 |
| 3.1 |
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| 279.6 |
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| 272.2 |
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| 7.4 |
| 2.7 |
| Interest Expense |
| 98.2 |
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| 94.8 |
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| 3.4 |
| 3.6 |
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Other Income, Net | Other Income, Net |
| 5.2 |
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| 11.8 |
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| (6.6) |
| (55.9) |
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| 23.9 |
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| 19.0 |
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| 4.9 |
| 25.8 |
| Other Income, Net |
| 2.0 |
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| 5.7 |
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| (3.7) |
| (64.9) |
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Income Before Income Tax Expense | Income Before Income Tax Expense |
| 381.9 |
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| 363.0 |
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| 18.9 |
| 5.2 |
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| 1,123.0 |
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| 949.4 |
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| 173.6 |
| 18.3 |
| Income Before Income Tax Expense |
| 392.3 |
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| 408.4 |
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| (16.1) |
| (3.9) |
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Income Tax Expense | Income Tax Expense |
| 144.1 |
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| 126.5 |
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| 17.6 |
| 13.9 |
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| 420.7 |
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| 345.9 |
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| 74.8 |
| 21.6 |
| Income Tax Expense |
| 146.2 |
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| 153.2 |
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| (7.0) |
| (4.6) |
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Net Income | Net Income |
| 237.8 |
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| 236.5 |
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| 1.3 |
| 0.5 |
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| 702.3 |
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| 603.5 |
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| 98.8 |
| 16.4 |
| Net Income |
| 246.1 |
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| 255.2 |
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| (9.1) |
| (3.6) |
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Net Income Attributable to Noncontrolling Interests | Net Income Attributable to Noncontrolling Interests |
| 1.9 |
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| 1.9 |
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| - |
| - |
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| 5.6 |
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| 5.6 |
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| - |
| Net Income Attributable to Noncontrolling Interests |
| 1.9 |
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| 1.9 |
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Net Income Attributable to Common Shareholders | Net Income Attributable to Common Shareholders | $ | 235.9 |
| $ | 234.6 |
| $ | 1.3 |
| 0.6 | % |
| $ | 696.7 |
| $ | 597.9 |
| $ | 98.8 |
| 16.5 | % | Net Income Attributable to Common Shareholders | $ | 244.2 |
| $ | 253.3 |
| $ | (9.1) |
| (3.6) | % |
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Operating Revenues | Operating Revenues |
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Electric Distribution | Electric Distribution | $ | 1,543.7 |
| $ | 1,502.6 |
| $ | 41.1 |
| 2.7 | % |
| $ | 4,686.5 |
| $ | 4,350.4 |
| $ | 336.1 |
| 7.7 | % | Electric Distribution | $ | 1,436.1 |
| $ | 1,760.1 |
| $ | (324.0) |
| (18.4) | % |
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Natural Gas Distribution | Natural Gas Distribution |
| 106.2 |
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| 109.2 |
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| (3.0) |
| (2.7) |
|
|
| 799.6 |
|
| 737.5 |
|
| 62.1 |
| 8.4 |
| Natural Gas Distribution |
| 342.6 |
|
| 507.4 |
|
| (164.8) |
| (32.5) |
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| Total Distribution |
| 1,649.9 |
|
| 1,611.8 |
|
| 38.1 |
| 2.4 |
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| 5,486.1 |
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| 5,087.9 |
|
| 398.2 |
| 7.8 |
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Electric Transmission | Electric Transmission |
| 270.4 |
|
| 262.5 |
|
| 7.9 |
| 3.0 |
|
|
| 787.2 |
|
| 721.4 |
|
| 65.8 |
| 9.1 |
| Electric Transmission |
| 283.3 |
|
| 249.0 |
|
| 34.3 |
| 13.8 |
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| Total Regulated Companies |
| 1,920.3 |
|
| 1,874.3 |
|
| 46.0 |
| 2.5 |
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| 6,273.3 |
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| 5,809.3 |
|
| 464.0 |
| 8.0 |
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Other and Eliminations | Other and Eliminations |
| 12.8 |
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| 18.2 |
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| (5.4) |
| (29.7) |
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| (9.7) |
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| 51.4 |
|
| (61.1) |
| (a) |
| Other and Eliminations |
| (6.4) |
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| (3.1) |
|
| (3.3) |
| (a) |
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Total Operating Revenues | Total Operating Revenues | $ | 1,933.1 |
| $ | 1,892.5 |
| $ | 40.6 |
| 2.1 | % |
| $ | 6,263.6 |
| $ | 5,860.7 |
| $ | 402.9 |
| 6.9 | % | Total Operating Revenues | $ | 2,055.6 |
| $ | 2,513.4 |
| $ | (457.8) |
| (18.2) | % |
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(a) Percent greater than 100 not shown as it is not meaningful. | (a) Percent greater than 100 not shown as it is not meaningful. |
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A summary of our retail electric sales volumes and firm natural gas sales volumes were as follows: |
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A summary of our retail electric GWh sales volumes and our firm natural gas sales volumes in million cubic feet were as follows: | A summary of our retail electric GWh sales volumes and our firm natural gas sales volumes in million cubic feet were as follows: | ||||||||||||||||||||||||||||||||||||||||
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| For the Three Months Ended September 30, |
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| For the Nine Months Ended September 30, |
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| 2016 |
| 2015 |
| Decrease |
| Percent |
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Electric | Electric |
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| 2015 |
| 2014 |
| (Decrease) |
| Percent |
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| 2015 |
| 2014 |
| Increase |
| Percent |
| Traditional |
| 6,994 |
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| 7,500 |
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| (506) |
| (6.7) | % |
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Retail Electric Sales Volumes in GWh |
| 15,206 |
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| 14,555 |
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| 651 |
| 4.5 | % |
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| 42,174 |
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| 41,439 |
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| 735 |
| 1.8 | % | ||||||||||||||||||
Firm Natural Gas Sales Volumes in Million Cubic Feet |
| 11,137 |
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| 11,328 |
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| (191) |
| (1.7) |
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| 78,489 |
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| 75,169 |
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| 3,320 |
| 4.4 |
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| Decoupled |
| 6,225 |
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| 6,948 |
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| (723) |
| (10.4) |
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Total Electric | Total Electric |
| 13,219 |
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| 14,448 |
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| (1,229) |
| (8.5) | % |
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Firm Natural Gas | Firm Natural Gas |
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| Traditional |
| 19,197 |
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| 24,275 |
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| (20.9) | % |
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| Decoupled |
| 20,151 |
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| 26,297 |
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| (6,146) |
| (23.4) |
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Total Firm Natural Gas | Total Firm Natural Gas |
| 39,348 |
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| 50,572 |
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| (11,224) |
| (22.2) | % |
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Three Months Ended:
Operating Revenues, increasedwhich primarily consist of base electric and natural gas distribution revenues and tracked revenues further described below, decreased by $40.6$457.8 million forin the three months ended September 30, 2015,first quarter of 2016, as compared to the same period in 2014.2015.
Base electric and natural gas distribution revenues: Base electric distribution segment revenues increased $52.8decreased $7.1 million due primarily to weather impacts. The impact of warmer than normal weather experienced in the first quarter of 2016, as compared to much colder than normal temperatures in the first quarter of 2015, was the primary driver of a 6.7 percent decrease in traditional retail sales volumes at NSTAR Electric and PSNH. Additionally, increased customer energy conservation efforts, including those resulting from company sponsored energy efficiency programs, contributed to the decrease in sales volumes. Also contributing to the decrease in operating revenues in the first quarter of 2016 was the absence of an $11 million benefit related to the Comprehensive Settlement Agreement associated with the recovery of LBR related to 2009 through 2011 energy efficiency programs recorded at NSTAR Electric in the first quarter of 2015. The decrease in base electric distribution revenues was partially offset by the 2015 PURA ADIT settlement agreement that is being collected from customers in distribution rates at CL&P’s&P ($6.6 million).
Firm natural gas base distribution segment revenues decreased $18 million due primarily to a 20.9 percent decrease in traditional firm natural gas sales volumes as a result of warmer than normal weather experienced in the first quarter of 2016, as compared to much colder than normal temperatures in the first quarter of 2015, partially offset by the impact of the NSTAR Gas base distribution rate increase approved by PURA on December 17, 2014, effective DecemberJanuary 1, 2014 ($40.7 million). In addition,2016.
Fluctuations in CL&P recognized $4.6 million in Operating Revenues in&P's, WMECO's and NSTAR Gas' sales volumes do not impact the third quarterlevel of 2015base distribution revenue realized or earnings due to a PURA-approved settlement agreement, which increased CL&P’s distribution revenue requirement through an adjustment to rate base associated with accumulated deferred income taxes (ADIT).
Effective December 1, 2014, CL&P’s distribution revenues were decoupled from its sales volumes. As a result, CL&P no longer earns LBR related to its energy efficiency programs. This is similar to WMECO’stheir respective regulatory commission approved revenue decoupling mechanism in that it permitsmechanisms. The revenue decoupling mechanisms permit recovery of a base
39
amount of distribution revenues ($1.059 billion annually for CL&P effective December 1, 2014) and effectively breaksbreak the relationship between sales volumes and revenues and customer electricity usage.recognized. Revenue decoupling mechanisms result in the recovery of our approved base distribution revenue requirements. Therefore, changes in sales volumes have no impact on the level of base distribution revenue realized.
Tracked distribution revenues:Tracked revenues consist of certain costs that are recovered from customers in rates through regulatory commission-approved cost tracking mechanisms and therefore have no impact on earnings. Costs recovered through cost tracking mechanisms include energy supply procurement costs and other energy-related costs for our electric and natural gas supply costs, federally mandated congestion charges,customers, retail electric transmission charges, energy efficiency program costs, system resiliency costs, certain uncollectible hardship bad debt expenses and restructuring and stranded costs as a result of deregulation.cost recovery revenues. Tracked electric distribution segment revenues decreased primarily as a result of a decreasedecreases in energy supply costs ($40.7367.2 million), driven by decreased average retail rates and lower sales volumes, partially offset by an increase in retail electric transmission charges ($14.8 million) and a decreasean increase in the federally mandated congestion charge primarily driven by refunds in 2015 for a prior year overrecovery ($25.7 million), partially offset by increases in stranded cost recoveries ($21.9 million), energy efficiency program cost revenues ($15.3 million) and retail transmission charges ($4.811.4 million). Tracked natural gas distribution segment revenues decreased due primarily to a decrease in rates related to the recovery of costs associated with the procurement of natural gas supply ($13.2 million).
42
Transmission revenues: The electric transmission segment revenues increased by $7.9 million due primarily to recovery of higher revenue requirements associated with ongoing investments in our transmission infrastructure.
Other: Other revenues decreased due primarily to the sale of Eversource's unregulated contracting business, which was sold on April 13, 2015 ($14.3 million).
Nine Months Ended:
Operating Revenues increased by $402.9 million for the nine months ended September 30, 2015, as compared to the same period in 2014.
Base electric and natural gas distribution revenues: Base electric distribution segment revenues increased $124.5 million due primarily to CL&P’s base distribution rate increase, approved by PURA on December 17, 2014, effective December 1, 2014 ($107.3 million) and weather. In addition, Operating Revenues increased $15.3 million at CL&P due to the PURA-approved settlement agreement regarding ADIT, $11 million for the 2014 Comprehensive Settlement Agreement associated with the recovery of LBR related to 2009 through 2011 energy efficiency programs at NSTAR Electric, and $18.5 million increase of LBR recognition at NSTAR Electric related to 2015 energy efficiency programs for the nine months ended September 30, 2015, as compared to the same period in 2014. The $15.3 million represents the incremental revenue requirement recognized for the period December 1, 2014 through September 30, 2015, which will be collected from customers over a 24-month period commencing December 1, 2015. The impact of colder winter weather experienced in the first quarter of 2015and the warmer weather in the third quarter of 2015 was the primary driver of the increase in retail electric sales volumes and base electric distribution revenues at NSTAR Electric and PSNH for the nine months ended September 30, 2015 compared to the same period in 2014.
Firm natural gas base distribution segment revenues increased $9.9 million as a result of the impact of colder winter weather experienceddecreases in the first quarter of 2015, resulting from a 4.4 percent increase in firm natural gas sales volumes for the nine months ended September 30, 2015, as compared to the same period in 2014. The winter weather conditions experienced in the first quarter of 2015 were significantly colder than both normal and the same period last year throughout our natural gas service territories. Weather-normalized firm natural gas sales volumes (based on 30-year average temperatures) increased 2.5 percent for the nine months ended September 30, 2015, as compared to the same period in 2014, due primarily to residential and commercial customer growth and improved economic conditions.
Tracked distribution revenues:Tracked electric distribution segment revenues increased as a result of increases in energy supply costs ($297.4 million) and tracked natural gas distribution segment revenues increased due primarily to an increase in rates related to the recovery of costs associated with the procurement of natural gas supply ($25.8 million). Energy and natural gas supply costs were impacted($116.6 million), driven by the overall New England wholesale energy supply market in which natural gas delivery costs adversely impacted the cost of electric energy purchased for our retail electric customersdecreased average rates and the cost of natural gas purchased on behalf of our retail natural gas customers. These increases were partially offset by a decrease in retail electric transmission charges ($80.3 million)lower sales volumes, and a decrease in the federally mandated congestion charge primarily driven by refunds in 2015 for a prior year overrecoveryenergy efficiency program revenues ($82.417.7 million).
Electric transmission revenues: The electric transmission segment revenues increased by $65.8$34.3 million due primarily to the impactabsence in 2016 of a lower$20 million reserve charge recorded in the first quarter of 2015 associated with the March 2015 FERC ROE complaint proceedings reserve recorded in 2015 as compared to 2014order, and the recovery of higher revenue requirements associated with ongoing investments in our transmission infrastructure.
Other: Other revenues decreased due primarily to the sale of Eversource's unregulated contracting business on April 13, 2015 ($42.511.4 million).
Purchased Power, Fuel and Transmission expense includes costs associated with purchasing electricity and natural gas on behalf of our customers. These energy supply costs are recovered from customers in rates through cost tracking mechanisms, which have no impact on earnings (tracked costs). Purchased Power, Fuel and Transmission expense decreased forin the three months ended September 30, 2015 and increased for the nine months ended September 30, 2015,first quarter of 2016, as compared to the same periodsperiod in 2014,2015, due primarily to the following:
| Three Months Ended |
| Nine Months Ended | ||
(Millions of Dollars) | Increase/(Decrease) |
| Increase/(Decrease) | ||
Electric Distribution | $ | (19.2) |
| $ | 197.3 |
Natural Gas Distribution |
| (4.6) |
|
| 48.9 |
Transmission |
| 0.6 |
|
| 2.3 |
Other and Eliminations |
| 9.2 |
|
| (17.7) |
Total Purchased Power, Fuel and Transmission | $ | (14.0) |
| $ | 230.8 |
(Millions of Dollars) | Increase/(Decrease) | |
Electric Distribution | $ | (308.3) |
Natural Gas Distribution | (127.9) | |
Transmission | 29.0 | |
Total Purchased Power, Fuel and Transmission | $ | (407.2) |
The decrease in purchased power costs for the three months ended September 30, 2015 at the electric distribution business was driven by lower sales volumes and lower prices associated with the procurement of energy supply, as compared towell as a decrease in the same period in 2014.amount of electricity generated by PSNH facilities. The decrease in purchased power costs at the natural gas distribution business was due to lower sales volumes and lower average natural gas prices forprices. The increase in transmission costs was primarily the three months ended September 30, 2015, as compared to the same period in 2014.
The increases in purchased power costs for the nine months ended September 30, 2015 at the electric and natural gas distribution businesses were driven by the higher prices associated with the procurementresult of energy supplyan increase in the first half of 2015, as compared to the same period in 2014. Our energy supply prices were impactedRNS costs billed by higher natural gas delivery costs which, in addition to its impact on the price of natural gas purchased on behalf of our retail natural gas customers, had an adverse impact on the price of electric energy purchased for our retail electric customers. ISO-NE.
Operations and Maintenanceexpense includes tracked costs and costs that are part of base electric and natural gas distribution rates with changes impacting earnings (non-tracked costs). Operations and Maintenance expense decreased forin the three and nine months ended September 30, 2015,first quarter of 2016, as compared to the same periodsperiod in 2014,2015, due primarily to the following:
43
| Three Months Ended |
| Nine Months Ended | ||
(Millions of Dollars) | Increase/(Decrease) |
| Increase/(Decrease) | ||
Base Electric Distribution: |
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|
|
Resolution of basic service bad debt adder mechanism at NSTAR Electric | $ | - |
| $ | (24.2) |
Decrease in employee-related expenses, including labor and benefits |
| (5.1) |
|
| (15.7) |
Contribution to create clean energy fund in connection with the generation |
| - |
|
| 5.0 |
Bad debt expense |
| 4.8 |
|
| 4.6 |
Storm restoration costs |
| 1.1 |
|
| 4.5 |
Lower contractor costs due to timing of capital projects at CL&P |
| (4.4) |
|
| (1.4) |
Other operations and maintenance |
| (0.8) |
|
| (0.5) |
Total Base Electric Distribution |
| (4.4) |
|
| (27.7) |
Total Base Natural Gas Distribution |
| (1.6) |
|
| (5.2) |
Total Tracked costs (Transmission and Electric and Natural Gas Distribution) |
| 3.4 |
|
| (4.7) |
Total Distribution and Transmission |
| (2.6) |
|
| (37.6) |
Other and eliminations: |
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Reorganizational costs |
| (1.6) |
|
| (7.8) |
Absence of Eversource's unregulated electrical contracting business due to sale |
| (9.4) |
|
| (34.8) |
ES Parent and Other Companies |
| (3.2) |
|
| (11.5) |
Total Operations and Maintenance | $ | (16.8) |
| $ | (91.7) |
(Millions of Dollars) | Increase/(Decrease) | |
Base Electric Distribution: | ||
Absence of 2015 resolution of basic service bad debt adder mechanism at NSTAR Electric | $ | 24.2 |
Employee-related expenses, including labor and benefits | (16.9) | |
Vegetation management | 3.3 | |
Other operations and maintenance | 4.3 | |
Total Base Electric Distribution | 14.9 | |
Total Base Natural Gas Distribution: | ||
Employee-related expenses, including labor and benefits | (10.2) | |
Other operations and maintenance | 0.1 | |
Total Base Natural Gas Distribution | (10.1) | |
Total Tracked costs (Transmission and Electric and Natural Gas Distribution) | 0.6 | |
Other and eliminations: | ||
Integration costs | (7.0) | |
Absence of Eversource's unregulated electrical contracting business due to sale in April 2015, net | (10.6) | |
Eversource Parent and Other Companies | (1.1) | |
Total Operations and Maintenance | $ | (13.3) |
Depreciationincreased forin the three and nine months ended September 30, 2015,first quarter of 2016, as compared to the same periodsperiod in 2014,2015, due primarily to higher utility plant in service balances resulting from completed construction projects placed into service and an increase in depreciation rates at CL&P as a result of the distribution rate case effective December 1, 2014. balances.
40
Amortization of Regulatory (Liabilities)/Assets, Net,which are tracked costs, include certain regulatory-approved tracking mechanisms. Fluctuations in these costs are recovered from customers in rates and have no impact on earnings. Amortization of Regulatory (Liabilities)/Assets, Net, increased for the three and nine months ended September 30, 2015, as compared to the same periods in 2014, due primarily to the following:
| Three Months Ended |
| Nine Months Ended | ||
(Millions of Dollars) | Increase/(Decrease) |
| Increase/(Decrease) | ||
CL&P: |
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|
Amortization increase (including storm cost recovery) approved and included in | $ | 16.5 |
| $ | 49.6 |
Energy and energy-related supply costs tracking mechanism |
| (52.5) |
|
| (94.3) |
NSTAR Electric (primarily transition costs tracking mechanism, and for the nine |
| 17.3 |
|
| (9.7) |
PSNH (primarily default energy service charge tracking mechanism) |
| 11.7 |
|
| 46.8 |
WMECO |
| 12.4 |
|
| 19.0 |
Other |
| 0.3 |
|
| (0.6) |
Total Amortization of Regulatory Assets, Net | $ | 5.7 |
| $ | 10.8 |
The increase in CL&P's amortization was due primarily to an increase in storm cost recovery, which was approved and included in distribution rates effective December 1, 2014. In connection with the 2014 Comprehensive Settlement Agreement associated with the settlement with the Massachusetts Attorney General on eleven open dockets covering the CPSL program filings, NSTAR Electric recognized an $11.7 million benefit in the first quarter of 2015, which was recorded as a reduction to amortization expense.
The remaining fluctuations in amortization expense are driven by the deferral of energy supply and energy-related costs whichincluded in certain regulatory-approved tracking mechanisms, and the amortization of certain costs. The deferral adjusts expense to match the corresponding revenues. Amortization of Regulatory Assets, Net, decreased in the first quarter of 2016, as compared to the same period in 2015, due primarily to the following:
(Millions of Dollars) | Increase/(Decrease) | |
CL&P (primarily energy and energy-related supply costs tracking mechanism) | $ | (38.4) |
NSTAR Electric (primarily the absence of the Comprehensive Settlement Agreement) | 10.3 | |
PSNH (primarily default energy service charge tracking mechanism) | (6.6) | |
WMECO | (2.7) | |
Other | (2.2) | |
Total Amortization of Regulatory Assets, Net | $ | (39.6) |
The deferral of energy supply and energy-related costs can fluctuate from period to period based on the timing of costs incurred and related rate changes to recover these costs. Fluctuations in energyEnergy supply and energy-related costs, which are the primary drivers in amortization, are recovered from customers in rates and have no impact on earnings.
Energy Efficiency Programs, which are tracked costs, increased fordecreased in the three and nine months ended September 30, 2015,first quarter of 2016, as compared to the same period in 2014,2015, due primarily to deferral adjustments at CL&P and the natural gas distribution businesses, which reflect the actual costs of energy efficiency programs, compared to the estimated amounts billed to customers. The deferrals adjust expense to match the energy efficiency programs revenue. Energy efficiency revenue was lower in the first quarter of 2016 as a result of lower retail sales. The impact of the deferral is partially offset by an increase in energy efficiency costs in accordance with the three-year program guidelines established by the DPU at NSTAR Electric. The costs for various state energy policy initiatives and expanded energy efficiency programs are recovered from customers in rates and have no impact on earnings.
Taxes Other Than Income Taxes expense increased forin the three and nine months ended September 30, 2015,first quarter of 2016, as compared to the same periodsperiod in 2014,2015, due primarily to an increase in property taxes as a result of both an increase in utility plant balances and property tax rates.balances.
Interest Expenseincreased forin the three and nine months ended September 30, 2015,first quarter of 2016, as compared to the same periodsperiod in 2014,2015, due primarily to higher interest on long-term debt ($2.4 million and $4.1 million, respectively), and higher interest on short-term borrowings,6.7 million) as a result of new debt issuances in 2015, partially offset by lower interest on regulatory deferral mechanisms for the three months ended September 30, 2015.($3.3 million).
Other Income, Netdecreased forin the three months ended September 30, 2015,first quarter of 2016, as compared to the same period in 2014,2015, due primarily to the absence in 2015 of a gain on the sale of land recorded in the third quarter of 2014 ($4.5 million) and a decrease in net gains related to the deferred compensation plans ($23.6 million).
44
Other Income Netincreased forTax Expensedecreased in the nine months ended September 30, 2015,first quarter of 2016, as compared to the same period in 2014,2015, due primarily to higher AFUDClower pre-tax earnings ($5.6 million) and the excess tax benefit due to the adoption of new accounting guidance related to equity fundsshare-based payment transactions ($3.6 million) and an increase in net gains related to the deferred compensation plans ($1.8 million).
Income Tax Expenseincreased for the three months ended September 30, 2015, as compared to the same period in 2014, due primarily to higher pre-tax earnings ($6.4 million), the impact of reconciling our provision for income taxes to what was filed on our tax return (return to provision) and a lower tax benefit in 2015 compared to 2014 from a reduction in tax reserves ($11.8 million).
Income Tax Expense increased for the nine months ended September 30, 2015, as compared to the same period in 2014, due primarily to higher pre-tax earnings ($59.6 million), higher state income taxes ($4.4 million), the impact of the return to provision and a lower tax benefit in 2015 compared to 2014 from a reduction in tax reserves ($13.22.5 million), partially offset by items that impact our tax rate as a result of regulatory treatment (flow-through items)higher state taxes ($2.91.6 million).
4541
RESULTS OF OPERATIONS – THE CONNECTICUT LIGHT AND POWER COMPANY
The following provides the amounts and variances in operating revenues and expense line items in the statements of income for CL&P for the three and nine months ended September 30,March 31, 2016 and 2015 and 2014 included in this Quarterly Report on Form 10-Q:
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| For the Three Months Ended September 30, |
| For the Nine Months Ended September 30, |
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| For the Three Months Ended March 31, |
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| Increase/ |
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| Increase/ |
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| ||||
(Millions of Dollars) | (Millions of Dollars) | 2015 |
| 2014 |
| (Decrease) |
| Percent |
| 2015 |
| 2014 |
| (Decrease) |
| Percent |
| (Millions of Dollars) | 2016 |
| 2015 |
| (Decrease) |
| Percent |
| ||||||||||||
Operating Revenues | Operating Revenues | $ | 704.3 |
| $ | 695.6 |
| $ | 8.7 |
| 1.3 | % |
| $ | 2,175.7 |
| $ | 2,017.6 |
| $ | 158.1 |
| 7.8 | % | Operating Revenues | $ | 735.3 |
| $ | 804.9 |
| $ | (69.6) |
| (8.6) | % | ||
Operating Expenses: | Operating Expenses: |
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| Operating Expenses: |
|
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|
|
|
|
|
|
|
| |||
| Purchased Power and Transmission |
| 274.8 |
|
| 255.8 |
|
| 19.0 |
| 7.4 |
|
| 861.6 |
|
| 737.0 |
|
| 124.6 |
| 16.9 |
| Purchased Power and Transmission |
| 272.6 |
|
| 333.6 |
|
| (61.0) |
| (18.3) |
| |||
| Operations and Maintenance |
| 122.3 |
|
| 127.2 |
|
| (4.9) |
| (3.9) |
|
| 358.3 |
|
| 368.6 |
|
| (10.3) |
| (2.8) |
| Operations and Maintenance |
| 110.8 |
|
| 117.4 |
|
| (6.6) |
| (5.6) |
| |||
| Depreciation |
| 54.8 |
|
| 46.9 |
|
| 7.9 |
| 16.8 |
|
| 159.9 |
|
| 139.6 |
|
| 20.3 |
| 14.5 |
| Depreciation |
| 57.0 |
|
| 52.9 |
|
| 4.1 |
| 7.8 |
| |||
| Amortization of Regulatory (Liabilities)/Assets, Net |
| (22.9) |
|
| 13.1 |
|
| (36.0) |
| (a) |
|
| 17.9 |
|
| 62.6 |
|
| (44.7) |
| (71.4) |
| Amortization of Regulatory Assets, Net |
| 9.9 |
|
| 48.3 |
|
| (38.4) |
| (79.5) |
| |||
| Energy Efficiency Programs |
| 42.6 |
|
| 41.4 |
|
| 1.2 |
| 2.9 |
|
| 119.4 |
|
| 119.4 |
|
| - |
| - |
| Energy Efficiency Programs |
| 38.1 |
|
| 42.8 |
|
| (4.7) |
| (11.0) |
| |||
| Taxes Other Than Income Taxes |
| 71.6 |
|
| 65.0 |
|
| 6.6 |
| 10.2 |
|
| 201.7 |
|
| 194.1 |
|
| 7.6 |
| 3.9 |
| Taxes Other Than Income Taxes |
| 75.4 |
|
| 68.1 |
|
| 7.3 |
| 10.7 |
| |||
|
| Total Operating Expenses |
| 543.2 |
|
| 549.4 |
|
| (6.2) |
| (1.1) |
|
| 1,718.8 |
|
| 1,621.3 |
|
| 97.5 |
| 6.0 |
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| Total Operating Expenses |
| 563.8 |
|
| 663.1 |
|
| (99.3) |
| (15.0) |
| |
Operating Income | Operating Income |
| 161.1 |
|
| 146.2 |
|
| 14.9 |
| 10.2 |
|
| 456.9 |
|
| 396.3 |
|
| 60.6 |
| 15.3 |
| Operating Income |
| 171.5 |
|
| 141.8 |
|
| 29.7 |
| 20.9 |
| |||
Interest Expense | Interest Expense |
| 36.7 |
|
| 38.7 |
|
| (2.0) |
| (5.2) |
|
| 109.5 |
|
| 110.4 |
|
| (0.9) |
| (0.8) |
| Interest Expense |
| 36.5 |
|
| 36.6 |
|
| (0.1) |
| (0.3) |
| |||
Other Income, Net | Other Income, Net |
| 2.4 |
|
| 6.4 |
|
| (4.0) |
| (62.5) |
|
| 8.6 |
|
| 10.6 |
|
| (2.0) |
| (18.9) |
| Other Income, Net |
| 0.9 |
|
| 2.2 |
|
| (1.3) |
| (59.1) |
| |||
Income Before Income Tax Expense | Income Before Income Tax Expense |
| 126.8 |
|
| 113.9 |
|
| 12.9 |
| 11.3 |
|
| 356.0 |
|
| 296.5 |
|
| 59.5 |
| 20.1 |
| Income Before Income Tax Expense |
| 135.9 |
|
| 107.4 |
|
| 28.5 |
| 26.5 |
| |||
Income Tax Expense | Income Tax Expense |
| 46.6 |
|
| 30.0 |
|
| 16.6 |
| 55.3 |
|
| 127.8 |
|
| 95.9 |
|
| 31.9 |
| 33.3 |
| Income Tax Expense |
| 48.9 |
|
| 38.2 |
|
| 10.7 |
| 28.0 |
| |||
Net Income | Net Income | $ | 80.2 |
| $ | 83.9 |
| $ | (3.7) |
| (4.4) | % |
| $ | 228.2 |
| $ | 200.6 |
| $ | 27.6 |
| 13.8 | % | Net Income | $ | 87.0 |
| $ | 69.2 |
| $ | 17.8 |
| 25.7 | % | ||
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Operating Revenues | Operating Revenues |
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CL&P's retail sales volumes were as follows: | CL&P's retail sales volumes were as follows: |
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| 2015 |
| 2014 |
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| 2015 |
| 2014 |
| Increase |
| Percent |
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| 2016 |
| 2015 |
| Decrease |
| Percent |
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Retail Sales Volumes in GWh | Retail Sales Volumes in GWh |
| 6,103 |
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| 5,791 |
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| 312 |
| 5.4 | % |
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| 17,123 |
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| 16,790 |
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| 333 |
| 2.0 | % | Retail Sales Volumes in GWh |
| 5,350 |
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| 5,994 |
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| (644) |
| (10.7) | % |
Three Months Ended:
CL&P's Operating Revenues, increasedwhich consist of base distribution revenues and tracked revenues further described below, decreased by $8.7$69.6 million forin the three months ended September 30, 2015,first quarter of 2016, as compared to the same period in 2014. 2015.
Base distribution revenues:Base distribution revenues increased $40.7by $7.7 million due to a basethe 2015 PURA ADIT settlement agreement that is being collected from customers in distribution rate increase approved by PURA on December 17, 2014, effective December 1, 2014. In addition, CL&P recognized $4.6 million in Operating Revenuesrates ($6.6 million) and the absence of an ROE penalty recorded in the thirdfirst quarter of 2015 due to a PURA-approved settlement agreement, which increased CL&P’s distribution revenue requirement through an adjustment to rate base associated with ADIT.($1.1 million).
Effective December 1, 2014,Fluctuations in CL&P’s&P's sales volumes do not impact the level of base distribution revenues were decoupled from its sales volumes. As a result,revenue realized or earnings due to the PURA approved revenue decoupling mechanism. CL&P no longer earns LBR related to its energy efficiency programs. The&P's revenue decoupling mechanism permits recovery of a base amount of distribution revenues ($1.059 billion annually effective December 1, 2014)annually) and effectively breaks the relationship between sales volumes and revenues and customer electricity usage.recognized. Revenue decoupling mechanisms result in the recovery of our approved base distribution revenue requirements. Therefore, changes
Fluctuations in sales volumes have no impact on the overall level of base distribution revenue realized.
Tracked revenues: operating revenues are primarily related to tracked revenues. Tracked revenues consist of certain costs that are recovered from customers in rates through PURA-approved cost tracking mechanisms and therefore have no impact on earnings. Costs recovered through cost tracking mechanisms include energy supply procurement and other energy-related costs, retail transmission charges, energy efficiency program costs system resiliency costs and uncollectible hardship bad debt expense.restructuring and stranded cost recovery revenues. Tracked distribution revenues decreased primarily as a result of a decrease in energy supply costs ($38.2120.7 million) and a decrease in the federally mandated congestion charge primarily driven by refunds in 2015 for a prior year overrecovery ($25.7 million), partially offset bydecreased average retail rates and lower sales volumes. Partially offsetting this decrease was an increase in retail transmission charges ($30.712.4 million).
Nine Months Ended:
CL&P's Operating Revenues increased by $158.1 million for the nine months ended September 30, 2015, as compared to the same period in 2014.
Base distribution revenues: Base distribution revenues increased $107.3 million due to a base distribution rate increase approved by PURA on December 17, 2014, effective December 1, 2014. In addition, CL&P recognized $15.3 million in Operating Revenues due to the PURA-approved settlement agreement regarding ADIT. The $15.3 million represents the incremental revenue requirement for the period December 1, 2014 through September 30, 2015, which will be collected from customers over a 24-month period commencing December 1, 2015.
Tracked revenues: Tracked distribution revenues increased primarily as a result of, an increase in energy supply costs ($110.9 million), partially offset by a decrease in the federally mandated congestion charge primarily driven by refunds in 2015 for a prior year overrecoverycharges ($82.411.4 million) and a decreasean increase in competitive transition assessment charges ($13.16.4 million). In addition, system benefits charge revenues increased by $4.1 million, which impacted earnings as a result of a higher rate base.
Transmission revenues increased by $18.7$15.4 million due primarily to the impactabsence in 2016 of a lower$12.5 million reserve charge recorded in the first quarter of 2015 associated with the March 2015 FERC ROE complaint proceedings reserve recorded in 2015 as compared to 2014order, and the recovery of higher revenue requirements associated with ongoing investments in our transmission infrastructure.
46
Purchased Power and Transmission expense includes costs associated with purchasing electricity on behalf of CL&P's customers. These energy supply costs are recovered from customers in PURA-approved cost tracking mechanisms, which have no impact on earnings (tracked costs). Purchased Power and Transmission increased forexpense decreased in the three and nine months ended September 30, 2015,first quarter of 2016, as compared to the same periodsperiod in 2014,2015, due primarily to the following:
| Three Months Ended |
| Nine Months Ended | ||
(Millions of Dollars) | Increase/(Decrease) |
| Increase/(Decrease) | ||
Purchased Power Costs | $ | (9.8) |
| $ | 126.4 |
Transmission Costs |
| 28.7 |
|
| (0.8) |
Other |
| 0.1 |
|
| (1.0) |
Total Purchased Power and Transmission | $ | 19.0 |
| $ | 124.6 |
(Millions of Dollars) | Increase/(Decrease) | |
Purchased Power Costs | $ | (74.1) |
Transmission Costs | 13.1 | |
Total Purchased Power and Transmission | $ | (61.0) |
Included in purchased power costs are the costs associated with CL&P's generation services charge (GSC) and deferred energy supply costs. The GSC recovers energy-related costs incurred as a result of providing electric generation service supply to all customers thatwho have not migrated to competitive energythird party suppliers. The decrease in purchased power costs for the three months ended September 30, 2015 was due primarily to a decrease in the GSC cost deferral. The increase in purchased power costs for the nine months ended September 30, 2015 was due primarily to higher prices associated with the procurement of energy supply related to standard offer from third party suppliers.supply and lower sales volumes. The increase in transmission costs for the three months ended September 30, 2015 was primarily the result of an increase in the retail transmission cost deferral, which reflects the actualRNS costs of transmission service compared to estimated amounts billed to customers. by ISO-NE.
42
Operations and Maintenanceexpense includes tracked costs and costs that are part of base distribution rates with changes impacting earnings (non-tracked costs). Operations and Maintenance expense decreased forin the three months ended September 30, 2015,first quarter of 2016, as compared to the same period in 2014,2015, driven by a $6.7$6.6 million decrease in non-tracked costs, which was primarily attributable to lower employee-related expensescontractor costs and lower contractor costs due to timing of capital projects, partially offset by higher bad debt expense.employee-related expenses. Tracked costs, which have no earnings impact, increased $1.8 million, which was primarily attributable to higher tracked bad debt expense.were unchanged.
Operations and Maintenance decreased forDepreciation expense increased in the nine months ended September 30, 2015,first quarter of 2016, as compared to the same period in 2014, driven by a $14.7 million decrease in non-tracked costs, which was primarily attributable to lower employee-related expenses, partially offset by higher bad debt expense and higher storm restoration costs. Tracked costs, which have no earnings impact, increased $4.4 million, which was primarily attributable to higher tracked bad debt expense.
Depreciation increased for the three and nine months ended September 30, 2015, as compared to the same periods in 2014, due primarily to an increase in depreciation rates as a result of the distribution rate case decision that was effective December 1, 2014 and higher utility plant in service balances.
Amortization of Regulatory (Liabilities)/Assets, Net¸Net decreased for the three and nine months ended September 30, 2015, as compared to the same periods in 2014, due primarily to a decrease inincludes the deferral of energy supply and energy-related costs thatand the amortization of storm and other costs. Amortization of Regulatory Assets, Net decreased in the first quarter of 2016, as compared to the same period in 2015, due primarily to the deferral adjustment of energy supply and energy-related costs, which can fluctuate from period to period based on the timing of costs incurred and related rate changes to recover these costs ($52.5 million and $94.3 million decreases forcosts. The deferral adjusts expense to match the three and nine month periods in 2015 as compared to 2014, respectively), partially offset by an increase in storm cost recovery and other cost recovery approved and included in distribution rates effective December 1, 2014 ($16.5 million and $49.6 million increases for the three and nine month periods in 2015 as compared to 2014, respectively). Fluctuations in energycorresponding revenues. Energy supply and energy-related costs, which are the primary drivers in amortization, are recovered from customers in rates and have no impact on earnings.
Energy Efficiency Programs,which are tracked costs, decreased in the first quarter of 2016, as compared to the same period in 2015, due primarily to the deferral adjustment, which reflects the actual costs of energy efficiency programs, compared to the estimated amounts billed to customers. The deferral adjusts expense to match the energy efficiency programs revenue, which was lower in 2016 as a result of lower retail sales. CL&P is allowed to recover its costs for state energy policy initiatives and expanded energy efficiency programs.
Taxes Other Than Income Taxesexpense increased forin the three and nine months ended September 30, 2015,first quarter of 2016, as compared to the same periodsperiod in 2014,2015, due primarily to an increase in property taxes as a result of both an increase in utility plant balances and property tax rates.an increase in gross earnings taxes.
Interest ExpenseOther Income, Netdecreased forin the three months ended September 30, 2015,first quarter of 2016, as compared to the same period in 2014,2015, due primarily to lower interest on regulatory deferral mechanisms.
Other Income, Netdecreased for the three and nine months ended September 30, 2015, as compareda decrease in net gains related to the same periods in 2014, due primarily to the absence in 2015 of a gain on the sale of land recorded in the third quarter of 2014deferred compensation plans ($4.51.4 million), partially offset by higher AFUDC related to equity funds ($0.2 million and $1.6 million, respectively).
Income Tax Expenseincreased forin the three months ended September 30, 2015,first quarter of 2016, as compared to the same period in 2014,2015, due primarily to higher pre-tax earnings ($4.510 million), thehigher state taxes ($0.8 million) and items that impact our tax rate as a result of the return to provision and a lower tax benefit in 2015 compared to 2014 from a reduction in tax reservesregulatory treatment (flow-through items) ($13.20.4 million), partially offset by the flow-through items ($1.2 million).
Income Tax Expense increased for the nine months ended September 30, 2015, as comparedexcess tax benefit due to the same period in 2014, due primarilyadoption of new accounting guidance related to higher pre-tax earningsshare-based payment transactions ($20.80.9 million), higher state income taxes ($1.8 million), the impact of the return to provision and a lower tax benefit in 2015 compared to 2014 from a reduction in tax reserves ($12.5 million), partially offset by the flow-through items ($3.4 million).
47
EARNINGS SUMMARY
CL&P's earnings decreased $3.7increased $17.8 million forin the three months ended September 30, 2015,first quarter of 2016, as compared to the same period in 2014,2015, due primarily to an increase in transmission earnings driven by higher income tax expense due to the absence in 2016 of favorable state income tax benefits recorded in the third quarter of 2014, the absence of2015 FERC ROE complaint proceedings reserve charge as well as a gain on the sale of land recorded in the third quarter of 2014, higher property taxes and higher depreciation expense. These unfavorable earnings impacts were partially offset bytransmission rate base, higher distribution revenues as a result of rate increases due primarily to the impact of the December 1, 2014 base distribution rate increase, the PURA-approved settlement agreement, which increased CL&P’s distribution revenues through an adjustment toa higher rate base, associated with ADIT, and lower operations and maintenance costs, which were primarily attributable to lower employee-related expenses.
CL&P's earnings increased $27.6 million for the nine months ended September 30, 2015, as compared to the same period in 2014, driven by higher distribution revenues due primarily to the impact of the December 1, 2014 base distribution rate increase and the PURA-approved settlement agreement, which increased CL&P’s distribution revenues.expiration of a 2015 ROE penalty. In addition, earnings increased due to lower operations and maintenance costs, which were primarily attributable to lower contractor costs and lower employee-related expenses, and the impact of the lower FERC ROE complaint proceedings reserve recorded in 2015, as compared to 2014.expenses. These favorable earnings impacts were partially offset by higher income tax expense due to the absence of favorable state income tax benefits recorded in 2014, the absence of a gain on the sale of land recorded in 2014, higher property taxes and higher depreciation expense.
LIQUIDITY
Cash totaled $16.5 million as of March 31, 2016, compared with $1.1 million as of December 31, 2015.
Eversource parent has a $1.45 billion commercial paper program allowing Eversource parent to issue commercial paper as a form of short-term debt, with intercompany loans to certain subsidiaries, including CL&P. The weighted-average interest rate on the commercial paper borrowings as of March 31, 2016 and December 31, 2015 was 0.68 percent and 0.72 percent, respectively. As of March 31, 2016 and December 31, 2015, there were intercompany loans from Eversource parent to CL&P of $115.5 million and $277.4 million, respectively.
CL&P had cash flows provided by operating activities of $421.8$221.2 million forin the nine months ended September 30, 2015,first quarter of 2016, as compared to $483$133.9 million in the same period of 2014.2015. The decreaseincrease in operating cash flows was due primarily to the absence of the receipt of $68.6 million in DOE Phase II Damages proceeds received on June 1, 2014 from the Yankee Companies, the timing of regulatory recoveries resulting from the increase in federally mandated congestion charges, and the timing of collections and payments related to our working capital items, including accounts receivable and accounts payable. Accounts receivable increased due toIn addition, there was an increase of $17 million in standard offer rates effective January 1, 2015 and an increase in base distribution rates effective December 1, 2014. Partially offsetting these unfavorable impacts were net income tax refunds received in the first quarter of $3.8 million2016, as compared to the same period in 2015, compared with income tax payments of $85.3 million in 2014.2015.
Investments in Property, Plant and Equipment on the statements of cash flows do not include amounts incurred on capital projects but not yet paid, cost of removal, AFUDC related to equity funds, and the capitalized portions of pension expense. ForCL&P's investments totaled $147.1 million in the nine months ended September 30, 2015, investments for CL&P were $359.3 million.
On October 26, 2015, Eversource parent and certainfirst quarter of its subsidiaries, including CL&P, amended and restated their joint five-year $1.45 billion revolving credit facility and extended the termination date to September 4, 2020. The facility serves to backstop Eversource parent's $1.45 billion commercial paper program. The commercial paper program allows Eversource parent to issue commercial paper as a form of short-term debt with intercompany loans to certain subsidiaries, including CL&P. As of December 31, 2014, there were intercompany loans from Eversource parent of $133.4 million to CL&P.2016.
Financing activities for the nine months ended September 30, 2015 included $147$49.9 million in common stock dividends paid to Eversource parent.
parent in the first quarter of 2016.
4843
RESULTS OF OPERATIONS – NSTAR ELECTRIC COMPANY AND SUBSIDIARY
The following provides the amounts and variances in operating revenues and expense line items in the statements of income for NSTAR Electric for the ninethree months ended September 30,March 31, 2016 and 2015 and 2014 included in this Quarterly Report on Form 10-Q:
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| For the Nine Months Ended September 30, |
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| For the Three Months Ended March 31, |
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(Millions of Dollars) | (Millions of Dollars) |
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| (Millions of Dollars) |
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| Increase/ |
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2015 |
| 2014 |
| (Decrease) |
| Percent |
| 2016 |
| 2015 |
| (Decrease) |
| Percent |
| |||||||||||
Operating Revenues | Operating Revenues | $ | 2,134.7 |
| $ | 1,955.6 |
| $ | 179.1 |
| 9.2 | % | Operating Revenues | $ | 614.2 |
| $ | 766.8 |
| $ | (152.6) |
| (19.9) | % | ||
Operating Expenses: | Operating Expenses: |
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| Operating Expenses: |
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| Purchased Power and Transmission |
| 984.0 |
|
| 879.8 |
|
| 104.2 |
| 11.8 |
| Purchased Power and Transmission |
| 254.3 |
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| 401.9 |
|
| (147.6) |
| (36.7) |
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| Operations and Maintenance |
| 228.8 |
|
| 244.6 |
|
| (15.8) |
| (6.5) |
| Operations and Maintenance |
| 94.7 |
|
| 75.8 |
|
| 18.9 |
| 24.9 |
| ||
| Depreciation |
| 146.8 |
|
| 141.0 |
|
| 5.8 |
| 4.1 |
| Depreciation |
| 51.9 |
|
| 48.8 |
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| 3.1 |
| 6.4 |
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| Amortization of Regulatory Liabilities, Net |
| (10.6) |
|
| (0.9) |
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| (9.7) |
| (a) |
| Amortization of Regulatory Assets/(Liabilities), Net |
| 4.7 |
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| (5.6) |
|
| 10.3 |
| (a) |
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| Energy Efficiency Programs |
| 164.8 |
|
| 145.5 |
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| 19.3 |
| 13.3 |
| Energy Efficiency Programs |
| 66.2 |
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| 55.4 |
|
| 10.8 |
| 19.5 |
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| Taxes Other Than Income Taxes |
| 95.8 |
|
| 99.1 |
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| (3.3) |
| (3.3) |
| Taxes Other Than Income Taxes |
| 32.6 |
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| 31.0 |
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| 1.6 |
| 5.2 |
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| Total Operating Expenses |
| 1,609.6 |
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| 1,509.1 |
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| 100.5 |
| 6.7 |
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| Total Operating Expenses |
| 504.4 |
|
| 607.3 |
|
| (102.9) |
| (16.9) |
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Operating Income | Operating Income |
| 525.1 |
|
| 446.5 |
|
| 78.6 |
| 17.6 |
| Operating Income |
| 109.8 |
|
| 159.5 |
|
| (49.7) |
| (31.2) |
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Interest Expense | Interest Expense |
| 57.2 |
|
| 59.1 |
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| (1.9) |
| (3.2) |
| Interest Expense |
| 20.9 |
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| 20.4 |
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| 0.5 |
| 2.5 |
| ||
Other Income, Net |
| 3.6 |
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| 3.0 |
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| 0.6 |
| 20.0 |
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Other (Loss)/Income, Net | Other (Loss)/Income, Net |
| (0.3) |
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| 0.6 |
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| (0.9) |
| (a) |
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Income Before Income Tax Expense | Income Before Income Tax Expense |
| 471.5 |
|
| 390.4 |
|
| 81.1 |
| 20.8 |
| Income Before Income Tax Expense |
| 88.6 |
|
| 139.7 |
|
| (51.1) |
| (36.6) |
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Income Tax Expense | Income Tax Expense |
| 187.4 |
|
| 156.6 |
|
| 30.8 |
| 19.7 |
| Income Tax Expense |
| 34.1 |
|
| 56.1 |
|
| (22.0) |
| (39.2) |
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Net Income | Net Income | $ | 284.1 |
| $ | 233.8 |
| $ | 50.3 |
| 21.5 | % | Net Income | $ | 54.5 |
| $ | 83.6 |
| $ | (29.1) |
| (34.8) | % | ||
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NSTAR Electric's retail sales volumes were as follows: | NSTAR Electric's retail sales volumes were as follows: |
| NSTAR Electric's retail sales volumes were as follows: |
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| 2014 |
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| 2015 |
| Decrease |
| Percent |
| ||||||
Retail Sales Volumes in GWh | Retail Sales Volumes in GWh |
| 16,260 |
|
| 15,958 |
|
| 302 |
| 1.9 | % | Retail Sales Volumes in GWh |
| 5,018 |
|
| 5,433 |
|
| (415) |
| (7.7) | % |
NSTAR Electric's Operating Revenues, increasedwhich consist of base distribution revenues and tracked revenues further described below, decreased by $179.1$152.6 million forin the nine months ended September 30, 2015,first quarter of 2016, as compared to the same period in 2014.2015.
Base distribution revenues: Base distribution revenues, increased $10.2excluding LBR, decreased $12.1 million as a result of thedue primarily to weather impacts. The impact of colder winterwarmer than normal weather experienced in the first quarter of 2015and the warmer weather2016, as compared to much colder than normal temperatures in the thirdfirst quarter of 2015, partially offset bywas the impactprimary driver of oura 7.7 percent decrease in sales volumes. Additionally, increased customer energy conservation efforts, including those resulting from company sponsored energy efficiency programs, resultingcontributed to the decrease in a 1.9 percent increasesales volumes. NSTAR Electric is allowed to recover LBR related to reductions in sales volumes for the nine months ended September 30, 2015, as compareda result of successful energy efficiency programs.
Also contributing to the same perioddecrease in 2014. The reductionoperating revenues in the first quarter of 2016 was the absence of an $11 million benefit recorded in the first quarter of 2015 related to sales volumesthe Comprehensive Settlement Agreement associated with ourthe recovery of LBR related to 2009 through 2011 energy efficiency programs was offset by the recognition of an $18.5 million increase in LBR for the nine months ended September 30, 2015, as compared to the same period in 2014.programs.
Tracked revenues: Tracked revenues consist of certain costs that are recovered from customers in rates through DPU-approved cost tracking mechanisms and therefore have no impact on earnings. Costs recovered through cost tracking mechanisms include energy supply costs, retail transmission charges, energy efficiency program costs, net metering for distributed generation and transition cost recovery revenues. Tracked distribution revenues increaseddecreased primarily as a result of increasesa decrease in energy supply costs ($151169.1 million) driven by lower sales volumes and increaseddecreased average retail rates. Partially offsetting this decrease was an increase in cost recovery related to our energy efficiency programs ($20.111.2 million). Energy supply costs are impacted by the overall New England wholesale energy supply market, an increase in which natural gas delivery costs adversely impacted the cost of energy purchased for our retail customers. These increases were partially offset by decreased retail transmission charges ($697.5 million) and an increase in net metering revenues ($6.4 million).
Transmission revenues increased by $27$7.5 million due primarily to the recovery of higher revenue requirements associated with ongoing investments in our transmission infrastructure and the impactabsence in 2016 of a lower FERC ROE complaint proceedings$2.4 million reserve charge recorded in 2015 as compared to 2014.
Other: In connection with the 2014 Comprehensive Settlement Agreement, NSTAR Electric recognized an $11 million benefit associated with the recovery of LBR related to 2009 through 2011 energy efficiency programs in the first quarter of 2015 which was recorded as an increase to Operating Revenues. For further information, see "Regulatory Developments and Rate Matters – Massachusetts – NSTAR Electric and NSTAR Gas 2014 Comprehensive Settlement Agreement" in thisManagement's Discussion and Analysis of Financial Condition and Results of Operations.associated with the March 2015 FERC ROE order.
Purchased Power and Transmissionexpense includes costs associated with purchasing electricity on behalf of NSTAR Electric's customers. These energy supply costs are recovered from customers in DPU-approved cost tracking mechanisms which have no impact on earnings (tracked costs). Purchased Power and Transmission increased forexpense decreased in the nine months ended September 30, 2015,first quarter of 2016, as compared to the same period in 2014,2015, due primarily to the following:
(Millions of Dollars) | Increase/(Decrease) | |
Purchased Power Costs | $ |
|
Transmission Costs |
|
|
Total Purchased Power and Transmission | $ |
|
Included in purchased power costs are the costs associated with NSTAR Electric's basic service charge and deferred energy supply costs. The basic service charge recovers energy-related costs incurred as a result of providing electric generation service supply to all customers thatwho have not
44
migrated to competitive energythird party suppliers. The increasedecrease in purchased power costs was due primarily to higherlower sales volumes and lower prices associated with the procurement
49
of energy supply. The decreaseincrease in transmission costs was primarily the result of a decreasean increase in the retail transmission cost deferral, which reflects the actualRNS costs of transmission service compared to estimated amounts billed to customers.by ISO-NE.
Operations and Maintenanceexpense includes tracked costs and costs that are part of base distribution rates with changes impacting earnings (non-tracked costs). Operations and Maintenance decreased forexpense increased in the nine months ended September 30, 2015,first quarter of 2016, as compared to the same period in 2014,2015, driven by a $7.5$21.8 million reductionincrease in non-tracked costs, which was primarily attributable to the absence in 2016 of the resolution of the basic service bad debt adder mechanism in 2015 ($24.2 million), and increased vegetation management expenses, partially offset by an increasea decrease in employee-related costs expensed and not capitalized, as a result of the impact from winter weather and storms in 2015 compared to 2014.expenses. Tracked costs, which have no earnings impact, decreased $8.3$2.9 million, which was primarily attributable to lower employee-relatedtransmission operations expenses.
Depreciationincreased for expenseincreased in the nine months ended September 30, 2015,first quarter of 2016, as compared to the same period in 2014,2015, due primarily to higher utility plant in service balances.
Amortization of Regulatory Liabilities,Assets/(Liabilities), Net,reflects the absence in 2016 of an $11.7 million benefit recognized in connection with the 2014first quarter of 2015 relating to the Comprehensive Settlement Agreement at NSTAR Electric associated withAgreement. The increase in amortization was partially offset by the settlement with the Massachusetts Attorney General on eleven open dockets covering the CPSL program filingsdeferral adjustment of certain costs that exceeded billed revenues in the first quarter of 2015, which was recorded as a reduction to amortization expense. For further information, see "Regulatory Developments and Rate Matters – Massachusetts – NSTAR Electric and NSTAR Gas 2014 Comprehensive Settlement Agreement" in thisManagement's Discussion and Analysis of Financial Condition and Results of Operations. Partially offsetting this benefit was an increase in the recovery of previously deferred tracked transition costs for the nine months ended September 30, 2015,2016, as compared to the same period in 2014. Fluctuations in2015. The deferral adjusts expense to match the corresponding revenues. These deferred costs, which can fluctuate from period to period based on the timing of costs incurred and related rate changes to recover these costs, are recovered from customers in rates and have no impact on earnings.
Energy Efficiency Programs, which are tracked costs, increased forin the nine months ended September 30, 2015,first quarter of 2016, as compared to the same period in 2014,2015, due primarily to an increase in energy efficiency costs incurred in accordance with the three-year program guidelines established by the DPU.
Taxes Other Than Income Tax ExpenseTaxesexpense increased forin the nine months ended September 30, 2015,first quarter of 2016, as compared to the same period in 2014,2015, due primarily to higheran increase in property taxes as a result an increase in utility plant balances.
Income Tax Expense decreased in the first quarter of 2016, as compared to the same period in 2015, due primarily to lower pre-tax earnings ($28.417.9 million) and higher, lower state income taxes ($4.62.8 million), and the excess tax benefit due to the adoption of new accounting guidance related to share-based payment transactions ($0.9 million).
EARNINGS SUMMARY
NSTAR Electric's earnings increased $50.3decreased $29.1 million forin the nine months ended September 30, 2015,first quarter of 2016, as compared to the same period in 2014,2015, due primarily to the absence in 2016 of the 2015 resolution of the basic service bad debt adder mechanism ($14.5 million), the absence in 2016 of the 2015 favorable impact associated with the 2014 Comprehensive Settlement Agreement related to the settlement with the Massachusetts Attorney General on eleven open dockets covering the CPSL program filings and the recovery of LBR related to 2009 through 2011 energy efficiency programs ($13 million), the recovery of higher LBR related to 2015 energy efficiency programs, higherlower retail sales volumes, and higher depreciation expense. These unfavorable earnings impacts were partially offsetby an increase in transmission earnings, which was driven by a higher transmission rate base as well as the impactabsence in 2016 of the lower2015 FERC ROE complaint proceedings reserve recorded in 2015, as compared to 2014. These favorable earnings impacts were partially offset by an increase in operations and maintenance costs due primarily to an increase in employee-related costs expensed and not capitalized, as a result of the impact from winter weather and storms in 2015, as compared to 2014, and higher depreciation expense. charge.
LIQUIDITY
NSTAR Electric had cash flows provided by operating activities of $502.3$96.3 million forin the nine months ended September 30, 2015,first quarter of 2016, as compared to $517.5$221.3 million in the same period of 2014.2015. The decrease in operating cash flows was due primarily to the timing of regulatory recoveries resulting from the increase in purchased power costs and the timing of collections and paymentschanges related to our working capital items, including the timing of collections and payments of affiliated company receivables accounts receivable and accounts payable. Accounts receivable increased due primarilypayable, as well as the use of inventory. In addition, there was a $53.6 million reduction in income tax refunds received in the first quarter of 2016, as compared to an increasethe same period in basic service rates effective January 1, 2015. Also contributing to the decrease in operating cash flows was the absencean increase in Pension Plan contributions of the receipt of $30.2$12.8 million in DOE Phase II Damages proceeds received on June 1, 2014 from the Yankee Companies.first quarter of 2016, as compared to the same period in 2015. Partially offsetting these unfavorable impacts were income tax refunds of $71.5 million for the nine months ended September 30, 2015 compared to income tax payments of $134.8 million for the nine months ended September 30, 2014, and the favorable impact inwas the timing of materials and supplies purchases. regulatory recoveries resulting from the decrease in purchased power costs.
On October 26,NSTAR Electric has a $450 million commercial paper program allowing NSTAR Electric to issue commercial paper as a form of short-term debt. As of March 31, 2016 and December 31, 2015, NSTAR Electric amendedhad $148.5 million and restated$62.5 million, respectively, in short-term borrowings outstanding under its commercial paper program, leaving $301.5 million and $387.5 million of available borrowing capacity as of March 31, 2016 and December 31, 2015, respectively. The weighted-average interest rate on these borrowings as of March 31, 2016 and December 31, 2015 was 0.38 percent and 0.40 percent, respectively. NSTAR Electric is a party to a five-year $450 million revolving credit facility, and extended the termination date towhich terminates on September 4, 2020. The facility serves to backstop NSTAR Electric's $450 million commercial paper program. As of September 30, 2015 and December 31, 2014, NSTAR Electric had $258.5 million and $302 million, respectively, in short-term borrowings outstanding under its commercial paper program, leaving $191.5 million and $148 million of available borrowing capacity as of September 30, 2015 and December 31, 2014, respectively. The weighted-average interest rate on these borrowings as of September 30, 2015 and December 31, 2014 was 0.18 percent and 0.27 percent, respectively.
5045
RESULTS OF OPERATIONS – PUBLIC SERVICE COMPANY OF NEW HAMPSHIRE AND SUBSIDIARY
The following provides the amounts and variances in operating revenues and expense line items in the statements of income for PSNH for the ninethree months ended September 30,March 31, 2016 and 2015 and 2014 included in this Quarterly Report on Form 10-Q:
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| For the Nine Months Ended September 30, |
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| For the Three Months Ended March 31, |
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| Increase/ |
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| Increase/ |
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(Millions of Dollars) | (Millions of Dollars) | 2015 |
| 2014 |
| (Decrease) |
| Percent |
|
| (Millions of Dollars) | 2016 |
| 2015 |
| (Decrease) |
| Percent |
|
| ||||||||
Operating Revenues | Operating Revenues | $ | 761.1 |
| $ | 735.1 |
| $ | 26.0 |
| 3.5 | % |
| Operating Revenues | $ | 242.3 |
| $ | 284.8 |
| $ | (42.5) |
| (14.9) | % |
| ||
Operating Expenses: | Operating Expenses: |
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| Operating Expenses: |
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| Purchased Power, Fuel and Transmission |
| 200.5 |
|
| 248.0 |
|
| (47.5) |
| (19.2) |
|
| Purchased Power, Fuel and Transmission |
| 50.2 |
|
| 99.6 |
|
| (49.4) |
| (49.6) |
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| ||
| Operations and Maintenance |
| 200.1 |
|
| 198.0 |
|
| 2.1 |
| 1.1 |
|
| Operations and Maintenance |
| 59.2 |
|
| 58.4 |
|
| 0.8 |
| 1.4 |
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| ||
| Depreciation |
| 78.0 |
|
| 73.2 |
|
| 4.8 |
| 6.6 |
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| Depreciation |
| 28.3 |
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| 25.6 |
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| 2.7 |
| 10.5 |
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| Amortization of Regulatory Assets/(Liabilities), Net |
| 29.2 |
|
| (17.6) |
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| 46.8 |
| (a) |
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| Amortization of Regulatory Assets, Net |
| 8.5 |
|
| 15.1 |
|
| (6.6) |
| (43.7) |
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| ||
| Energy Efficiency Programs |
| 11.0 |
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| 10.9 |
|
| 0.1 |
| 0.9 |
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| Energy Efficiency Programs |
| 3.6 |
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| 3.8 |
|
| (0.2) |
| (5.3) |
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| ||
| Taxes Other Than Income Taxes |
| 61.4 |
|
| 53.1 |
|
| 8.3 |
| 15.6 |
|
| Taxes Other Than Income Taxes |
| 21.8 |
|
| 19.1 |
|
| 2.7 |
| 14.1 |
|
| ||
|
| Total Operating Expenses |
| 580.2 |
|
| 565.6 |
|
| 14.6 |
| 2.6 |
|
|
| Total Operating Expenses |
| 171.6 |
|
| 221.6 |
|
| (50.0) |
| (22.6) |
|
|
Operating Income | Operating Income |
| 180.9 |
|
| 169.5 |
|
| 11.4 |
| 6.7 |
|
| Operating Income |
| 70.7 |
|
| 63.2 |
|
| 7.5 |
| 11.9 |
|
| ||
Interest Expense | Interest Expense |
| 34.6 |
|
| 34.0 |
|
| 0.6 |
| 1.8 |
|
| Interest Expense |
| 12.5 |
|
| 11.3 |
|
| 1.2 |
| 10.6 |
|
| ||
Other Income, Net | Other Income, Net |
| 2.3 |
|
| 1.7 |
|
| 0.6 |
| 35.3 |
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| Other Income, Net |
| 0.2 |
|
| 0.4 |
|
| (0.2) |
| (50.0) |
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| ||
Income Before Income Tax Expense | Income Before Income Tax Expense |
| 148.6 |
|
| 137.2 |
|
| 11.4 |
| 8.3 |
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| Income Before Income Tax Expense |
| 58.4 |
|
| 52.3 |
|
| 6.1 |
| 11.7 |
|
| ||
Income Tax Expense | Income Tax Expense |
| 56.1 |
|
| 52.2 |
|
| 3.9 |
| 7.5 |
|
| Income Tax Expense |
| 22.3 |
|
| 20.3 |
|
| 2.0 |
| 9.9 |
|
| ||
Net Income | Net Income | $ | 92.5 |
| $ | 85.0 |
| $ | 7.5 |
| 8.8 | % |
| Net Income | $ | 36.1 |
| $ | 32.0 |
| $ | 4.1 |
| 12.8 | % |
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(a) Percent greater than 100 percent not shown as it is not meaningful. |
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Operating Revenues | Operating Revenues |
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| Operating Revenues |
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PSNH's retail sales volumes were as follows: | PSNH's retail sales volumes were as follows: |
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| PSNH's retail sales volumes were as follows: |
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| For the Nine Months Ended September 30, |
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| For the Three Months Ended March 31, |
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| 2015 |
| 2014 |
| Increase |
| Percent |
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| 2016 |
| 2015 |
| Decrease |
| Percent |
|
| ||||||
Retail Sales Volumes in GWh | Retail Sales Volumes in GWh |
| 6,049 |
|
| 5,970 |
|
| 79 |
| 1.3 | % |
| Retail Sales Volumes in GWh |
| 1,976 |
|
| 2,067 |
|
| (91) |
| (4.4) | % |
|
PSNH's Operating Revenues, increasedwhich consist of base distribution revenues and tracked revenues further described below, decreased by $26$42.5 million forin the nine months ended September 30, 2015,first quarter of 2016, as compared to the same period in 2014.2015.
Base distribution revenues: Base distribution revenues increased $7decreased $2.6 million as a result of a 1.3 percent increase in sales volumes for the nine months ended September 30, 2015, as compareddue primarily to the same period in 2014, primarily related to theweather impacts. The impact of colder winterwarmer than normal weather experienced in the first quarter of 2015, the warmer weather2016, as compared to much colder than normal temperatures in the thirdfirst quarter of 2015and2015, was the primary driver of a 4.4 percent decrease in sales volumes. Additionally, increased customer energy conservation efforts, including those resulting from company sponsored energy efficiency programs, contributed to the decrease in sales volumes. Partially offsetting this decrease was a $1.8 million increase as a result of a distribution rate increase effective July 1, 2015.
Tracked revenues:Tracked revenues consist of certain costs that are recovered from customers in rates through NHPUC-approved cost tracking mechanisms and therefore have no impact on earnings. Costs recovered through cost tracking mechanisms include energy supply costs and costs associated with the generation of electricity for customers, retail transmission charges, energy efficiency program costs and stranded cost recovery revenues. Tracked distribution revenues increaseddecreased primarily as a result of increasesa decrease in energy supply costs partially offset byand a reduction in wholesale generation revenues ($6.1 million) forin the nine months ended September 30, 2015,first quarter of 2016, as compared to the same period in 2014.first quarter of 2015 ($46.9 million), driven by lower sales volumes and decreased average retail rates.
Transmission revenues increased by $10.6$5.5 million due primarily to the recovery of higher revenue requirements associated with ongoing investments in our transmission infrastructure and the impactabsence in 2016 of a lower$1 million reserve charge recorded in the first quarter of 2015 associated with the March 2015 FERC ROE complaint proceedings reserve recorded in 2015 as compared to 2014.order.
Purchased Power, Fuel and Transmissionexpense includes costs associated with PSNH's generation of electricity as well as purchasing electricity on behalf of its customers. These generation and energy supply costs are recovered from customers in NHPUC-approved cost tracking mechanisms, which have no impact on earnings (tracked costs). Purchased Power, Fuel and Transmission expense decreased forin the nine months ended September 30, 2015,first quarter of 2016, as compared to the same period in 2014,2015, due primarily to the following:
(Millions of Dollars) |
| |
Purchased Power and Generation Fuel Costs | $ |
|
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| |
Transmission Costs |
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| |
Total Purchased Power, Fuel and Transmission | $ |
|
In order to meet the demand of customers who have not migrated to third party suppliers, PSNH procures power through its own generation, long-term power supply contracts and short-term purchases and spot purchases in the competitive New England wholesale power market.market and/or produces power through its own generation. The decrease in purchased power and generation fuel costs was due primarily to a decrease in the amount of electricity generated by PSNH facilities for the nine months ended September 30, 2015, as compared to the same period in 2014. The decrease in purchased power costs was due to lower power prices of short-term and spot purchases made in the wholesale power market for the nine months ended September 30, 2015, as compared to the same period in 2014. The decrease in transmission costs for the nine months ended September 30, 2015 was primarily the result of a decrease in the retail transmission cost deferral, which reflects the actual costs of transmission service compared to estimated amounts billed to customers.facilities.
Operations and Maintenance expense includes tracked costs and costs that are part of base distribution rates with changes impacting earnings (non-tracked costs). Operations and Maintenance expense increased forin the nine months ended September 30, 2015,first quarter of 2016, as compared to the same period in 2014,2015, driven by a $2$0.8 million increase in various tracked costs, which have no earnings impact, that was primarily attributable to higher tracked bad debt expense,impact.
5146
and a $0.1 million increase in non-tracked costs, which was primarily attributable to a $5 million contribution to create a clean energy fund that was recorded in the second quarter of 2015 in connection with the generation divestiture agreement, which is not recoverable from customers, offset by lower employee-related expenses.
Depreciationincreased forexpenseincreased in the nine months ended September 30, 2015,first quarter of 2016, as compared to the same period in 2014,2015, due primarily to higher utility plant in service balances.
Amortization of Regulatory Assets/(Liabilities),Assets, Net, reflects an increase inincludes the deferral to expense of energy supply costs and other amortizations for the nine months ended September 30, 2015, as compared to the same period in 2014. Fluctuations in theseamortization of certain costs, which are recovered from customers in rates and have no impact on earnings. The decrease in the first quarter of 2016, as compared to the same period in 2015, was due primarily to a decrease in the default energy service charge. The deferral adjusts expense to match the corresponding revenues.
Taxes Other Than Income Taxes expense increased forin the nine months ended September 30, 2015,first quarter of 2016, as compared to the same period in 2014,2015, due primarily to an increase in property taxes as a result of an increase in utility plant balances.
Income Tax Expense increased forin the nine months ended September 30, 2015,first quarter of 2016, as compared to the same period in 2014,2015, due primarily to higher pre-tax earnings ($42.1 million).
EARNINGS SUMMARY
PSNH's earnings increased $7.5$4.1 million forin the nine months ended September 30, 2015,first quarter of 2016, as compared to the same period in 2014,2015, due primarily to an increase in transmission earnings, which was driven by a higher transmission rate base as well as the absence in 2016 of the 2015 FERC ROE complaint proceedings reserve charge, higher generation earnings due primarily to the timing of recording REC revenues, and the impact of the distribution rate increase effective July 1, 2015, higher retail sales volumes, a decrease in operations and maintenance costs due primarily to lower employee-related expense, and the lower FERC ROE complaint proceedings reserve recorded in 2015, as compared to 2014. Partially offsetting these2015. These favorable earnings impacts were a $5 million contribution to create a clean energy fund that was recorded in the second quarter of 2015 in connection with the generation divestiture agreement, which is not recoverable from customers,partially offset by lower retail sales volumes, higher depreciationproperty tax expense and higher property taxdepreciation expense.
LIQUIDITY
PSNH had cash flows provided by operating activities of $243.9$156.3 million forin the nine months ended September 30, 2015,first quarter of 2016, as compared to $205.8$113.9 million in the same period in 2014.2015. The increase in operating cash flows was due primarily to the timingan increase of fuel, materials and supplies and a decrease$52.1 million in net income tax paymentsrefunds received in 20152016, as compared withto the same period in 2014. Partially offsetting these favorable impacts were2015. In addition, the timing of collections and payments related to our working capital items, including accounts receivable and accounts payable favorably impacted the first quarter 2016 operating cash flows, as compared to the same period in 2015. Partially offsetting these favorable impacts was an increase in Pension Plan contributions of $9.9 million in 2016 and the absenceuse of the receipt of $14.5 million in DOE Phase II Damages proceeds received on June 1, 2014 from the Yankee Companies.fuel inventories.
5247
RESULTS OF OPERATIONS – WESTERN MASSACHUSETTS ELECTRIC COMPANY
The following provides the amounts and variances in operating revenues and expense line items in the statements of income for WMECO for the ninethree months ended September 30,March 31, 2016 and 2015 and 2014 included in this Quarterly Report on Form 10-Q:
|
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| For the Nine Months Ended September 30, |
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| For the Three Months Ended March 31, |
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| Increase/ |
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| Increase/ |
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(Millions of Dollars) | (Millions of Dollars) | 2015 |
| 2014 |
| (Decrease) |
| Percent |
| (Millions of Dollars) | 2016 |
| 2015 |
| (Decrease) |
| Percent |
| ||||||||
Operating Revenues | Operating Revenues | $ | 403.2 |
| $ | 363.8 |
| $ | 39.4 |
| 10.8 | % | Operating Revenues | $ | 128.1 |
| $ | 152.9 |
| $ | (24.8) |
| (16.2) | % | ||
Operating Expenses: | Operating Expenses: |
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| Operating Expenses: |
|
|
|
|
|
|
|
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| ||
| Purchased Power and Transmission |
| 149.2 |
|
| 131.0 |
|
| 18.2 |
| 13.9 |
| Purchased Power and Transmission |
| 39.5 |
|
| 69.7 |
|
| (30.2) |
| (43.3) |
| ||
| Operations and Maintenance |
| 61.7 |
|
| 67.1 |
|
| (5.4) |
| (8.0) |
| Operations and Maintenance |
| 21.8 |
|
| 19.8 |
|
| 2.0 |
| 10.1 |
| ||
| Depreciation |
| 32.4 |
|
| 31.1 |
|
| 1.3 |
| 4.2 |
| Depreciation |
| 11.4 |
|
| 10.4 |
|
| 1.0 |
| 9.6 |
| ||
| Amortization of Regulatory Assets/(Liabilities), Net |
| 11.2 |
|
| (7.8) |
|
| 19.0 |
| (a) |
| Amortization of Regulatory Assets, Net |
| 1.2 |
|
| 3.9 |
|
| (2.7) |
| (69.2) |
| ||
| Energy Efficiency Programs |
| 32.7 |
|
| 33.1 |
|
| (0.4) |
| (1.2) |
| Energy Efficiency Programs |
| 10.9 |
|
| 11.1 |
|
| (0.2) |
| (1.8) |
| ||
| Taxes Other Than Income Taxes |
| 28.4 |
|
| 25.7 |
|
| 2.7 |
| 10.5 |
| Taxes Other Than Income Taxes |
| 10.2 |
|
| 9.4 |
|
| 0.8 |
| 8.5 |
| ||
|
| Total Operating Expenses |
| 315.6 |
|
| 280.2 |
|
| 35.4 |
| 12.6 |
|
| Total Operating Expenses |
| 95.0 |
|
| 124.3 |
|
| (29.3) |
| (23.6) |
|
Operating Income | Operating Income |
| 87.6 |
|
| 83.6 |
|
| 4.0 |
| 4.8 |
| Operating Income |
| 33.1 |
|
| 28.6 |
|
| 4.5 |
| 15.7 |
| ||
Interest Expense | Interest Expense |
| 19.0 |
|
| 18.9 |
|
| 0.1 |
| 0.5 |
| Interest Expense |
| 6.0 |
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| 6.8 |
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| (0.8) |
| (11.8) |
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Other Income, Net |
| 2.4 |
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| 1.7 |
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| 0.7 |
| 41.2 |
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Other (Loss)/Income, Net | Other (Loss)/Income, Net |
| (0.2) |
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| 0.5 |
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| (0.7) |
| (a) |
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Income Before Income Tax Expense | Income Before Income Tax Expense |
| 71.0 |
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| 66.4 |
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| 4.6 |
| 6.9 |
| Income Before Income Tax Expense |
| 26.9 |
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| 22.3 |
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| 4.6 |
| 20.6 |
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Income Tax Expense | Income Tax Expense |
| 28.6 |
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| 26.6 |
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| 2.0 |
| 7.5 |
| Income Tax Expense |
| 10.1 |
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| 9.1 |
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| 1.0 |
| 11.0 |
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Net Income | Net Income | $ | 42.4 |
| $ | 39.8 |
| $ | 2.6 |
| 6.5 | % | Net Income | $ | 16.8 |
| $ | 13.2 |
| $ | 3.6 |
| 27.3 | % | ||
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(a) Percent greater than 100 percent not shown as it is not meaningful. |
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(a) Percent greater than 100 not shown as it is not meaningful. | (a) Percent greater than 100 not shown as it is not meaningful. |
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Operating Revenues | Operating Revenues |
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WMECO's retail sales volumes were as follows: | WMECO's retail sales volumes were as follows: |
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| WMECO's retail sales volumes were as follows: |
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| 2015 |
| 2014 |
| Increase |
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| 2016 |
| 2015 |
| Decrease |
| Percent |
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Retail Sales Volumes in GWh | Retail Sales Volumes in GWh |
| 2,742 |
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| 2,721 |
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| 21 |
| 0.8 | % | Retail Sales Volumes in GWh |
| 876 |
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| 955 |
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| (79) |
| (8.3) | % |
WMECO's Operating Revenues, which consist of base distribution revenues and tracked revenues further described below, decreased by $24.8 million in the first quarter of 2016, as compared to the same period in 2015.
Fluctuations in WMECO's sales volumes have nodo not impact on total operating revenuesthe level of base distribution revenue realized or earnings as WMECO’sdue to the DPU approved revenue decoupling mechanism. WMECO's revenue decoupling mechanism permits recovery of a base amount of distribution revenues are decoupled from($132.4 million annually) and breaks the relationship between sales volumes. volumes and revenues recognized. Revenue decoupling mechanisms result in the recovery of approved base distribution revenue requirements.
Fluctuations in the overall level of operating revenues are primarily related to tracked revenues. Tracked revenues consist of certain costs that are recovered from customers in rates through DPU-approved cost tracking mechanisms and therefore have no impact on earnings. Costs recovered through cost tracking mechanisms include energy supply costs, retail transmission related costs,charges, energy efficiency program costs, low income assistance programs, and restructuring and stranded costs as a result of deregulation.
WMECO's Operating Revenues increased by $39.4 million for the nine months ended September 30, 2015, as compared to the same period in 2014,cost recovery revenues. Tracked revenues decreased due primarily to an increasea decrease in energy supply costs ($29.430.5 million). Energy supply costs are impacted driven by the overall New England wholesale energy supply market in which higher natural gas delivery costs adversely impacted the cost of energy purchased for ourlower sales volumes and decreased average retail customers. The increase was partially offset by a $3.9 million decrease in revenues that impacts earnings due to the absence of a 2014 wholesale billing adjustment. rates.
Transmission revenues increased by $9.4$5.9 million due primarily to the recoveryabsence in 2016 of a $4.1 million reserve charge recorded in the first quarter of 2015 associated with the March 2015 FERC ROE order and higher revenue requirements associated with ongoing investments in our transmission infrastructure and the impact of a lower FERC ROE complaint proceedings reserve recorded in 2015 as compared to 2014.infrastructure.
Purchased Power and Transmissionexpense includes costs associated with the procurement of energy supply on behalf of WMECO's customers. These energy supply costs are recovered from customers in DPU-approved cost tracking mechanisms, which have no impact on earnings (tracked costs). Purchased Power and Transmissionincreased forTransmissionexpense decreased in the nine months ended September 30, 2015,first quarter of 2016, as compared to the same period in 2014,2015, due primarily to the following:
(Millions of Dollars) | Increase/(Decrease) | |
Purchased Power Costs | $ |
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Transmission Costs |
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Total Purchased Power and Transmission | $ |
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Included in purchased power costs are the costs associated with WMECO's basic service charge and deferred energy supply costs. The basic service charge recovers energy-related costs incurred as a result of providing electric generation service supply to all customers thatwho have not migrated to competitive energythird party suppliers. The increasedecrease in purchased power costs was due primarily to higherlower sales volumes and lower prices associated with the procurement of energy supply. The decrease in transmission costs was as a result of a decrease in the retail transmission cost deferral, which reflects the actual costs of transmission service compared to estimated amounts billed to customers.
Operations and Maintenanceexpense includes tracked costs and costs that are part of base distribution rates with changes impacting earnings (non-tracked costs). Operations and Maintenance decreased forexpense increased in the nine months ended September 30, 2015,first quarter of 2016, as compared to the same period in 2014,2015, driven by a $4$2.3 million reduction in non-tracked costs, which was primarily attributable to lower employee-related expenses and a decrease in workers' compensation claims, partially offset by higher bad debt expense, and a $1.4 million reductionincrease in tracked costs, which have no earnings impact, that was primarily attributable to lower employee-related expenses,the deferral of RECs generated and sold by the WMECO solar program, partially offset by a reduction in non-tracked costs of $0.3 million.
48
Depreciationexpenseincreased in the first quarter of 2016, as compared to the same period in 2015, due primarily to higher tracked bad debt expense.utility plant in service balances.
Amortization of Regulatory Assets/(Liabilities),Assets, Net,reflectsdecreased in the absencefirst quarter of 2016, as compared to the refund of the DOE proceedssame period in 2015, due to customersfluctuations in 2014 as well as other energy and energy related costs and amortizations that can fluctuate period to period based on timing of costs incurred and related rate changes to recover these costs. Fluctuations in energyEnergy and energy related costs are recovered from customers in rates and have no impact on earnings.
Taxes Other Than Income Taxes expense increased forin the nine months ended September 30, 2015,first quarter of 2016, as compared to the same period in 2014,2015, due primarily to an increase in property taxes as a result of an increase in utility plant balances and property tax rates.balances.
Income Tax Expense increased forin the nine months ended September 30, 2015,first quarter of 2016, as compared to the same period in 2014,2015, due primarily to higher pre-tax earnings ($1.6 million), partially offset by items that impact our tax rate as a result of regulatory treatment (flow-through items) ($0.4 million).
EARNINGS SUMMARY
WMECO's earnings increased $2.6$3.6 million forin the nine months ended September 30, 2015,first quarter of 2016, as compared to the same period in 2014,2015, due primarily to an increase in transmission earnings, which was driven by the impactabsence in 2016 of the lower2015 FERC ROE complaint proceedings reserve recorded in 2015,charge as compared to 2014,well as a higher transmission rate base, and a decrease in operations and maintenance costs primarily attributable to lower employee-related expenses and a decrease in workers' compensation claims. Partially offsetting theseinterest expense on long-term debt. These favorable earnings impacts was the absence of a 2014 wholesale billing adjustment, which favorably impacted 2014 revenueswere partially offset by higher depreciation expense and interesthigher property and other taxes expense.
LIQUIDITY
WMECO had cash flows provided by operating activities of $68$50.7 million forin the nine months ended September 30, 2015,first quarter of 2016, as compared to $120.6cash flows used in operating activities of $1.4 million in the same period in 2014.of 2015. The decreaseincrease in operating cash flows was due primarily to the timing of collections and payments related to our working capital items, including accounts receivable. Accounts receivable increased due primarily to an increase of $22.7 million in basic service rates effective January 1,income tax refunds in the first quarter of 2016, as compared to the same period in 2015. In addition, the decreaseincrease in operating cash flows was due to the timing of regulatory recoveries resulting from the increase inrelating to purchased power costs and the absencetiming of collections of accounts receivable, partially offset by the receipttiming of $18.9 million in DOE Phase II Damages proceeds received on June 1, 2014 from the Yankee Companies. Partially offsetting these unfavorable cash flow impacts were net income tax refunds of $0.6 million in 2015 compared with net income tax payments of $26.5 million in 2014.related to accounts payable.
5349
ITEM 3.
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Market Risk Information
Commodity Price Risk Management: Our Regulated companies enter into energy contracts to serve our customers and the economic impacts of those contracts are passed on to our customers. Accordingly, the Regulated companies have no exposure to loss of future earnings or fair values due to these market risk-sensitive instruments. Eversource's Energy Supply Risk Committee, comprised of senior officers, reviews and approves all large scale energy related transactions entered into by its Regulated companies.
Other Risk Management Activities
Interest Rate Risk Management: We manage our interest rate risk exposure in accordance with our written policies and procedures by maintaining a mix of fixed and variable rate long-term debt.
Credit Risk Management: Credit risk relates to the risk of loss that we would incur as a result of non-performance by counterparties pursuant to the terms of our contractual obligations. We serve a wide variety of customers and transact with suppliers that include IPPs, industrial companies, natural gas and electric utilities, oil and gas producers, financial institutions, and other energy marketers. Margin accounts exist within this diverse group, and we realize interest receipts and payments related to balances outstanding in these margin accounts. This wide customer and supplier mix generates a need for a variety of contractual structures, products and terms that, in turn, require us to manage the portfolio of market risk inherent in those transactions in a manner consistent with the parameters established by our risk management process.
Our Regulated companies are subject to credit risk from certain long-term or high-volume supply contracts with energy marketing companies. Our Regulated companies manage the credit risk with these counterparties in accordance with established credit risk practices and monitor contracting risks, including credit risk. As of September 30, 2015,March 31, 2016, our Regulated companies did not hold collateral (letters of credit) from counterparties related to our standard service contracts. As of September 30, 2015,March 31, 2016, Eversource had $18 million of cash posted of approximately $15.1 million with ISO-NE related to energy purchase transactions.
We have provided additional disclosures regarding interest rate risk management and credit risk management in Part II, Item 7A, "Quantitative and Qualitative Disclosures about Market Risk," in Eversource's 20142015 Form 10-K, which is incorporated herein by reference. There have been no additional risks identified and no material changes with regard to the items previously disclosed in the Eversource 20142015 Form 10-K.
ITEM 4.
CONTROLS AND PROCEDURES
Management, on behalf of Eversource, CL&P, NSTAR Electric, PSNH and WMECO, evaluated the design and operation of the disclosure controls and procedures as of September 30, 2015March 31, 2016 to determine whether they are effective in ensuring that the disclosure of required information is made timely and in accordance with the Securities Exchange Act of 1934 and the rules and regulations of the SEC. This evaluation was made under management's supervision and with management's participation, including the principal executive officer and principal financial officer as of the end of the period covered by this Quarterly Report on Form 10-Q. There are inherent limitations of disclosure controls and procedures, including the possibility of human error and the circumventing or overriding of the controls and procedures. Accordingly, even effective disclosure controls and procedures can only provide reasonable assurance of achieving their control objectives. The principal executive officer and principal financial officer have concluded, based on their review, that the disclosure controls and procedures of Eversource, CL&P, NSTAR Electric, PSNH and WMECO are effective to ensure that information required to be disclosed by us in reports filed under the Securities Exchange Act of 1934 (i) is recorded, processed, summarized, and reported within the time periods specified in SEC rules and regulations and (ii) is accumulated and communicated to management, including the principal executive officer and principal financial officer, as appropriate to allow timely decisions regarding required disclosures.
There have been no changes in internal controls over financial reporting for Eversource, CL&P, NSTAR Electric, PSNH and WMECO during the quarter ended September 30, 2015March 31, 2016 that have materially affected, or are reasonably likely to materially affect, internal controls over financial reporting.
5450
PART II. OTHER INFORMATION
ITEM 1.
LEGAL PROCEEDINGS
We are parties to various legal proceedings. We have disclosed these legal proceedings in Part I, Item 3, "Legal Proceedings," and elsewhere in our 20142015 Form 10-K. These disclosures are incorporated herein by reference.
As previously disclosed, the Yankee Companies each filed lawsuits against the DOE in August 2013 seeking recovery of actual damages incurred in the years 2009 through 2012, as described under the caption "Yankee Companies v. U.S. Department of Energy" "-DOE Phase III Damages" in Part I, Item 3, "Legal Proceedings" of our 2015 Form 10-K. On March 25, 2016, the court issued its decision awarding CYAPC, YAEC, and MYAPC damages of $32.6 million, $19.6 million and $24.6 million, respectively. In total, the Yankee Companies were awarded $76.8 million of the $77.9 million in damages sought by the Yankee Companies in Phase III. The parties have 60 days following the final judgment date to appeal.
There have been no additional material legal proceedings identified and no further material changes with regard to the legal proceedings previously disclosed in our 20142015 Form 10-K.
ITEM 1A.
RISK FACTORS
We are subject to a variety of significant risks in addition to the matters set forth under "Forward-Looking Statements," in Item 2, "Management's Discussion and Analysis of Financial Condition and Results of Operations," of this Quarterly Report on Form 10-Q. We have identified a number of these risk factors in Part I, Item 1A, "Risk Factors," in our 20142015 Form 10-K, which risk factors are incorporated herein by reference. These risk factors should be considered carefully in evaluating our risk profile. There have been no additional risk factors identified and no material changes with regard to the risk factors previously disclosed in our 20142015 Form 10-K.
ITEM 2.
UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
The following table discloses purchases of our common shares made by us or on our behalf for the periods shown below. The common shares purchased consist of open market purchases made by the Company or an independent agent. These share transactions related to shares awarded under the Company's Incentive Plan and Dividend Reinvestment Plan and matching contributions under the Eversource 401k Plan.
Period |
| Total Number |
|
| Average | Total Number of | Approximate Dollar |
July 1 – July 31, 2015 |
| 121,847 |
| $ | 45.92 | - | - |
August 1 – August 31, 2015 |
| 176,419 |
|
| 51.76 | - | - |
September 1 – September 30, 2015 |
| 1,755 |
|
| 46.83 | - | - |
Total |
| 300,021 |
| $ | 49.36 | - | - |
Period |
| Total Number |
|
| Average | Total Number of | Approximate Dollar |
January 1 – January 31, 2016 |
| 122,281 |
| $ | 51.36 | - | - |
February 1 – February 29, 2016 |
| 275,608 |
|
| 54.58 | - | - |
March 1 – March 31, 2016 |
| 128,547 |
|
| 56.93 | - | - |
Total |
| 526,436 |
| $ | 54.41 | - | - |
5551
ITEM 6.
EXHIBITS
Each document described below is filed herewith, unless designated with an asterisk (*), which exhibits are incorporated by reference by the registrant under whose name the exhibit appears.
Exhibit No.
Description
Listing of Exhibits (Eversource)
10.1* 4
TwelfthSeventh Supplemental Indenture of Mortgage and Deed of Trust, dated as of September 1, 2015, between Yankee Gas Services CompanyEversource Energy, and The Bank of New York Mellon Trust Company N.A., successor as Trustee, dated as of March 1, 2016, relating to The Bank$250,000,000 aggregate principal amount of New York, as successorits Senior Notes, Series I, Due 2021, and $250,000,000 aggregate principal amount of its Senior Notes, Series J, Due 2026 (incorporated by reference to Fleet National Bank (formerly known as The Connecticut National Bank)Exhibit 4.1 of the Eversource Energy Current Report on Form 8-K filed on March 15, 2016, File No. 001-05324)
12
Ratio of Earnings to Fixed Charges
31
Certification of Thomas J. May, Chairman, President andby the Chief Executive Officer of Eversource Energy required by Rule 13a-14(a)/15d-14(a) of the Securities Exchange Act of 1934, as amended, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 dated November 6, 2015
31.1
Certification of James J. Judge, Executive Vice President andby the Chief Financial Officer of Eversource Energy required by Rule 13a-14(a)/15d-14(a) of the Securities Exchange Act of 1934, as amended, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 dated November 6, 2015
32
Certification of Thomas J. May, Chairman, President andby the Chief Executive Officer of Eversource Energy, and James J. Judge, Executive Vice President and Chief Financial Officer of Eversource Energy pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 dated November 6, 2015
Listing of Exhibits (CL&P)
12
Ratio of Earnings to Fixed Charges
31
Certification of Thomas J. May,by the Chairman of The Connecticut Light and Power Company required by Rule 13a-14(a)/15d-14(a) of the Securities Exchange Act of 1934, as amended, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 dated November 6, 2015
31.1
Certification of James J. Judge, Executive Vice President andby the Chief Financial Officer of The Connecticut Light and Power Company required by Rule 13a-14(a)/15d-14(a) of the Securities Exchange Act of 1934, as amended, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 dated November 6, 2015
32
Certification of Thomas J. May,by the Chairman of The Connecticut Light and Power Company, and James J. Judge, Executive Vice President andthe Chief Financial Officer of The Connecticut Light and Power Company pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 dated November 6, 2015
Listing of Exhibits (NSTAR Electric Company)
12
Ratio of Earnings to Fixed Charges
31
Certification of Thomas J. May,by the Chairman of NSTAR Electric Company required by Rule 13a-14(a)/15d-14(a) of the Securities Exchange Act of 1934, as amended, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 dated November 6, 2015
31.1
Certification of James J. Judge, Executive Vice President andby the Chief Financial Officer of NSTAR Electric Company required by Rule 13a-14(a)/15d-14(a) of the Securities Exchange Act of 1934, as amended, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 dated November 6, 2015
32
Certification of Thomas J. May,by the Chairman of NSTAR Electric Company, and James J. Judge, Executive Vice President andthe Chief Financial Officer of NSTAR Electric Company pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 dated November 6, 2015
56
Listing of Exhibits (PSNH)
12
Ratio of Earnings to Fixed Charges
31
Certification of Thomas J. May,by the Chairman of Public Service Company of New Hampshire required by Rule 13a-14(a)/15d-14(a) of the Securities Exchange Act of 1934, as amended, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 dated November 6, 2015
31.1
Certification of James J. Judge, Executive Vice President andby the Chief Financial Officer of Public Service Company of New Hampshire required by Rule 13a-14(a)/15d-14(a) of the Securities Exchange Act of 1934, as amended, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 dated November 6, 2015
32
Certification of Thomas J. May,by the Chairman of Public Service Company of New Hampshire, and James J. Judge, Executive Vice President andthe Chief Financial Officer of Public Service Company of New Hampshire pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 dated November 6, 2015
52
Listing of Exhibits (WMECO)
12
Ratio of Earnings to Fixed Charges
31
Certification of Thomas J. May,by the Chairman of Western Massachusetts Electric Company required by Rule 13a-14(a)/15d-14(a) of the Securities Exchange Act of 1934, as amended, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 dated November 6, 2015
31.1
Certification of James J. Judge, Executive Vice President andby the Chief Financial Officer of Western Massachusetts Electric Company required by Rule 13a-14(a)/15d-14(a) of the Securities Exchange Act of 1934, as amended, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 dated November 6, 2015
32
Certification of Thomas J. May,by the Chairman of Western Massachusetts Electric Company, and James J. Judge, Executive Vice President andthe Chief Financial Officer of Western Massachusetts Electric Company pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 dated November 6, 2015
Listing of Exhibits (Eversource, CL&P, NSTAR Electric, PSNH, WMECO)
101.INS | XBRL Instance Document |
101.SCH | XBRL Taxonomy Extension Schema |
101.CAL | XBRL Taxonomy Extension Calculation |
101.DEF | XBRL Taxonomy Extension Definition |
101.LAB | XBRL Taxonomy Extension Labels |
101.PRE | XBRL Taxonomy Extension Presentation |
53
SIGNATURE
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
EVERSOURCE ENERGY | |||
May 6, 2016 | By: | /s/ Jay S. Buth | |
Jay S. Buth | |||
Vice President, Controller and Chief Accounting Officer | |||
SIGNATURE
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
THE CONNECTICUT LIGHT AND POWER COMPANY | |||
May 6, 2016 | By: | /s/ Jay S. Buth | |
Jay S. Buth | |||
Vice President, Controller and Chief Accounting Officer | |||
57
SIGNATURE
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
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NSTAR ELECTRIC COMPANY | |||
May 6, 2016 | By: | /s/ Jay S. Buth | |
Jay S. Buth | |||
Vice President, Controller and Chief Accounting Officer | |||
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54
SIGNATURE
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
EVERSOURCE ENERGY
November 6, 2015
PUBLIC SERVICE COMPANY OF NEW HAMPSHIRE | |||
May 6, 2016 |
| By: | /s/ Jay S. Buth |
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| Jay S. Buth |
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| Vice President, Controller and Chief Accounting Officer |
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SIGNATURE
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
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WESTERN MASSACHUSETTS ELECTRIC COMPANY | |||
May 6, 2016 | By: | /s/ Jay S. Buth | |
Jay S. Buth | |||
Vice President, Controller and Chief Accounting Officer | |||
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55
SIGNATURE
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
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SIGNATURE
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
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SIGNATURE
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
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59