false--12-31--12-31--12-31--12-31Q1202000000727410000013372000031525600000234266760.00122482100075406000104970009734800026207800071111000111540001308760000.5350.5675380000000100000000100000000245000000.03950.0510.04460.03450.02330.03150.0487P5YP5Y1900000466000000001460000031000002140000039100000114660000046600000155600000 0000072741 us-gaap:OperatingSegmentsMember es:WholesaleTransmissionRevenueMember es:EversourceElectricTransmissionMember 2020-01-01 2020-03-31
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UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549
FORM 10-Q
|
x | FORM | 10-Q |
| ☒ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
| | For the Quarterly Period Ended September 30, 2017 | March 31, 2020 |
| | or |
¨
☐ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 |
| |
For the transition period from ____________ to ____________ |
Registrant; State of Incorporation; Address; Telephone Number;
Commission File Number; and I.R.S. Employer Identification No.
EVERSOURCE ENERGY
(a Massachusetts voluntary association)
300 Cadwell Drive, Springfield, Massachusetts 01104
Telephone: (800) 286-5000
Commission File Number: 1-5324
I.R.S. Employer Identification No. 04-2147929
THE CONNECTICUT LIGHT AND POWER COMPANY
(a Connecticut corporation)
107 Selden Street, Berlin, Connecticut 06037-1616
Telephone: (800) 286-5000
Commission File Number: 0-00404
I.R.S. Employer Identification No. 06-0303850
NSTAR ELECTRIC COMPANY
(a Massachusetts corporation)
800 Boylston Street, Boston, Massachusetts 02199
Telephone: (800) 286-5000
Commission File Number: 1-02301
I.R.S. Employer Identification No. 04-1278810
PUBLIC SERVICE COMPANY OF NEW HAMPSHIRE
(a New Hampshire corporation)
Energy Park
780 North Commercial Street, Manchester, New Hampshire 03101-1134
Telephone: (800) 286-5000
Commission File Number: 1-6392
I.R.S. Employer Identification No. 02-0181050
|
| | | | |
Commission
File Number
| Registrant; StateSecurities registered pursuant to Section 12(b) of Incorporation;
Address; and Telephone Number
| I.R.S. Employer
Identification No.
the Act: |
| | | |
1-5324 | EVERSOURCE ENERGY
(a Massachusetts voluntary association)
300 Cadwell Drive
Springfield, Massachusetts 01104
Telephone: (800) 286-5000
| 04-2147929 |
| | |
0-00404 | THE CONNECTICUT LIGHT AND POWER COMPANY
(a Connecticut corporation)
107 Selden Street
Berlin, Connecticut 06037-1616
Telephone: (800) 286-5000
| 06-0303850 |
| Title of each class | | |
1-02301 | NSTAR ELECTRIC COMPANY
(a Massachusetts corporation)
800 Boylston Street
Boston, Massachusetts 02199
Telephone: (800) 286-5000
| 04-1278810 |
| Trading Symbol(s) | | Name of each exchange on which registered |
1-6392 | PUBLIC SERVICE COMPANY OF NEW HAMPSHIRE
(a New Hampshire corporation)
Energy Park
780 North Commercial Street
Manchester, New Hampshire 03101-1134
Telephone: (800) 286-5000
| 02-0181050 |
| Common Shares, $5.00 par value per share | | |
0-7624 | WESTERN MASSACHUSETTS ELECTRIC COMPANY
(a Massachusetts corporation)
300 Cadwell Drive
Springfield, Massachusetts 01104
Telephone: (800) 286-5000
| 04-1961130 |
| ES | | |
| | New York Stock Exchange |
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.
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 (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrants were required to submit and post such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one):
|
| | | | | | | | | | |
| Eversource Energy | Large accelerated filer | ☒ | Accelerated filer | ☐ | Non-accelerated filer | ☐ | Smaller reporting company | ☐ | Emerging growth company |
| | | | | | | | | |
Eversource Energy | x | | ¨ | | ¨ | | ¨ | | ¨☐ |
| The Connecticut Light and Power Company | ¨Large accelerated filer | ☐ | ¨Accelerated filer | ☐ | xNon-accelerated filer | ☒ | ¨Smaller reporting company | ☐ | ¨Emerging growth company | ☐ |
| NSTAR Electric Company | ¨Large accelerated filer | ☐ | ¨Accelerated filer | ☐ | xNon-accelerated filer | ☒ | ¨Smaller reporting company | ☐ | ¨Emerging growth company | ☐ |
| Public Service Company of New Hampshire | ¨Large accelerated filer | ☐ | ¨Accelerated filer | ☐ | xNon-accelerated filer | ☒ | ¨Smaller reporting company | ☐ | ¨ |
Western Massachusetts Electric CompanyEmerging growth company | ¨ | | ¨ | | x | | ¨ | | ¨☐ |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨
Indicate by check mark whether the registrants are shell companies (as defined in Rule 12b-2 of the Exchange Act):
|
| | |
| | Yes | No |
| | | |
| 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'registrant's classes of common stock, as of the latest practicable date:
|
| | | |
| Company - Class of Stock | Outstanding as of October 31, 2017April 30, 2020 |
| | |
| Eversource Energy Common Shares, $5.00 par value | 316,885,808 336,442,541 |
| shares |
| The Connecticut Light and Power Company Common Stock, $10.00 par value | 6,035,205 |
| shares |
| NSTAR Electric Company Common Stock, $1.00 par value | 100 200 |
| shares |
| Public Service Company of New Hampshire Common Stock, $1.00 par value | 301 shares |
Western Massachusetts Electric Company Common Stock, $25.00 par value | 434,653
| shares |
Eversource Energy holds all of the 6,035,205 shares, 100 shares, 301200 shares, and 434,653301 shares of the outstanding common stock of The Connecticut Light and Power Company, NSTAR Electric Company, and Public Service Company of New Hampshire, and Western Massachusetts Electric Company, respectively.
NSTAR Electric Company and 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.10‑Q.
Eversource Energy, The Connecticut Light and Power Company, NSTAR Electric Company, and 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 and acronyms that are found in this report:
|
| |
| 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, Eversource Water Ventures, Inc. (parent company of Aquarion), 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, and Eversource parent's equity ownership interests that are not consolidated |
| CL&P | The Connecticut Light and Power Company |
| NSTAR Electric | NSTAR Electric Company |
| PSNH | Public Service Company of New Hampshire |
WMECOPSNH Funding | Western Massachusetts Electric CompanyPSNH Funding LLC 3, a bankruptcy remote, special purpose, wholly-owned subsidiary of PSNH |
| NSTAR Gas | NSTAR Gas Company |
| Yankee Gas | Yankee Gas Services Company |
| Aquarion | Eversource Aquarion Holdings, Inc. and its subsidiaries |
| NPT | Northern Pass Transmission LLC |
| Northern Pass | The HVDC and associated alternating-current transmission line project from Canada into New Hampshire |
| HEEC | Harbor Electric Energy Company, a wholly-owned subsidiary of NSTAR Electric |
| Eversource Service | Eversource Energy Service Company |
| Bay State Wind | A projectBay State Wind LLC, an offshore wind business being developed jointly by Eversource and Denmark-based Ørsted, (formerly known as DONG Energy) to constructwhich holds the Sunrise Wind project |
| North East Offshore | North East Offshore, LLC, an offshore wind farm offbusiness holding company being developed jointly by Eversource and Denmark-based Ørsted, which holds the coast of MassachusettsRevolution Wind and South Fork Wind projects |
| 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 Regulatedregulated companies are comprised of the electric distribution and transmission businesses of CL&P, NSTAR Electric PSNH, and WMECO,PSNH, the natural gas distribution businesses of Yankee Gas and NSTAR Gas, NPT, Aquarion, and the generation activitiessolar power facilities of PSNH and WMECO |
| NSTAR Electric |
| Regulators: | |
| 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 |
| |
| Other Terms and Abbreviations: |
Access Northeast | A project being developed jointly by Eversource, Enbridge, Inc. ("Enbridge"), and National Grid plc ("National Grid") through Algonquin Gas Transmission, LLC to bring needed additional natural gas pipeline and storage capacity to New England. |
| ADIT | Accumulated Deferred Income Taxes |
| AFUDC | Allowance For Funds Used During Construction |
AOCLAOCI | Accumulated Other Comprehensive Loss |
Aquarion | Aquarion Water CompanyIncome |
| ARO | Asset Retirement Obligation |
| Bcf | Billion cubic feet |
| 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 |
| EDIT | Excess Deferred Income Taxes |
| EPS | Earnings Per Share |
|
| |
| ERISA | Employee Retirement Income Security Act of 1974 |
|
| |
| ESOP | Employee Stock Ownership Plan |
ESPP | Employee Share Purchase Plan |
Eversource 20162019 Form 10-K | The Eversource Energy and Subsidiaries 20162019 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 |
| GSRP | Greater Springfield Reliability Project |
| GWh | Gigawatt-Hours |
| 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 |
MMcfMG | Million cubic feetgallons |
| MGP | Manufactured Gas Plant |
| MMBtu | One million British thermal units |
| MMcf | Million cubic feet |
| Moody's | Moody's Investors Services, Inc. |
| MW | Megawatt |
| MWh | Megawatt-Hours |
| NEEWS | New England East-West Solution |
| NETOs | New England Transmission Owners (including Eversource, National Grid and Avangrid) |
NOx
| Nitrogen oxides |
| OCI | Other Comprehensive Income/(Loss) |
| 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 ActPower purchase agreement |
| 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 |
RRBRRBs | Rate Reduction BondBonds or Rate Reduction CertificateCertificates |
| 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 |
| VIE | Variable Interest Entity |
EVERSOURCE ENERGY AND SUBSIDIARIES
THE CONNECTICUT LIGHT AND POWER COMPANY
NSTAR ELECTRIC COMPANY AND SUBSIDIARY
PUBLIC SERVICE COMPANY OF NEW HAMPSHIRE AND SUBSIDIARYSUBSIDIARIES
WESTERN MASSACHUSETTS ELECTRIC COMPANY
TABLE OF CONTENTS
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PART I – FINANCIAL INFORMATION |
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| | Condensed Consolidated Statements of Common Shareholders' Equity | |
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| Condensed Statements of Common Stockholder's Equity | |
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| Condensed Consolidated Statements of Common Stockholder's Equity | |
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| | Common Stockholder's Equity | |
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| PART II – OTHER INFORMATION |
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EVERSOURCE ENERGY AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
| | | (Thousands of Dollars) | As of September 30, 2017 |
| As of December 31, 2016 | As of March 31, 2020 |
| As of December 31, 2019 |
|
|
|
|
|
|
|
|
|
| ASSETS | |
|
| | |
|
| |
| Current Assets: | |
|
| | |
|
| |
| Cash and Cash Equivalents | $ | 125,761 |
|
| $ | 30,251 |
| |
| Receivables, Net | 919,959 |
|
| 847,301 |
| |
| Cash | | $ | 47,425 |
|
| $ | 15,432 |
|
| Receivables, Net (net of allowance for uncollectible accounts of $262,078 and $224,821 as of March 31, 2020 and December 31, 2019, respectively) | | 1,018,941 |
|
| 989,383 |
|
| Unbilled Revenues | 146,634 |
|
| 168,490 |
| 155,224 |
|
| 181,006 |
|
| Fuel, Materials, Supplies and Inventory | 305,035 |
|
| 328,721 |
| |
| Fuel, Materials, Supplies and REC Inventory | | 286,498 |
| | 235,471 |
|
| Regulatory Assets | 746,142 |
|
| 887,625 |
| 785,125 |
|
| 651,112 |
|
| Prepayments and Other Current Assets | 159,939 |
|
| 215,284 |
| 269,457 |
|
| 342,135 |
|
| Total Current Assets | 2,403,470 |
|
| 2,477,672 |
| 2,562,670 |
|
| 2,414,539 |
|
|
|
|
|
|
| |
| Property, Plant and Equipment, Net | 22,537,304 |
|
| 21,350,510 |
| 28,041,356 |
|
| 27,585,470 |
|
|
|
|
|
|
| |
| Deferred Debits and Other Assets: | |
|
| |
| |
|
| |
|
| Regulatory Assets | 3,505,901 |
|
| 3,638,688 |
| 4,778,321 |
|
| 4,863,639 |
|
| Goodwill | 3,519,401 |
|
| 3,519,401 |
| 4,427,266 |
|
| 4,427,266 |
|
| Investments in Unconsolidated Affiliates | | 876,328 |
| | 871,633 |
|
| Marketable Securities | 570,255 |
|
| 544,642 |
| 418,715 |
|
| 449,130 |
|
| Other Long-Term Assets | 627,289 |
|
| 522,260 |
| 544,330 |
|
| 512,238 |
|
| Total Deferred Debits and Other Assets | 8,222,846 |
|
| 8,224,991 |
| 11,044,960 |
|
| 11,123,906 |
|
|
|
|
|
|
| |
| Total Assets | $ | 33,163,620 |
|
| $ | 32,053,173 |
| $ | 41,648,986 |
|
| $ | 41,123,915 |
|
|
|
|
|
|
|
|
| LIABILITIES AND CAPITALIZATION | |
| | |
| |
| Current Liabilities: | |
| | |
| |
| Notes Payable | $ | 18,238 |
|
| $ | 1,148,500 |
| $ | 661,420 |
|
| $ | 889,084 |
|
| Long-Term Debt – Current Portion | 957,697 |
|
| 773,883 |
| 532,440 |
|
| 327,411 |
|
| Rate Reduction Bonds – Current Portion | | 43,210 |
| | 43,210 |
|
| Accounts Payable | 794,195 |
|
| 884,521 |
| 914,333 |
|
| 1,147,872 |
|
| Obligations to Third Party Suppliers | 149,789 |
|
| 122,806 |
| |
| Renewable Portfolio Standards Compliance Obligations | | 192,660 |
| | 160,149 |
|
| Regulatory Liabilities | 170,215 |
|
| 146,787 |
| 439,859 |
|
| 361,152 |
|
| Other Current Liabilities | 530,297 |
|
| 562,108 |
| 611,706 |
|
| 676,685 |
|
| Total Current Liabilities | 2,620,431 |
|
| 3,638,605 |
| 3,395,628 |
|
| 3,605,563 |
|
|
|
|
| |
| Deferred Credits and Other Liabilities: | |
| | |
| |
| Accumulated Deferred Income Taxes | 6,001,589 |
|
| 5,607,207 |
| 3,816,988 |
|
| 3,755,777 |
|
| Regulatory Liabilities | 700,207 |
|
| 702,255 |
| 3,668,158 |
|
| 3,658,042 |
|
| Derivative Liabilities | 391,910 |
|
| 413,676 |
| 342,990 |
|
| 338,710 |
|
| Accrued Pension and SERP | 946,629 |
|
| 1,141,514 |
| |
| Asset Retirement Obligations | | 489,519 |
| | 488,511 |
|
| Accrued Pension, SERP and PBOP | | 1,331,884 |
|
| 1,370,245 |
|
| Other Long-Term Liabilities | 881,056 |
|
| 853,260 |
| 821,195 |
|
| 810,553 |
|
| Total Deferred Credits and Other Liabilities | 8,921,391 |
|
| 8,717,912 |
| 10,470,734 |
|
| 10,421,838 |
|
|
|
|
|
|
| |
| Capitalization: | |
| | |
| Long-Term Debt | 10,468,193 |
|
| 8,829,354 |
| 13,898,581 |
|
| 13,770,828 |
|
|
|
|
|
|
| |
| Rate Reduction Bonds | | 518,517 |
| | 540,122 |
|
| Noncontrolling Interest – Preferred Stock of Subsidiaries | 155,568 |
|
| 155,568 |
| 155,570 |
|
| 155,570 |
|
|
|
|
|
|
| |
| Equity: | |
| | |
| Common Shareholders' Equity: | |
| |
|
| |
| Common Shares | 1,669,392 |
|
| 1,669,392 |
| 1,759,092 |
|
| 1,729,292 |
|
| Capital Surplus, Paid In | 6,235,846 |
|
| 6,250,224 |
| 7,479,689 |
|
| 7,087,768 |
|
| Retained Earnings | 3,474,185 |
|
| 3,175,171 |
| 4,322,825 |
|
| 4,177,048 |
|
| Accumulated Other Comprehensive Loss | (63,615 | ) |
| (65,282 | ) | (63,111 | ) |
| (65,059 | ) |
| Treasury Stock | (317,771 | ) |
| (317,771 | ) | (288,539 | ) |
| (299,055 | ) |
| Common Shareholders' Equity | 10,998,037 |
|
| 10,711,734 |
| 13,209,956 |
|
| 12,629,994 |
|
| Total Capitalization | 21,621,798 |
|
| 19,696,656 |
| |
|
|
|
|
|
| |
| Commitments and Contingencies (Note 9) | |
|
| |
|
|
| Total Liabilities and Capitalization | $ | 33,163,620 |
|
| $ | 32,053,173 |
| $ | 41,648,986 |
|
| $ | 41,123,915 |
|
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 September 30, | | For the Nine Months Ended September 30, |
| (Thousands of Dollars, Except Share Information) | 2017 | | 2016 | | 2017 | | 2016 |
| | | | | | | | |
| Operating Revenues | $ | 1,988,512 |
| | $ | 2,039,706 |
| | $ | 5,856,458 |
| | $ | 5,862,525 |
|
| | | | | | | | |
| Operating Expenses: | | | | | | | |
| Purchased Power, Fuel and Transmission | 651,776 |
| | 665,810 |
| | 1,955,129 |
| | 2,001,929 |
|
| Operations and Maintenance | 300,421 |
| | 324,734 |
| | 933,400 |
| | 965,584 |
|
| Depreciation | 194,466 |
| | 181,288 |
| | 571,152 |
| | 531,781 |
|
| Amortization of Regulatory Assets, Net | 41,848 |
| | 43,942 |
| | 58,058 |
| | 56,223 |
|
| Energy Efficiency Programs | 129,205 |
| | 149,121 |
| | 391,761 |
| | 405,962 |
|
| Taxes Other Than Income Taxes | 168,193 |
| | 164,942 |
| | 479,648 |
| | 479,219 |
|
| Total Operating Expenses | 1,485,909 |
| | 1,529,837 |
| | 4,389,148 |
| | 4,440,698 |
|
| Operating Income | 502,603 |
| | 509,869 |
| | 1,467,310 |
| | 1,421,827 |
|
| Interest Expense | 108,719 |
| | 99,865 |
| | 319,477 |
| | 298,568 |
|
| Other Income, Net | 21,184 |
| | 13,641 |
| | 56,304 |
| | 23,689 |
|
| Income Before Income Tax Expense | 415,068 |
| | 423,645 |
| | 1,204,137 |
| | 1,146,948 |
|
| Income Tax Expense | 152,818 |
| | 156,446 |
| | 447,921 |
| | 428,186 |
|
| Net Income | 262,250 |
| | 267,199 |
| | 756,216 |
| | 718,762 |
|
| Net Income Attributable to Noncontrolling Interests | 1,880 |
| | 1,880 |
| | 5,639 |
| | 5,639 |
|
| Net Income Attributable to Common Shareholders | $ | 260,370 |
| | $ | 265,319 |
| | $ | 750,577 |
| | $ | 713,123 |
|
| | | | | | | | |
| Basic and Diluted Earnings Per Common Share | $ | 0.82 |
| | $ | 0.83 |
| | $ | 2.36 |
| | $ | 2.24 |
|
| | | | | | | | |
| Dividends Declared Per Common Share | $ | 0.48 |
| | $ | 0.45 |
| | $ | 1.43 |
| | $ | 1.34 |
|
| | | | | | | | |
| Weighted Average Common Shares Outstanding: | | | | | | | |
| Basic | 317,393,029 |
| | 317,787,836 |
| | 317,415,848 |
| | 317,696,823 |
|
| Diluted | 317,949,396 |
| | 318,577,079 |
| | 318,007,042 |
| | 318,511,609 |
|
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
EVERSOURCE ENERGY AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Unaudited)
|
| | | | | | | | | | | | | | | |
| | For the Three Months Ended September 30, | | For the Nine Months Ended September 30, |
| (Thousands of Dollars) | 2017 | | 2016 | | 2017 | | 2016 |
| | | | | | | | |
| Net Income | $ | 262,250 |
| | $ | 267,199 |
| | $ | 756,216 |
| | $ | 718,762 |
|
| Other Comprehensive (Loss)/Income, Net of Tax: | | | | | | | |
| Qualified Cash Flow Hedging Instruments | 519 |
| | 534 |
| | 1,567 |
| | 1,602 |
|
Changes in Unrealized (Losses)/Gains on Marketable Securities | (1,872 | ) | | 946 |
| | 733 |
| | 2,271 |
|
Changes in Funded Status of Pension, SERP and PBOP Benefit Plans | 673 |
| | (1,733 | ) | | (633 | ) | | (2,646 | ) |
| Other Comprehensive (Loss)/Income, Net of Tax | (680 | ) | | (253 | ) | | 1,667 |
| | 1,227 |
|
Comprehensive Income Attributable to Noncontrolling Interests | (1,880 | ) | | (1,880 | ) | | (5,639 | ) | | (5,639 | ) |
Comprehensive Income Attributable to Common Shareholders | $ | 259,690 |
| | $ | 265,066 |
| | $ | 752,244 |
| | $ | 714,350 |
|
|
| | | | | | | |
| | For the Three Months Ended March 31, |
| (Thousands of Dollars, Except Share Information) | 2020 | | 2019 |
| | | | |
| Operating Revenues | $ | 2,373,726 |
| | $ | 2,415,792 |
|
| | | | |
| Operating Expenses: | | | |
| Purchased Power, Fuel and Transmission | 876,570 |
| | 974,882 |
|
| Operations and Maintenance | 342,062 |
| | 335,597 |
|
| Depreciation | 236,211 |
| | 214,948 |
|
| Amortization | 49,776 |
| | 70,961 |
|
| Energy Efficiency Programs | 148,393 |
| | 140,116 |
|
| Taxes Other Than Income Taxes | 181,594 |
| | 184,588 |
|
| Total Operating Expenses | 1,834,606 |
| | 1,921,092 |
|
| Operating Income | 539,120 |
| | 494,700 |
|
| Interest Expense | 134,715 |
| | 131,734 |
|
| Other Income, Net | 24,104 |
| | 30,985 |
|
| Income Before Income Tax Expense | 428,509 |
| | 393,951 |
|
| Income Tax Expense | 91,876 |
| | 83,393 |
|
| Net Income | 336,633 |
| | 310,558 |
|
| Net Income Attributable to Noncontrolling Interests | 1,880 |
| | 1,880 |
|
| Net Income Attributable to Common Shareholders | $ | 334,753 |
| | $ | 308,678 |
|
| | | | |
| Basic and Diluted Earnings Per Common Share | $ | 1.01 |
| | $ | 0.97 |
|
| | | | |
| Weighted Average Common Shares Outstanding: | | | |
| Basic | 331,102,237 |
| | 317,624,593 |
|
| Diluted | 332,937,153 |
| | 318,316,082 |
|
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Unaudited)
|
| | | | | | | |
| | For the Three Months Ended March 31, |
| (Thousands of Dollars) | 2020 | | 2019 |
| | | | |
| Net Income | $ | 336,633 |
| | $ | 310,558 |
|
| Other Comprehensive Income, Net of Tax: | | | |
| Qualified Cash Flow Hedging Instruments | 229 |
| | 316 |
|
| Changes in Unrealized Gains on Marketable Securities | 160 |
| | 655 |
|
| Changes in Funded Status of Pension, SERP and PBOP Benefit Plans | 1,559 |
| | 1,225 |
|
| Other Comprehensive Income, Net of Tax | 1,948 |
| | 2,196 |
|
| Comprehensive Income Attributable to Noncontrolling Interests | (1,880 | ) | | (1,880 | ) |
| Comprehensive Income Attributable to Common Shareholders | $ | 336,701 |
| | $ | 310,874 |
|
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
EVERSOURCE ENERGY AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF COMMON SHAREHOLDERS' EQUITY
(Unaudited)
|
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| | For the Three Months Ended March 31, 2020 |
| | Common Shares | | Capital Surplus, Paid In | | Retained Earnings | | Accumulated Other Comprehensive Loss | | Treasury Stock | | Total Common Shareholders' Equity |
| (Thousands of Dollars, Except Share Information) | Shares | | Amount |
| Balance as of January 1, 2020 | 329,880,645 |
| | $ | 1,729,292 |
| | $ | 7,087,768 |
| | $ | 4,177,048 |
| | $ | (65,059 | ) | | $ | (299,055 | ) | | $ | 12,629,994 |
|
| Net Income | |
| | |
| | | | 336,633 |
| | | | | | 336,633 |
|
| Dividends on Common Shares - $0.5675 Per Share | |
| | |
| | | | (187,462 | ) | | | | | | (187,462 | ) |
| Dividends on Preferred Stock | |
| | |
| | | | (1,880 | ) | | | | | | (1,880 | ) |
| Issuance of Common Shares - $5 par value | 5,960,000 |
| | 29,800 |
| | 402,300 |
| | | | | | | | 432,100 |
|
| Long-Term Incentive Plan Activity | |
| | |
| | (15,295 | ) | | |
| | | | | | (15,295 | ) |
| Issuance of Treasury Shares | 570,542 |
| | | | 17,230 |
| | | | | | 10,516 |
| | 27,746 |
|
| Capital Stock Expense | | | | | (12,314 | ) | | | | | | | | (12,314 | ) |
| Adoption of New Accounting Standard (See Note 1B) | | | | | | | (1,514 | ) | | | | | | (1,514 | ) |
| Other Comprehensive Income | |
| | |
| | | | | | 1,948 |
| | | | 1,948 |
|
| Balance as of March 31, 2020 | 336,411,187 |
|
| $ | 1,759,092 |
|
| $ | 7,479,689 |
|
| $ | 4,322,825 |
|
| $ | (63,111 | ) |
| $ | (288,539 | ) |
| $ | 13,209,956 |
|
|
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| | For the Three Months Ended March 31, 2019 |
| | Common Shares | | Capital Surplus, Paid In | | Retained Earnings | | Accumulated Other Comprehensive Loss | | Treasury Stock | | Total Common Shareholders' Equity |
| (Thousands of Dollars, Except Share Information) | Shares | | Amount |
| Balance as of January 1, 2019 | 316,885,808 |
| | $ | 1,669,392 |
| | $ | 6,241,222 |
| | $ | 3,953,974 |
| | $ | (60,000 | ) | | $ | (317,771 | ) | | $ | 11,486,817 |
|
| Net Income | | | |
| | | | 310,558 |
| | | | | | 310,558 |
|
| Dividends on Common Shares - $0.535 Per Share | | | |
| | | | (169,757 | ) | | | | | | (169,757 | ) |
| Dividends on Preferred Stock | | | |
| | | | (1,880 | ) | | | | | | (1,880 | ) |
| Long-Term Incentive Plan Activity | | | |
| | (16,609 | ) | | |
| | | | | | (16,609 | ) |
| Issuance of Treasury Shares | 461,662 |
| | | | 17,476 |
| | | | | | 8,633 |
| | 26,109 |
|
| Other Comprehensive Income | | | |
| | | | |
| | 2,196 |
| | | | 2,196 |
|
| Balance as of March 31, 2019 | 317,347,470 |
| | $ | 1,669,392 |
| | $ | 6,242,089 |
| | $ | 4,092,895 |
| | $ | (57,804 | ) | | $ | (309,138 | ) | | $ | 11,637,434 |
|
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 Nine Months Ended September 30, | For the Three Months Ended March 31, |
| (Thousands of Dollars) | 2017 | | 2016 | 2020 | | 2019 |
|
|
|
|
|
|
|
| Operating Activities: | |
| | |
| |
| Net Income | $ | 756,216 |
|
| $ | 718,762 |
| $ | 336,633 |
|
| $ | 310,558 |
|
| Adjustments to Reconcile Net Income to Net Cash Flows Provided by Operating Activities: | |
| | |
| |
| Depreciation | 571,152 |
|
| 531,781 |
| 236,211 |
|
| 214,948 |
|
| Deferred Income Taxes | 374,863 |
|
| 301,413 |
| 44,201 |
|
| 18,085 |
|
| Uncollectible Expense | | 11,353 |
| | 18,565 |
|
| Pension, SERP and PBOP Expense, Net | 16,891 |
|
| 31,627 |
| 1,953 |
|
| 8,428 |
|
| Pension and PBOP Contributions | (197,900 | ) |
| (121,854 | ) | (723 | ) |
| (4,700 | ) |
| Regulatory Overrecoveries, Net | 185,952 |
|
| 152,808 |
| |
| Amortization of Regulatory Assets, Net | 58,058 |
|
| 56,223 |
| |
| Regulatory Underrecoveries, Net | | (22,288 | ) |
| (19,232 | ) |
| Amortization | | 49,776 |
|
| 70,961 |
|
| Other | (148,741 | ) |
| (27,671 | ) | (33,317 | ) |
| (37,310 | ) |
| Changes in Current Assets and Liabilities: | |
| | |
| |
| Receivables and Unbilled Revenues, Net | (107,473 | ) |
| (191,454 | ) | (55,290 | ) |
| (155,823 | ) |
| Fuel, Materials, Supplies and Inventory | 23,686 |
|
| 25,425 |
| |
| Fuel, Materials, Supplies and REC Inventory | | (51,027 | ) |
| (39,063 | ) |
| Taxes Receivable/Accrued, Net | 88,856 |
|
| 347,898 |
| 92,140 |
|
| 126,381 |
|
| Accounts Payable | (96,551 | ) |
| (121,513 | ) | (127,366 | ) |
| (60,121 | ) |
| Other Current Assets and Liabilities, Net | (32,874 | ) |
| (53,077 | ) | (61,950 | ) |
| (70,242 | ) |
| Net Cash Flows Provided by Operating Activities | 1,492,135 |
|
| 1,650,368 |
| 420,306 |
|
| 381,435 |
|
|
|
|
|
|
|
|
| Investing Activities: | |
| | |
| |
| Investments in Property, Plant and Equipment | (1,642,280 | ) |
| (1,359,171 | ) | (725,520 | ) |
| (628,129 | ) |
| Proceeds from Sales of Marketable Securities | 520,664 |
|
| 444,209 |
| 58,627 |
|
| 234,497 |
|
| Purchases of Marketable Securities | (506,302 | ) |
| (437,197 | ) | (50,723 | ) |
| (237,794 | ) |
| Investments in Unconsolidated Affiliates, Net | | (6,113 | ) | | (249,138 | ) |
| Other Investing Activities | (10,177 | ) |
| (9,463 | ) | 6,119 |
|
| 4,893 |
|
| Net Cash Flows Used in Investing Activities | (1,638,095 | ) |
| (1,361,622 | ) | (717,610 | ) |
| (875,671 | ) |
|
|
|
|
|
|
|
| Financing Activities: | |
| | |
| |
| Issuance of Common Shares, Net of Issuance Costs | | 419,786 |
| | — |
|
| Cash Dividends on Common Shares | (451,562 | ) |
| (423,471 | ) | (181,608 | ) |
| (169,757 | ) |
| Cash Dividends on Preferred Stock | (5,639 | ) |
| (5,639 | ) | (1,880 | ) |
| (1,880 | ) |
| Decrease in Notes Payable | (231,500 | ) |
| (426,453 | ) | |
| (Decrease)/Increase in Notes Payable | | (408,950 | ) |
| 829,430 |
|
| Repayment of Rate Reduction Bonds | | (21,605 | ) | | (30,727 | ) |
| Issuance of Long-Term Debt | 1,250,000 |
|
| 800,000 |
| 750,000 |
|
| — |
|
| Retirements of Long-Term Debt | (320,000 | ) |
| (200,000 | ) | |
| Retirement of Long-Term Debt | | (220,253 | ) |
| (250,215 | ) |
| Other Financing Activities | 171 |
|
| (17,074 | ) | (21,560 | ) |
| 16,433 |
|
| Net Cash Flows Provided by/(Used in) Financing Activities | 241,470 |
|
| (272,637 | ) | |
| Net Increase in Cash and Cash Equivalents | 95,510 |
|
| 16,109 |
| |
| Cash and Cash Equivalents - Beginning of Period | 30,251 |
|
| 23,947 |
| |
| Cash and Cash Equivalents - End of Period | $ | 125,761 |
|
| $ | 40,056 |
| |
| Net Cash Flows Provided by Financing Activities | | 313,930 |
|
| 393,284 |
|
| Net Increase/(Decrease) in Cash and Restricted Cash | | 16,626 |
|
| (100,952 | ) |
| Cash and Restricted Cash - Beginning of Period | | 117,063 |
|
| 209,324 |
|
| Cash and Restricted Cash - End of Period | | $ | 133,689 |
|
| $ | 108,372 |
|
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
THE CONNECTICUT LIGHT AND POWER COMPANY
CONDENSED BALANCE SHEETS
(Unaudited)
| | | (Thousands of Dollars) | As of September 30, 2017 | | As of December 31, 2016 | As of March 31, 2020 | | As of December 31, 2019 |
| | | | | | | |
| ASSETS | | | | | | |
| Current Assets: | | | | | | |
| Cash | $ | 9,364 |
| | $ | 6,579 |
| $ | 3,785 |
| | $ | — |
|
| Receivables, Net | 404,065 |
| | 359,132 |
| |
| Receivables, Net (net of allowance for uncollectible accounts of $130,876 and $97,348 as of March 31, 2020 and December 31, 2019, respectively) | | 389,102 |
| | 400,927 |
|
| Accounts Receivable from Affiliated Companies | 29,287 |
| | 16,851 |
| 33,701 |
| | 24,577 |
|
| Unbilled Revenues | 48,625 |
| | 50,373 |
| 49,982 |
| | 56,465 |
|
| Materials, Supplies and Inventory | 44,516 |
| | 52,050 |
| |
| Materials and Supplies | | 49,962 |
| | 50,700 |
|
| Regulatory Assets | 274,982 |
| | 335,526 |
| 290,630 |
| | 178,607 |
|
| Prepaid Property Taxes | 55,375 |
| | 19,678 |
| |
| Prepayments and Other Current Assets | 13,832 |
| | 32,992 |
| 69,767 |
| | 73,184 |
|
| Total Current Assets | 880,046 |
| | 873,181 |
| 886,929 |
| | 784,460 |
|
| | | | | |
| Property, Plant and Equipment, Net | 8,107,957 |
| | 7,632,392 |
| 9,760,890 |
| | 9,625,765 |
|
| | | | | |
| Deferred Debits and Other Assets: | | | | | | |
| Regulatory Assets | 1,312,191 |
| | 1,391,564 |
| 1,529,003 |
| | 1,557,261 |
|
| Other Long-Term Assets | 145,246 |
| | 137,907 |
| 250,243 |
| | 217,705 |
|
| Total Deferred Debits and Other Assets | 1,457,437 |
| | 1,529,471 |
| 1,779,246 |
| | 1,774,966 |
|
| | | | | |
| Total Assets | $ | 10,445,440 |
| | $ | 10,035,044 |
| $ | 12,427,065 |
| | $ | 12,185,191 |
|
| | | | | | | |
| LIABILITIES AND CAPITALIZATION | | | | | | |
| Current Liabilities: | | | | | | |
| Notes Payable to Eversource Parent | $ | — |
| | $ | 80,100 |
| $ | 219,000 |
| | $ | 63,800 |
|
| Long-Term Debt – Current Portion | 300,000 |
| | 250,000 |
| |
| Accounts Payable | 292,234 |
| | 289,532 |
| 331,491 |
| | 374,698 |
|
| Accounts Payable to Affiliated Companies | 80,899 |
| | 88,075 |
| 88,553 |
| | 97,793 |
|
| Obligations to Third Party Suppliers | 52,865 |
| | 55,520 |
| 50,335 |
| | 56,952 |
|
| Accrued Taxes | 64,332 |
| | 16,090 |
| |
| Regulatory Liabilities | 69,296 |
| | 47,055 |
| 119,283 |
| | 82,763 |
|
| Derivative Liabilities | 59,895 |
| | 77,765 |
| 69,631 |
| | 67,804 |
|
| Other Current Liabilities | 99,467 |
| | 104,309 |
| 152,138 |
| | 132,339 |
|
| Total Current Liabilities | 1,018,988 |
| | 1,008,446 |
| 1,030,431 |
| | 876,149 |
|
| | | | | |
| Deferred Credits and Other Liabilities: | | | | | | |
| Accumulated Deferred Income Taxes | 2,089,480 |
| | 1,987,661 |
| 1,270,025 |
| | 1,244,551 |
|
| Regulatory Liabilities | 98,777 |
| | 100,138 |
| 1,179,663 |
| | 1,164,991 |
|
| Derivative Liabilities | 391,758 |
| | 412,750 |
| 342,701 |
| | 338,594 |
|
| Accrued Pension, SERP and PBOP | 297,492 |
| | 300,208 |
| 385,451 |
| | 391,159 |
|
| Other Long-Term Liabilities | 134,870 |
| | 123,244 |
| 149,693 |
| | 147,586 |
|
| Total Deferred Credits and Other Liabilities | 3,012,377 |
| | 2,924,001 |
| 3,327,533 |
| | 3,286,881 |
|
| | | | | |
| Capitalization: | | | | |
| Long-Term Debt | 2,758,851 |
| | 2,516,010 |
| 3,518,129 |
| | 3,518,136 |
|
| | | | | |
| Preferred Stock Not Subject to Mandatory Redemption | 116,200 |
| | 116,200 |
| 116,200 |
| | 116,200 |
|
| | | | | |
| Common Stockholder's Equity: | | | | | | |
| Common Stock | 60,352 |
| | 60,352 |
| 60,352 |
| | 60,352 |
|
| Capital Surplus, Paid In | 2,110,752 |
| | 2,110,714 |
| 2,535,765 |
| | 2,535,765 |
|
| Retained Earnings | 1,367,650 |
| | 1,299,374 |
| 1,838,340 |
| | 1,791,392 |
|
| Accumulated Other Comprehensive Income/(Loss) | 270 |
| | (53 | ) | |
| Accumulated Other Comprehensive Income | | 315 |
| | 316 |
|
| Common Stockholder's Equity | 3,539,024 |
| | 3,470,387 |
| 4,434,772 |
| | 4,387,825 |
|
| Total Capitalization | 6,414,075 |
| | 6,102,597 |
| |
| | | | | |
| Commitments and Contingencies (Note 9) | |
|
| |
|
|
| Total Liabilities and Capitalization | $ | 10,445,440 |
| | $ | 10,035,044 |
| $ | 12,427,065 |
| | $ | 12,185,191 |
|
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 September 30, | | For the Nine Months Ended September 30, |
| (Thousands of Dollars) | 2017 | | 2016 | | 2017 | | 2016 |
| | | | | | | | |
| Operating Revenues | $ | 774,762 |
| | $ | 760,037 |
| | $ | 2,173,629 |
| | $ | 2,175,141 |
|
| | | | | | | | |
| Operating Expenses: | | | | | | | |
| Purchased Power and Transmission | 259,005 |
| | 253,509 |
| | 711,154 |
| | 760,613 |
|
| Operations and Maintenance | 123,107 |
| | 123,034 |
| | 359,834 |
| | 356,409 |
|
| Depreciation | 63,727 |
| | 57,675 |
| | 184,275 |
| | 172,175 |
|
| Amortization of Regulatory Assets, Net | 34,574 |
| | 23,418 |
| | 58,799 |
| | 30,308 |
|
| Energy Efficiency Programs | 37,739 |
| | 44,381 |
| | 106,483 |
| | 117,969 |
|
| Taxes Other Than Income Taxes | 79,067 |
| | 81,948 |
| | 223,482 |
| | 227,981 |
|
| Total Operating Expenses | 597,219 |
| | 583,965 |
| | 1,644,027 |
| | 1,665,455 |
|
| Operating Income | 177,543 |
| | 176,072 |
| | 529,602 |
| | 509,686 |
|
| Interest Expense | 36,313 |
| | 36,083 |
| | 106,577 |
| | 108,561 |
|
| Other Income, Net | 7,509 |
| | 3,669 |
| | 14,070 |
| | 10,881 |
|
| Income Before Income Tax Expense | 148,739 |
| | 143,658 |
| | 437,095 |
| | 412,006 |
|
| Income Tax Expense | 52,595 |
| | 57,026 |
| | 159,450 |
| | 155,453 |
|
| Net Income | $ | 96,144 |
| | $ | 86,632 |
| | $ | 277,645 |
| | $ | 256,553 |
|
The accompanying notes are an integral part of these unaudited condensed financial statements.
THE CONNECTICUT LIGHT AND POWER COMPANY
CONDENSED STATEMENTS OF COMPREHENSIVE INCOME
(Unaudited)
|
| | | | | | | |
| | For the Three Months Ended March 31, |
| (Thousands of Dollars) | 2020 | | 2019 |
| | | | |
| Operating Revenues | $ | 899,703 |
| | $ | 849,246 |
|
| | | | |
| Operating Expenses: | | | |
| Purchased Power and Transmission | 374,717 |
| | 319,833 |
|
| Operations and Maintenance | 135,597 |
| | 130,637 |
|
| Depreciation | 78,435 |
| | 73,289 |
|
| Amortization of Regulatory Assets, Net | 6,548 |
| | 35,671 |
|
| Energy Efficiency Programs | 35,479 |
| | 25,988 |
|
| Taxes Other Than Income Taxes | 82,987 |
| | 92,000 |
|
| Total Operating Expenses | 713,763 |
| | 677,418 |
|
| Operating Income | 185,940 |
| | 171,828 |
|
| Interest Expense | 37,883 |
| | 35,781 |
|
| Other Income, Net | 1,898 |
| | 3,880 |
|
| Income Before Income Tax Expense | 149,955 |
| | 139,927 |
|
| Income Tax Expense | 31,217 |
| | 29,456 |
|
| Net Income | $ | 118,738 |
| | $ | 110,471 |
|
|
| | | | | | | | | | | | | | | |
| | For the Three Months Ended September 30, | | For the Nine Months Ended September 30, |
| (Thousands of Dollars) | 2017 | | 2016 | | 2017 | | 2016 |
| | | | | | | | |
| Net Income | $ | 96,144 |
| | $ | 86,632 |
| | $ | 277,645 |
| | $ | 256,553 |
|
| Other Comprehensive Income, Net of Tax: | | | | | | | |
| Qualified Cash Flow Hedging Instruments | 96 |
| | 111 |
| | 298 |
| | 333 |
|
Changes in Unrealized (Losses)/Gains on Marketable Securities | (64 | ) | | 33 |
| | 25 |
| | 78 |
|
| Other Comprehensive Income, Net of Tax | 32 |
| | 144 |
| | 323 |
| | 411 |
|
| Comprehensive Income | $ | 96,176 |
| | $ | 86,776 |
| | $ | 277,968 |
| | $ | 256,964 |
|
The accompanying notes are an integral part of these unaudited condensed financial statements.
CONDENSED STATEMENTS OF COMPREHENSIVE INCOME
(Unaudited)
|
| | | | | | | |
| | For the Three Months Ended March 31, |
| (Thousands of Dollars) | 2020 | | 2019 |
| | | | |
| Net Income | $ | 118,738 |
| | $ | 110,471 |
|
| Other Comprehensive (Loss)/Income, Net of Tax: | | | |
| Qualified Cash Flow Hedging Instruments | (7 | ) | | (6 | ) |
| Changes in Unrealized Gains on Marketable Securities | 6 |
| | 23 |
|
| Other Comprehensive (Loss)/Income, Net of Tax | (1 | ) | | 17 |
|
| Comprehensive Income | $ | 118,737 |
| | $ | 110,488 |
|
The accompanying notes are an integral part of these unaudited condensed financial statements.
THE CONNECTICUT LIGHT AND POWER COMPANY
CONDENSED STATEMENTS OF COMMON STOCKHOLDER'S EQUITY
(Unaudited)
|
| | | | | | | | | | | | | | | | | | | | | | |
| | For the Three Months Ended March 31, 2020 |
| | Common Stock | | Capital Surplus, Paid In | | Retained Earnings | | Accumulated Other Comprehensive Income | | Total Common Stockholder's Equity |
| (Thousands of Dollars, Except Stock Information) | Stock | | Amount | | | | |
| Balance as of January 1, 2020 | 6,035,205 |
| | $ | 60,352 |
| | $ | 2,535,765 |
| | $ | 1,791,392 |
| | $ | 316 |
| | $ | 4,387,825 |
|
| Net Income | |
| | |
| | | | 118,738 |
| | | | 118,738 |
|
| Dividends on Preferred Stock | |
| | |
| | | | (1,390 | ) | | | | (1,390 | ) |
| Dividends on Common Stock | |
| | |
| | | | (69,500 | ) | | | | (69,500 | ) |
| Adoption of New Accounting Standard (See Note 1B) | | | | | | | (900 | ) | | | | (900 | ) |
| Other Comprehensive Loss | |
| | |
| | | | |
| | (1 | ) | | (1 | ) |
| Balance as of March 31, 2020 | 6,035,205 |
| | $ | 60,352 |
| | $ | 2,535,765 |
| | $ | 1,838,340 |
| | $ | 315 |
| | $ | 4,434,772 |
|
|
| | | | | | | | | | | | | | | | | | | | | | |
| | For the Three Months Ended March 31, 2019 |
| | Common Stock | | Capital Surplus, Paid In | | Retained Earnings | | Accumulated Other Comprehensive Income | | Total Common Stockholder's Equity |
| (Thousands of Dollars, Except Stock Information) | Stock | | Amount | | | | |
| Balance as of January 1, 2019 | 6,035,205 |
| | $ | 60,352 |
| | $ | 2,410,765 |
| | $ | 1,727,899 |
| | $ | 301 |
| | $ | 4,199,317 |
|
| Net Income | |
| | |
| | | | 110,471 |
| | | | 110,471 |
|
| Dividends on Preferred Stock | |
| | |
| | | | (1,390 | ) | | | | (1,390 | ) |
| Dividends on Common Stock | |
| | |
| | | | (99,000 | ) | | | | (99,000 | ) |
| Other Comprehensive Income | |
| | |
| | | | |
| | 17 |
| | 17 |
|
| Balance as of March 31, 2019 | 6,035,205 |
| | $ | 60,352 |
| | $ | 2,410,765 |
| | $ | 1,737,980 |
| | $ | 318 |
| | $ | 4,209,415 |
|
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 Nine Months Ended September 30, | For the Three Months Ended March 31, |
| (Thousands of Dollars) | 2017 | | 2016 | 2020 | | 2019 |
| | | | | | | |
| Operating Activities: | | | | | | |
| Net Income | $ | 277,645 |
| | $ | 256,553 |
| $ | 118,738 |
| | $ | 110,471 |
|
| Adjustments to Reconcile Net Income to Net Cash Flows Provided by Operating Activities: | | | | | | |
| Depreciation | 184,275 |
| | 172,175 |
| 78,435 |
| | 73,289 |
|
| Deferred Income Taxes | 90,132 |
| | 109,637 |
| 19,910 |
| | 15,188 |
|
| Pension, SERP, and PBOP Expense, Net of PBOP Contributions | 4,546 |
| | 4,825 |
| |
| Regulatory Overrecoveries, Net | 71,413 |
| | 33,492 |
| |
| Uncollectible Expense | | 3,230 |
| | 4,116 |
|
| Pension, SERP, and PBOP Expense, Net | | 3,315 |
| | 4,063 |
|
| Regulatory Underrecoveries, Net | | (34,198 | ) | | (54,671 | ) |
| Amortization of Regulatory Assets, Net | 58,799 |
| | 30,308 |
| 6,548 |
| | 35,671 |
|
| Other | (22,113 | ) | | (14,873 | ) | (27,239 | ) | | (5,848 | ) |
| Changes in Current Assets and Liabilities: | | | | | | |
| Receivables and Unbilled Revenues, Net | (70,936 | ) | | (100,074 | ) | (27,969 | ) | | (60,506 | ) |
| Taxes Receivable/Accrued, Net | 69,335 |
| | 197,422 |
| 40,505 |
| | 41,399 |
|
| Accounts Payable | (1,649 | ) | | (30,168 | ) | (27,298 | ) | | 75,373 |
|
| Other Current Assets and Liabilities, Net | (38,111 | ) | | (44,908 | ) | (21,801 | ) | | (40,274 | ) |
| Net Cash Flows Provided by Operating Activities | 623,336 |
| | 614,389 |
| 132,176 |
| | 198,271 |
|
| | | | | | | |
| Investing Activities: | | | | | | |
| Investments in Property, Plant and Equipment | (621,882 | ) | | (438,518 | ) | (212,374 | ) | | (189,423 | ) |
| Proceeds from the Sale of Property, Plant and Equipment | — |
| | 9,047 |
| |
| Other Investing Activities | 185 |
| | 310 |
| 74 |
| | 59 |
|
| Net Cash Flows Used in Investing Activities | (621,697 | ) | | (429,161 | ) | (212,300 | ) | | (189,364 | ) |
| | | | | | | |
| Financing Activities: | | | | | | |
| Cash Dividends on Common Stock | (205,200 | ) | | (149,700 | ) | (69,500 | ) | | (99,000 | ) |
| Cash Dividends on Preferred Stock | (4,169 | ) | | (4,169 | ) | (1,390 | ) | | (1,390 | ) |
| Capital Contributions from Eversource Parent | — |
| | 145,700 |
| |
| Issuance of Long-Term Debt | 525,000 |
| | — |
| |
| Retirement of Long-Term Debt | (250,000 | ) | | — |
| — |
| | (250,000 | ) |
| Decrease in Notes Payable to Eversource Parent | (80,100 | ) | | (168,900 | ) | |
| Premium on Issuance of Long-Term Debt | 21,937 |
| | — |
| |
| Increase in Notes Payable to Eversource Parent | | 155,200 |
| | 261,600 |
|
| Other Financing Activities | (6,322 | ) | | (609 | ) | (390 | ) | | (326 | ) |
| Net Cash Flows Provided by/(Used in) Financing Activities | 1,146 |
| | (177,678 | ) | 83,920 |
| | (89,116 | ) |
| Net Increase in Cash | 2,785 |
| | 7,550 |
| |
| Cash - Beginning of Period | 6,579 |
| | 1,057 |
| |
| Cash - End of Period | $ | 9,364 |
| | $ | 8,607 |
| |
| Net Increase/(Decrease) in Cash and Restricted Cash | | 3,796 |
| | (80,209 | ) |
| Cash and Restricted Cash - Beginning of Period | | 4,971 |
| | 91,613 |
|
| Cash and Restricted Cash - End of Period | | $ | 8,767 |
| | $ | 11,404 |
|
The accompanying notes are an integral part of these unaudited condensed financial statements.
NSTAR ELECTRIC COMPANY AND SUBSIDIARY
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
| | | (Thousands of Dollars) | As of September 30, 2017 | | As of December 31, 2016 | As of March 31, 2020 | | As of December 31, 2019 |
| | | | | | | |
| ASSETS | |
| | |
| |
| | |
|
| Current Assets: | | | | | | |
| Cash and Cash Equivalents | $ | 89,915 |
| | $ | 3,494 |
| |
| Receivables, Net | 322,193 |
| | 257,557 |
| |
| Cash | | $ | 2,844 |
| | $ | 52 |
|
| Receivables, Net (net of allowance for uncollectible accounts of $71,111 and $75,406 as of March 31, 2020 and December 31, 2019, respectively) | | 375,587 |
| | 346,785 |
|
| Accounts Receivable from Affiliated Companies | 13,632 |
| | 8,581 |
| 66,838 |
| | 29,914 |
|
| Unbilled Revenues | 39,160 |
| | 31,632 |
| 32,629 |
| | 37,482 |
|
| Taxes Receivable | — |
| | 39,738 |
| |
| Materials, Supplies and Inventory | 53,203 |
| | 62,288 |
| |
| Materials, Supplies and REC Inventory | | 178,510 |
| | 124,060 |
|
| Regulatory Assets | 230,620 |
| | 289,400 |
| 304,007 |
| | 285,591 |
|
| Prepayments and Other Current Assets | 16,550 |
| | 14,906 |
| 16,305 |
| | 31,150 |
|
| Total Current Assets | 765,273 |
| | 707,596 |
| 976,720 |
| | 855,034 |
|
| | | | | |
| Property, Plant and Equipment, Net | 6,268,689 |
| | 6,051,835 |
| 9,614,555 |
| | 9,472,770 |
|
| | | | | |
| Deferred Debits and Other Assets: | | | | | | |
| Regulatory Assets | 1,049,324 |
| | 1,057,746 |
| 1,225,314 |
| | 1,250,029 |
|
| Prepaid PBOP | 115,367 |
| | 95,073 |
| 172,244 |
| | 166,058 |
|
| Other Long-Term Assets | 79,653 |
| | 60,572 |
| 139,304 |
| | 144,368 |
|
| Total Deferred Debits and Other Assets | 1,244,344 |
| | 1,213,391 |
| 1,536,862 |
| | 1,560,455 |
|
| | | | | |
| Total Assets | $ | 8,278,306 |
| | $ | 7,972,822 |
| $ | 12,128,137 |
| | $ | 11,888,259 |
|
| | | | | | | |
| LIABILITIES AND CAPITALIZATION | | | | | | |
| Current Liabilities: | | | | | | |
| Notes Payable | $ | — |
| | $ | 126,500 |
| $ | 88,000 |
| | $ | 10,500 |
|
| Notes Payable to Eversource Parent | | 38,400 |
| | 30,300 |
|
| Long-Term Debt – Current Portion | 43,814 |
| | 400,000 |
| — |
| | 95,000 |
|
| Accounts Payable | 198,251 |
| | 232,599 |
| 264,148 |
| | 363,691 |
|
| Accounts Payable to Affiliated Companies | 81,953 |
| | 91,532 |
| 93,344 |
| | 96,307 |
|
| Obligations to Third Party Suppliers | 86,346 |
| | 55,863 |
| 107,341 |
| | 108,827 |
|
| Renewable Portfolio Standards Compliance Obligations | 69,527 |
| | 75,571 |
| 179,075 |
| | 150,429 |
|
| Accrued Taxes | 32,021 |
| | 3,922 |
| |
| Regulatory Liabilities | 65,520 |
| | 63,653 |
| 219,872 |
| | 209,180 |
|
| Other Current Liabilities | 58,628 |
| | 67,200 |
| 68,463 |
| | 71,333 |
|
| Total Current Liabilities | 636,060 |
| | 1,116,840 |
| 1,058,643 |
| | 1,135,567 |
|
| | | | | |
| Deferred Credits and Other Liabilities: | | | | | | |
| Accumulated Deferred Income Taxes | 1,910,328 |
| | 1,836,292 |
| 1,374,963 |
| | 1,357,265 |
|
| Regulatory Liabilities | 392,851 |
| | 391,823 |
| 1,515,732 |
| | 1,516,585 |
|
| Accrued Pension and SERP | 39,830 |
| | 111,827 |
| 95,746 |
| | 108,243 |
|
| Other Long-Term Liabilities | 135,613 |
| | 123,194 |
| 334,538 |
| | 320,629 |
|
| Total Deferred Credits and Other Liabilities | 2,478,622 |
| | 2,463,136 |
| 3,320,979 |
| | 3,302,722 |
|
| | | | | |
| Capitalization: | | | | |
| Long-Term Debt | 2,382,392 |
| | 1,678,116 |
| 3,642,325 |
| | 3,247,086 |
|
| | | | | |
| Preferred Stock Not Subject to Mandatory Redemption | 43,000 |
| | 43,000 |
| 43,000 |
| | 43,000 |
|
| | | | | |
| Common Stockholder's Equity: | | | | | | |
| Common Stock | — |
| | — |
| — |
| | — |
|
| Capital Surplus, Paid In | 1,047,678 |
| | 1,045,378 |
| 1,813,442 |
| | 1,813,442 |
|
| Retained Earnings | 1,690,198 |
| | 1,625,984 |
| 2,249,526 |
| | 2,346,287 |
|
| Accumulated Other Comprehensive Income | 356 |
| | 368 |
| 222 |
| | 155 |
|
| Common Stockholder's Equity | 2,738,232 |
| | 2,671,730 |
| 4,063,190 |
| | 4,159,884 |
|
| Total Capitalization | 5,163,624 |
| | 4,392,846 |
| |
| | | | | |
| Commitments and Contingencies (Note 9) | |
|
| |
|
|
| Total Liabilities and Capitalization | $ | 8,278,306 |
|
| $ | 7,972,822 |
| $ | 12,128,137 |
|
| $ | 11,888,259 |
|
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 September 30, | | For the Nine Months Ended September 30, | For the Three Months Ended March 31, |
| (Thousands of Dollars) | 2017 | | 2016 | | 2017 | | 2016 | 2020 | | 2019 |
| | | | | | | | | | | |
| Operating Revenues | $ | 725,701 |
| | $ | 780,462 |
| | $ | 1,913,548 |
| | $ | 1,985,979 |
| $ | 733,833 |
| | $ | 797,612 |
|
| | | | | | | | | | | |
| Operating Expenses: | |
| | |
| | |
| | |
| |
| | |
|
| Purchased Power and Transmission | 259,400 |
| | 291,382 |
| | 689,784 |
| | 764,907 |
| 242,439 |
| | 330,104 |
|
| Operations and Maintenance | 92,571 |
| | 96,282 |
| | 266,203 |
| | 279,932 |
| 122,318 |
| | 112,963 |
|
| Depreciation | 56,200 |
| | 54,695 |
| | 167,598 |
| | 159,151 |
| 78,345 |
| | 72,584 |
|
| Amortization of Regulatory Assets, Net | 9,845 |
| | 9,621 |
| | 17,806 |
| | 18,275 |
| 27,008 |
| | 22,584 |
|
| Energy Efficiency Programs | 71,615 |
| | 84,717 |
| | 198,803 |
| | 212,882 |
| 68,667 |
| | 76,729 |
|
| Taxes Other Than Income Taxes | 37,052 |
| | 35,050 |
| | 99,090 |
| | 101,800 |
| 48,722 |
| | 44,822 |
|
| Total Operating Expenses | 526,683 |
| | 571,747 |
| | 1,439,284 |
| | 1,536,947 |
| 587,499 |
| | 659,786 |
|
| Operating Income | 199,018 |
| | 208,715 |
| | 474,264 |
| | 449,032 |
| 146,334 |
| | 137,826 |
|
| Interest Expense | 24,488 |
| | 21,101 |
| | 69,962 |
| | 62,206 |
| 31,017 |
| | 27,881 |
|
| Other Income, Net | 3,426 |
| | 5,022 |
| | 8,703 |
| | 7,524 |
| 12,238 |
| | 11,086 |
|
| Income Before Income Tax Expense | 177,956 |
| | 192,636 |
| | 413,005 |
| | 394,350 |
| 127,555 |
| | 121,031 |
|
| Income Tax Expense | 69,796 |
| | 75,440 |
| | 161,320 |
| | 154,493 |
| 27,165 |
| | 27,017 |
|
| Net Income | $ | 108,160 |
| | $ | 117,196 |
| | $ | 251,685 |
| | $ | 239,857 |
| $ | 100,390 |
| | $ | 94,014 |
|
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Unaudited)
| | | | For the Three Months Ended September 30, | | For the Nine Months Ended September 30, | For the Three Months Ended March 31, |
| (Thousands of Dollars) | 2017 | | 2016 | | 2017 | | 2016 | 2020 | | 2019 |
| | | | | | | | | | | |
| Net Income | $ | 108,160 |
| | $ | 117,196 |
| | $ | 251,685 |
| | $ | 239,857 |
| $ | 100,390 |
| | $ | 94,014 |
|
| Other Comprehensive Loss, Net of Tax: | | | | | | | | |
| Other Comprehensive Income, Net of Tax: | | | | |
| Changes in Funded Status of SERP Benefit Plan | (4 | ) | | (10 | ) | | (12 | ) | | (31 | ) | (43 | ) | | 1 |
|
| Other Comprehensive Loss, Net of Tax | (4 | ) | | (10 | ) | | (12 | ) | | (31 | ) | |
| Qualified Cash Flow Hedging Instruments | | 109 |
| | 110 |
|
| Changes in Unrealized Gains on Marketable Securities | | 1 |
| | 6 |
|
| Other Comprehensive Income, Net of Tax | | 67 |
| | 117 |
|
| Comprehensive Income | $ | 108,156 |
| | $ | 117,186 |
| | $ | 251,673 |
| | $ | 239,826 |
| $ | 100,457 |
| | $ | 94,131 |
|
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
NSTAR ELECTRIC COMPANY AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF COMMON STOCKHOLDER'S EQUITY
(Unaudited)
|
| | | | | | | | | | | | | | | | | | | | | | |
| | For the Three Months Ended March 31, 2020 |
| | Common Stock | | Capital Surplus, Paid In | | Retained Earnings | | Accumulated Other Comprehensive Income | | Total Common Stockholder's Equity |
| (Thousands of Dollars, Except Stock Information) | Stock | | Amount | | | | |
| Balance as of January 1, 2020 | 200 |
| | $ | — |
| | $ | 1,813,442 |
| | $ | 2,346,287 |
| | $ | 155 |
| | $ | 4,159,884 |
|
| Net Income | |
| | |
| | | | 100,390 |
| | | | 100,390 |
|
| Dividends on Preferred Stock | |
| | |
| | | | (490 | ) | | | | (490 | ) |
| Dividends on Common Stock | |
| | |
| | | | (196,500 | ) | | | | (196,500 | ) |
| Adoption of New Accounting Standard (See Note 1B) | | | | | | | (161 | ) | | | | (161 | ) |
| Other Comprehensive Income | |
| | |
| | | | | | 67 |
| | 67 |
|
| Balance as of March 31, 2020 | 200 |
|
| $ | — |
|
| $ | 1,813,442 |
|
| $ | 2,249,526 |
|
| $ | 222 |
|
| $ | 4,063,190 |
|
|
| | | | | | | | | | | | | | | | | | | | | | |
| | For the Three Months Ended March 31, 2019 |
| | Common Stock | | Capital Surplus, Paid In | | Retained Earnings | | Accumulated Other Comprehensive Loss | | Total Common Stockholder's Equity |
| (Thousands of Dollars, Except Stock Information) | Stock | | Amount | | | | |
| Balance as of January 1, 2019 | 200 |
| | $ | — |
| | $ | 1,633,442 |
| | $ | 2,098,091 |
| | $ | (1,378 | ) | | $ | 3,730,155 |
|
| Net Income | |
| | |
| | | | 94,014 |
| | | | 94,014 |
|
| Dividends on Preferred Stock | |
| | |
| | | | (490 | ) | | | | (490 | ) |
| Dividends on Common Stock | |
| | |
| | | | (60,600 | ) | | | | (60,600 | ) |
| Capital Contributions from Eversource Parent | |
| | |
| | 20,000 |
| |
| | | | 20,000 |
|
| Other Comprehensive Income | |
| | |
| | | | | | 117 |
| | 117 |
|
| Balance as of March 31, 2019 | 200 |
| | $ | — |
| | $ | 1,653,442 |
| | $ | 2,131,015 |
| | $ | (1,261 | ) | | $ | 3,783,196 |
|
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
NSTAR ELECTRIC COMPANY AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
| | | | For the Nine Months Ended September 30, | For the Three Months Ended March 31, |
| (Thousands of Dollars) | 2017 | | 2016 | 2020 | | 2019 |
| | | | | | | |
| Operating Activities: | |
| | |
| |
| | |
|
| Net Income | $ | 251,685 |
| | $ | 239,857 |
| $ | 100,390 |
| | $ | 94,014 |
|
| Adjustments to Reconcile Net Income to Net Cash Flows Provided by Operating Activities: | |
| | |
| |
| | |
|
| Depreciation | 167,598 |
| | 159,151 |
| 78,345 |
| | 72,584 |
|
| Deferred Income Taxes | 71,327 |
| | 40,960 |
| 9,775 |
| | 3,722 |
|
| Pension, SERP and PBOP (Benefits)/Expense, Net | (7,305 | ) | | 1,370 |
| |
| Uncollectible Expense | | 3,704 |
| | 5,953 |
|
| Pension, SERP and PBOP Income, Net | | (4,754 | ) | | (4,279 | ) |
| Pension and PBOP Contributions | (83,040 | ) | | (26,734 | ) | — |
| | (1,503 | ) |
| Regulatory Overrecoveries, Net | 61,356 |
| | 131,774 |
| |
| Regulatory (Under)/Over Recoveries, Net | | (17,434 | ) | | 4,329 |
|
| Amortization of Regulatory Assets, Net | 17,806 |
| | 18,275 |
| 27,008 |
| | 22,584 |
|
| Other | (23,120 | ) | | (20,088 | ) | (1,643 | ) | | (8,043 | ) |
| Changes in Current Assets and Liabilities: | |
| | |
| |
| | |
|
| Receivables and Unbilled Revenues, Net | (95,398 | ) | | (103,444 | ) | (64,951 | ) | | (29,220 | ) |
| Materials, Supplies and Inventory | 9,086 |
| | 30,659 |
| |
| Materials, Supplies and REC Inventory | | (54,450 | ) | | (46,020 | ) |
| Taxes Receivable/Accrued, Net | 67,501 |
| | 141,379 |
| 32,135 |
| | 29,483 |
|
| Accounts Payable | (38,486 | ) | | (22,913 | ) | (53,462 | ) | | (18,109 | ) |
| Other Current Assets and Liabilities, Net | 13,961 |
| | (25,942 | ) | 7,033 |
| | 11,466 |
|
| Net Cash Flows Provided by Operating Activities | 412,971 |
| | 564,304 |
| 61,696 |
| | 136,961 |
|
| | | | | | | |
| Investing Activities: | |
| | |
| |
| | |
|
| Investments in Property, Plant and Equipment | (358,041 | ) | | (327,731 | ) | (247,549 | ) | | (208,540 | ) |
| Other Investing Activities | (3,617 | ) | | — |
| 21 |
| | 17 |
|
| Net Cash Flows Used in Investing Activities | (361,658 | ) | | (327,731 | ) | (247,528 | ) | | (208,523 | ) |
| | | | | | | |
| Financing Activities: | |
| | |
| |
| | |
|
| Cash Dividends on Common Stock | (186,000 | ) | | (278,300 | ) | (196,500 | ) | | (60,600 | ) |
| Cash Dividends on Preferred Stock | (1,470 | ) | | (1,470 | ) | (490 | ) | | (490 | ) |
| Issuance of Long-Term Debt | | 400,000 |
| | — |
|
| Retirement of Long-Term Debt | | (95,000 | ) | | — |
|
| Capital Contributions from Eversource Parent | 2,300 |
| | 25,000 |
| — |
| | 20,000 |
|
| Decrease in Notes Payable | (126,500 | ) | | (26,500 | ) | |
| Issuance of Long-Term Debt | 350,000 |
| | 250,000 |
| |
| Retirements of Long-Term Debt | — |
| | (200,000 | ) | |
| Increase in Notes Payable to Eversource Parent | | 8,100 |
| | 22,300 |
|
| Increase in Notes Payable | | 77,500 |
| | 89,930 |
|
| Other Financing Activities | (3,222 | ) | | (2,495 | ) | (4,961 | ) | | 668 |
|
| Net Cash Flows Provided by/(Used in) Financing Activities | 35,108 |
| | (233,765 | ) | |
| Increase in Cash and Cash Equivalents | 86,421 |
| | 2,808 |
| |
| Cash and Cash Equivalents - Beginning of Period | 3,494 |
| | 3,346 |
| |
| Cash and Cash Equivalents - End of Period | $ | 89,915 |
| | $ | 6,154 |
| |
| Net Cash Flows Provided by Financing Activities | | 188,649 |
| | 71,808 |
|
| Net Increase in Cash and Restricted Cash | | 2,817 |
| | 246 |
|
| Cash and Restricted Cash - Beginning of Period | | 6,312 |
| | 14,659 |
|
| Cash and Restricted Cash - End of Period | | $ | 9,129 |
| | $ | 14,905 |
|
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
PUBLIC SERVICE COMPANY OF NEW HAMPSHIRE AND SUBSIDIARYSUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
| | | (Thousands of Dollars) | As of September 30, 2017 | | As of December 31, 2016 | As of March 31, 2020 | | As of December 31, 2019 |
| | | | | | | |
| ASSETS | | | | | | |
| Current Assets: | | | | | | |
| Cash | $ | 597 |
| | $ | 4,646 |
| $ | 19 |
| | $ | 413 |
|
| Receivables, Net | 93,299 |
| | 84,450 |
| |
| Receivables, Net (net of allowance for uncollectible accounts of $11,154 and $10,497 as of March 31, 2020 and December 31, 2019, respectively) | | 99,792 |
| | 99,934 |
|
| Accounts Receivable from Affiliated Companies | 24,331 |
| | 4,185 |
| 10,176 |
| | 6,763 |
|
| Unbilled Revenues | 37,133 |
| | 41,004 |
| 42,344 |
| | 48,146 |
|
| Fuel, Materials, Supplies and Inventory | 158,091 |
| | 162,354 |
| |
| Materials, Supplies and REC Inventory | | 28,483 |
| | 24,957 |
|
| Regulatory Assets | 112,465 |
| | 117,240 |
| 102,438 |
| | 84,053 |
|
| Special Deposits | | 16,627 |
| | 32,513 |
|
| Prepayments and Other Current Assets | 3,797 |
| | 28,908 |
| 6,268 |
| | 19,431 |
|
| Total Current Assets | 429,713 |
| | 442,787 |
| 306,147 |
| | 316,210 |
|
| | | | | |
| Property, Plant and Equipment, Net | 3,167,905 |
| | 3,039,313 |
| 3,187,282 |
| | 3,129,506 |
|
| | | | | |
| Deferred Debits and Other Assets: | | | | | | |
| Regulatory Assets | 244,561 |
| | 245,525 |
| 843,904 |
| | 861,672 |
|
| Other Long-Term Assets | 51,740 |
| | 37,720 |
| 41,564 |
| | 43,270 |
|
| Total Deferred Debits and Other Assets | 296,301 |
| | 283,245 |
| 885,468 |
| | 904,942 |
|
| | | | | |
| Total Assets | $ | 3,893,919 |
| | $ | 3,765,345 |
| $ | 4,378,897 |
| | $ | 4,350,658 |
|
| | | | | | | |
| LIABILITIES AND CAPITALIZATION | | | | | | |
| Current Liabilities: | | | | | | |
| Notes Payable to Eversource Parent | $ | 202,300 |
| | $ | 160,900 |
| $ | 84,700 |
| | $ | 27,000 |
|
| Long-Term Debt – Current Portion | 110,000 |
| | 70,000 |
| |
| Rate Reduction Bonds – Current Portion | | 43,210 |
| | 43,210 |
|
| Accounts Payable | 92,201 |
| | 85,716 |
| 103,551 |
| | 127,081 |
|
| Accounts Payable to Affiliated Companies | 42,788 |
| | 29,154 |
| 32,707 |
| | 37,946 |
|
| Regulatory Liabilities | 7,923 |
| | 12,659 |
| 69,042 |
| | 65,766 |
|
| Accrued Interest | | 14,323 |
| | 19,138 |
|
| Other Current Liabilities | 61,210 |
| | 43,253 |
| 39,636 |
| | 32,736 |
|
| Total Current Liabilities | 516,422 |
| | 401,682 |
| 387,169 |
| | 352,877 |
|
| | | | | |
| Deferred Credits and Other Liabilities: | | | | | | |
| Accumulated Deferred Income Taxes | 827,412 |
| | 785,385 |
| 511,822 |
| | 506,212 |
|
| Regulatory Liabilities | 40,822 |
| | 44,779 |
| 411,959 |
| | 413,381 |
|
| Accrued Pension, SERP and PBOP | 98,553 |
| | 94,652 |
| 152,649 |
| | 157,638 |
|
| Other Long-Term Liabilities | 54,131 |
| | 49,442 |
| 36,022 |
| | 37,075 |
|
| Total Deferred Credits and Other Liabilities | 1,020,918 |
| | 974,258 |
| 1,112,452 |
| | 1,114,306 |
|
| | | | | |
| Capitalization: | | | | |
| Long-Term Debt | 892,581 |
| | 1,002,048 |
| 951,747 |
| | 951,620 |
|
| | | | | |
| Rate Reduction Bonds | | 518,517 |
| | 540,122 |
|
| Common Stockholder's Equity: | | | | | | |
| Common Stock | — |
| | — |
| — |
| | — |
|
| Capital Surplus, Paid In | 843,134 |
| | 843,134 |
| 903,134 |
| | 903,134 |
|
| Retained Earnings | 625,012 |
| | 549,286 |
| 507,307 |
| | 490,306 |
|
| Accumulated Other Comprehensive Loss | (4,148 | ) | | (5,063 | ) | (1,429 | ) | | (1,707 | ) |
| Common Stockholder's Equity | 1,463,998 |
| | 1,387,357 |
| 1,409,012 |
| | 1,391,733 |
|
| Total Capitalization | 2,356,579 |
| | 2,389,405 |
| |
| | | | | |
| Commitments and Contingencies (Note 9) | |
|
| |
|
|
| Total Liabilities and Capitalization | $ | 3,893,919 |
| | $ | 3,765,345 |
| $ | 4,378,897 |
| | $ | 4,350,658 |
|
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
PUBLIC SERVICE COMPANY OF NEW HAMPSHIRE AND SUBSIDIARYSUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
| | | | For the Three Months Ended September 30, | | For the Nine Months Ended September 30, | For the Three Months Ended March 31, |
| (Thousands of Dollars) | 2017 | | 2016 | | 2017 | | 2016 | 2020 | | 2019 |
| | | | | | | | | | | |
| Operating Revenues | $ | 250,032 |
| | $ | 266,946 |
| | $ | 733,572 |
| | $ | 727,753 |
| $ | 276,368 |
| | $ | 276,435 |
|
| | | | | | | | | | | |
| Operating Expenses: | | | | | | | | | | |
| Purchased Power, Fuel and Transmission | 57,099 |
| | 59,833 |
| | 179,289 |
| | 155,700 |
| |
| Purchased Power and Transmission | | 94,138 |
| | 113,531 |
|
| Operations and Maintenance | 63,669 |
| | 64,183 |
| | 191,153 |
| | 187,184 |
| 47,128 |
| | 52,630 |
|
| Depreciation | 32,084 |
| | 29,646 |
| | 95,266 |
| | 86,524 |
| 24,334 |
| | 22,919 |
|
| Amortization of Regulatory Assets/(Liabilities), Net | 2,835 |
| | 14,158 |
| | (10,658 | ) | | 14,490 |
| |
| Amortization of Regulatory Assets, Net | | 20,110 |
| | 13,667 |
|
| Energy Efficiency Programs | 4,007 |
| | 3,983 |
| | 11,040 |
| | 10,862 |
| 9,364 |
| | 6,714 |
|
| Taxes Other Than Income Taxes | 22,936 |
| | 20,460 |
| | 66,935 |
| | 64,543 |
| 19,701 |
| | 17,311 |
|
| Total Operating Expenses | 182,630 |
| | 192,263 |
| | 533,025 |
| | 519,303 |
| 214,775 |
| | 226,772 |
|
| Operating Income | 67,402 |
| | 74,683 |
| | 200,547 |
| | 208,450 |
| 61,593 |
| | 49,663 |
|
| Interest Expense | 12,896 |
| | 12,397 |
| | 38,676 |
| | 37,386 |
| 14,479 |
| | 14,367 |
|
| Other Income, Net | 1,229 |
| | 574 |
| | 2,883 |
| | 1,007 |
| 3,190 |
| | 7,022 |
|
| Income Before Income Tax Expense | 55,735 |
| | 62,860 |
| | 164,754 |
| | 172,071 |
| 50,304 |
| | 42,318 |
|
| Income Tax Expense | 22,012 |
| | 24,345 |
| | 65,128 |
| | 66,242 |
| 10,703 |
| | 9,537 |
|
| Net Income | $ | 33,723 |
| | $ | 38,515 |
| | $ | 99,626 |
| | $ | 105,829 |
| $ | 39,601 |
| | $ | 32,781 |
|
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Unaudited)
| | | | For the Three Months Ended September 30, | | For the Nine Months Ended September 30, | For the Three Months Ended March 31, |
| (Thousands of Dollars) | 2017 | | 2016 | | 2017 | | 2016 | 2020 | | 2019 |
| | | | | | | | | | | |
| Net Income | $ | 33,723 |
| | $ | 38,515 |
| | $ | 99,626 |
| | $ | 105,829 |
| $ | 39,601 |
| | $ | 32,781 |
|
| Other Comprehensive Income, Net of Tax: | | | | | | | | | | |
| Qualified Cash Flow Hedging Instruments | 291 |
| | 290 |
| | 872 |
| | 871 |
| 269 |
| | 269 |
|
Changes in Unrealized (Losses)/Gains on Marketable Securities | (112 | ) | | 56 |
| | 43 |
| | 135 |
| |
| Changes in Unrealized Gains on Marketable Securities | | 9 |
| | 38 |
|
| Other Comprehensive Income, Net of Tax | 179 |
| | 346 |
| | 915 |
| | 1,006 |
| 278 |
| | 307 |
|
| Comprehensive Income | $ | 33,902 |
| | $ | 38,861 |
| | $ | 100,541 |
| | $ | 106,835 |
| $ | 39,879 |
| | $ | 33,088 |
|
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
PUBLIC SERVICE COMPANY OF NEW HAMPSHIRE AND SUBSIDIARYSUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWSCOMMON STOCKHOLDER'S EQUITY
(Unaudited)
|
| | | | | | | |
| | For the Nine Months Ended September 30, |
| (Thousands of Dollars) | 2017 | | 2016 |
| | | | |
| Operating Activities: | | | |
| Net Income | $ | 99,626 |
| | $ | 105,829 |
|
| Adjustments to Reconcile Net Income to Net Cash Flows Provided by Operating Activities: | | | |
| Depreciation | 95,266 |
| | 86,524 |
|
| Deferred Income Taxes | 43,217 |
| | 74,522 |
|
| Regulatory Over/(Under) Recoveries, Net | 8,910 |
| | (4,289 | ) |
| Amortization of Regulatory (Liabilities)/Assets, Net | (10,658 | ) | | 14,490 |
|
| Other | (7,792 | ) | | (12,660 | ) |
| Changes in Current Assets and Liabilities: | | | |
| Receivables and Unbilled Revenues, Net | (30,276 | ) | | (28,754 | ) |
| Fuel, Materials, Supplies and Inventory | 4,263 |
| | (4,014 | ) |
| Taxes Receivable/Accrued, Net | 10,749 |
| | 33,589 |
|
| Accounts Payable | 18,394 |
| | 14,508 |
|
| Other Current Assets and Liabilities, Net | 32,296 |
| | 26,207 |
|
| Net Cash Flows Provided by Operating Activities | 263,995 |
| | 305,952 |
|
| | | | |
| Investing Activities: | | | |
| Investments in Property, Plant and Equipment | (215,470 | ) | | (215,804 | ) |
| Other Investing Activities | 113 |
| | 272 |
|
| Net Cash Flows Used in Investing Activities | (215,357 | ) | | (215,532 | ) |
| | | | |
| Financing Activities: | | | |
| Cash Dividends on Common Stock | (23,900 | ) | | (58,200 | ) |
| Capital Contributions from Eversource Parent | — |
| | 94,500 |
|
| Retirements of Long-Term Debt | (70,000 | ) | | — |
|
| Increase/(Decrease) in Notes Payable to Eversource Parent | 41,400 |
| | (123,800 | ) |
| Other Financing Activities | (187 | ) | | (217 | ) |
| Net Cash Flows Used in Financing Activities | (52,687 | ) | | (87,717 | ) |
| Net (Decrease)/Increase in Cash | (4,049 | ) | | 2,703 |
|
| Cash - Beginning of Period | 4,646 |
| | 1,733 |
|
| Cash - End of Period | $ | 597 |
| | $ | 4,436 |
|
|
| | | | | | | | | | | | | | | | | | | | | | |
| | For the Three Months Ended March 31, 2020 |
| | Common Stock | | Capital Surplus, Paid In | | Retained Earnings | | Accumulated Other Comprehensive Loss | | Total Common Stockholder's Equity |
| (Thousands of Dollars, Except Stock Information) | Stock | | Amount | | | | |
| Balance as of January 1, 2020 | 301 |
| | $ | — |
| | $ | 903,134 |
| | $ | 490,306 |
| | $ | (1,707 | ) | | $ | 1,391,733 |
|
| Net Income | |
| | |
| | | | 39,601 |
| | | | 39,601 |
|
| Dividends on Common Stock | |
| | |
| | | | (22,300 | ) | | | | (22,300 | ) |
| Adoption of New Accounting Standard (See Note 1B) | | | | | | | (300 | ) | | | | (300 | ) |
| Other Comprehensive Income | |
| | |
| | | | |
| | 278 |
| | 278 |
|
| Balance as of March 31, 2020 | 301 |
|
| $ | — |
|
| $ | 903,134 |
|
| $ | 507,307 |
|
| $ | (1,429 | ) |
| $ | 1,409,012 |
|
|
| | | | | | | | | | | | | | | | | | | | | | |
| | For the Three Months Ended March 31, 2019 |
| | Common Stock | | Capital Surplus, Paid In | | Retained Earnings | | Accumulated Other Comprehensive Loss | | Total Common Stockholder's Equity |
| (Thousands of Dollars, Except Stock Information) | Stock | | Amount | | | | |
| Balance as of January 1, 2019 | 301 |
| | $ | — |
| | $ | 678,134 |
| | $ | 627,258 |
| | $ | (2,851 | ) | | $ | 1,302,541 |
|
| Net Income | |
| | |
| | | | 32,781 |
| | | | 32,781 |
|
| Dividends on Common Stock | | | | | | | (19,000 | ) | | | | (19,000 | ) |
| Other Comprehensive Income | |
| | |
| | | | |
| | 307 |
| | 307 |
|
| Balance as of March 31, 2019 | 301 |
|
| $ | — |
|
| $ | 678,134 |
|
| $ | 641,039 |
|
| $ | (2,544 | ) |
| $ | 1,316,629 |
|
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
WESTERN MASSACHUSETTS ELECTRIC
PUBLIC SERVICE COMPANY OF NEW HAMPSHIRE AND SUBSIDIARIES
CONDENSED BALANCE SHEETSCONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
|
| | | | | | | |
| (Thousands of Dollars) | As of September 30, 2017 | | As of December 31, 2016 |
| | | | |
| ASSETS | | | |
| Current Assets: | | | |
| Receivables, Net | $ | 58,034 |
| | $ | 54,940 |
|
| Accounts Receivable from Affiliated Companies | 23,440 |
| | 14,425 |
|
| Unbilled Revenues | 15,000 |
| | 15,329 |
|
| Materials, Supplies and Inventory | 6,221 |
| | 8,618 |
|
| Regulatory Assets | 60,606 |
| | 64,123 |
|
| Prepayments and Other Current Assets | 1,297 |
| | 2,595 |
|
| Total Current Assets | 164,598 |
| | 160,030 |
|
| | | | |
| Property, Plant and Equipment, Net | 1,769,566 |
| | 1,678,262 |
|
| | | | |
| Deferred Debits and Other Assets: | | | |
| Regulatory Assets | 121,796 |
| | 127,291 |
|
| Other Long-Term Assets | 38,934 |
| | 29,062 |
|
| Total Deferred Debits and Other Assets | 160,730 |
| | 156,353 |
|
| | | | |
| Total Assets | $ | 2,094,894 |
| | $ | 1,994,645 |
|
| | | | |
| LIABILITIES AND CAPITALIZATION | | | |
| Current Liabilities: | | | |
| Notes Payable to Eversource Parent | $ | 96,900 |
| | $ | 51,000 |
|
| Accounts Payable | 58,518 |
| | 56,036 |
|
| Accounts Payable to Affiliated Companies | 22,181 |
| | 19,478 |
|
| Obligations to Third Party Suppliers | 9,736 |
| | 10,508 |
|
| Renewable Portfolio Standards Compliance Obligations | 16,144 |
| | 20,383 |
|
| Regulatory Liabilities | 10,236 |
| | 14,888 |
|
| Other Current Liabilities | 13,020 |
| | 14,984 |
|
| Total Current Liabilities | 226,735 |
| | 187,277 |
|
| | | | |
| Deferred Credits and Other Liabilities: | |
| | |
| Accumulated Deferred Income Taxes | 519,998 |
| | 490,793 |
|
| Regulatory Liabilities | 22,726 |
| | 17,227 |
|
| Accrued Pension, SERP and PBOP | 18,038 |
| | 20,390 |
|
| Other Long-Term Liabilities | 45,831 |
| | 41,308 |
|
| Total Deferred Credits and Other Liabilities | 606,593 |
| | 569,718 |
|
| | | | |
| Capitalization: | |
| | |
| Long-Term Debt | 566,172 |
| | 566,536 |
|
| | | | |
| Common Stockholder's Equity: | |
| | |
| Common Stock | 10,866 |
| | 10,866 |
|
| Capital Surplus, Paid In | 444,398 |
| | 444,398 |
|
| Retained Earnings | 242,157 |
| | 218,212 |
|
| Accumulated Other Comprehensive Loss | (2,027 | ) | | (2,362 | ) |
| Common Stockholder's Equity | 695,394 |
| | 671,114 |
|
| Total Capitalization | 1,261,566 |
| | 1,237,650 |
|
| | | | |
| Total Liabilities and Capitalization | $ | 2,094,894 |
| | $ | 1,994,645 |
|
|
| | | | | | | |
| | For the Three Months Ended March 31, |
| (Thousands of Dollars) | 2020 | | 2019 |
| | | | |
| Operating Activities: | | | |
| Net Income | $ | 39,601 |
| | $ | 32,781 |
|
| Adjustments to Reconcile Net Income to Net Cash Flows Provided by Operating Activities: | | | |
| Depreciation | 24,334 |
| | 22,919 |
|
| Deferred Income Taxes | 4,167 |
| | 6,541 |
|
| Uncollectible Expense | 666 |
| | 1,725 |
|
| Regulatory Underrecoveries, Net | (22,977 | ) | | (26,986 | ) |
| Amortization of Regulatory Assets, Net | 20,110 |
| | 13,667 |
|
| Other | (3,885 | ) | | (1,621 | ) |
| Changes in Current Assets and Liabilities: | | | |
| Receivables and Unbilled Revenues, Net | 2,843 |
| | 1,103 |
|
| Materials, Supplies and REC Inventory | (3,526 | ) | | 144 |
|
| Taxes Receivable/Accrued, Net | 6,110 |
| | 17,572 |
|
| Accounts Payable | (18,064 | ) | | 11,762 |
|
| Other Current Assets and Liabilities, Net | 9,118 |
| | 6,472 |
|
| Net Cash Flows Provided by Operating Activities | 58,497 |
| | 86,079 |
|
| | | | |
| Investing Activities: | | | |
| Investments in Property, Plant and Equipment | (88,694 | ) | | (64,361 | ) |
| Other Investing Activities | 126 |
| | 102 |
|
| Net Cash Flows Used in Investing Activities | (88,568 | ) | | (64,259 | ) |
| | | | |
| Financing Activities: | | | |
| Cash Dividends on Common Stock | (22,300 | ) | | (19,000 | ) |
| Repayment of Rate Reduction Bonds | (21,605 | ) | | (30,727 | ) |
| Increase in Notes Payable to Eversource Parent | 57,700 |
| | 4,000 |
|
| Other Financing Activities | (22 | ) | | (20 | ) |
| Net Cash Flows Provided by/(Used in) Financing Activities | 13,773 |
| | (45,747 | ) |
| Net Decrease in Cash and Restricted Cash | (16,298 | ) | | (23,927 | ) |
| Cash and Restricted Cash - Beginning of Period | 36,688 |
| | 52,723 |
|
| Cash and Restricted Cash - End of Period | $ | 20,390 |
| | $ | 28,796 |
|
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 September 30, | | For the Nine Months Ended September 30, |
| (Thousands of Dollars) | 2017 | | 2016 | | 2017 | | 2016 |
| | | | | | | | |
| Operating Revenues | $ | 126,335 |
| | $ | 124,042 |
| | $ | 377,214 |
| | $ | 368,533 |
|
| | | | | | | | |
| Operating Expenses: | | | | | | | |
| Purchased Power and Transmission | 34,828 |
| | 32,178 |
| | 109,553 |
| | 104,406 |
|
| Operations and Maintenance | 21,528 |
| | 24,125 |
| | 65,769 |
| | 68,018 |
|
| Depreciation | 12,546 |
| | 11,567 |
| | 36,844 |
| | 34,414 |
|
| Amortization of Regulatory Assets/(Liabilities), Net | 286 |
| | 1,102 |
| | (563 | ) | | 3,305 |
|
| Energy Efficiency Programs | 10,996 |
| | 12,389 |
| | 29,739 |
| | 33,593 |
|
| Taxes Other Than Income Taxes | 10,779 |
| | 10,609 |
| | 31,403 |
| | 30,440 |
|
| Total Operating Expenses | 90,963 |
| | 91,970 |
| | 272,745 |
| | 274,176 |
|
| Operating Income | 35,372 |
| | 32,072 |
| | 104,469 |
| | 94,357 |
|
| Interest Expense | 6,321 |
| | 6,222 |
| | 18,752 |
| | 18,298 |
|
| Other Income, Net | 1,060 |
| | 179 |
| | 1,409 |
| | 133 |
|
| Income Before Income Tax Expense | 30,111 |
| | 26,029 |
| | 87,126 |
| | 76,192 |
|
| Income Tax Expense | 12,504 |
| | 10,018 |
| | 34,680 |
| | 30,089 |
|
| Net Income | $ | 17,607 |
| | $ | 16,011 |
| | $ | 52,446 |
| | $ | 46,103 |
|
The accompanying notes are an integral part of these unaudited condensed financial statements.
CONDENSED STATEMENTS OF COMPREHENSIVE INCOME
(Unaudited)
|
| | | | | | | | | | | | | | | |
| | For the Three Months Ended September 30, | | For the Nine Months Ended September 30, |
| (Thousands of Dollars) | 2017 | | 2016 | | 2017 | | 2016 |
| | | | | | | | |
| Net Income | $ | 17,607 |
| | $ | 16,011 |
| | $ | 52,446 |
| | $ | 46,103 |
|
| Other Comprehensive Income, Net of Tax: | |
| | | | |
| | |
| Qualified Cash Flow Hedging Instruments | 109 |
| | 109 |
| | 328 |
| | 328 |
|
Changes in Unrealized (Losses)/Gains on Marketable Securities | (18 | ) | | 9 |
| | 7 |
| | 22 |
|
| Other Comprehensive Income, Net of Tax | 91 |
| | 118 |
| | 335 |
| | 350 |
|
| Comprehensive Income | $ | 17,698 |
| | $ | 16,129 |
| | $ | 52,781 |
| | $ | 46,453 |
|
The accompanying notes are an integral part of these unaudited condensed financial statements.
WESTERN MASSACHUSETTS ELECTRIC COMPANY
CONDENSED STATEMENTS OF CASH FLOWS
(Unaudited)
|
| | | | | | | |
| | For the Nine Months Ended September 30, |
| (Thousands of Dollars) | 2017 | | 2016 |
| | | | |
| Operating Activities: | | | |
| Net Income | $ | 52,446 |
| | $ | 46,103 |
|
| Adjustments to Reconcile Net Income to Net Cash Flows Provided by Operating Activities: | | | |
| Depreciation | 36,844 |
| | 34,414 |
|
| Deferred Income Taxes | 29,008 |
| | 15,587 |
|
| Regulatory Overrecoveries, Net | 10,291 |
| | 323 |
|
| Amortization of Regulatory (Liabilities)/Assets, Net | (563 | ) | | 3,305 |
|
| Other | (10,182 | ) | | (2,532 | ) |
| Changes in Current Assets and Liabilities: | | | |
| Receivables and Unbilled Revenues, Net | (16,818 | ) | | 1,933 |
|
| Taxes Receivable/Accrued, Net | 4,203 |
| | 36,658 |
|
| Accounts Payable | (5,777 | ) | | (16,240 | ) |
| Other Current Assets and Liabilities, Net | (7,482 | ) | | 5,277 |
|
| Net Cash Flows Provided by Operating Activities | 91,970 |
| | 124,828 |
|
| | | | |
| Investing Activities: | | | |
| Investments in Property, Plant and Equipment | (109,233 | ) | | (104,811 | ) |
| Proceeds from Sales of Marketable Securities | 1,641 |
| | 1,934 |
|
| Purchases of Marketable Securities | (1,590 | ) | | (1,894 | ) |
| Net Cash Flows Used in Investing Activities | (109,182 | ) | | (104,771 | ) |
| | | | |
| Financing Activities: | | | |
| Cash Dividends on Common Stock | (28,500 | ) | | (28,500 | ) |
| Capital Contributions from Eversource Parent | — |
| | 53,000 |
|
| Increase/(Decrease) in Notes Payable to Eversource Parent | 45,900 |
| | (95,200 | ) |
| Issuance of Long-Term Debt | — |
| | 50,000 |
|
| Other Financing Activities | (188 | ) | | (191 | ) |
| Net Cash Flows Provided by/(Used in) Financing Activities | 17,212 |
| | (20,891 | ) |
| Net Decrease in Cash | — |
| | (834 | ) |
| Cash - Beginning of Period | — |
| | 834 |
|
| Cash - End of Period | $ | — |
| | $ | — |
|
The accompanying notes are an integral part of these unaudited condensedconsolidated financial statements.
EVERSOURCE ENERGY AND SUBSIDIARIES
THE CONNECTICUT LIGHT AND POWER COMPANY
NSTAR ELECTRIC COMPANY AND SUBSIDIARY
PUBLIC SERVICE COMPANY OF NEW HAMPSHIRE AND SUBSIDIARYSUBSIDIARIES
WESTERN MASSACHUSETTS ELECTRIC COMPANY
COMBINED NOTES TO CONDENSED 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 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 and PSNH WMECO,(electric utilities), Yankee Gas and NSTAR Gas.Gas (natural gas utilities) and Aquarion (water utilities). Eversource provides energy delivery and/or water service to approximately 3.7 million4000000 electric, and natural gas and water customers through these six8 regulated utilities in Connecticut, Massachusetts and New Hampshire.
On June 2, 2017, Eversource announced that it had entered into an agreement to acquire Aquarion from Macquarie Infrastructure Partners for $1.675 billion, consisting of approximately $880 million in cash and $795 million of assumed Aquarion debt. The transaction requires approval from PURA, the DPU, the NHPUC, the Maine PUC, and the Federal Communications Commission, and is also subject to a review under the Hart-Scott-Rodino Act. On June 29, 2017, Eversource and Aquarion filed joint applications with regulatory agencies in Connecticut, Massachusetts, New Hampshire and Maine requesting approval of the transaction. With the exception of Massachusetts, all state and federal regulatory agency approvals have been received and the related review period has expired. The transaction is expected to close by December 31, 2017.
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 Combined Notes to Financial Statements included in Item 8, "Financial Statements and Supplementary Data," of the Eversource 20162019 Form 10-K, which was filed with the SEC.SEC on February 27, 2020. 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'sPSNH's financial position as of September 30, 2017March 31, 2020 and December 31, 2016,2019, and the results of operations, and comprehensive income, for the threecommon shareholders' equity, and nine months ended September 30, 2017 and 2016, and the cash flows for the ninethree months ended September 30, 2017March 31, 2020 and 2016.2019. The results of operations, and comprehensive income, for the three and nine months ended September 30, 2017 and 2016 and the cash flows for the ninethree months ended September 30, 2017March 31, 2020 and 20162019 are not necessarily indicative of the results expected for a full year.
Eversource consolidates the operations of CYAPC and YAEC, both of which are inactive regional nuclear power companies engaged in the long-term storage of their spent nuclear fuel. Eversource consolidates CYAPC and YAEC because CL&P's, NSTAR Electric's PSNH's and WMECO'sPSNH's combined ownership interestand voting interests 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.
Eversource holds several equity ownership interests that are not consolidated and are accounted for under the equity method.
Eversource's utility subsidiaries' electric, natural gas and water distribution (including generation assets) 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.
In March 2020, the World Health Organization declared the outbreak of the 2019 novel coronavirus (COVID-19) a pandemic and President Trump declared a national emergency affecting the entire United States where each state qualifies as being part of a national disaster. The spread of COVID-19 has adversely affected workforces, the overall economy and caused significant volatility in the financial markets. To date, Eversource has not experienced significant operational or financial impacts directly related to the pandemic. Due to the inherent uncertainty of the unprecedented and rapidly evolving situation, management will continue to closely monitor how COVID-19 related developments affect Eversource. As of the date of our filing and based on information available, management is unable to predict the impacts that the COVID-19 pandemic will have on future operations, financial position, results of operations, and cash flows. The extent of the impact in the future will vary and depend in large part on the duration, scope and severity of a national and global economic slowdown, risk of inflation, governmental and regulatory actions, the maintenance of a strong regional and national healthcare system, and the continued spread of the virus, which is mitigated through social distancing measures.
Our customer receivable balances and uncollectible accounts have not been materially impacted by COVID-19. We believe that we will be able to develop a successful structure with our respective state regulatory commissions to recover our costs associated with COVID-19, while balancing the impact on our customers’ bills. See Note 1C, "Summary of Significant Accounting Policies - Allowance for Uncollectible Accounts," for further discussion of our evaluation of the allowance for doubtful accounts as of March 31, 2020 in light of the COVID-19 pandemic.
An extended economic slowdown could result in lower demand for electricity, natural gas and/or water by our commercial and industrial customers. However, fluctuations in retail sales volumes for CL&P, NSTAR Electric, Yankee Gas, NSTAR Gas and our Connecticut water distribution business are not expected to materially impact earnings due to their respective regulatory commission-approved distribution revenue decoupling mechanisms. The revenue decoupling mechanisms mitigate the impact of lower demand and resulting lost sales revenues by allowing for a true-up to occur as part of each company’s annual decoupling filing. These revenue decoupling mechanisms qualify as alternative revenue programs in accordance with accounting guidance for rate-regulated operations.
As of March 31, 2020, we did not have indicators of triggering events for impairments to our goodwill, long-lived assets, available-for-sale debt securities, or equity method investment carrying values.
Certain reclassifications of prior period data were made in the accompanying financial statements to conform to the current period presentation.
The Eversource and PSNH 2019 statements of cash flows and the 2019 segment footnote were revised to correct an error in the presentation of non-cash capital additions. The impact of this revision on the statement of cash flows is a decrease to operating cash inflows in Accounts Payable of $46.6 million and a corresponding decrease to investing cash outflows in Investments in Property, Plant and Equipment for the quarter ended March 31, 2019. This revision is not deemed material, individually or in the aggregate, to the previously issued financial statements.
B. Accounting Standards
Accounting Standards Issued but Not Yet Effective: In May 2014,December 2019, the Financial Accounting Standards Board ("FASB")FASB issued an Accounting Standards Update ("ASU") 2014-09, Revenue from Contracts with Customers(ASU) 2019-12, Income Taxes (Topic 740) - Simplifying the Accounting for Income Taxes, which amends existing revenue recognitioneliminates certain exceptions to the general principles of current income tax guidance in ASC 740 and simplifies and improves consistency in application of that income tax guidance through clarifications of and amendments to ASC 740. The guidance is required to be applied retrospectively (either to each reporting period presented or cumulatively at the date of initial application). The Company will implement the standardeffective in the first quarter of 2018 cumulatively at the date of initial application. Implementation of the ASU is not expected to have a material effect on the financial statements of Eversource, CL&P, NSTAR Electric, PSNH or WMECO.
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 2018.2021. The ASU will remove the available-for-sale designation for equity securities, whereby changes in fair value are recorded in accumulated other comprehensive income within 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 September 30, 2017 was approximately $51 million with an unrealized gain of $1.7 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 and PSNH.
Accounting Standards Recently Adopted: On January 1, 2020, the Company adopted ASU 2016-13, Financial Instruments - Credit Losses (Topic 326), which provides a model for recognizing credit losses on financial instruments based on an estimate of current expected losses, requiring immediate recognition of credit losses expected over the life of a financial instrument. The Company determined the impacts of this standard on the allowance for credit losses on its financial instruments, primarily accounts receivable. As of January 1, 2020, the Company recorded increases to the allowance for uncollectible accounts for late fees and other receivable amounts of $1.6 million, $0.9 million, $0.2 million and $0.3 million at Eversource, CL&P, NSTAR Electric and PSNH, or WMECO.respectively. The impact to retained earnings, net of tax, was $1.5 million, $0.9 million, $0.2 million and $0.3 million at Eversource, CL&P, NSTAR Electric and PSNH, respectively.
In February 2016,The Company also adjusted the FASB issuedallowance for uncollectible amounts of hardship receivables and other low-income assistance programs, which are ultimately collectible in rates at specified points in time under approved regulatory mechanisms. The impact on the allowance, which was offset in other long-term assets on the balance sheets, was an increase of $22.2 million and $21.3 million at Eversource and CL&P, respectively, and a decrease of $1.5 million at NSTAR Electric. See Note 1C, “Summary of Significant Accounting Policies - Allowance for Uncollectible Accounts,” for further information.
The Company adopted ASU 2016-02, Leases2017-04, Intangibles - Goodwill and Other (Topic 350), which changes existing leaseSimplifying the Test for Goodwill Impairment as of January 1, 2020. The ASU simplified the accounting guidance and is required to be appliedfor goodwill impairment by removing a complex step in the first quarter of 2019, with earlier application permitted. The ASU lease criteria are required to be applied to leases and lease renewals entered into effective January 1, 2019, and leases entered into before that date are required to be recognized andgoodwill impairment test. Under the guidance, goodwill impairment is measured using a modified retrospective approach. The Company is reviewingas the requirements of ASU 2016-02, including balance sheet recognition of leases previously deemed to be operating leases, and expects to implement the ASU in the first quarter of 2019.
In March 2017, the FASB issued ASU 2017-07, Compensation – Retirement Benefits: Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost, required to be implemented in the first quarter of 2018. The ASU requires separate presentation of service cost from other components of net pension and PBOP costs, with the other components presented as non-operating income and not subject to capitalization.amount by which its carrying value exceeds its fair value. The ASU is requirednot expected to be applied retrospectively for the separate presentation in the income statement of service costs and other components and prospectively in the balance sheet for the capitalization of only the service cost component. The implementation of the ASU will not have an impact on the net incomefinancial statements of Eversource.
On January 1, 2020, the Company adopted ASU 2018-15, Intangibles - Goodwill and Other - Internal-Use Software (Subtopic 350-40) - Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract. The ASU aligned the requirements for capitalizing costs incurred to implement a cloud computing arrangement with existing internal-use software guidance. The prospective implementation of this standard did not have any impact on the financial statements of Eversource, CL&P, NSTAR Electric or PSNH or WMECO.for the period ending March 31, 2020.
On January 1, 2020, the Company prospectively adopted ASU 2018-13, Fair Value Measurement (Topic 820), Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurement. The ASU modified fair value disclosure requirements. The standard includes new disclosure requirements for Level 3 unobservable inputs and eliminated the requirement to disclose certain information relating to transfers between levels. The modified disclosures are included in Note 1D, “Summary of Significant Accounting Policies - Fair Value Measurements,” and Note 4, “Derivative Instruments.”
C. ProvisionAllowance for Uncollectible Accounts
Eversource, including CL&P, NSTAR Electric, PSNHReceivables, Net on the balance sheets primarily includes trade receivables from retail customers and WMECO, presents itscustomers related to wholesale transmission contracts, wholesale market sales, sales of RECs and property rentals. Receivables, Net also includes customer receivables for the purchase of electricity from a competitive third party supplier, the current portion of customer energy efficiency loans, property damage receivables and other miscellaneous receivables. There is no material concentration of receivables. Receivables are recorded at amortized cost, net of a credit loss provision (or allowance for uncollectible accounts).
Receivables are presented net of expected credit losses at estimated net realizable value by maintaining a provisionan allowance for uncollectible accounts. Effective January 1, 2020, the current expected credit loss (CECL) model was applied to receivables for purposes of calculating the allowance for uncollectible accounts. This provisionmodel is based on expected losses and results in the recognition of estimated expected credit losses, including uncollectible amounts for both billed and unbilled revenues, over the life of the receivable at the time a receivable is recorded.
The allowance for uncollectible accounts 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 uponFactors in determining credit loss include historical collection, and write-off experience, and management's assessment of collectabilitycollectibility from customers.customers, including current conditions, reasonable forecasts, and expectations of future collectibility and collection efforts. Management continuously assesses the collectabilitycollectibility of receivables and adjusts collectability estimates based on actual experience.experience and future expectations based on economic indicators. Management also monitors the aging analysis of receivables to determine if there are changes in the collections of accounts receivable. Receivable balances are written off against the provisionallowance for uncollectible accounts when the customer accounts are terminatedno longer in service and these balances are deemed to be uncollectible.
As of March 31, 2020, management evaluated the adequacy of the allowance for uncollectible accounts in light of the COVID-19 pandemic and the economic downturn to date. This evaluation included an analysis of collection and customer payment trends in 2020, economic conditions, flexible payment plans and financial hardship arrearage management programs being offered to customers, and the impacts of federal governmental pandemic relief programs for our customers and the expansion of unemployment benefits initiatives, which help to mitigate the potential for increasing customer account delinquencies. Additionally, management considered past economic declines and corresponding uncollectible reserves as part of the current assessment. Based upon the evaluation performed, management concluded that the reserve balance as of March 31, 2020 adequately reflected the collection risk and net realizable value for Eversource’s receivables. Management will continue to evaluate the adequacy of the uncollectible allowance in future reporting periods based on an ongoing assessment of accounts receivable collections, delinquency statistics, and analysis of aging-based quantitative assessments.
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 WMECONSTAR Electric and NSTAR Gas also to recover in rates amounts associated with certain uncollectible hardship accounts receivable. Certain of NSTAR Electric'sThese uncollectible hardship accounts receivable are expected to be recovered in future rates, similar to WMECO and NSTAR Gas. These uncollectible customer account balances are included in Regulatory Assets or Other Long-Term Assets on the balance sheets.
The total provision for uncollectible accounts Hardship customers are protected from shut-off in certain circumstances, and historical collection experience has reflected a higher default risk as compared to the rest of the receivable population. As a result of the adoption of ASU 2016-13, management aligned the allowance for uncollectible hardship accounts whichacross all regulatory jurisdictions, using a higher credit risk profile for this pool of trade receivables as compared to non-hardship receivables. Implementation impacts of the accounting standard on the allowance for uncollectible hardship accounts are reflected in the rollforward of the uncollectible allowance in the table below. The allowance for uncollectible hardship accounts is included in the total provision,uncollectible allowance balance.
The total allowance for uncollectible accounts is included in Receivables, Net on the balance sheets, and wassheets. The activity in the allowance for uncollectible accounts by portfolio segment is as follows:
|
| | | | | | | | | | | | | | | |
| | Total Provision for Uncollectible Accounts | | Uncollectible Hardship |
| (Millions of Dollars) | As of September 30, 2017 | | As of December 31, 2016 | | As of September 30, 2017 | | As of December 31, 2016 |
| Eversource | $ | 196.8 |
| | $ | 200.6 |
| | $ | 126.3 |
| | $ | 119.9 |
|
| CL&P | 77.6 |
| | 86.4 |
| | 64.6 |
| | 67.7 |
|
| NSTAR Electric | 55.7 |
| | 54.8 |
| | 32.3 |
| | 26.2 |
|
| PSNH | 10.6 |
| | 9.9 |
| | — |
| | — |
|
| WMECO | 17.0 |
| | 15.5 |
| | 11.3 |
| | 9.9 |
|
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | For the Three Months Ended March 31, 2020 |
| | Eversource | | CL&P | | NSTAR Electric | | PSNH |
| (Millions of Dollars) | Hardship Accounts | | Retail (Non-Hardship), Wholesale, and Other Receivables | | Total Allowance | | Hardship Accounts | | Retail (Non-Hardship), Wholesale and Other Receivables | | Total Allowance | | Hardship Accounts | | Retail (Non-Hardship), Wholesale, and Other Receivables | | Total Allowance | | Total Allowance |
| Beginning Balance | $ | 143.3 |
| | $ | 81.5 |
| | $ | 224.8 |
| | $ | 80.1 |
| | $ | 17.2 |
| | $ | 97.3 |
| | $ | 43.9 |
| | $ | 31.5 |
| | $ | 75.4 |
| | $ | 10.5 |
|
| ASU 2016-13 Implementation Impact on January 1, 2020 | 21.6 |
| | 2.2 |
| | 23.8 |
| | 21.3 |
| | 0.9 |
| | 22.2 |
| | (1.6 | ) | | 0.3 |
| | (1.3 | ) | | 0.3 |
|
Uncollectible Expense (1) | — |
| | 11.4 |
| | 11.4 |
| | — |
| | 3.2 |
| | 3.2 |
| | — |
| | 3.7 |
| | 3.7 |
| | 0.7 |
|
Uncollectible Costs Deferred (2) | 11.8 |
| | 8.5 |
| | 20.3 |
| | 12.9 |
| | 1.8 |
| | 14.7 |
| | (3.4 | ) | | 3.4 |
| | — |
| | 1.3 |
|
| Write-Offs | (4.7 | ) | | (16.8 | ) | | (21.5 | ) | | (3.8 | ) | | (3.5 | ) | | (7.3 | ) | | (0.4 | ) | | (8.0 | ) | | (8.4 | ) | | (1.7 | ) |
| Recoveries Collected | 0.2 |
| | 3.1 |
| | 3.3 |
| | 0.2 |
| | 0.6 |
| | 0.8 |
| | — |
| | 1.7 |
| | 1.7 |
| | 0.1 |
|
| Ending Balance | $ | 172.2 |
| | $ | 89.9 |
| | $ | 262.1 |
| | $ | 110.7 |
| | $ | 20.2 |
| | $ | 130.9 |
| | $ | 38.5 |
| | $ | 32.6 |
| | $ | 71.1 |
| | $ | 11.2 |
|
(1) Uncollectible expense associated with customer and other accounts receivable is included in Operations and Maintenance expense on the statements of income. For the three months ended March 31, 2019, uncollectible expense included in Operations and Maintenance Expense was $18.6 million, $4.1 million, $6.0 million and $1.7 million for Eversource, CL&P, NSTAR Electric and PSNH, respectively.
(2) The current period provision for expected credit losses for hardship accounts and other customer receivables that are ultimately recovered in rates is deferred as a regulatory cost on the balance sheets.
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")(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, the nonrecurring fair value measurements of nonfinancial assets such as goodwill, long-lived assets and AROs, and the estimated fair value of preferred stock, long-term debt and long-term debt.RRBs.
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.basis. 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.
Uncategorized - Investments that are measured at net asset value are not categorized within the fair value hierarchy.
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 10, "Fair Value of Financial Instruments," to the financial statements.
E. Other Income, Net
Items included withinThe components of Other Income, Net on the statements of income primarily consist of income/(loss) related to equity method investments, investment income/(loss), interest income and AFUDC related to equity funds. For the three and nine months ended September 30, 2017, Eversource had equity in earnings of $5.1 million and $23.0 million, respectively, related to its equity method investments. For the three and nine months ended September 30, 2016 Eversource had equity in earnings of $0.9 million and losses of $2.0 million, respectively, related to its equity method investments. 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.were as follows: |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | For the Three Months Ended |
| | March 31, 2020 | | March 31, 2019 |
| (Millions of Dollars) | Eversource | | CL&P | | NSTAR Electric | | PSNH | | Eversource | | CL&P | | NSTAR Electric | | PSNH |
Pension, SERP and PBOP Non-Service Income/(Expense) Components | $ | 12.7 |
| | $ | 1.1 |
| | $ | 7.9 |
| | $ | 1.9 |
| | $ | 7.4 |
| | $ | (0.6 | ) | | $ | 7.0 |
| | $ | 0.5 |
|
| AFUDC Equity | 10.6 |
| | 3.9 |
| | 5.0 |
| | 1.5 |
| | 10.9 |
| | 2.6 |
| | 4.0 |
| | 0.2 |
|
| Equity in Earnings of Unconsolidated Affiliates | 4.0 |
| | — |
| | 0.1 |
| | — |
| | 5.0 |
| | — |
| | 0.2 |
| | — |
|
| Investment Income/(Loss) | (4.3 | ) | | (3.4 | ) | | (1.3 | ) | | (0.5 | ) | | 1.2 |
| | 1.7 |
| | (0.3 | ) | | 0.4 |
|
| Interest Income | 0.7 |
| | 0.3 |
| | 0.1 |
| | 0.3 |
| | 6.5 |
| | 0.4 |
| | 0.2 |
| | 5.9 |
|
| Other | 0.4 |
| | — |
| | 0.4 |
| | — |
| | — |
| | (0.2 | ) | | — |
| | — |
|
| Total Other Income, Net | $ | 24.1 |
| | $ | 1.9 |
| | $ | 12.2 |
| | $ | 3.2 |
| | $ | 31.0 |
| | $ | 3.9 |
| | $ | 11.1 |
| | $ | 7.0 |
|
F. Other Taxes
GrossEversource's companies that serve customers in Connecticut collect 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 shownrecorded 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 |
| (Millions of Dollars) | March 31, 2020 | | March 31, 2019 |
| Eversource | $ | 43.1 |
| | $ | 45.0 |
|
| CL&P | 35.5 |
| | 36.2 |
|
|
| | | | | | | | | | | | | | | |
| | For the Three Months Ended | | For the Nine Months Ended |
| (Millions of Dollars) | September 30, 2017 | | September 30, 2016 | | September 30, 2017 | | September 30, 2016 |
| Eversource | $ | 40.3 |
| | $ | 45.1 |
| | $ | 118.2 |
| | $ | 124.8 |
|
| CL&P | 37.8 |
| | 42.6 |
| | 103.5 |
| | 112.2 |
|
Separate from above were amounts recorded as Taxes Other Than Income Taxes at CL&P related to the remittance to the State of Connecticut of energy efficiency funds collected from customers of $10.7 million for the three months ended March 31, 2019. Energy efficiency funds collected from customers after July 1, 2019 are no longer subject to remittance to the State of Connecticut. These amounts were recorded separately, with collections in Operating Revenues and with payments in Taxes Other Than Income Taxes on the Eversource and CL&P statements of income.
As agents for state and local governments, Eversource's companies that serve customers in Connecticut and Massachusetts collect certain sales taxes that are recorded on a net basis with no impact on the statements of income.
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, 2020 | | As of March 31, 2019 |
| Eversource | $ | 273.7 |
| | $ | 336.3 |
|
| CL&P | 85.0 |
| | 121.9 |
|
| NSTAR Electric | 70.2 |
| | 83.2 |
|
| PSNH | 37.9 |
| | 30.4 |
|
|
| | | | | | | |
| (Millions of Dollars) | As of September 30, 2017 | | As of September 30, 2016 |
| Eversource | $ | 307.7 |
| | $ | 203.6 |
|
| CL&P | 113.4 |
| | 64.5 |
|
| NSTAR Electric | 55.4 |
| | 39.4 |
|
| PSNH | 39.6 |
| | 31.0 |
|
| WMECO | 37.1 |
| | 17.6 |
|
The following table reconciles cash as reported on the balance sheets to the cash and restricted cash balance as reported on the statements of cash flows: |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | As of March 31, 2020 | | As of December 31, 2019 |
| (Millions of Dollars) | Eversource | | CL&P | | NSTAR Electric | | PSNH | | Eversource | | CL&P | | NSTAR Electric | | PSNH |
| Cash as reported on the Balance Sheets | $ | 47.4 |
| | $ | 3.8 |
| | $ | 2.8 |
| | $ | — |
| | $ | 15.4 |
| | $ | — |
| | $ | 0.1 |
| | $ | 0.4 |
|
| Restricted cash included in: | | | | | | | | | | | | | | | |
| Special Deposits | 39.0 |
| | 4.7 |
| | 6.2 |
| | 16.6 |
| | 52.5 |
| | 4.6 |
| | 6.2 |
| | 32.5 |
|
| Marketable Securities | 44.1 |
| | 0.3 |
| | 0.1 |
| | 0.6 |
| | 46.0 |
| | 0.4 |
| | — |
| | 0.6 |
|
| Other Long-Term Assets | 3.2 |
| | — |
| | — |
| | 3.2 |
| | 3.2 |
| | — |
| | — |
| | 3.2 |
|
Cash and Restricted Cash reported on the Statements of Cash Flows | $ | 133.7 |
| | $ | 8.8 |
| | $ | 9.1 |
| | $ | 20.4 |
| | $ | 117.1 |
| | $ | 5.0 |
| | $ | 6.3 |
| | $ | 36.7 |
|
Special Deposits represent cash collections related to the PSNH RRB customer charges that are held in trust, required ISO-NE cash deposits, and CYAPC and YAEC cash balances. Special Deposits are included in Current Assets on the balance sheets. Restricted cash included in Marketable Securities represents money market funds held in trusts to fund certain non-qualified executive benefits and restricted trusts to fund CYAPC and YAEC's spent nuclear fuel storage obligations.
H. Pending Acquisition of Assets of Columbia Gas of Massachusetts
On February 26, 2020, Eversource and NiSource Inc. entered into an asset purchase agreement (the Agreement) pursuant to which Eversource would acquire certain assets that comprise NiSource’s local natural gas distribution business in Massachusetts, which is doing business as Columbia Gas of Massachusetts (CMA). The purchase price of $1.1 billion includes a target working capital amount that is subject to adjustment to reflect actual working capital as of the closing date.
The liabilities to be assumed by Eversource under the Agreement specifically exclude any liabilities (past or future) arising out of, or related to, the fires and explosions that occurred on September 13, 2018 in Lawrence, Andover and North Andover, Massachusetts related to the delivery of natural gas by CMA, including certain subsequent events, all as described and in the DPU's Order on Scope dated December 23, 2019 (D.P.U. 19-141) (the Greater Lawrence Incident or GLI). The liabilities to be assumed also exclude any further emergency events prior to the closing of the acquisition related to the restoration and reconstruction with respect to the GLI, including any losses arising out of, or related to, any litigation, demand, cause of action, claim, suit, investigation, proceeding, indemnification agreements or rights. Eversource is not assuming any of CMA's or NiSource Inc.'s debt.
The transaction requires approval from the DPU, the Maine Public Utilities Commission, the FERC, and the Federal Communications Commission, and it is subject to review under the Hart-Scott-Rodino Act, for which the relevant review period has expired. The resulting rate plan also requires DPU approval. Eversource expects to finance the asset acquisition through a combination of debt and equity issuances in a ratio that is consistent with our current consolidated capital structure. The transaction is expected to close by the end of the third quarter of 2020.
2. REGULATORY ACCOUNTING
Eversource's Regulatedutility 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 considers the effect of regulation on the timing of the recognition of certain revenues and expenses. The Regulatedregulated companies' financial statements reflect the effects of the rate-making process. The rates charged to the customers of Eversource's Regulatedregulated companies are designed to collect each company's costs to provide service, includingplus a return on investment.
The application of accounting guidance for rate-regulated enterprises results in recording regulatory assets and liabilities. Regulatory assets represent the deferral of incurred costs that are probable of future recovery in customer rates. Regulatory assets are amortized as the incurred costs are recovered through customer rates. Regulatory liabilities represent either revenues received from customers to fund expected costs that have not yet been incurred or probable future refunds to customers.
Management believes it is probable that each of the Regulatedregulated companies will recover its 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 Regulatedregulated companies' operations, or if 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.
Regulatory Assets: The components of regulatory assets were as follows:
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | As of March 31, 2020 | | As of December 31, 2019 |
| (Millions of Dollars) | Eversource | | CL&P | | NSTAR Electric | | PSNH | | Eversource | | CL&P | | NSTAR Electric | | PSNH |
| Benefit Costs | $ | 2,334.3 |
| | $ | 528.3 |
| | $ | 616.3 |
| | $ | 213.9 |
| | $ | 2,382.9 |
| | $ | 539.0 |
| | $ | 629.8 |
| | $ | 218.2 |
|
| Income Taxes, Net | 727.2 |
| | 458.9 |
| | 108.5 |
| | 12.8 |
| | 725.8 |
| | 458.8 |
| | 108.0 |
| | 12.8 |
|
| Securitized Stranded Costs | 554.5 |
| | — |
| | — |
| | 554.5 |
| | 565.3 |
| | — |
| | — |
| | 565.3 |
|
| Storm Restoration Costs, Net | 497.6 |
| | 251.6 |
| | 183.0 |
| | 63.0 |
| | 540.6 |
| | 274.6 |
| | 200.6 |
| | 65.4 |
|
| Regulatory Tracker Mechanisms | 551.5 |
| | 191.0 |
| | 227.4 |
| | 84.6 |
| | 411.5 |
| | 78.3 |
| | 207.1 |
| | 65.8 |
|
| Derivative Liabilities | 335.2 |
| | 333.8 |
| | — |
| | — |
| | 334.5 |
| | 329.2 |
| | — |
| | — |
|
| Goodwill-related | 327.3 |
| | — |
| | 281.0 |
| | — |
| | 331.5 |
| | — |
| | 284.6 |
| | — |
|
| Asset Retirement Obligations | 99.3 |
| | 31.2 |
| | 51.5 |
| | 3.7 |
| | 97.2 |
| | 30.8 |
| | 50.3 |
| | 3.6 |
|
| Other Regulatory Assets | 136.5 |
| | 24.8 |
| | 61.6 |
| | 13.8 |
| | 125.4 |
| | 25.2 |
| | 55.2 |
| | 14.7 |
|
| Total Regulatory Assets | 5,563.4 |
| | 1,819.6 |
|
| 1,529.3 |
|
| 946.3 |
|
| 5,514.7 |
| | 1,735.9 |
|
| 1,535.6 |
|
| 945.8 |
|
| Less: Current Portion | 785.1 |
| | 290.6 |
| | 304.0 |
| | 102.4 |
| | 651.1 |
| | 178.6 |
| | 285.6 |
| | 84.1 |
|
| Total Long-Term Regulatory Assets | $ | 4,778.3 |
| | $ | 1,529.0 |
|
| $ | 1,225.3 |
|
| $ | 843.9 |
|
| $ | 4,863.6 |
| | $ | 1,557.3 |
|
| $ | 1,250.0 |
|
| $ | 861.7 |
|
|
| | | | | | | |
| Eversource | As of September 30, 2017 | | As of December 31, 2016 |
| (Millions of Dollars) | |
| Benefit Costs | $ | 1,793.8 |
| | $ | 1,817.8 |
|
| Derivative Liabilities | 385.1 |
| | 423.3 |
|
| Income Taxes, Net | 652.7 |
| | 644.5 |
|
| Storm Restoration Costs | 330.1 |
| | 385.3 |
|
| Goodwill-related | 449.0 |
| | 464.4 |
|
| Regulatory Tracker Mechanisms | 470.7 |
| | 576.6 |
|
| Asset Retirement Obligations | 104.8 |
| | 99.3 |
|
| Other Regulatory Assets | 65.8 |
| | 115.1 |
|
| Total Regulatory Assets | 4,252.0 |
| | 4,526.3 |
|
| Less: Current Portion | 746.1 |
| | 887.6 |
|
| Total Long-Term Regulatory Assets | $ | 3,505.9 |
| | $ | 3,638.7 |
|
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | As of September 30, 2017 | | As of December 31, 2016 |
| (Millions of Dollars) | CL&P | | NSTAR Electric | | PSNH | | WMECO | | CL&P | | NSTAR Electric | | PSNH | | WMECO |
| Benefit Costs | $ | 415.8 |
| | $ | 436.7 |
| | $ | 183.2 |
| | $ | 84.8 |
| | $ | 429.3 |
| | $ | 438.6 |
| | $ | 184.2 |
| | $ | 86.7 |
|
| Derivative Liabilities | 381.6 |
| | 2.4 |
| | — |
| | — |
| | 420.5 |
| | 2.8 |
| | — |
| | — |
|
| Income Taxes, Net | 441.1 |
| | 92.4 |
| | 22.3 |
| | 30.5 |
| | 437.0 |
| | 89.7 |
| | 24.2 |
| | 30.8 |
|
| Storm Restoration Costs | 195.7 |
| | 112.4 |
| | 9.2 |
| | 12.8 |
| | 239.8 |
| | 112.5 |
| | 17.1 |
| | 15.9 |
|
| Goodwill-related | — |
| | 385.5 |
| | — |
| | — |
| | — |
| | 398.7 |
| | — |
| | — |
|
| Regulatory Tracker Mechanisms | 87.9 |
| | 201.1 |
| | 108.0 |
| | 44.4 |
| | 123.9 |
| | 257.3 |
| | 104.5 |
| | 46.7 |
|
| Asset Retirement Obligations | 35.1 |
| | 33.9 |
| | 16.8 |
| | 4.5 |
| | 33.2 |
| | 31.9 |
| | 16.2 |
| | 4.2 |
|
| Other Regulatory Assets | 30.0 |
| | 15.5 |
| | 17.6 |
| | 5.4 |
| | 43.4 |
| | 15.6 |
| | 16.5 |
| | 7.1 |
|
| Total Regulatory Assets | 1,587.2 |
|
| 1,279.9 |
|
| 357.1 |
|
| 182.4 |
|
| 1,727.1 |
|
| 1,347.1 |
|
| 362.7 |
|
| 191.4 |
|
| Less: Current Portion | 275.0 |
| | 230.6 |
| | 112.5 |
| | 60.6 |
| | 335.5 |
| | 289.4 |
| | 117.2 |
| | 64.1 |
|
| Total Long-Term Regulatory Assets | $ | 1,312.2 |
|
| $ | 1,049.3 |
|
| $ | 244.6 |
|
| $ | 121.8 |
|
| $ | 1,391.6 |
|
| $ | 1,057.7 |
|
| $ | 245.5 |
|
| $ | 127.3 |
|
Regulatory Costs in Other Long-Term Assets: Eversource's Regulatedregulated companies had $108.7$171.3 million (including $3.9$82.6 million for CL&P, $42.3$50.3 million for NSTAR Electric $18.5and $16.9 million for PSNH,PSNH) and $25.7 million for WMECO) and $86.3$146.0 million (including $5.9$51.8 million for CL&P, $35.0$55.7 million for NSTAR Electric $8.2and $18.0 million for PSNH, and $20.1 million for WMECO)PSNH) of additional regulatory costs as of September 30, 2017March 31, 2020 and December 31, 2016,2019, respectively, that were included in Other Long-Term Assetslong-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.
Regulatory Liabilities: The components of regulatory liabilities were as follows:
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | As of March 31, 2020 | | As of December 31, 2019 |
| (Millions of Dollars) | Eversource | | CL&P | | NSTAR Electric | | PSNH | | Eversource | | CL&P | | NSTAR Electric | | PSNH |
| EDIT due to Tax Cuts and Jobs Act | $ | 2,831.2 |
| | $ | 1,019.8 |
| | $ | 1,063.9 |
| | $ | 391.4 |
| | $ | 2,844.6 |
| | $ | 1,022.8 |
| | $ | 1,071.2 |
| | $ | 392.8 |
|
| Cost of Removal | 579.3 |
| | 77.4 |
| | 337.2 |
| | 14.8 |
| | 559.8 |
| | 64.6 |
| | 330.6 |
| | 16.3 |
|
| Benefit Costs | 80.1 |
| | — |
| | 68.6 |
| | — |
| | 84.5 |
| | — |
| | 72.2 |
| | — |
|
| Regulatory Tracker Mechanisms | 412.5 |
| | 121.7 |
| | 189.8 |
| | 64.1 |
| | 325.1 |
| | 94.8 |
| | 165.6 |
| | 57.0 |
|
| AFUDC - Transmission | 74.4 |
| | 45.7 |
| | 28.7 |
| | — |
| | 73.2 |
| | 46.0 |
| | 27.2 |
| | — |
|
| Other Regulatory Liabilities | 130.6 |
| | 34.4 |
| | 47.4 |
| | 10.7 |
| | 132.0 |
| | 19.6 |
| | 59.0 |
| | 13.1 |
|
| Total Regulatory Liabilities | 4,108.1 |
| | 1,299.0 |
|
| 1,735.6 |
|
| 481.0 |
|
| 4,019.2 |
| | 1,247.8 |
|
| 1,725.8 |
|
| 479.2 |
|
| Less: Current Portion | 439.9 |
| | 119.3 |
| | 219.9 |
| | 69.0 |
| | 361.2 |
| | 82.8 |
| | 209.2 |
| | 65.8 |
|
| Total Long-Term Regulatory Liabilities | $ | 3,668.2 |
| | $ | 1,179.7 |
|
| $ | 1,515.7 |
|
| $ | 412.0 |
|
| $ | 3,658.0 |
| | $ | 1,165.0 |
|
| $ | 1,516.6 |
|
| $ | 413.4 |
|
|
| | | | | | | |
| Eversource | As of September 30, 2017 | | As of December 31, 2016 |
| (Millions of Dollars) | |
| Cost of Removal | $ | 470.3 |
| | $ | 459.7 |
|
| Benefit Costs | 125.5 |
| | 136.2 |
|
| Regulatory Tracker Mechanisms | 175.8 |
| | 145.3 |
|
| AFUDC - Transmission | 65.4 |
| | 65.8 |
|
| Other Regulatory Liabilities | 33.4 |
| | 42.1 |
|
| Total Regulatory Liabilities | 870.4 |
| | 849.1 |
|
| Less: Current Portion | 170.2 |
| | 146.8 |
|
| Total Long-Term Regulatory Liabilities | $ | 700.2 |
| | $ | 702.3 |
|
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | As of September 30, 2017 | | As of December 31, 2016 |
| (Millions of Dollars) | CL&P | | NSTAR Electric | | PSNH | | WMECO | | CL&P | | NSTAR Electric | | PSNH | | WMECO |
| Cost of Removal | $ | 40.5 |
| | $ | 278.8 |
| | $ | 40.5 |
| | $ | 11.7 |
| | $ | 38.8 |
| | $ | 271.6 |
| | $ | 44.1 |
| | $ | 8.6 |
|
| Benefit Costs | — |
| | 106.0 |
| | — |
| | — |
| | — |
| | 113.1 |
| | — |
| | — |
|
| Regulatory Tracker Mechanisms | 57.1 |
| | 65.5 |
| | 5.6 |
| | 12.7 |
| | 37.2 |
| | 63.7 |
| | 10.7 |
| | 14.7 |
|
| AFUDC - Transmission | 49.2 |
| | 7.7 |
| | — |
| | 8.5 |
| | 50.2 |
| | 6.9 |
| | — |
| | 8.7 |
|
| Other Regulatory Liabilities | 21.3 |
| | 0.4 |
| | 2.6 |
| | — |
| | 21.0 |
| | 0.2 |
| | 2.7 |
| | 0.1 |
|
| Total Regulatory Liabilities | 168.1 |
|
| 458.4 |
|
| 48.7 |
|
| 32.9 |
|
| 147.2 |
|
| 455.5 |
|
| 57.5 |
|
| 32.1 |
|
| Less: Current Portion | 69.3 |
| | 65.5 |
| | 7.9 |
| | 10.2 |
| | 47.1 |
| | 63.7 |
| | 12.7 |
| | 14.9 |
|
| Total Long-Term Regulatory Liabilities | $ | 98.8 |
|
| $ | 392.9 |
|
| $ | 40.8 |
|
| $ | 22.7 |
|
| $ | 100.1 |
|
| $ | 391.8 |
|
| $ | 44.8 |
|
| $ | 17.2 |
|
3. PROPERTY, PLANT AND EQUIPMENT AND ACCUMULATED DEPRECIATION
The following tables summarize property, plant and equipment by asset category:
|
| | | | | | | |
| Eversource | As of March 31, 2020 | | As of December 31, 2019 |
| (Millions of Dollars) | |
| Distribution - Electric | $ | 16,117.4 |
| | $ | 15,880.0 |
|
| Distribution - Natural Gas | 3,984.2 |
| | 3,931.1 |
|
| Transmission - Electric | 11,059.4 |
| | 10,958.4 |
|
| Distribution - Water | 1,730.2 |
| | 1,726.5 |
|
| Solar | 200.5 |
| | 200.2 |
|
| Utility | 33,091.7 |
| | 32,696.2 |
|
Other (1) | 1,073.2 |
| | 1,025.6 |
|
| Property, Plant and Equipment, Gross | 34,164.9 |
| | 33,721.8 |
|
| Less: Accumulated Depreciation | | | |
| Utility | (7,572.4 | ) | | (7,483.5 | ) |
| Other | (408.0 | ) | | (387.4 | ) |
| Total Accumulated Depreciation | (7,980.4 | ) | | (7,870.9 | ) |
| Property, Plant and Equipment, Net | 26,184.5 |
| | 25,850.9 |
|
| Construction Work in Progress | 1,856.9 |
| | 1,734.6 |
|
| Total Property, Plant and Equipment, Net | $ | 28,041.4 |
| | $ | 27,585.5 |
|
|
| | | | | | | |
| Eversource | As of September 30, 2017 | | As of December 31, 2016 |
| (Millions of Dollars) | |
| Distribution - Electric | $ | 14,217.3 |
| | $ | 13,716.9 |
|
| Distribution - Natural Gas | 3,158.1 |
| | 3,010.4 |
|
| Transmission - Electric | 8,918.2 |
| | 8,517.4 |
|
| Generation | 1,215.8 |
| | 1,224.2 |
|
| Electric and Natural Gas Utility | 27,509.4 |
| | 26,468.9 |
|
Other (1) | 679.9 |
| | 591.6 |
|
| Property, Plant and Equipment, Gross | 28,189.3 |
| | 27,060.5 |
|
| Less: Accumulated Depreciation | | | |
| Electric and Natural Gas Utility | (6,838.5 | ) | | (6,480.4 | ) |
| Other | (274.4 | ) | | (242.0 | ) |
| Total Accumulated Depreciation | (7,112.9 | ) | | (6,722.4 | ) |
| Property, Plant and Equipment, Net | 21,076.4 |
| | 20,338.1 |
|
Construction Work in Progress (2) | 1,460.9 |
| | 1,012.4 |
|
| Total Property, Plant and Equipment, Net | $ | 22,537.3 |
| | $ | 21,350.5 |
|
(1) These assets are primarily comprised of building improvements, computer software, hardware and equipment at Eversource Service.
(2) As of September 30, 2017, the total CWIP related to NPT was approximately $201 million.
|
| | | | | | | | | | | | | | | | | | | | | | | |
| | As of March 31, 2020 | | As of December 31, 2019 |
| (Millions of Dollars) | CL&P | | NSTAR Electric | | PSNH | | CL&P | | NSTAR Electric | | PSNH |
| Distribution - Electric | $ | 6,607.8 |
| | $ | 7,250.8 |
| | $ | 2,299.1 |
| | $ | 6,485.5 |
| | $ | 7,163.7 |
| | $ | 2,271.1 |
|
| Transmission - Electric | 5,094.1 |
| | 4,444.7 |
| | 1,515.8 |
| | 5,043.0 |
| | 4,411.9 |
| | 1,498.7 |
|
| Solar | — |
| | 200.5 |
| | — |
| | — |
| | 200.2 |
| | — |
|
| Property, Plant and Equipment, Gross | 11,701.9 |
| | 11,896.0 |
| | 3,814.9 |
| | 11,528.5 |
| | 11,775.8 |
| | 3,769.8 |
|
| Less: Accumulated Depreciation | (2,413.6 | ) | | (2,925.2 | ) | | (810.1 | ) | | (2,385.7 | ) | | (2,895.3 | ) | | (799.9 | ) |
| Property, Plant and Equipment, Net | 9,288.3 |
| | 8,970.8 |
| | 3,004.8 |
| | 9,142.8 |
| | 8,880.5 |
| | 2,969.9 |
|
| Construction Work in Progress | 472.6 |
| | 643.8 |
| | 182.5 |
| | 483.0 |
| | 592.3 |
| | 159.6 |
|
| Total Property, Plant and Equipment, Net | $ | 9,760.9 |
| | $ | 9,614.6 |
| | $ | 3,187.3 |
| | $ | 9,625.8 |
| | $ | 9,472.8 |
| | $ | 3,129.5 |
|
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | As of September 30, 2017 | | As of December 31, 2016 |
| (Millions of Dollars) | CL&P | | NSTAR Electric | | PSNH | | WMECO | | CL&P | | NSTAR Electric | | PSNH | | WMECO |
| Distribution | $ | 5,797.6 |
| | $ | 5,543.1 |
| | $ | 2,048.8 |
| | $ | 868.1 |
| | $ | 5,562.9 |
| | $ | 5,402.3 |
| | $ | 1,949.8 |
| | $ | 841.9 |
|
| Transmission | 4,061.2 |
| | 2,545.0 |
| | 1,115.7 |
| | 1,147.9 |
| | 3,912.9 |
| | 2,435.8 |
| | 1,059.3 |
| | 1,061.1 |
|
| Generation | — |
| | — |
| | 1,179.8 |
| | 36.0 |
| | — |
| | — |
| | 1,188.2 |
| | 36.0 |
|
| Property, Plant and Equipment, Gross | 9,858.8 |
| | 8,088.1 |
| | 4,344.3 |
| | 2,052.0 |
| | 9,475.8 |
| | 7,838.1 |
| | 4,197.3 |
| | 1,939.0 |
|
| Less: Accumulated Depreciation | (2,207.0 | ) | | (2,143.8 | ) | | (1,315.7 | ) | | (356.5 | ) | | (2,082.4 | ) | | (2,025.4 | ) | | (1,254.7 | ) | | (338.8 | ) |
| Property, Plant and Equipment, Net | 7,651.8 |
| | 5,944.3 |
| | 3,028.6 |
| | 1,695.5 |
| | 7,393.4 |
| | 5,812.7 |
| | 2,942.6 |
| | 1,600.2 |
|
| Construction Work in Progress | 456.2 |
| | 324.4 |
| | 139.3 |
| | 74.1 |
| | 239.0 |
| | 239.1 |
| | 96.7 |
| | 78.1 |
|
| Total Property, Plant and Equipment, Net | $ | 8,108.0 |
| | $ | 6,268.7 |
| | $ | 3,167.9 |
| | $ | 1,769.6 |
| | $ | 7,632.4 |
| | $ | 6,051.8 |
| | $ | 3,039.3 |
| | $ | 1,678.3 |
|
| |
(1) | These assets are primarily comprised of computer software, hardware and equipment at Eversource Service and buildings at The Rocky River Realty Company. |
4. DERIVATIVE INSTRUMENTS
The Regulatedelectric and natural gas 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 RegulatedThese regulated companies manage the risks associated with the price volatility of energy and energy-related products through the use of derivative and non-derivative 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 Regulatedelectric and natural gas 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.
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 amounts recorded as current or long-term derivative assets or liabilities:
|
| | | | | | | | | | | | | | | | | | | | | | | |
| | As of September 30, 2017 | | As of December 31, 2016 |
| (Millions of Dollars) | Commodity Supply and Price Risk Management | | Netting (1) | | Net Amount Recorded as a Derivative | | Commodity Supply and Price Risk
Management | | Netting (1) | | Net Amount Recorded as a Derivative |
| Current Derivative Assets: | | | | | | | | | | | |
| Level 2: | | | | | | | | | | | |
| Eversource | $ | — |
| | $ | — |
| | $ | — |
| | $ | 6.0 |
| | $ | — |
| | $ | 6.0 |
|
| Level 3: | | | | | | | | | | | |
| CL&P | 10.4 |
| | (7.7 | ) | | 2.7 |
| | 13.9 |
| | (9.4 | ) | | 4.5 |
|
| Long-Term Derivative Assets: | | | | | | | | | | | |
| Level 2: | | | | | | | | | | | |
| Eversource | $ | — |
| | $ | — |
| | $ | — |
| | $ | 0.3 |
| | $ | (0.1 | ) | | $ | 0.2 |
|
| Level 3: | | | | | | | | | | | |
| CL&P | 74.3 |
| | (6.9 | ) | | 67.4 |
| | 77.3 |
| | (11.7 | ) | | 65.6 |
|
| Current Derivative Liabilities: | | | | | | | | | | | |
| Level 2: | | | | | | | | | | | |
| Eversource | $ | (1.5 | ) | | $ | 0.4 |
| | $ | (1.1 | ) | | $ | — |
| | $ | — |
| | $ | — |
|
| Level 3: | | | | | | | | | | | |
| Eversource | (62.2 | ) | | — |
| | (62.2 | ) | | (79.7 | ) | | — |
| | (79.7 | ) |
| CL&P | (59.9 | ) | | — |
| | (59.9 | ) | | (77.8 | ) | | — |
| | (77.8 | ) |
| NSTAR Electric | (2.3 | ) | | — |
| | (2.3 | ) | | (1.9 | ) | | — |
| | (1.9 | ) |
| Long-Term Derivative Liabilities: | | | | | | | | | | | |
| Level 3: | | | | | | | | | | | |
| Eversource | $ | (391.9 | ) | | $ | — |
| | $ | (391.9 | ) | | $ | (413.7 | ) | | $ | — |
| | $ | (413.7 | ) |
| CL&P | (391.8 | ) | | — |
| | (391.8 | ) | | (412.8 | ) | | — |
| | (412.8 | ) |
| NSTAR Electric | (0.1 | ) | | — |
| | (0.1 | ) | | (0.9 | ) | | — |
| | (0.9 | ) |
|
| | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | As of March 31, 2020 | | As of December 31, 2019 |
| (Millions of Dollars) | Fair Value Hierarchy | | Commodity Supply and Price Risk Management | | Netting (1) | | Net Amount Recorded as a Derivative | | Commodity Supply and Price Risk
Management | | Netting (1) | | Net Amount Recorded as a Derivative |
| Current Derivative Assets: | | | | | | | | | | | | | |
| CL&P | Level 3 | | $ | 12.8 |
| | $ | (0.4 | ) | | $ | 12.4 |
| | $ | 12.2 |
| | $ | (0.4 | ) | | $ | 11.8 |
|
| Long-Term Derivative Assets: | | | | | | | | | | | | | |
| CL&P | Level 3 | | 68.2 |
| | (2.1 | ) | | 66.1 |
| | 67.5 |
| | (2.1 | ) | | 65.4 |
|
| Current Derivative Liabilities: | | | | | | | | | | | | | |
| CL&P | Level 3 | | (69.6 | ) | | — |
| | (69.6 | ) | | (67.8 | ) | | — |
| | (67.8 | ) |
| Other | Level 2 | | (1.4 | ) | | 0.3 |
| | (1.1 | ) | | (5.2 | ) | | — |
| | (5.2 | ) |
| Long-Term Derivative Liabilities: | | | | | | | | | | | | | |
| CL&P | Level 3 | | (342.7 | ) | | — |
| | (342.7 | ) | | (338.6 | ) | | — |
| | (338.6 | ) |
| Other | Level 2 | | (0.3 | ) | | — |
| | (0.3 | ) | | (0.1 | ) | | — |
| | (0.1 | ) |
| |
(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 capacitycapacities of these contracts is 787as of both March 31, 2020 and December 31, 2019, were676 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, 2017March 31, 2020 and December 31, 2016,2019, Eversource had New York Mercantile Exchange ("NYMEX")(NYMEX) financial contracts for natural gas futures in order to reduce variability associated with the purchase price of approximately 10.43.5 million and 9.29.6 million MMBtu of natural gas, respectively.
For the three months ended September 30, 2017March 31, 2020 and 2016,2019, there were gainslosses of $0.6$18.0 million and losses of $53.4$5.2 million, respectively, deferred as regulatory costs, which reflect the change in fair value associated with Eversource's derivative contracts. For the nine months ended September 30, 2017 and 2016, these losses were $30.3 million and $127.8 million, respectively.
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.
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 relatingrelated 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 term 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 March 31, 2020 | | As of December 31, 2019 |
| CL&P | Range | | Weighted Average (1) | | | | Period Covered | | Range | | Period Covered |
| Capacity Prices | $ | 4.30 |
| | — | | $5.82 | | $ | 4.81 |
| | per kW-Month | | 2024 - 2026 | | $ | 3.01 |
| | — | | $7.34 | | per kW-Month | | 2023 - 2026 |
| Forward Reserve Prices | 0.80 |
| | — | | 1.90 | | 1.35 |
| | per kW-Month | | 2020 - 2024 | | 0.80 |
| | — | | 1.90 | | per kW-Month | | 2020 - 2024 |
|
| | | | | | | | | | | | | | | | | | | | | | | | | |
| | As of September 30, 2017 | | As of December 31, 2016 |
| | Range | | Period Covered | | Range | | Period Covered |
| Capacity Prices: | | | | | | | | | | | | | | | | | | | |
| CL&P | $ | 5.00 |
| | — | | 8.70 |
| | per kW-Month | | 2021 - 2026 | | $ | 5.50 |
| | — | | 8.70 |
| | per kW-Month | | 2020 - 2026 |
| Forward Reserve: | | | | | | | | | | | | | | | | | | | |
| CL&P | $ | 1.00 |
| | — | | 2.00 |
| | per kW-Month | | 2017 - 2024 | | $ | 1.40 |
| | — | | 2.00 |
| | per kW-Month | | 2017 - 2024 |
| REC Prices: | | | | | | | | | | | | | | | | | | | |
| NSTAR Electric | $ | 15.75 |
| | — | | 22.00 | | per REC | | 2017 - 2018 | | $ | 24.00 |
| | — | | 29.00 | | per REC | | 2017 - 2018 |
| |
(1) | Unobservable inputs were weighted by the relative future capacity and forward reserve prices and contractual MWs over the periods covered. |
Exit price premiums of 11.5 percent through 1813 percent, or a weighted average of 11.9 percent, are also applied onto 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. The risk premium was weighted by the relative fair value of the net derivative instruments.
Significant increases or decreases in future energycapacity or capacityforward reserve prices in isolation would decrease or increase, respectively, the fair value of the derivative liability. Any increases in risk premiums would increase the fair value of the derivative liability. Changes in these fair values are recorded as a regulatory asset or liability and do 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. |
| | | | | | | |
| CL&P | For the Three Months Ended March 31, |
| (Millions of Dollars) | 2020 | | 2019 |
| Derivatives, Net: | | | |
| Fair Value as of Beginning of Period | $ | (329.2 | ) | | $ | (356.5 | ) |
Net Realized/Unrealized Losses Included in Regulatory Assets | (16.4 | ) | | (5.3 | ) |
| Settlements | 11.8 |
| | 8.7 |
|
| Fair Value as of End of Period | $ | (333.8 | ) | | $ | (353.1 | ) |
|
| | | | | | | | | | | | | | | | | | | | | | | |
| | For the Three Months Ended September 30, |
| | 2017 | | 2016 |
| (Millions of Dollars) | Eversource | | CL&P | | NSTAR Electric | | Eversource | | CL&P | | NSTAR
Electric |
| Derivatives, Net: | | | | | | | | | | | |
| Fair Value as of Beginning of Period | $ | (397.1 | ) | | $ | (394.8 | ) | | $ | (2.3 | ) | | $ | (412.6 | ) | | $ | (411.3 | ) | | $ | (1.3 | ) |
| Net Realized/Unrealized Gains/Losses Included in Regulatory Assets and Liabilities | 0.5 |
| | (0.7 | ) | | 1.2 |
| | (52.3 | ) | | (49.8 | ) | | (2.5 | ) |
| Settlements | 12.6 |
| | 13.9 |
| | (1.3 | ) | | 21.2 |
| | 20.1 |
| | 1.1 |
|
| Fair Value as of End of Period | $ | (384.0 | ) | | $ | (381.6 | ) | | $ | (2.4 | ) | | $ | (443.7 | ) | | $ | (441.0 | ) | | $ | (2.7 | ) |
| | | | | | | | | | | | |
| | For the Nine Months Ended September 30, |
| | 2017 | | 2016 |
| (Millions of Dollars) | Eversource | | CL&P | | NSTAR
Electric | | Eversource | | CL&P | | NSTAR
Electric |
| Derivatives, Net: | | | | | | | | | | | |
| Fair Value as of Beginning of Period | $ | (423.3 | ) | | $ | (420.5 | ) | | $ | (2.8 | ) | | $ | (380.9 | ) | | $ | (380.8 | ) | | $ | (0.1 | ) |
| Net Realized/Unrealized Losses Included in Regulatory Assets and Liabilities | (17.9 | ) | | (15.9 | ) | | (2.0 | ) | | (128.9 | ) | | (122.0 | ) | | (6.9 | ) |
| Settlements | 57.2 |
| | 54.8 |
| | 2.4 |
| | 66.1 |
| | 61.8 |
| | 4.3 |
|
| Fair Value as of End of Period | $ | (384.0 | ) | | $ | (381.6 | ) | | $ | (2.4 | ) | | $ | (443.7 | ) | | $ | (441.0 | ) | | $ | (2.7 | ) |
5. MARKETABLE SECURITIES
Eversource maintains trusts that holdholds marketable securities that are primarily used to fund certain non-qualified executive benefits. TheseThe trusts that hold marketable securities are not subject to regulatory oversight by state or federal agencies. CYAPC and YAEC maintain legally restricted trusts, each of which holds marketable securities, to fund the spent nuclear fuel removal obligations of their nuclear fuel storage facilities.
TradingEquity Securities: Eversource has elected to record certain Unrealized gains and losses on equity securities as trading securities, with the changesheld in fair valuesEversource's non-qualified executive benefit trust are recorded in Other Income, Net on the statements of income. AsThe fair value of these equity securities as of March 31, 2020 and December 31, 2016, these securities were classified as Level 1 in the fair value hierarchy2019 was $34.8 million and totaled $9.6 million. These securities were sold during the first quarter of 2017 and were no longer held as of September 30, 2017.$45.7 million, respectively. For the three and nine months ended September 30, 2016, net gains on these securitiesMarch 31, 2020 and 2019, there were unrealized losses of $0.1$9.1 million and $0.6unrealized gains of $1.0 million, respectively, were recorded in Other Income, Net on the statements of income. Dividend income is recorded in Other Income, Net when dividends are declared. related to these equity securities.
Available-for-Sale Securities: The following is a summary of available-for-sale 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, 2017 | | As of December 31, 2016 |
Eversource (Millions of Dollars) | Amortized Cost | | Pre-Tax Unrealized Gains | | Pre-Tax Unrealized Losses | | Fair Value | | Amortized Cost | | Pre-Tax Unrealized Gains | | Pre-Tax Unrealized Losses | | Fair Value |
| Debt Securities | $ | 286.5 |
| | $ | 5.5 |
| | $ | (0.5 | ) | | $ | 291.5 |
| | $ | 296.2 |
| | $ | 1.1 |
| | $ | (2.1 | ) | | $ | 295.2 |
|
| Equity Securities | 210.7 |
| | 81.5 |
| | — |
| | 292.2 |
| | 203.3 |
| | 62.3 |
| | (1.2 | ) | | 264.4 |
|
Eversource's debt and equity securities also include CYAPC's and YAEC's marketable securities held in spent nuclear decommissioningfuel trusts, in the amountswhich had fair values of $489.1$162.0 million and $466.7$182.8 million as of September 30, 2017March 31, 2020 and December 31, 2016,2019, respectively. Unrealized gains and losses for these spent nuclear decommissioningfuel trusts are subject to regulatory accounting treatment and 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.
Available-for-Sale Debt Securities: The following is a summary of the available-for-sale debt securities, which are recorded at fair value and are included in current and long-term Marketable Securities on the balance sheets.
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | As of March 31, 2020 | | As of December 31, 2019 |
Eversource (Millions of Dollars) | Amortized Cost | | Pre-Tax Unrealized Gains | | Pre-Tax Unrealized Losses | | Fair Value | | Amortized Cost | | Pre-Tax Unrealized Gains | | Pre-Tax Unrealized Losses | | Fair Value |
| Debt Securities | $ | 224.2 |
| | $ | 10.9 |
| | $ | (0.6 | ) | | $ | 234.5 |
| | $ | 228.4 |
| | $ | 5.8 |
| | $ | (0.1 | ) | | $ | 234.1 |
|
Eversource's debt securities include CYAPC's and YAEC's marketable securities held in spent nuclear fuel trusts in the amounts of $198.7 million and $198.1 million as of March 31, 2020 and December 31, 2019, respectively.
Unrealized Lossesgains and Other-than-Temporary Impairment:losses on available-for-sale debt securities held in Eversource's non-qualified benefit trust are recorded in Accumulated Other Comprehensive Income, excluding amounts related to credit losses or losses on securities intended to be sold, which are recorded in Other Income, Net. There have been no significant unrealized losses other-than-temporary impairments orand no credit losses for the three and nine months ended September 30, 2017March 31, 2020 and 2016. 2019, and no allowance for credit losses as of March 31, 2020. 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.security, and the severity of the impairment. For asset-backed debt securities, underlying collateral and expected future cash flows are also evaluated. Debt securities included in Eversource's non-qualified benefit trust portfolio are investment-grade bonds with a lower default risk based on their credit quality.
As of March 31, 2020, the contractual maturities of available-for-sale debt securities were as follows:
|
| | | | | | | |
Eversource (Millions of Dollars) | Amortized Cost | | Fair Value |
Less than one year (1) | $ | 56.5 |
| | $ | 56.6 |
|
| One to five years | 40.1 |
| | 41.7 |
|
| Six to ten years | 38.6 |
| | 41.4 |
|
| Greater than ten years | 89.0 |
| | 94.8 |
|
| Total Debt Securities | $ | 224.2 |
| | $ | 234.5 |
|
| |
(1) | Amounts in the Less than one year category include securities in the CYAPC and YAEC spent nuclear fuel trusts, which are restricted and are classified in long-term Marketable Securities on the balance sheets. |
Realized Gains and Losses: Realized gains and losses on available-for-sale securities are recorded in Other Income, Net for Eversource's non-qualified benefit trust and are offset in Other Long-Term Liabilities for CYAPC and YAEC. Eversource utilizes the specific identification basis method for the Eversource non-qualified benefit trust, and the average cost basis method for the CYAPC and YAEC spent nuclear decommissioningfuel trusts to compute the realized gains and losses on the sale of available-for-salemarketable securities.
Contractual Maturities: As of September 30, 2017, the contractual maturities of available-for-sale debt securities were as follows:
|
| | | | | | | |
Eversource (Millions of Dollars) | Amortized Cost | | Fair Value |
Less than one year (1) | $ | 40.2 |
| | $ | 40.2 |
|
| One to five years | 56.7 |
| | 57.6 |
|
| Six to ten years | 52.6 |
| | 54.1 |
|
| Greater than ten years | 137.0 |
| | 139.6 |
|
| Total Debt Securities | $ | 286.5 |
| | $ | 291.5 |
|
| |
(1)
| Amounts in the Less than one year 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 (Millions of Dollars) | As of March 31, 2020 | | As of December 31, 2019 |
| Level 1: | | | |
| Mutual Funds and Equities | $ | 196.8 |
| | $ | 228.5 |
|
| Money Market Funds | 44.1 |
| | 46.0 |
|
| Total Level 1 | $ | 240.9 |
| | $ | 274.5 |
|
| Level 2: | | | |
| U.S. Government Issued Debt Securities (Agency and Treasury) | $ | 100.9 |
| | $ | 96.8 |
|
| Corporate Debt Securities | 45.9 |
| | 44.0 |
|
| Asset-Backed Debt Securities | 13.7 |
| | 12.9 |
|
| Municipal Bonds | 22.2 |
| | 26.7 |
|
| Other Fixed Income Securities | 7.7 |
| | 7.7 |
|
| Total Level 2 | $ | 190.4 |
| | $ | 188.1 |
|
| Total Marketable Securities | $ | 431.3 |
| | $ | 462.6 |
|
|
| | | | | | | |
Eversource (Millions of Dollars) | As of September 30, 2017 | | As of December 31, 2016 |
| Level 1: | | | |
| Mutual Funds and Equities | $ | 292.2 |
| | $ | 274.0 |
|
| Money Market Funds | 21.8 |
| | 54.8 |
|
| Total Level 1 | $ | 314.0 |
| | $ | 328.8 |
|
| Level 2: | | | |
| U.S. Government Issued Debt Securities (Agency and Treasury) | $ | 69.0 |
| | $ | 63.0 |
|
| Corporate Debt Securities | 56.1 |
| | 41.1 |
|
| Asset-Backed Debt Securities | 20.4 |
| | 18.5 |
|
| Municipal Bonds | 113.6 |
| | 107.5 |
|
| Other Fixed Income Securities | 10.6 |
| | 10.3 |
|
| Total Level 2 | $ | 269.7 |
| | $ | 240.4 |
|
| Total Marketable Securities | $ | 583.7 |
| | $ | 569.2 |
|
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 instrumentinstruments 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.
6. SHORT-TERM AND LONG-TERM DEBT
Short-Term Debt - Commercial Paper Programs and Credit Agreements: Eversource parent has a $1.45 billion commercial paper program allowing Eversource parent to issue commercial paper as a form of short-term debt. As of September 30, 2017 and December 31, 2016, Eversource parent had $917.0 million and approximately $1.0 billion, respectively, in short-term borrowings outstanding under the Eversource parent commercial paper program, leaving $533.0 million and $428.0 million of available borrowing capacity as of September 30, 2017 and December 31, 2016, respectively. The weighted-average interest rate on these borrowings as of September 30, 2017 and December 31, 2016 was 1.34 percent and 0.88 percent, respectively. As of September 30, 2017, there were intercompany loans from Eversource parent of $202.3 million to PSNH and $96.9 million to WMECO. As of December 31, 2016, there were intercompany loans from Eversource parent of $80.1 million to CL&P, $160.9 million to PSNH and $51.0 million to WMECO. Eversource parent, CL&P, PSNH, WMECO, NSTAR Gas, and Yankee Gas and Aquarion Water Company of Connecticut are also parties to a five-year $1.45 billion revolving credit facility. The revolving credit facility, which terminates on September 4, 2021.December 6, 2024. The revolving credit facility serves to backstop Eversource parent's $1.45 billion commercial paper program. There were no borrowings outstanding on the revolving credit facility as of September 30, 2017 and December 31, 2016.
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 their respective balance sheets. Intercompany loans from Eversource parent to CL&P, PSNH and WMECO are eliminated in consolidation on Eversource's balance sheets.
As a result of the October 2017 Eversource parent long-term debt issuances, the net proceeds of which were used to repay short-term borrowings outstanding under the Eversource parent commercial paper program, $898.8 million of short-term debt was reclassified to Long-Term Debt as of September 30, 2017.
NSTAR Electric has a $450$650 million commercial paper program allowing NSTAR Electric to issue commercial paper as a form of short-term debt. As of September 30, 2017, NSTAR Electric had no short-term borrowings outstanding and as of December 31, 2016, NSTAR Electric had $126.5 million in short-term borrowings outstanding under its commercial paper program, leaving $450.0 million and $323.5 million of available borrowing capacity as of September 30, 2017 and December 31, 2016, respectively. The weighted-average interest rate on these borrowings as of December 31, 2016 was 0.71 percent. NSTAR Electric is also a party to a five-year $450$650 million revolving credit facility. The revolving credit facility, which terminates on September 4, 2021.December 6, 2024. The revolving credit facility serves to backstop NSTAR Electric's $450$650 million commercial paper program.
The amount of borrowings outstanding and available under the commercial paper programs were as follows:
|
| | | | | | | | | | | | | | | | | | | | | |
| | Borrowings Outstanding as of | | Available Borrowing Capacity as of | | Weighted-Average Interest Rate as of |
| | March 31, 2020 | | December 31, 2019 | | March 31, 2020 | | December 31, 2019 | | March 31, 2020 | | December 31, 2019 |
| (Millions of Dollars) | | | | | |
| Eversource Parent Commercial Paper Program | $ | 738.4 |
| | $ | 1,224.9 |
| | $ | 711.6 |
| | $ | 225.1 |
| | 3.38 | % | | 1.98 | % |
| NSTAR Electric Commercial Paper Program | 88.0 |
| | 10.5 |
| | 562.0 |
| | 639.5 |
| | 1.25 | % | | 1.63 | % |
There were no0 borrowings outstanding on either the Eversource parent or NSTAR Electric revolving credit facilityfacilities as of September 30, 2017 andMarch 31, 2020 or December 31, 2016.2019.
Long-Term Debt Issuances: In March 2017,Amounts outstanding under the commercial paper programs and revolving credit facilities are included in Notes Payable and classified in current liabilities on the Eversource parent issued $300and NSTAR Electric balance sheets, as all borrowings are outstanding for no more than 364 days at one time. As a result of the NSTAR Gas long-term debt issuances in May 2020, $25.0 million of 2.75 percent Series K Senior Notes due to mature in 2022. The proceeds, netthe current portion of issuance costs, were used to repay short-termlong-term debt and $165.0 million of commercial paper borrowings under the Eversource parent commercial paper program.program were classified as Long-Term Debt as of March 31, 2020.
In March 2017,The Company expects the future operating cash flows of Eversource, CL&P, issued $300 million of 3.20 percent 2017 Series A First and Refunding Mortgage Bonds due to mature in 2027. The proceeds, net of issuance costs, were used to repay short-term borrowings.
In May 2017, NSTAR Electric issued $350 million of 3.20 percent Debentures dueand PSNH, along with existing borrowing availability and access to mature in 2027. The proceeds, net of issuance costs, were used to repay short-term borrowings and fund capital expenditures and working capital.
In August 2017, CL&P issued $225 million of 4.30 percent 2014 Series A First and Refunding Mortgage Bonds due to mature in 2044. These bonds are part of the same series of CL&P’s existing 4.30 percent bonds that were initially issued in 2014. The aggregate outstanding principal amount for these bonds is now $475 million. The proceeds, net of issuance costs, were used to refinance short-termboth debt and fundequity markets, will be sufficient to meet any working capital expenditures and working capital.future operating requirements, and capital investment forecasted opportunities.
In September 2017, Yankee Gas issued $75 million of 3.02 percent Series N First Mortgage Bonds due to mature in 2027. The proceeds, net of issuance costs, were used to repay short-term borrowings.
In October 2017,Intercompany Borrowings: Eversource parent issued $450 million 2.75 percent Series K Senior Notes dueuses its available capital resources to matureprovide loans to its subsidiaries to assist in 2022. These senior notes are part of the same series of Eversource parent’s existing 2.75 percent Series K Senior Notes that were initially issued in March 2017. The aggregate outstanding principal amount for the Series K Senior Notes is now $750 million. In addition,meeting their short-term borrowing needs. Eversource parent issued $450records intercompany interest income from its loans to subsidiaries, which is eliminated in consolidation. Intercompany loans from Eversource parent to its subsidiaries are eliminated in consolidation on Eversource's balance sheets. As of March 31, 2020, there were intercompany loans from Eversource parent to CL&P of $219.0 million, to PSNH of 2.90 percent 2017 Series L Senior Notes due$84.7 million, and to mature in 2024. The proceeds, neta subsidiary of issuance costs, were used to repay short-term borrowings.
In October 2017, NSTAR Electric issued $350of $38.4 million. As of December 31, 2019, there were intercompany loans from Eversource parent to CL&P of $63.8 million, to PSNH of 3.20 percent Debentures due$27.0 million, and to mature in 2027. The debentures are part of the same seriesa subsidiary of NSTAR Electric’s existing 3.20 percent Debentures that were initially issuedElectric of $30.3 million. Intercompany loans from Eversource parent are included in May 2017. The aggregate outstanding principal amount forNotes Payable to Eversource Parent and classified in current liabilities on the 3.20 percent Debentures is now $700 million. The proceeds, net of issuance costs, will be used to redeem long-term debt due to mature on November 15, 2017. As the debt issuance refinanced short-term debt, the amount was reclassified to Long-Term Debt on Eversource's and NSTAR Electric'srespective subsidiary's balance sheets.
Long-Term Debt Repayments: In March 2017, CL&P repaid at maturity the $150 million 5.375 percent 2007 Series A First and Refunding Mortgage Bonds.
In September 2017, CL&P repaid at maturity $100 million of 5.75 percent 2007 Series C First Mortgage Bonds and PSNH repaid at maturity $70 million of 6.15 percent 2007 Series N First Mortgage Bonds.
In October 2017, NSTAR Gas repaid at maturity $25 million of 7.04 percent Series M First Mortgage Bonds.
Long-Term Debt Issuance Authorizations: Authorization: On January 4, 2017, PURA27, 2020, the DPU approved CL&P'sNSTAR Gas' request for authorization to issue up to $1.325 billion in long-term debt through December 31, 2020. On March 30, 2017, the DPU approved NSTAR Electric's request for authorization to issue up to $700$270 million in long-term debt through December 31, 2018.2021.
Long-Term Debt:The following table summarizes long-term debt issuances and repayments:
|
| | | | | | | | | |
| (Millions of Dollars) | Issuance/(Repayment) | | Issue Date or Repayment Date | | Maturity Date | | Use of Proceeds for Issuance/
Repayment Information |
| NSTAR Electric: | | | | | | | |
| 3.95% 2020 Debentures | $ | 400.0 |
| | March 2020 | | April 2030 | | Refinanced investments in eligible green expenditures, which were previously financed in 2018 and 2019 |
| 5.10% Series E Senior Notes | (95.0 | ) | | March 2020 | | March 2020 | | Paid at maturity |
| Other: | | | | | | | |
| Eversource Parent 3.45% Series P Senior Notes | 350.0 |
| | January 2020 | | January 2050 | | Paid short-term borrowings |
| NSTAR Gas 4.46% Series N First Mortgage Bonds | (125.0 | ) | | January 2020 | | January 2020 | | Paid at maturity |
| Yankee Gas 4.87% Series K First Mortgage Bonds | (50.0 | ) | | April 2020 | | April 2020 | | Paid at maturity |
| NSTAR Gas 2.33% Series R First Mortgage Bonds | 75.0 |
| | May 2020 | | May 2025 | | Refinanced existing indebtedness, funded capital expenditures and for general corporate purposes |
| NSTAR Gas 3.15% Series S First Mortgage Bonds | 115.0 |
| | May 2020 | | May 2050 | | Refinanced existing indebtedness, funded capital expenditures and for general corporate purposes |
7. RATE REDUCTION BONDS AND VARIABLE INTEREST ENTITIES
Rate Reduction Bonds: On May 8, 2018, PSNH Funding, a wholly-owned subsidiary of PSNH, issued $635.7 million of securitized RRBs in multiple tranches with a weighted average interest rate of 3.66 percent, and final maturity dates ranging from 2026 to 2035. The RRBs are expected to be repaid by February 1, 2033. RRB payments consist of principal and interest and are paid semi-annually, beginning on February 1, 2019. The RRBs were issued pursuant to a finance orderissued by the NHPUC on January 30, 2018 to recover remaining costs resulting from the divestiture of PSNH’s generation assets.
PSNH Funding was formed solely to issue RRBs to finance PSNH's unrecovered remaining costs associated with the divestiture of its generation assets. PSNH Funding is considered a VIE primarily because the equity capitalization is insufficient to support its operations. PSNH has the power to direct the significant activities of the VIE and is most closely associated with the VIE as compared to other interest holders. Therefore, PSNH is considered the primary beneficiary and consolidates PSNH Funding in its consolidated financial statements. The following tables summarize the impact of PSNH Funding on PSNH's balance sheets and income statements: |
| | | | | | | |
| (Millions of Dollars) | | | |
| Balance Sheet: | As of March 31, 2020 | | As of December 31, 2019 |
| Restricted Cash - Current Portion (included in Current Assets) | $ | 16.6 |
| | $ | 32.5 |
|
| Restricted Cash - Long-Term Portion (included in Other Long-Term Assets) | 3.2 |
| | 3.2 |
|
| Securitized Stranded Cost (included in Regulatory Assets) | 554.5 |
| | 565.3 |
|
| Other Regulatory Liabilities (included in Regulatory Liabilities) | 6.0 |
| | 5.6 |
|
| Accrued Interest (included in Other Current Liabilities) | 3.3 |
| | 8.6 |
|
| Rate Reduction Bonds - Current Portion | 43.2 |
| | 43.2 |
|
| Rate Reduction Bonds - Long-Term Portion | 518.5 |
| | 540.1 |
|
|
| | | | | | | |
| (Millions of Dollars) | For the Three Months Ended |
| Income Statement: | March 31, 2020 | | March 31, 2019 |
| Amortization of RRB Principal (included in Amortization of Regulatory Assets, Net) | $ | 10.8 |
| | $ | 10.6 |
|
| Interest Expense on RRB Principal (included in Interest Expense) | 5.0 |
| | 5.4 |
|
8. PENSION BENEFITS AND POSTRETIREMENT BENEFITS OTHER THAN PENSIONSPENSION
Eversource Service sponsors aprovides defined benefit retirement plan ("Pension Plan")plans (Pension Plans) that coverscover eligible participants.employees. In addition to the Pension Plan,Plans, Eversource maintains non-qualified defined benefit retirement plans sponsored by Eversource Service ("SERP Plans")(SERP Plans), which provide benefits in excess of Internal Revenue Code limitations to eligible participants.participants consisting of current and retired employees. Eversource Service also sponsors aprovides defined benefit postretirement planplans (PBOP Plans) that providesprovide life insurance and a health reimbursement arrangement created for the purpose of reimbursing retirees and dependents for health insurance premiums and certain medical expenses to eligible participantsemployees that meet certain age and service eligibility requirements ("PBOP Plan").requirements.
In August 2016, the Company amended its PBOP Plan, which standardized separate benefit structures that existed within the plan and made other benefit changes. The remeasurement resulted in a prior service credit of $5.3 million and $16.1 million for the three and nine months ended September 30, 2017, respectively, which was reflected as a reduction to net periodic benefit expense for PBOP benefits. The majority of this amount will be deferred for future refund to customers.
The components of net periodic benefit expenseexpense/(income) for the Pension, SERP and PBOP Plans, prior to amounts capitalized as Property, Plant and Equipment or deferred as regulatory assets for future recovery, are shown below. The service cost component of net periodic benefit expense and the intercompany allocations,expense/(income), less the capitalized portions of pension, SERP and PBOP amounts, areportion, is included in Operations and Maintenance expense on the statements of income. Capitalized amounts relate to employees working on capital projects andThe remaining components of net periodic benefit expense/(income), less the deferred portion, are included in Property, Plant and Equipment,Other Income, Net on the balance sheets.statements of income. Pension, SERP and PBOP expense reflected in the statements of cash flows for CL&P, NSTAR Electric PSNH and WMECOPSNH does not include the intercompany allocations or the corresponding capitalized and deferred portion, as these amounts are cash settled on a short-term basis.
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Pension and SERP | | PBOP |
| | For the Three Months Ended March 31, 2020 | | For the Three Months Ended March 31, 2020 |
| (Millions of Dollars) | Eversource | | CL&P | | NSTAR Electric | | PSNH | | Eversource | | CL&P | | NSTAR Electric | | PSNH |
| Service Cost | $ | 19.6 |
| | $ | 5.7 |
| | $ | 3.8 |
| | $ | 2.2 |
| | $ | 2.6 |
| | $ | 0.5 |
| | $ | 0.6 |
| | $ | 0.2 |
|
| Interest Cost | 44.3 |
| | 9.5 |
| | 9.6 |
| | 4.9 |
| | 6.1 |
| | 1.2 |
| | 1.7 |
| | 0.6 |
|
| Expected Return on Plan Assets | (100.3 | ) | | (20.0 | ) | | (25.8 | ) | | (11.3 | ) | | (18.1 | ) | | (2.4 | ) | | (8.5 | ) | | (1.4 | ) |
| Actuarial Loss | 49.3 |
| | 10.0 |
| | 13.3 |
| | 4.1 |
| | 2.1 |
| | 0.4 |
| | 0.7 |
| | 0.1 |
|
| Prior Service Cost/(Credit) | 0.3 |
| | — |
| | 0.1 |
| | — |
| | (5.4 | ) | | 0.2 |
| | (4.2 | ) | | 0.1 |
|
| Total Net Periodic Benefit Expense/(Income) | $ | 13.2 |
| | $ | 5.2 |
| | $ | 1.0 |
| | $ | (0.1 | ) | | $ | (12.7 | ) | | $ | (0.1 | ) | | $ | (9.7 | ) | | $ | (0.4 | ) |
| Intercompany Allocations | N/A |
| | $ | 1.9 |
| | $ | 1.9 |
| | $ | 0.6 |
| | N/A |
| | $ | (0.4 | ) | | $ | (0.4 | ) | | $ | (0.2 | ) |
| | | | Pension and SERP | Pension and SERP | | PBOP |
| Eversource | For the Three Months Ended | | For the Nine Months Ended | |
| (Millions of Dollars) | September 30, 2017 | | September 30, 2016 | | September 30, 2017 | | September 30, 2016 | |
| Service Cost | $ | 17.4 |
| | $ | 18.6 |
| | $ | 53.8 |
| | $ | 56.6 |
| |
| Interest Cost | 47.2 |
| | 46.4 |
| | 140.7 |
| | 139.2 |
| |
| Expected Return on Pension Plan Assets | (83.5 | ) | | (79.4 | ) | | (250.5 | ) | | (238.5 | ) | |
| Actuarial Loss | 33.9 |
| | 31.4 |
| | 101.3 |
| | 94.2 |
| |
| Prior Service Cost | 1.2 |
| | 0.9 |
| | 3.4 |
| | 2.6 |
| |
| Total Net Periodic Benefit Expense | $ | 16.2 |
| | $ | 17.9 |
| | $ | 48.7 |
| | $ | 54.1 |
| |
| Capitalized Pension Expense | $ | 5.5 |
| | $ | 5.4 |
| | $ | 16.5 |
| | $ | 16.8 |
| |
| | | | | | | | | For the Three Months Ended March 31, 2019 | | For the Three Months Ended March 31, 2019 |
| | PBOP | |
| Eversource | For the Three Months Ended | | For the Nine Months Ended | |
| (Millions of Dollars) | September 30, 2017 | | September 30, 2016 | | September 30, 2017 | | September 30, 2016 | Eversource | | CL&P | | NSTAR Electric | | PSNH | | Eversource | | CL&P | | NSTAR Electric | | PSNH |
| Service Cost | $ | 2.4 |
| | $ | 3.0 |
| | $ | 7.1 |
| | $ | 9.2 |
| $ | 19.3 |
| | $ | 4.8 |
| | $ | 3.9 |
| | $ | 2.6 |
| | $ | 2.1 |
| | $ | 0.4 |
| | $ | 0.4 |
| | $ | 0.2 |
|
| Interest Cost | 6.8 |
| | 7.5 |
| | 20.3 |
| | 26.5 |
| 54.2 |
| | 11.5 |
| | 11.9 |
| | 6.2 |
| | 8.1 |
| | 1.5 |
| | 2.3 |
| | 0.9 |
|
| Expected Return on Plan Assets | (16.0 | ) | | (15.9 | ) | | (47.8 | ) | | (47.3 | ) | (92.3 | ) | | (18.8 | ) | | (24.4 | ) | | (10.3 | ) | | (16.6 | ) | | (2.3 | ) | | (7.5 | ) | | (1.3 | ) |
| Actuarial Loss | 2.2 |
| | 3.0 |
| | 6.9 |
| | 5.0 |
| 35.8 |
| | 8.1 |
| | 9.4 |
| | 3.5 |
| | 2.5 |
| | 0.4 |
| | 0.9 |
| | 0.2 |
|
| Prior Service Credit | (5.3 | ) | | (3.6 | ) | | (16.1 | ) | | (3.7 | ) | |
| Total Net Periodic Benefit Income | $ | (9.9 | ) | | $ | (6.0 | ) | | $ | (29.6 | ) | | $ | (10.3 | ) | |
| Capitalized PBOP Income | $ | (4.8 | ) | | $ | (2.6 | ) | | $ | (14.3 | ) | | $ | (4.6 | ) | |
| Prior Service Cost/(Credit) | | 1.1 |
| | — |
| | 0.1 |
| | — |
| | (5.8 | ) | | 0.3 |
| | (4.2 | ) | | 0.1 |
|
| Total Net Periodic Benefit Expense/(Income) | | $ | 18.1 |
| | $ | 5.6 |
| | $ | 0.9 |
| | $ | 2.0 |
| | $ | (9.7 | ) | | $ | 0.3 |
| | $ | (8.1 | ) | | $ | 0.1 |
|
| Intercompany Allocations | | N/A |
| | $ | 7.8 |
| | $ | 3.0 |
| | $ | 2.4 |
| | N/A |
| | $ | (0.1 | ) | | $ | (0.2 | ) | | $ | (0.1 | ) |
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Pension and SERP |
| | For the Three Months Ended September 30, 2017 | | For the Three Months Ended September 30, 2016 |
| (Millions of Dollars) | CL&P | | NSTAR Electric | | PSNH | | WMECO | | CL&P | | NSTAR Electric | | PSNH | | WMECO |
| Service Cost | $ | 4.6 |
| | $ | 3.1 |
| | $ | 2.4 |
| | $ | 0.7 |
| | $ | 4.6 |
| | $ | 3.3 |
| | $ | 2.5 |
| | $ | 0.8 |
|
| Interest Cost | 10.5 |
| | 8.6 |
| | 5.3 |
| | 2.1 |
| | 10.2 |
| | 8.5 |
| | 5.1 |
| | 2.1 |
|
| Expected Return on Pension Plan Assets | (17.8 | ) | | (17.5 | ) | | (10.0 | ) | | (4.4 | ) | | (18.0 | ) | | (16.9 | ) | | (9.6 | ) | | (4.4 | ) |
| Actuarial Loss | 6.8 |
| | 8.9 |
| | 3.0 |
| | 1.5 |
| | 6.3 |
| | 8.7 |
| | 2.5 |
| | 1.3 |
|
| Prior Service Cost | 0.4 |
| | 0.1 |
| | 0.1 |
| | 0.1 |
| | 0.4 |
| | — |
| | 0.1 |
| | 0.1 |
|
| Total Net Periodic Benefit Expense/(Income) | $ | 4.5 |
| | $ | 3.2 |
| | $ | 0.8 |
| | $ | — |
| | $ | 3.5 |
| | $ | 3.6 |
| | $ | 0.6 |
| | $ | (0.1 | ) |
| Intercompany Allocations | $ | 2.4 |
| | $ | 1.8 |
| | $ | 0.8 |
| | $ | 0.5 |
| | $ | 3.5 |
| | $ | 2.2 |
| | $ | 1.0 |
| | $ | 0.6 |
|
| Capitalized Pension Expense | $ | 2.4 |
| | $ | 1.9 |
| | $ | 0.4 |
| | $ | 0.1 |
| | $ | 2.2 |
| | $ | 2.0 |
| | $ | 0.4 |
| | $ | 0.1 |
|
| | | | | | | | | | | | | | | | |
| | Pension and SERP |
| | For the Nine Months Ended September 30, 2017 | | For the Nine Months Ended September 30, 2016 |
| (Millions of Dollars) | CL&P | | NSTAR Electric | | PSNH | | WMECO | | CL&P | | NSTAR Electric | | PSNH | | WMECO |
| Service Cost | $ | 13.9 |
| | $ | 9.4 |
| | $ | 7.3 |
| | $ | 2.3 |
| | $ | 14.3 |
| | $ | 9.9 |
| | $ | 7.5 |
| | $ | 2.4 |
|
| Interest Cost | 31.3 |
| | 25.6 |
| | 15.9 |
| | 6.3 |
| | 31.2 |
| | 25.3 |
| | 15.4 |
| | 6.3 |
|
| Expected Return on Pension Plan Assets | (53.9 | ) | | (52.5 | ) | | (29.9 | ) | | (13.3 | ) | | (54.2 | ) | | (50.7 | ) | | (28.9 | ) | | (13.1 | ) |
| Actuarial Loss | 20.7 |
| | 26.4 |
| | 8.7 |
| | 4.5 |
| | 19.2 |
| | 25.8 |
| | 7.5 |
| | 4.1 |
|
| Prior Service Cost | 1.1 |
| | 0.2 |
| | 0.4 |
| | 0.2 |
| | 1.1 |
| | — |
| | 0.3 |
| | 0.2 |
|
| Total Net Periodic Benefit Expense/(Income) | $ | 13.1 |
| | $ | 9.1 |
| | $ | 2.4 |
| | $ | — |
| | $ | 11.6 |
| | $ | 10.3 |
| | $ | 1.8 |
| | $ | (0.1 | ) |
| Intercompany Allocations | $ | 7.4 |
| | $ | 5.5 |
| | $ | 2.5 |
| | $ | 1.4 |
| | $ | 10.3 |
| | $ | 6.7 |
| | $ | 3.0 |
| | $ | 1.9 |
|
| Capitalized Pension Expense | $ | 7.3 |
| | $ | 5.4 |
| | $ | 1.1 |
| | $ | 0.3 |
| | $ | 7.1 |
| | $ | 5.7 |
| | $ | 1.0 |
| | $ | 0.3 |
|
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | PBOP |
| | For the Three Months Ended September 30, 2017 | | For the Three Months Ended September 30, 2016 |
| (Millions of Dollars) | CL&P | | NSTAR Electric | | PSNH | | WMECO | | CL&P | | NSTAR Electric | | PSNH | | WMECO |
| Service Cost | $ | 0.5 |
| | $ | 0.3 |
| | $ | 0.3 |
| | $ | 0.1 |
| | $ | 0.6 |
| | $ | 0.6 |
| | $ | 0.4 |
| | $ | 0.1 |
|
| Interest Cost | 1.3 |
| | 1.9 |
| | 0.8 |
| | 0.3 |
| | 1.3 |
| | 2.5 |
| | 0.7 |
| | 0.3 |
|
| Expected Return on Plan Assets | (2.4 | ) | | (6.6 | ) | | (1.4 | ) | | (0.6 | ) | | (2.5 | ) | | (6.4 | ) | | (1.4 | ) | | (0.6 | ) |
| Actuarial Loss | 0.2 |
| | 0.9 |
| | 0.1 |
| | — |
| | 0.5 |
| | 1.2 |
| | 0.2 |
| | — |
|
| Prior Service Cost/(Credit) | 0.3 |
| | (4.3 | ) | | 0.2 |
| | — |
| | 0.2 |
| | (2.9 | ) | | 0.1 |
| | — |
|
| Total Net Periodic Benefit (Income)/Expense | $ | (0.1 | ) | | $ | (7.8 | ) | | $ | — |
| | $ | (0.2 | ) | | $ | 0.1 |
| | $ | (5.0 | ) | | $ | — |
| | $ | (0.2 | ) |
| Intercompany Allocations | $ | (0.2 | ) | | $ | (0.2 | ) | | $ | (0.1 | ) | | $ | — |
| | $ | — |
| | $ | (0.1 | ) | | $ | — |
| | $ | — |
|
| Capitalized PBOP Income | $ | (0.1 | ) | | $ | (4.0 | ) | | $ | — |
| | $ | (0.1 | ) | | $ | — |
| | $ | (2.2 | ) | | $ | — |
| | $ | (0.1 | ) |
| | | | | | | | | | | | | | | | |
| | PBOP |
| | For the Nine Months Ended September 30, 2017 | | For the Nine Months Ended September 30, 2016 |
| (Millions of Dollars) | CL&P | | NSTAR Electric | | PSNH | | WMECO | | CL&P | | NSTAR Electric | | PSNH | | WMECO |
| Service Cost | $ | 1.5 |
| | $ | 1.1 |
| | $ | 1.0 |
| | $ | 0.3 |
| | $ | 1.4 |
| | $ | 2.5 |
| | $ | 0.9 |
| | $ | 0.3 |
|
| Interest Cost | 4.0 |
| | 5.7 |
| | 2.3 |
| | 0.8 |
| | 4.0 |
| | 10.3 |
| | 2.2 |
| | 0.8 |
|
| Expected Return on Plan Assets | (7.3 | ) | | (19.9 | ) | | (4.1 | ) | | (1.7 | ) | | (7.6 | ) | | (19.2 | ) | | (4.2 | ) | | (1.7 | ) |
| Actuarial Loss | 0.7 |
| | 2.6 |
| | 0.4 |
| | — |
| | 0.9 |
| | 1.7 |
| | 0.5 |
| | — |
|
| Prior Service Cost/(Credit) | 0.8 |
| | (12.9 | ) | | 0.4 |
| | 0.1 |
| | 0.2 |
| | (2.9 | ) | | 0.1 |
| | — |
|
| Total Net Periodic Benefit Income | $ | (0.3 | ) | | $ | (23.4 | ) | | $ | — |
| | $ | (0.5 | ) | | $ | (1.1 | ) | | $ | (7.6 | ) | | $ | (0.5 | ) | | $ | (0.6 | ) |
| Intercompany Allocations | $ | (0.5 | ) | | $ | (0.7 | ) | | $ | (0.3 | ) | | $ | (0.1 | ) | | $ | 0.3 |
| | $ | — |
| | $ | — |
| | $ | — |
|
| Capitalized PBOP Income | $ | (0.4 | ) | | $ | (11.9 | ) | | $ | — |
| | $ | (0.2 | ) | | $ | (0.5 | ) | | $ | (3.3 | ) | | $ | — |
| | $ | (0.3 | ) |
9. COMMITMENTS AND CONTINGENCIES
A. Environmental Matters
Eversource, CL&P, NSTAR Electric PSNH and WMECOPSNH 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 WMECOPSNH have an active environmental auditing and training program and each believes it is substantially in compliance with all enacted laws and regulations.
The number of environmental sites and related reserves for which remediation or long-term monitoring, preliminary site work or site assessment is being performed are as follows:
|
| | | | | | | | | | | | | |
| | As of March 31, 2020 | | As of December 31, 2019 |
| | Number of Sites | | Reserve (in millions) | | Number of Sites | | Reserve (in millions) |
| Eversource | 55 |
| | $ | 79.1 |
| | 57 |
| | $ | 81.0 |
|
| CL&P | 15 |
| | 11.8 |
| | 15 |
| | 11.4 |
|
| NSTAR Electric | 13 |
| | 6.2 |
| | 15 |
| | 8.0 |
|
| PSNH | 9 |
| | 7.4 |
| | 9 |
| | 7.5 |
|
|
| | | | | | | | | | | | | |
| | As of September 30, 2017 | | As of December 31, 2016 |
| | Number of Sites | | Reserve (in millions) | | Number of Sites | | Reserve (in millions) |
| Eversource | 58 |
| | $ | 57.7 |
| | 61 |
| | $ | 65.8 |
|
| CL&P | 14 |
| | 4.9 |
| | 14 |
| | 4.9 |
|
| NSTAR Electric | 10 |
| | 2.0 |
| | 13 |
| | 3.2 |
|
| PSNH | 11 |
| | 5.7 |
| | 11 |
| | 5.3 |
|
| WMECO | 4 |
| | 0.8 |
| | 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, for which Eversource may have potential liability. The reserve balances related to these former MGP sites were $51.9$67.4 million and $59.0$67.9 million as of September 30, 2017March 31, 2020 and December 31, 2016,2019, respectively, and related primarily to the natural gas business segment. The reduction in the reserve balance at the MGP sites in the first quarter of 2017 was primarily due to a change in cost estimates at one site where actual contamination was less than originally estimated.
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's, CL&P's, NSTAR Electric's PSNH's, and WMECO'sPSNH's responsibility for remediation or the extent of remediation required, recently enacted laws and regulations or changes in cost estimates due to certain economic factors. It is possible that new information or future developments could require a reassessment of the potential exposure to relatedrequired environmental matters.remediation. As this information becomes available, management will continue to assess the potential exposure and adjust the reserves accordingly.
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,PSNH, in the form of guarantees.
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. Eversource parent has also entered into a guaranty on behalf of NPT under which Eversource parent will guarantee NPT's obligations under a facility with a financial institution pursuant to which NPT may request letters of credit in an aggregate amount of up to approximately $14 million.
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 or cash flows as a result of these various guarantees and indemnifications.
The following table summarizes Eversource parent's exposure to guarantees and indemnifications of its subsidiaries and affiliates to external parties as of September 30, 2017:March 31, 2020:
|
| | | | | | | | |
| Company | | Description | | Maximum Exposure (in millions) | | Expiration Dates |
| On behalf of subsidiaries: | | | | | | |
| Eversource Gas Transmission LLC | | Access Northeast Project Capital Contributions Guaranty (1) | | $ | 185.1 |
| | 2021 |
| Various | | Surety Bonds (2) | | 40.1 |
| | 2017 - 2018 |
| Eversource Service and Rocky River Realty Company | | Lease Payments for Vehicles and Real Estate | | 8.2 |
| | 2019 - 2024 |
|
| | | | | | | | |
| Company | | Description | | Maximum Exposure (in millions) | | Expiration Dates |
| Various | | Surety Bonds (1) | | $ | 30.0 |
| | 2020 - 2023 |
| Rocky River Realty Company and Eversource Service | | Lease Payments for Real Estate | | 6.1 |
| | 2024 |
| Bay State Wind LLC | | Real Estate Purchase | | 2.5 |
| | 2020 |
| Sunrise Wind LLC | | Offshore Wind (2) | | 2.2 |
| | - |
| |
(1) | Eversource parent issued a declining balance guaranty on behalf of its subsidiary, Eversource Gas Transmission LLC, to guarantee the payment of the subsidiary's capital contributions for its investment in the Access Northeast project. The guaranty decreases as capital contributions are made. The guaranty will expire upon the earlier of the full performance of the guaranteed obligations or December 31, 2021. |
| |
(2)
| 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 parent are downgraded. |
| |
(2) | On October 25, 2019, Eversource parent issued a guaranty on behalf of its 50 percent-owned affiliate, Sunrise Wind LLC, whereby Eversource parent will guaranty Sunrise Wind LLC’s performance of certain obligations, in an amount not to exceed $15.4 million, under the Offshore Wind Renewable Energy Certificate Purchase and Sale Agreement (the Agreement). The Agreement was executed on October 23, 2019, by and between the New York State Energy Research and Development Authority (NYSERDA) and Sunrise Wind LLC. The Company regularly reviews performance risk under this arrangement, and in the event it becomes probable that Eversource parent will be required to perform under the guarantee, the amount of probable payment will be recorded. As of March 31, 2020, the fair value of the guarantee was immaterial. |
C. Spent Nuclear Fuel Obligations - Yankee Companies
CL&P, NSTAR Electric PSNH and WMECOPSNH have plant closure and fuel storage cost obligations to the Yankee Companies, which have each completed the physical decommissioning of their respective nuclear power facilities and are now engaged in the long-term storage of their spent fuel. The Yankee Companies collectfund these costs through litigation proceeds received from the DOE and, to the extent necessary, through wholesale, FERC-approved rates charged under power purchase agreements with several New England utilities, including CL&P, NSTAR Electric PSNH and WMECO. These companiesPSNH. CL&P, NSTAR Electric and PSNH, in turn recover these costs from their customers through state regulatory commission-approved retail rates.
The Yankee Companies have collected or are currently collectingcollect amounts that management believes are adequate to recover the remaining plant closure and fuel storage cost estimates for the respective plants. Management believes CL&P and NSTAR Electric and WMECO will recover their shares of these obligations from their customers. PSNH has recovered its total share of these costs from its customers.
Spent Nuclear Fuel Litigation:
The Yankee Companies have filed complaints against the DOE in the Court of Federal Claims seeking monetary damages resulting from the DOE's failure to accept delivery of, and provide for a permanent facility to store, spent nuclear fuel pursuant to the terms of the 1983 spent fuel and high levelhigh-level waste disposal contracts between the Yankee Companies and the DOE. The court had previously awarded the Yankee Companies damages for PhasePhases I, II and III of litigation resulting from the DOE's failure to meet its contractual obligations. These Phases covered damages incurred in the years 1998 through 2012, and the awarded damages have been received by the Yankee Companies with certain amounts of the damages refunded to their customers.
DOE Phase IV Damages - On May 22, 2017, each of the Yankee Companies filed subsequenta fourth set of lawsuits against the DOE in the Court of Federal Claims seekingClaims. The Yankee Companies sought monetary damages totaling approximately $100$104.4 million for CYAPC, YAEC and MYAPC, resulting from the DOE's failure to begin accepting spent nuclear fuel for disposal covering the years from 2013 to 2016 (“DOE(DOE Phase IV”)IV). On February 21, 2019, the Yankee Companies received a partial summary judgment and partial final judgment in their favor for the undisputed amount of monetary damages of $103.2 million. The court awarded CYAPC, YAEC and MYAPC damages of $40.7 million, $28.1 million and $34.4 million, respectively. The DOE did not appeal the court's judgment and the decision became final on April 23, 2019. On June 12, 2019, each of the Yankee Companies received the damages proceeds. On June 12, 2019, the court accepted an offer of judgment in the amount of $0.5 million to settle the disputed amount of approximately $1 million in Phase IV trial is expected to begin in 2018.
For further discussion, see Part I, Item 3, “Legal Proceedings - contested damages. The Yankee Companies v. U.S. Departmentreceived the $0.5 million payment in July 2019.
In September 2019, the Yankee Companies made a required informational filing with FERC as to the use of Energy”proceeds, for which approval was received in the fourth quarter of our 2016 Form 10-K.2019. In December 2019, YAEC and MYAPC returned proceeds of $5.4 million and $21.0 million, respectively, to its member companies, of which the Eversource utilities (CL&P, NSTAR Electric and PSNH) received a total of $2.8 million from YAEC and $5.0 million from MYAPC. The Eversource utilities refund these amounts received to their utility customers. Also, in December 2019, CYAPC paid $29.0 million to the DOE to partially settle its pre-1983 spent nuclear fuel obligation.
D. FERC ROE Complaints
Four separate complaints have beenwere filed at the FERC by combinations of New England state attorneys general, state regulatory commissions, consumer advocates, consumer groups, municipal parties and other parties (collectively, the "Complainants")Complainants). In each of the first three complaints, filed on October 1, 2011, December 27, 2012, and July 31, 2014, respectively, the Complainants challenged the NETOs' base ROE of 11.14 percent that had been utilized since 2005 and sought an order to reduce it prospectively from the date of the final FERC order and for the separate 15-month complaint periods. In the fourth complaint, filed April 29, 2016, the Complainants challenged the NETOs' base ROE billed of 10.57 percent and the maximum ROE for transmission incentive ("incentive cap")(incentive cap) of 11.74 percent, asserting that these ROEs were unjust and unreasonable.
In response to appealsThe ROE originally billed during the period October 1, 2011 (beginning of the FERC decision in the first complaint filed by the NETOs and the Complainants, the U.S. Court of Appeals for the D.C. Circuit (the "Court") issued a decision on April 14, 2017 vacating and remanding the FERC's decision. The Court found that the FERC failed to make an explicit finding that the 11.14 percent base ROE was unjust and unreasonable, as required under Section 206 of the Federal Power Act, before it set a new base ROE. The Court also found that the FERC did not provide a rational connection between the record evidence and its decision to select the midpoint of the upper half of the zone of reasonableness for the new base ROE.
On May 26, 2017, the Chief Administrative Law Judge ("ALJ") issued an order that the fourth complaint will continue to trial in December 2017 with an ALJ initial decision expected in March of 2018.
A summary of the four separate complaints and the base ROEs pertinent to those complaints are as follows:
|
| | | | | | |
| Complaint | 15-Month Time Period of Complaint (Beginning as of Complaint Filing Date) | Original Base ROE Authorized by FERC at Time of Complaint Filing Date (1) | Base ROE Subsequently Authorized by FERC for First Complaint Period and also Effective from October 16, 2014 through April 14, 2017 (1) | Reserve (Pre-Tax and Excluding Interest) as of September 30, 2017 (in millions) | | FERC ALJ Recommendation of Base ROE on Second and Third Complaints (Issued March 22, 2016) |
| First | 10/1/2011 - 12/31/2012 | 11.14% | 10.57% | $— | (2) | N/A |
| Second | 12/27/2012 - 3/26/2014 | 11.14% | N/A | 39.1 | (3) | 9.59% |
| Third | 7/31/2014 - 10/30/2015 | 11.14% | 10.57% | — | | 10.90% |
| Fourth | 4/29/2016 - 7/28/2017 | 10.57% | 10.57% | — | | N/A |
(1) The billed ROE (base plus incentives) between October 1, 2011 andperiod) through October 15, 2014 was withinconsisted of a rangebase ROE of 11.14 percent and incentives up to 13.1 percent. On October 16, 2014, the FERC set the base ROE at 10.57 percent and the incentive cap at 11.74 percent for the first complaint period andperiod. This was also effective fromfor all prospective billings to customers beginning October 16, 2014 through2014. This FERC order was vacated on April 14, 2017 by the date on whichU.S. Court of Appeals for the Court vacated this FERC order.D.C. Circuit (the Court).
(2) CL&P, NSTAR Electric, PSNH and WMECO have refunded allAll amounts associated with the first complaint period totalinghave been refunded, which totaled $38.9 million (pre-tax and excluding interest) at Eversource (consisting of $22.4 million at CL&P, $8.4 million at NSTAR Electric, $2.8 million at PSNH, and $5.3 million at WMECO), reflectingreflected both the base ROE and incentive cap prescribed by the FERC order. The refund consisted of $22.4 million for CL&P, $13.7 million for NSTAR Electric and $2.8 million for PSNH.
(3) TheEversource has recorded a reserve of $39.1 million (pre-tax and excluding interest) for the second complaint period as of March 31, 2020 and December 31, 2019. This reserve represents the difference between the ROEs billed rates during the second complaint period and a 10.57 percent base ROE and 11.74 percent incentive cap. The reserve consisted of $21.4 million for CL&P, $8.5$14.6 million for NSTAR Electric and $3.1 million for PSNH and $6.1 million for WMECO as of September 30, 2017.March 31, 2020 and December 31, 2019.
On June 5, 2017,October 16, 2018, FERC issued an order on all four complaints describing how it intends to address the issues that were remanded by the Court. FERC proposed a new framework to determine (1) whether an existing ROE is unjust and unreasonable and, if so, (2) how to calculate a replacement ROE. Initial briefs were filed by the NETOs, including Eversource, submitted a filing toComplainants and FERC Trial Staff on January 11, 2019 and reply briefs were filed on March 8, 2019. The NETOs' brief was supportive of the overall ROE methodology determined in the October 16, 2018 order provided the FERC to reinstatedoes not change the proposed methodology or alter its implementation in a manner that has a material impact on the results.
The FERC order included illustrative calculations for the first complaint using FERC's proposed frameworks with financial data from that complaint. Those illustrative calculations indicated that for the first complaint period, for the NETOs, which FERC concludes are of average financial risk, the preliminary just and reasonable base ROE of 11.14is 10.41 percent with an associated ROEand the preliminary incentive cap on total ROE is 13.08 percent.
If the results of 13.5 percent effective June 8, 2017, as thesethe illustrative calculations were the last ROEs lawfullyincluded in effect for transmission billing purposes prior to thea final FERC order vacated byfor each of the Court on April 14, 2017. On October 6, 2017, the FERC did not accept the NETOs filing, temporarily leaving in place the ROEs (10.57complaint periods, then a 10.41 percent base ROE with an 11.74and a 13.08 percent incentive cap ROE) set inwould not have a significant impact on our financial statements for all of the first complaint proceeding untilperiods. These preliminary calculations are not binding and do not represent what we believe to be the most likely outcome of a final FERC addresses the Court’s decision.order.
On November 21, 2019, FERC issued an order concerning the transmission ROEs for the Midcontinent ISO transmission owners (MISO). In that order, FERC adopted another new methodology for determining base ROEs for MISO, which differed significantly from the methodology and framework set forth in its October 5, 201716, 2018 FERC order on the NETOs’ ROE dockets. On December 23, 2019, the NETOs filed a series of motions, requesting thatSupplemental Paper Hearing Brief and a Motion to supplement the record in the NETO ROE dockets to respond to the new methodology proposed in the MISO order, as there is uncertainty to whether it may be applied to the NETOs’ cases. On January 21, 2020, the FERC dismississued an order granting rehearing for further consideration to give the FERC more time to act on the substantive issues of the MISO ROE proceedings. Further changes to the methodology by FERC are possible as a result of the arguments in both the MISO and NETO proceedings.
Given the significant uncertainty relating to the October 2018 FERC order, the November 2019 FERC order to MISO, and the FERC's rehearing of the MISO order, the Company is unable to predict the potential effect of the MISO order on the NETO complaints or the outcome of the four complaints and concluded that there is no reasonable basis for a change to the reserve or recognized ROEs for any of the complaint proceedings. Alternatively, if the FERC does not dismiss the proceedings, the NETOs requested that the FERC consolidate all four complaint proceedings for expeditious resolution and/or stay the trial in the fourth complaint proceeding and resolve it based on the standards set in the April 14, 2017 Court decision.
Atperiods at this time,time. Further, the Company cannot reasonably estimate a range of gain or loss for the complaint proceedings. The April 14, 2017 Court decision did not provide a reasonable basis for a change to the reserve balance of $39.1 million (pre-tax, excluding interest) for the second complaint period, and the Company has not changed its reserve or recognized ROEs for any of the four complaint periods.proceedings.
Management cannot at this time predict the ultimate effect of the Court decision or future FERC action on any of the complaint periods or the estimated impacts on the financial position, results of operations or cash flows of Eversource, CL&P, NSTAR Electric and PSNH or WMECO.currently record revenues at the 10.57 percent base ROE and incentive cap at 11.74 percent established in the October 16, 2014 FERC order.
The average impactA change of a 10 basis point changepoints to the base ROE used to establish the reserves would impact Eversource's after-tax earnings by an average of approximately $3 million for each of the four 15-month complaint periods would affect Eversource's after-tax earnings by approximately $3 million.periods.
E. Eversource and NSTAR Electric Boston Harbor Civil Action
On July 15,In 2016, the United States Attorney on behalf of the United States Army Corps of Engineers filed a civil action in the United States District Court for the District of Massachusetts under provisions of the Rivers and Harbors Act of 1899 and the Clean Water Act against NSTAR Electric, Harbor Electric Energy Company, a wholly-owned subsidiary of NSTAR Electric ("HEEC"),HEEC, and the Massachusetts Water Resources Authority (together with NSTAR Electric and HEEC, the "Defendants"). The action alleged that the Defendants failed to comply with certain permitting requirements related to the placement of the HEEC-owned electric distribution cable beneath Boston Harbor. The action sought an order to compel HEEC to comply with cable depth requirements in the United States Army Corps of Engineers' permit or alternatively to remove the electric distribution cable and cease unauthorized work in U.S. waterways. The action also sought civil penalties and other costs.
After substantial negotiations, theThe parties reached a settlement wherebypursuant to which HEEC willagreed to install a new 115kV distribution cable across Boston Harbor to Deer Island, utilizing a different route, and will remove portions of the existing cable. Upon the installation and completionConstruction of the new distribution cable was completed in August 2019 and the removal of the portions of the existing cable allwas completed in January 2020. All issues surrounding the current permit from the United States Army Corps of Engineers are expected to be resolved, and such litigation is expected to be dismissed with prejudice.
In 2017, as a result of the settlement, NSTAR Electric expensed $4.9 million (pre-tax) of previously incurred capitalized costs associated with engineering work performed on the existing cable that will no longer be used. In addition, NSTAR Electric agreed to provide a rate base credit of $17.5 million to the Massachusetts Water Resources Authority for the new cable. This negotiated credit will result in the initial $17.5 million of construction costs on the new cable to be expensed as incurred. Construction of the new cable is expected to be completed in 2019.
9. PSNH GENERATION ASSET SALE
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 NHPUC staff, the Office of Consumer Advocate, two State Senators, and several other parties. Under the terms of the Agreement, PSNH agreed to divest its generation assets, subject to NHPUC approval. The Agreement provided for a resolution of issues pertaining to PSNH's generation assets in pending regulatory proceedings before the NHPUC. The Agreement provided 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 agreed to forego recovery of $25 million of the equity return related to the Clean Air Project.
On July 1, 2016, the NHPUC approved the Agreement in an order that, among other things, instructed PSNH to begin the process of divesting its generation assets. The NHPUC selected an auction adviser to assist with the divestiture, and the final plan and auction process were approved by the NHPUC in November 2016.
As of September 30, 2017, PSNH's generation assets were as follows:
|
| | | |
| (Millions of Dollars) | |
| Gross Plant | $ | 1,184.1 |
|
| Accumulated Depreciation | (573.3 | ) |
| Net Plant | 610.8 |
|
| Fuel | 92.9 |
|
| Materials and Supplies | 44.0 |
|
| Emission Allowances | 19.4 |
|
| Total Generation Assets | $ | 767.1 |
|
On October 11, 2017, PSNH entered into two Purchase and Sale Agreements ("Agreements") to sell its thermal and hydroelectric generation assets to private investors at purchase prices of $175 million and $83 million, respectively, subject to adjustments as set forth in each Agreement.
On October 12, 2017, PSNH filed an application with the NHPUC requesting approval of the Agreements. We expect to receive approvals from the NHPUC and other necessary regulatory agencies by late December 2017 or early 2018, with the transactions to be completed shortly thereafter. The Company will classify these assets as held for sale upon NHPUC approval of the sale.
Upon completion, full recovery of PSNH's generation assets will occur through a combination of cash flows during the remaining operating period, sales proceeds, and recovery of stranded costs via bonds that will be secured by a non-bypassable charge or through recoveries in future rates billed to PSNH's customers.
10. 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, Long-Term Debt and Long-Term Debt:Rate Reduction Bonds: 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 and RRB 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 tablestable below are classified as Level 2 within the fair value hierarchy. Carrying amounts and estimated fair values are as follows:
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Eversource | | CL&P | | NSTAR Electric | | PSNH |
| (Millions of Dollars) | Carrying Amount | | Fair Value | | Carrying Amount | | Fair Value | | Carrying Amount | | Fair Value | | Carrying Amount | | Fair Value |
| As of March 31, 2020: | | | | | | | | | | | | | | | |
| Preferred Stock Not Subject to Mandatory Redemption | $ | 155.6 |
| | $ | 156.0 |
| | $ | 116.2 |
| | $ | 113.8 |
| | $ | 43.0 |
| | $ | 42.2 |
| | $ | — |
| | $ | — |
|
| Long-Term Debt | 14,431.0 |
| | 15,177.1 |
| | 3,518.1 |
| | 3,949.4 |
| | 3,642.3 |
| | 3,901.2 |
| | 951.7 |
| | 995.8 |
|
| Rate Reduction Bonds | 561.7 |
| | 596.0 |
| | — |
| | — |
| | — |
| | — |
| | 561.7 |
| | 596.0 |
|
| | | | | | | | | | | | | | | | |
| As of December 31, 2019: | | | | | | | | | | | | | | | |
| Preferred Stock Not Subject to Mandatory Redemption | $ | 155.6 |
| | $ | 162.0 |
| | $ | 116.2 |
| | $ | 117.8 |
| | $ | 43.0 |
| | $ | 44.2 |
| | $ | — |
| | $ | — |
|
| Long-Term Debt | 14,098.2 |
| | 15,170.2 |
| | 3,518.1 |
| | 4,058.0 |
| | 3,342.1 |
| | 3,659.9 |
| | 951.6 |
| | 1,005.7 |
|
| Rate Reduction Bonds | 583.3 |
| | 625.9 |
| | — |
| | — |
| | — |
| | — |
| | 583.3 |
| | 625.9 |
|
|
| | | | | | | | | | | | | | | |
| | As of September 30, 2017 | | As of December 31, 2016 |
Eversource (Millions of Dollars) | Carrying Amount | | Fair Value | | Carrying Amount | | Fair Value |
| Preferred Stock Not Subject to Mandatory Redemption | $ | 155.6 |
| | $ | 160.3 |
| | $ | 155.6 |
| | $ | 158.3 |
|
| Long-Term Debt | 11,425.9 |
| | 11,968.1 |
| | 9,603.2 |
| | 9,980.5 |
|
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | CL&P | | NSTAR Electric | | PSNH | | WMECO |
| (Millions of Dollars) | Carrying Amount | | Fair Value | | Carrying Amount | | Fair Value | | Carrying Amount | | Fair Value | | Carrying Amount | | Fair Value |
| As of September 30, 2017: | | | | | | | | | | | | | | | |
| Preferred Stock Not Subject to Mandatory Redemption | $ | 116.2 |
| | $ | 115.9 |
| | $ | 43.0 |
| | $ | 44.4 |
| | $ | — |
| | $ | — |
| | $ | — |
| | $ | — |
|
| Long-Term Debt | 3,058.9 |
| | 3,388.8 |
| | 2,426.2 |
| | 2,598.1 |
| | 1,002.6 |
| | 1,047.0 |
| | 566.2 |
| | 603.7 |
|
| | | | | | | | | | | | | | | | |
| As of December 31, 2016: | | | | | | | | | | | | | | | |
| Preferred Stock Not Subject to Mandatory Redemption | $ | 116.2 |
| | $ | 114.7 |
| | $ | 43.0 |
| | $ | 43.6 |
| | $ | — |
| | $ | — |
| | $ | — |
| | $ | — |
|
| Long-Term Debt | 2,766.0 |
| | 3,049.6 |
| | 2,078.1 |
| | 2,201.6 |
| | 1,072.0 |
| | 1,109.7 |
| | 566.5 |
| | 589.0 |
|
Derivative Instruments and Marketable Securities: Derivative instruments and investments in marketable securities are carried at fair value. For further information, see Note 4, "Derivative Instruments," and Note 5, "Marketable Securities," to the financial statements.
See Note 1D, "Summary of Significant Accounting Policies - Fair Value Measurements," for the fair value measurement policy and the fair value hierarchy.
11. ACCUMULATED OTHER COMPREHENSIVE INCOME/(LOSS)
The changes in accumulated other comprehensive income/(loss) by component, net of tax, isare as follows:
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | For the Three Months Ended March 31, 2020 | | For the Three Months Ended March 31, 2019 |
Eversource (Millions of Dollars) | Qualified Cash Flow Hedging Instruments | | Unrealized Gains on Marketable Securities | | Defined Benefit Plans | | Total | | Qualified Cash Flow Hedging Instruments | | Unrealized Gains/(Losses) on Marketable Securities | | Defined Benefit Plans | | Total |
| Balance as of January 1st | $ | (3.0 | ) | | $ | 0.7 |
| | $ | (62.8 | ) | | $ | (65.1 | ) | | $ | (4.4 | ) | | $ | (0.5 | ) | | $ | (55.1 | ) | | $ | (60.0 | ) |
| | | | | | | | | | | | | | | | |
| OCI Before Reclassifications | — |
| | 0.2 |
| | — |
| | 0.2 |
| | — |
| | 0.7 |
| | — |
| | 0.7 |
|
| Amounts Reclassified from AOCI | 0.2 |
| | — |
| | 1.6 |
| | 1.8 |
| | 0.3 |
| | — |
| | 1.2 |
| | 1.5 |
|
| Net OCI | 0.2 |
| | 0.2 |
| | 1.6 |
| | 2.0 |
| | 0.3 |
| | 0.7 |
| | 1.2 |
| | 2.2 |
|
| Balance as of March 31st | $ | (2.8 | ) | | $ | 0.9 |
| | $ | (61.2 | ) | | $ | (63.1 | ) | | $ | (4.1 | ) | | $ | 0.2 |
| | $ | (53.9 | ) | | $ | (57.8 | ) |
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | For the Nine Months Ended September 30, 2017 | | For the Nine Months Ended September 30, 2016 |
| | Qualified | | Unrealized | | | | | | Qualified | | Unrealized | | | | |
| | Cash Flow | | Gains | | | | | | Cash Flow | | Gains/(Losses) | | | | |
Eversource (Millions of Dollars) | Hedging | | on Marketable | | Defined | | | | Hedging | | on Marketable | | Defined | | |
| Instruments | | Securities | | Benefit Plans | | Total | | Instruments | | Securities | | Benefit Plans | | Total |
| Balance as of Beginning of Period | $ | (8.2 | ) | | $ | 0.4 |
| | $ | (57.5 | ) | | $ | (65.3 | ) | | $ | (10.3 | ) | | $ | (1.9 | ) | | $ | (54.6 | ) | | $ | (66.8 | ) |
| | | | | | | | | | | | | | | | |
| OCI Before Reclassifications | — |
| | 0.7 |
| | (3.5 | ) | | (2.8 | ) | | — |
| | 2.3 |
| | (5.3 | ) | | (3.0 | ) |
| Amounts Reclassified from AOCL | 1.6 |
| | — |
| | 2.9 |
| | 4.5 |
| | 1.6 |
| | — |
| | 2.6 |
| | 4.2 |
|
| Net OCI | 1.6 |
| | 0.7 |
| | (0.6 | ) | | 1.7 |
| | 1.6 |
| | 2.3 |
| | (2.7 | ) | | 1.2 |
|
| Balance as of End of Period | $ | (6.6 | ) | | $ | 1.1 |
| | $ | (58.1 | ) | | $ | (63.6 | ) | | $ | (8.7 | ) | | $ | 0.4 |
| | $ | (57.3 | ) | | $ | (65.6 | ) |
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 AOCL 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 AOCL into Interest Expense over the remaining life of the associated long-term debt. Such interest rate swaps are not material to their respective financial statements.
Defined benefit plan OCI amounts before reclassifications relate to actuarial gains and losses and prior service costs that arose during the year and were recognized in AOCL.AOCI. The unamortized actuarial gains and losses and prior service costs on the defined benefit plans are amortized from AOCLAOCI into Operations and Maintenance expenseOther Income, Net over the average future employee service period, and are reflected in amounts reclassified from AOCL. For further information, see Note 7, "Pension Benefits and Postretirement Benefits Other Than Pensions."AOCI.
12. 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 WMECOPSNH that were authorized and issued, as well as the respective per share par values:
|
| | | | | | | | | | | | |
| | Shares |
| | | | Authorized as of March 31, 2020 and December 31, 2019 | | Issued as of |
| | Par Value | | | March 31, 2020 | | December 31, 2019 |
| Eversource | $ | 5 |
| | 380,000,000 |
| | 351,818,402 |
| | 345,858,402 |
|
| CL&P | $ | 10 |
| | 24,500,000 |
| | 6,035,205 |
| | 6,035,205 |
|
| NSTAR Electric | $ | 1 |
| | 100,000,000 |
| | 200 |
| | 200 |
|
| PSNH | $ | 1 |
| | 100,000,000 |
| | 301 |
| | 301 |
|
|
| | | | | | | | | | | | |
| | Shares |
| | | | Authorized as of September 30, 2017 and | | Issued as of |
| | Par Value | | December 31, 2016 | | September 30, 2017 | | December 31, 2016 |
| Eversource | $ | 5 |
| | 380,000,000 |
| | 333,878,402 |
| | 333,878,402 |
|
| CL&P | $ | 10 |
| | 24,500,000 |
| | 6,035,205 |
| | 6,035,205 |
|
| NSTAR Electric | $ | 1 |
| | 100,000,000 |
| | 100 |
| | 100 |
|
| PSNH | $ | 1 |
| | 100,000,000 |
| | 301 |
| | 301 |
|
| WMECO | $ | 25 |
| | 1,072,471 |
| | 434,653 |
| | 434,653 |
|
Common Share Issuance and Forward Sale Agreement: In June 2019, Eversource completed an equity offering consisting of 5,980,000 common shares issued directly by the Company and 11,960,000 common shares issuable pursuant to a forward sale agreement with an investment bank. Under the forward sale agreement, 11,960,000 common shares were borrowed from third parties and sold by the underwriters. The forward sale agreement allowed Eversource, at its election and prior to May 29, 2020, to physically settle the forward sale agreement by issuing common shares in exchange for net proceeds at the then-applicable forward sale price specified by the agreement (initially, $71.48 per share) or, alternatively, to settle the forward sale agreement in whole or in part through the delivery or receipt of shares or cash. The forward sale price was subject to adjustment daily based on a floating interest rate factor and would decrease in respect of certain fixed amounts specified in the agreement, such as dividends.
Eversource previously issued 6,000,000 common shares under the forward sale agreement in December 2019. On March 23, 2020, Eversource physically settled a portion of the forward sale agreement by delivering 1,500,000 common shares in exchange for net proceeds of $105.7 million. Subsequently, on March 26, 2020, Eversource physically settled the remaining portion of the forward sale agreement by delivering 4,460,000 common shares in exchange for net proceeds of $314.1 million. The forward sale price used to determine the cash proceeds received by Eversource was calculated based on the initial forward sale price of $71.48 per share, as adjusted in accordance with the forward sale agreement.
The 2020 issuances of 5,960,000 common shares resulted in proceeds of $419.8 million, net of issuance costs, and were reflected in shareholders' equity and as financing activities on the statement of cash flows.
Issuances of shares under the forward sale agreement are classified as equity transactions. Accordingly, no amounts relating to the forward sale agreement were recorded in the financial statements until settlements took place. Prior to any settlements, the only impact to the financial statements was the inclusion of incremental shares within the calculation of diluted EPS using the treasury stock method. See Note 14, "Earnings Per Share," to the financial statements for information on the forward sale agreement’s impact on the calculation of diluted EPS.
Eversource used the net proceeds received upon the direct issuance of common shares and the net proceeds received upon settlement of the forward sale agreement to repay short-term debt under the commercial paper program, to fund capital spending and clean energy initiatives, and for general corporate purposes.
Treasury Shares:As of both September 30, 2017March 31, 2020 and December 31, 2016,2019, there were 16,992,59415,407,215 and 15,977,757 Eversource common shares held as treasury shares.shares, respectively. As of both September 30, 2017March 31, 2020 and December 31, 2016,2019, Eversource common shares outstanding were 316,885,808.336,411,187 and 329,880,645, respectively.
Eversource issues treasury shares to satisfy awards under the Company's incentive plans, shares issued under the dividend reinvestment and share purchase plan, and matching contributions under the Eversource 401k Plan. The issuance of treasury shares represents a non-cash transaction, as the treasury shares were used to fulfill Eversource's obligations that require the issuance of common shares.
13. COMMON SHAREHOLDERS' EQUITY AND NONCONTROLLING INTERESTS
Dividends on the preferred stock of CL&P and NSTAR Electric totaled $1.9 million for botheach of the three months ended September 30, 2017March 31, 2020 and 2016, and $5.6 million for both of the nine months ended September 30, 2017 and 2016.2019. 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 September 30, 2017March 31, 2020 and December 31, 2016.2019. On the Eversource balance sheets, Common Shareholders' Equity was fully attributable to theEversource parent and Noncontrolling Interest – Preferred Stock of Subsidiaries was fully attributable to the noncontrolling interest.
14. 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 and the equity forward sale agreement, as if they were converted into outstanding common shares. The dilutive effect of unvested RSU and performance share awards, as well as the equity forward sale agreement, 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
As described in Note 12, "Common Shares," earnings per share dilution, if any, related to the three and nine months ended September 30, 2017 and 2016, there were no antidilutive share awards excluded fromforward sale agreement is determined under the computationtreasury stock method until settlement of the forward sale agreement. Under this method, the number of Eversource common shares used in calculating diluted EPS.EPS is deemed to be increased by the excess, if any, of the number of shares that would be issued upon physical settlement of the forward sale agreement less the number of shares that would be purchased by Eversource in the market (based on the average market price during the same reporting period) using the proceeds receivable upon settlement (based on the adjusted forward sale price at the end of that reporting period). Share dilution occurs when the average market price of Eversource's common shares is higher than the adjusted forward sale price.
The following table sets forth the components of basic and diluted EPS:
|
| | | | | | | |
Eversource (Millions of Dollars, except share information) | For the Three Months Ended |
| March 31, 2020 | | March 31, 2019 |
| Net Income Attributable to Common Shareholders | $ | 334.8 |
| | $ | 308.7 |
|
| Weighted Average Common Shares Outstanding: | | | |
| Basic | 331,102,237 |
| | 317,624,593 |
|
| Dilutive Effect of: | | | |
| Share-Based Compensation Awards and Other | 747,233 |
| | 691,489 |
|
| Equity Forward Sale Agreement | 1,087,683 |
| | — |
|
| Total Dilutive Effect | 1,834,916 |
| | 691,489 |
|
| Diluted | 332,937,153 |
| | 318,316,082 |
|
| Basic and Diluted EPS | $ | 1.01 |
| | $ | 0.97 |
|
|
| | | | | | | | | | | | | | | |
Eversource (Millions of Dollars, except share information) | For the Three Months Ended | | For the Nine Months Ended |
| September 30, 2017 | | September 30, 2016 | | September 30, 2017 | | September 30, 2016 |
| Net Income Attributable to Common Shareholders | $ | 260.4 |
| | $ | 265.3 |
| | $ | 750.6 |
| | $ | 713.1 |
|
| Weighted Average Common Shares Outstanding: | | | | | | | |
| Basic | 317,393,029 |
| | 317,787,836 |
| | 317,415,848 |
| | 317,696,823 |
|
| Dilutive Effect | 556,367 |
| | 789,243 |
| | 591,194 |
| | 814,786 |
|
| Diluted | 317,949,396 |
| | 318,577,079 |
| | 318,007,042 |
| | 318,511,609 |
|
| Basic and Diluted EPS | $ | 0.82 |
| | $ | 0.83 |
| | $ | 2.36 |
| | $ | 2.24 |
|
15. REVENUES
The following tables present operating revenues disaggregated by revenue source:
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | For the Three Months Ended March 31, 2020 |
Eversource (Millions of Dollars) | Electric Distribution | | Natural Gas Distribution | | Electric Transmission | | Water Distribution | | Other | | Eliminations | | Total |
| Revenues from Contracts with Customers | | | | | | | | | | | | | |
| Retail Tariff Sales | | | | | | | | | | | | | |
| Residential | $ | 963.8 |
| | $ | 238.0 |
| | $ | — |
| | $ | 27.8 |
| | $ | — |
| | $ | — |
| | $ | 1,229.6 |
|
| Commercial | 607.0 |
| | 134.6 |
| | — |
| | 14.8 |
| | — |
| | (1.0 | ) | | 755.4 |
|
| Industrial | 79.8 |
| | 28.3 |
| | — |
| | 1.1 |
| | — |
| | (3.2 | ) | | 106.0 |
|
| Total Retail Tariff Sales Revenues | 1,650.6 |
| | 400.9 |
| | — |
| | 43.7 |
| | — |
| | (4.2 | ) | | 2,091.0 |
|
| Wholesale Transmission Revenues | — |
| | — |
| | 336.3 |
| | — |
| | 17.3 |
| | (283.6 | ) | | 70.0 |
|
| Wholesale Market Sales Revenues | 91.0 |
| | 13.2 |
| | — |
| | 0.8 |
| | — |
| | — |
| | 105.0 |
|
| Other Revenues from Contracts with Customers | 19.1 |
| | 0.9 |
| | 3.4 |
| | 1.9 |
| | 277.3 |
| | (276.2 | ) | | 26.4 |
|
Amortization/(Reserve) for Revenues Subject to Refund | 2.3 |
| | 0.5 |
| | — |
| | (0.8 | ) | | — |
| | — |
| | 2.0 |
|
| Total Revenues from Contracts with Customers | 1,763.0 |
| | 415.5 |
| | 339.7 |
| | 45.6 |
| | 294.6 |
| | (564.0 | ) | | 2,294.4 |
|
Alternative Revenue Programs (1) | 38.8 |
| | 32.2 |
| | 29.8 |
| | 1.1 |
| | — |
| | (27.4 | ) | | 74.5 |
|
Other Revenues (2) | 3.5 |
| | 0.9 |
| | 0.2 |
| | 0.2 |
| | — |
| | — |
| | 4.8 |
|
| Total Operating Revenues | $ | 1,805.3 |
| | $ | 448.6 |
| | $ | 369.7 |
| | $ | 46.9 |
| | $ | 294.6 |
| | $ | (591.4 | ) | | $ | 2,373.7 |
|
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | For the Three Months Ended March 31, 2019 |
Eversource (Millions of Dollars) | Electric Distribution | | Natural Gas Distribution | | Electric Transmission | | Water Distribution | | Other | | Eliminations | | Total |
| Revenues from Contracts with Customers | | | | | | | | | | | | | |
| Retail Tariff Sales | | | | | | | | | | | | | |
| Residential | $ | 1,033.3 |
| | $ | 258.9 |
| | $ | — |
| | $ | 27.0 |
| | $ | — |
| | $ | — |
| | $ | 1,319.2 |
|
| Commercial | 652.6 |
| | 143.8 |
| | — |
| | 14.3 |
| | — |
| | (1.1 | ) | | 809.6 |
|
| Industrial | 82.1 |
| | 30.9 |
| | — |
| | 1.1 |
| | — |
| | (2.7 | ) | | 111.4 |
|
| Total Retail Tariff Sales Revenues | 1,768.0 |
| | 433.6 |
| | — |
| | 42.4 |
| | — |
| | (3.8 | ) | | 2,240.2 |
|
| Wholesale Transmission Revenues | — |
| | — |
| | 324.9 |
| | — |
| | 13.5 |
| | (270.8 | ) | | 67.6 |
|
| Wholesale Market Sales Revenues | 51.5 |
| | 21.7 |
| | — |
| | 1.0 |
| | — |
| | — |
| | 74.2 |
|
| Other Revenues from Contracts with Customers | 12.6 |
| | 0.9 |
| | 3.2 |
| | 1.7 |
| | 244.6 |
| | (245.4 | ) | | 17.6 |
|
Amortization/(Reserve) for Revenues
Subject to Refund | (3.1 | ) | | 1.6 |
| | — |
| | (0.8 | ) | | — |
| | — |
| | (2.3 | ) |
| Total Revenues from Contracts with Customers | 1,829.0 |
| | 457.8 |
| | 328.1 |
| | 44.3 |
| | 258.1 |
| | (520.0 | ) | | 2,397.3 |
|
Alternative Revenue Programs (1) | 2.1 |
| | 10.4 |
| | 12.4 |
| | 0.9 |
| | — |
| | (11.1 | ) | | 14.7 |
|
Other Revenues (2) | 2.8 |
| | 0.7 |
| | — |
| | 0.3 |
| | — |
| | — |
| | 3.8 |
|
| Total Operating Revenues | $ | 1,833.9 |
| | $ | 468.9 |
| | $ | 340.5 |
| | $ | 45.5 |
| | $ | 258.1 |
| | $ | (531.1 | ) | | $ | 2,415.8 |
|
|
| | | | | | | | | | | | | | | | | | | | | | | |
| | For the Three Months Ended March 31, 2020 | | For the Three Months Ended March 31, 2019 |
| (Millions of Dollars) | CL&P | | NSTAR Electric | | PSNH | | CL&P | | NSTAR Electric | | PSNH |
| Revenues from Contracts with Customers | | | | | | | | | | | |
| Retail Tariff Sales | | | | | | | | | | | |
| Residential | $ | 489.9 |
| | $ | 331.0 |
| | $ | 142.9 |
| | $ | 510.5 |
| | $ | 371.0 |
| | $ | 151.8 |
|
| Commercial | 226.4 |
| | 301.9 |
| | 79.1 |
| | 236.7 |
| | 336.5 |
| | 79.8 |
|
| Industrial | 34.0 |
| | 26.8 |
| | 19.0 |
| | 34.6 |
| | 28.8 |
| | 18.7 |
|
| Total Retail Tariff Sales Revenues | 750.3 |
| | 659.7 |
| | 241.0 |
| | 781.8 |
| | 736.3 |
| | 250.3 |
|
| Wholesale Transmission Revenues | 151.8 |
| | 134.8 |
| | 49.7 |
| | 154.8 |
| | 122.6 |
| | 47.5 |
|
| Wholesale Market Sales Revenues | 64.7 |
| | 14.4 |
| | 11.9 |
| | 13.7 |
| | 24.4 |
| | 13.4 |
|
| Other Revenues from Contracts with Customers | 8.8 |
| | 10.7 |
| | 3.7 |
| | 8.9 |
| | 4.0 |
| | 3.6 |
|
Amortization/(Reserve) for Revenues
Subject to Refund | — |
| | — |
| | 2.3 |
| | — |
| | — |
| | (3.1 | ) |
| Total Revenues from Contracts with Customers | 975.6 |
| | 819.6 |
| | 308.6 |
| | 959.2 |
| | 887.3 |
| | 311.7 |
|
Alternative Revenue Programs (1) | 44.6 |
| | 19.3 |
| | 4.7 |
| | 5.7 |
| | 7.3 |
| | 1.5 |
|
Other Revenues (2) | 1.7 |
| | 1.4 |
| | 0.6 |
| | 1.0 |
| | 1.5 |
| | 0.3 |
|
| Eliminations | (122.2 | ) | | (106.5 | ) | | (37.5 | ) | | (116.7 | ) | | (98.5 | ) | | (37.1 | ) |
| Total Operating Revenues | $ | 899.7 |
| | $ | 733.8 |
| | $ | 276.4 |
| | $ | 849.2 |
| | $ | 797.6 |
| | $ | 276.4 |
|
| |
(1) | CL&P, NSTAR Electric, Yankee Gas, NSTAR Gas and the Connecticut water distribution business each have a revenue decoupling mechanism approved by a regulatory commission. The revenue decoupling mechanisms mitigate the impact of lower demand and resulting lost sales revenues by allowing for a true-up to occur as part of each company’s annual decoupling filing. These revenue decoupling mechanisms qualify as alternative revenue programs in accordance with accounting guidance for rate-regulated operations. The increase in revenues from Alternative Revenue Programs for the three months ended March 31, 2020, as compared to the three months ended March 31, 2019, was primarily the result of a higher decoupling deferral adjustment driven by lower distribution sales volumes in the first quarter of 2020. The decoupling deferral adjustment to revenues is recorded as a regulatory tracker mechanism within Regulatory Assets on the balance sheets. |
| |
(2) | Other Revenues include certain fees charged to customers that are not considered revenue from contracts with customers. Other revenues also includes lease revenues under lessor accounting guidance of $1.1 million (including $0.2 million at CL&P, and $0.7 million at NSTAR Electric) and $1.0 million (including $0.2 million at CL&P, and $0.6 million at NSTAR Electric) for the three months ended March 31, 2020 and March 31, 2019, respectively. |
16. SEGMENT INFORMATION
Presentation:Eversource is organized amonginto the Electric Distribution, Electric Transmission, and Natural Gas Distribution and Water Distribution reportable segments and Other based on a combination of factors, including the characteristics of each segments' 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 and water 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 activitiesresults of NSTAR Electric, PSNHElectric's solar power facilities. Eversource's reportable segments are determined based upon the level at which Eversource's chief operating decision maker assesses performance and WMECO. makes decisions about the allocation of company resources.
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, and 4) Eversource Water Ventures, Inc., parent company of Aquarion, 5) the results of other unregulated subsidiaries, which are not part of its core business. In addition, Other in the tables below includesbusiness, and 6) Eversource parent's equity ownership interests in certainthat are not consolidated, which primarily include the offshore wind business, anatural gas pipeline projects owned by Enbridge, Inc., the Bay State Wind project,and a renewable energy investment fund, and two companies that transmit hydroelectricity imported from the Hydro-Quebec system in Canada. fund.
In the ordinary course of business, Yankee Gas and NSTAR Gas purchase natural gas transmission services from the Enbridge, Inc. natural gas pipeline projectsproject described above. These affiliate transaction costs total approximately $62.5 million annually and are classified as Purchased Power, Fuel and Transmission on the Eversource statements of income.
Each of Eversource's subsidiaries, including CL&P, NSTAR Electric and PSNH, has 1 reportable segment.
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 and PBOP 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, 2017 | |
Eversource (Millions of Dollars) | Electric Distribution | | Natural Gas Distribution | | Electric Transmission | | Other | | Eliminations | | Total | |
| Operating Revenues | $ | 1,547.1 |
| | $ | 109.2 |
| | $ | 328.5 |
| | $ | 224.2 |
| | $ | (220.5 | ) | | $ | 1,988.5 |
| |
| Depreciation and Amortization | (159.6 | ) | | (15.2 | ) | | (52.6 | ) | | (9.5 | ) | | 0.6 |
| | (236.3 | ) | |
| Other Operating Expenses | (1,088.7 | ) | | (95.5 | ) | | (95.5 | ) | | (190.0 | ) | | 220.1 |
| | (1,249.6 | ) | |
| Operating Income/(Loss) | $ | 298.8 |
| | $ | (1.5 | ) | | $ | 180.4 |
| | $ | 24.7 |
| | $ | 0.2 |
| | $ | 502.6 |
| |
| Interest Expense | $ | (51.3 | ) | | $ | (10.8 | ) | | $ | (29.2 | ) | | $ | (21.8 | ) | | $ | 4.4 |
| | $ | (108.7 | ) | |
| Other Income, Net | 7.7 |
| | 0.3 |
| | 8.5 |
| | 267.5 |
| | (262.8 | ) | | 21.2 |
| |
Net Income/(Loss) Attributable to Common Shareholders | 157.4 |
| | (6.2 | ) | | 99.0 |
| | 268.4 |
| | (258.2 | ) | | 260.4 |
| |
| | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | For the Nine Months Ended September 30, 2017 | For the Three Months Ended March 31, 2020 |
Eversource (Millions of Dollars) | Electric Distribution | | Natural Gas Distribution | | Electric Transmission | | Other | | Eliminations | | Total | Electric Distribution | | Natural Gas Distribution | | Electric Transmission | | Water Distribution | | Other | | Eliminations | | Total |
| Operating Revenues | $ | 4,224.2 |
| | $ | 698.8 |
| | $ | 970.0 |
| | $ | 677.5 |
| | $ | (714.0 | ) | | $ | 5,856.5 |
| $ | 1,805.3 |
| | $ | 448.6 |
| | $ | 369.7 |
| | $ | 46.9 |
| | $ | 294.6 |
| | $ | (591.4 | ) | | $ | 2,373.7 |
|
| Depreciation and Amortization | (394.9 | ) | | (54.8 | ) | | (154.5 | ) | | (26.7 | ) | | 1.7 |
| | (629.2 | ) | (167.3 | ) | | (19.1 | ) | | (67.5 | ) | | (11.4 | ) | | (21.3 | ) | | 0.6 |
| | (286.0 | ) |
| Other Operating Expenses | (3,056.0 | ) | | (535.2 | ) | | (280.4 | ) | | (602.4 | ) | | 714.0 |
| | (3,760.0 | ) | (1,439.6 | ) | | (311.6 | ) | | (106.8 | ) | | (25.0 | ) | | (257.0 | ) | | 591.4 |
| | (1,548.6 | ) |
| Operating Income | $ | 773.3 |
| | $ | 108.8 |
| | $ | 535.1 |
| | $ | 48.4 |
| | $ | 1.7 |
| | $ | 1,467.3 |
| $ | 198.4 |
| | $ | 117.9 |
| | $ | 195.4 |
| | $ | 10.5 |
| | $ | 16.3 |
| | $ | 0.6 |
| | $ | 539.1 |
|
| Interest Expense | $ | (149.0 | ) | | $ | (32.3 | ) | | $ | (86.1 | ) | | $ | (63.1 | ) | | $ | 11.0 |
| | $ | (319.5 | ) | $ | (53.1 | ) | | $ | (11.4 | ) | | $ | (30.6 | ) | | $ | (8.7 | ) | | $ | (42.7 | ) | | $ | 11.8 |
| | $ | (134.7 | ) |
| Other Income, Net | 15.2 |
| | 0.8 |
| | 20.1 |
| | 853.9 |
| | (833.7 | ) | | 56.3 |
| 12.5 |
| | 1.4 |
| | 5.2 |
| | 0.1 |
| | 468.1 |
| | (463.2 | ) | | 24.1 |
|
| Net Income Attributable to Common Shareholders | 393.4 |
| | 49.1 |
| | 289.6 |
| | 839.5 |
| | (821.0 | ) | | 750.6 |
| 130.1 |
| | 84.4 |
| | 126.8 |
| | 2.1 |
| | 442.2 |
| | (450.8 | ) | | 334.8 |
|
| Cash Flows Used for Investments in Plant | 752.4 |
| | 209.8 |
| | 575.6 |
| | 104.5 |
| | — |
| | 1,642.3 |
| 315.8 |
| | 99.1 |
| | 232.8 |
| | 18.5 |
| | 59.3 |
| | — |
| | 725.5 |
|
| | | | For the Three Months Ended September 30, 2016 | |
Eversource (Millions of Dollars) | Electric Distribution | | Natural Gas Distribution | | Electric Transmission | | Other | | Eliminations | | Total | |
| Operating Revenues | $ | 1,623.4 |
| | $ | 99.2 |
| | $ | 306.8 |
| | $ | 211.5 |
| | $ | (201.2 | ) | | $ | 2,039.7 |
| |
| Depreciation and Amortization | (154.8 | ) | | (15.2 | ) | | (47.1 | ) | | (8.6 | ) | | 0.5 |
| | (225.2 | ) | |
| Other Operating Expenses | (1,146.8 | ) | | (87.8 | ) | | (90.2 | ) | | (179.3 | ) | | 199.5 |
| | (1,304.6 | ) | |
| Operating Income/(Loss) | $ | 321.8 |
| | $ | (3.8 | ) | | $ | 169.5 |
| | $ | 23.6 |
| | $ | (1.2 | ) | | $ | 509.9 |
| |
| Interest Expense | $ | (49.0 | ) | | $ | (10.2 | ) | | $ | (26.9 | ) | | $ | (15.1 | ) | | $ | 1.3 |
| | $ | (99.9 | ) | |
| Other Income, Net | 5.3 |
| | 0.6 |
| | 6.3 |
| | 256.9 |
| | (255.5 | ) | | 13.6 |
| |
Net Income/(Loss) Attributable to Common Shareholders | 170.1 |
| | (7.0 | ) | | 88.4 |
| | 268.5 |
| | (254.7 | ) | | 265.3 |
| |
| | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | For the Nine Months Ended September 30, 2016 | For the Three Months Ended March 31, 2019 |
Eversource (Millions of Dollars) | Electric Distribution | | Natural Gas Distribution | | Electric Transmission | | Other | | Eliminations | | Total | Electric Distribution | | Natural Gas Distribution | | Electric Transmission | | Water Distribution | | Other | | Eliminations | | Total |
| Operating Revenues | $ | 4,362.6 |
| | $ | 622.3 |
| | $ | 892.5 |
| | $ | 636.8 |
| | $ | (651.7 | ) | | $ | 5,862.5 |
| $ | 1,833.9 |
| | $ | 468.9 |
| | $ | 340.5 |
| | $ | 45.5 |
| | $ | 258.1 |
| | $ | (531.1 | ) | | $ | 2,415.8 |
|
| Depreciation and Amortization | (380.9 | ) | | (47.9 | ) | | (137.7 | ) | | (23.1 | ) | | 1.6 |
| | (588.0 | ) | (179.2 | ) | | (20.4 | ) | | (61.5 | ) | | (11.8 | ) | | (13.6 | ) | | 0.6 |
| | (285.9 | ) |
| Other Operating Expenses | (3,230.1 | ) | | (462.4 | ) | | (245.7 | ) | | (564.7 | ) | | 650.2 |
| | (3,852.7 | ) | (1,475.6 | ) | | (341.3 | ) | | (98.8 | ) | | (25.0 | ) | | (225.5 | ) | | 531.0 |
| | (1,635.2 | ) |
| Operating Income | $ | 751.6 |
| | $ | 112.0 |
| | $ | 509.1 |
| | $ | 49.0 |
| | $ | 0.1 |
| | $ | 1,421.8 |
| $ | 179.1 |
| | $ | 107.2 |
| | $ | 180.2 |
| | $ | 8.7 |
| | $ | 19.0 |
| | $ | 0.5 |
| | $ | 494.7 |
|
| Interest Expense | $ | (144.6 | ) | | $ | (30.8 | ) | | $ | (82.2 | ) | | $ | (45.8 | ) | | $ | 4.8 |
| | $ | (298.6 | ) | $ | (49.2 | ) | | $ | (11.7 | ) | | $ | (30.6 | ) | | $ | (8.6 | ) | | $ | (44.2 | ) | | $ | 12.6 |
| | $ | (131.7 | ) |
| Other Income, Net | 11.6 |
| | 0.5 |
| | 14.2 |
| | 781.4 |
| | (784.0 | ) | | 23.7 |
| 18.2 |
| | 0.2 |
| | 8.1 |
| | 0.4 |
| | 431.7 |
| | (427.6 | ) | | 31.0 |
|
| Net Income Attributable to Common Shareholders | 381.3 |
| | 51.9 |
| | 266.6 |
| | 791.7 |
| | (778.4 | ) | | 713.1 |
| 120.1 |
| | 76.5 |
| | 118.2 |
| | 0.9 |
| | 407.5 |
| | (414.5 | ) | | 308.7 |
|
| Cash Flows Used for Investments in Plant | 570.9 |
| | 170.3 |
| | 536.2 |
| | 81.8 |
| | — |
| | 1,359.2 |
| |
Cash Flows Used for Investments in Plant (1) | | 279.3 |
| | 87.4 |
| | 184.8 |
| | 20.7 |
| | 55.9 |
| | — |
| | 628.1 |
|
The following table summarizes Eversource's segmented total assets:
|
| | | | | | | | | | | | | | | | | | | | | | | |
Eversource (Millions of Dollars) | Electric Distribution | | Natural Gas Distribution | | Electric
Transmission | | Other | | Eliminations | | Total |
| As of September 30, 2017 | $ | 18,826.0 |
| | $ | 3,432.6 |
| | $ | 9,290.3 |
| | $ | 14,939.4 |
| | $ | (13,324.7 | ) | | $ | 33,163.6 |
|
| As of December 31, 2016 | 18,367.5 |
| | 3,303.8 |
| | 8,751.5 |
| | 14,493.1 |
| | (12,862.7 | ) | | 32,053.2 |
|
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | |
Eversource (Millions of Dollars) | Electric Distribution | | Natural Gas Distribution | | Electric
Transmission | | Water Distribution | | Other | | Eliminations | | Total |
| As of March 31, 2020 | $ | 23,135.9 |
| | $ | 4,430.4 |
| | $ | 11,137.5 |
| | $ | 2,368.7 |
| | $ | 20,860.8 |
| | $ | (20,284.3 | ) | | $ | 41,649.0 |
|
| As of December 31, 2019 | 22,541.9 |
| | 4,345.5 |
| | 10,904.0 |
| | 2,351.7 |
| | 20,469.6 |
| | (19,488.8 | ) | | 41,123.9 |
|
| |
(1) | See Note 1A, "Summary of Significant Accounting Policies - Basis of Presentation," for information regarding the correction of cash investments in plant reported in 2019. |
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, the combined quarterly reports on Form 10-Q for the quarters ended March 31, 2017 and June 30, 2017, as well as the Eversource 20162019 combined Annual Report on Form 10-K. References in this combined Quarterly Report on 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 this Management'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, 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. Our earnings discussion also includes non-GAAP financial measures referencing our 2020 earnings and EPS excluding certain acquisition costs and our Q2 2019 earnings and EPS excluding the impairment charge for the NPT project.
We use thisthese non-GAAP financial measuremeasures to evaluate and provide details of earnings results by business.business and to more fully compare and explain our 2020 and 2019 results without including these items. We believe the acquisition costs and the NPT impairment charge are not indicative of our ongoing costs and performance. Due to the nature and significance of these items on Net Income Attributable to Common Shareholders, we believe that the non-GAAP presentation is a more meaningful representativerepresentation of our financial performance and provides additional and useful information to readers of this report in analyzing historical and future performance byof our business. ThisThese non-GAAP financial measuremeasures 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.
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:
cybercyberattacks or breaches, actsincluding those resulting in the compromise of war or terrorism, or grid disturbances,
actions or inactionthe confidentiality of local, stateour proprietary information and federal regulatory, public policy and taxing bodies,
changes in business conditions, which could include disruptive technology related tothe personal information of 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,customers,
disruptions in the capital markets or other events that make our access to necessary capital more difficult or costly,
developmentsthe negative impacts of the novel coronavirus (COVID-19) pandemic on our customers, vendors, employees, regulators, and operations,
changes in legaleconomic conditions, including impact on interest rates, tax policies, and customer demand and payment ability,
ability or inability to commence and complete our major strategic development projects and opportunities,
acts of war or terrorism, physical attacks or grid disturbances that may damage and disrupt our electric transmission and electric, natural gas, and water distribution systems,
actions or inaction of local, state and federal regulatory, public policy doctrines,and taxing bodies,
technological developments,substandard performance of third-party suppliers and service providers,
fluctuations in weather patterns, including extreme weather due to climate change,
changes in business conditions, which could include disruptive technology or development of alternative energy sources related to our current or future business model,
contamination of, or disruption in, our water supplies,
changes in levels or timing of capital expenditures, including the Columbia Gas of Massachusetts asset acquisition;
changes in laws, regulations or regulatory policy, including compliance with environmental laws and regulations,
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 and contain uncertainties that may materially affect our actual results, many of which are beyond our control. You should not place undue reliance on the forward-looking statements, as each speaks only as of the date on which such statement is made, and, except as required by federal securities laws, 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 20162019 combined Annual Report on Form 10-K. This combined Quarterly Report on Form 10-Q and Eversource's 20162019 combined Annual Report on Form 10-K also describe material contingencies and critical accounting policies in the accompanying Management's Discussion and Analysis of Financial Condition and Results of Operations and Combined Notes to Financial Statements. We encourage you to review these items.
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:Earnings Overview and Future Outlook:
We earned $260.4$334.8 million, or $0.82 per share, in the third quarter of 2017, and $750.6 million, or $2.36$1.01 per share, in the first nine monthsquarter of 2017,2020, compared with $265.3$308.7 million, or $0.83 per share, in the third quarter of 2016, and $713.1 million, or $2.24$0.97 per share, in the first nine monthsquarter of 2016. 2019. Results for the first quarter of 2020 include after-tax acquisition costs related to our planned purchase of the assets of Columbia Gas of Massachusetts (CMA) of $3.5 million, or $0.01 per share. Excluding those acquisition costs, we earned $338.3 million, or $1.02 per share, in the first quarter of 2020.
Our electric distribution segment which includes generation, earned $157.4$130.1 million, or $0.50 per share, in the third quarter of 2017, and $393.4 million, or $1.24$0.39 per share, in the first nine monthsquarter of 2017,2020, compared with $170.1$120.1 million, or $0.53 per share, in the third quarter of 2016, and $381.3 million, or $1.20$0.38 per share, in the first nine monthsquarter of 2016.
2019. Our electric transmission segment earned $99.0$126.8 million, or $0.31 per share, in the third quarter of 2017, and $289.6 million, or $0.91$0.38 per share, in the first nine monthsquarter of 2017,2020, compared with $88.4$118.2 million, or $0.28 per share, in the third quarter of 2016, and $266.6 million, or $0.84$0.37 per share, in the first nine monthsquarter of 2016.
2019. Our natural gas distribution segment earned $84.4 million, or $0.25 per share, in the first quarter of 2020, compared with $76.5 million, or $0.24 per share, in the first quarter of 2019. Our water distribution segment earned $2.1 million in the first quarter of 2020, compared with $0.9 million in the first quarter of 2019.
Eversource parent and other companies had a net loss of $6.2$8.6 million, or $0.02 per share, in the thirdfirst quarter of 2017, and earnings of $49.1 million, or $0.15 per share, in the first nine months of 2017,2020, compared with a net loss of $7.0 million, or $0.02 per share, in the thirdfirst quarter of 2016,2019. Excluding acquisition costs, Eversource parent and earningsother companies had a net loss of $51.9$5.1 million, or $0.16$0.01 per share, in the first nine months of 2016.
Eversource parent and other companies earned $10.2 million in the third quarter of 20172020.
We reaffirmed 2020 earnings of between $3.60 per share and $18.5 million$3.70 per share.
In March 2020, the World Health Organization declared the outbreak of the 2019 novel coronavirus (COVID-19) a pandemic. As of the date of our filing, the outbreak of COVID-19 has not resulted in a significant financial or operational impact. We are continuing to closely monitor for COVID-19 pandemic related changes, as well as operate under our pandemic response plan; however, we cannot at this time predict the first nine months of 2017, compared with $13.8 million inimpact that the third quarter of 2016COVID-19 pandemic will have on our future financial condition and $13.3 million in the first nine months of 2016. operations.
Liquidity:
Cash flows provided by operating activities totaled $1.49 billion$420.3 million in the first nine monthsquarter of 2017,2020, compared with $1.65 billion$381.4 million in the first nine monthsquarter of 2016.2019. Investments in property, plant and equipment totaled $1.64 billion$725.5 million in the first nine monthsquarter of 2017,2020, compared with $1.36 billion$628.1 million in the first nine monthsquarter of 2016.2019. Cash and cash equivalents totaled $125.8$47.4 million as of September 30, 2017,March 31, 2020, compared with $30.3$15.4 million as of December 31, 2016.2019. Our available borrowing capacity under our commercial paper programs totaled $1.27 billion as of March 31, 2020.
In 2017,the first quarter of 2020, we issued $2.5 billion5,960,000 common shares, which resulted in proceeds of $419.8 million, net of issuance costs.
In the first quarter of 2020, we issued $750 million of new long-term debt, consisting of $1.2 billion by Eversource parent, $700$400 million by NSTAR Electric $525and $350 million by CL&P, and $75 million by Yankee Gas.Eversource parent. Proceeds from these new issuances were used primarily to refinance investments in eligible green expenditures at NSTAR Electric and to pay short-term borrowings and redeem long-term debt at maturity.Eversource parent.
On SeptemberMay 6, 2017,2020, our Board of Trustees approved a common share dividend payment of $0.475$0.5675 per share, payable on June 30, 2020 to shareholders of record as of May 20, 2020. On February 5, 2020, our Board of Trustees approved a common share dividend payment of $0.5675 per share, which was paid on September 29, 2017March 31, 2020 to shareholders of record as of September 19, 2017.
March 4, 2020.
Strategic, Legislative, Regulatory, Policy and Other Items:Strategic:
On October 6, 2017,February 26, 2020, Eversource and NiSource Inc. entered into an asset purchase agreement where Eversource would acquire certain assets that comprise NiSource’s local natural gas distribution business in Massachusetts for a purchase price of $1.1 billion. The liabilities to be assumed by Eversource specifically exclude any liabilities (past or future) arising out of, or related to, the FERC issued an orderfires and explosions that didoccurred on September 13, 2018 in Lawrence, Andover and North Andover, Massachusetts. The acquisition and resulting rate plan both require DPU and other approvals. The transaction is expected to close by the end of the third quarter of 2020.
Impact of COVID-19
In March 2020, the World Health Organization declared the outbreak of COVID-19 a pandemic and President Trump declared a national emergency affecting the entire United States where each state qualifies as being part of a national disaster. The spread of COVID-19 has adversely affected workforces, the overall economy and caused significant volatility in the financial markets. To date, we have not acceptexperienced significant operational or financial impacts directly related to the NETOs June 5, 2017 filingpandemic. Due to reinstate the base ROEinherent uncertainty of 11.14 percent with an associated ROE incentive cap of 13.5 percent. Therefore, the Companyunprecedented and rapidly evolving situation, we will continue to recognize transmission revenues as billed utilizing a base ROE of 10.57 percent with an incentive cap of 11.74 percent.
On October 12, 2017, PSNH filed an application with the NHPUC requesting approvalclosely monitor how COVID-19 related developments affect Eversource. As of the saledate of our filing and based on information we have available, we are unable to predict the impacts that the COVID-19 pandemic will have on our future operations, financial position, results of operations, and cash flows. The extent of the impact to us in the future will vary and depend in large part on the duration, scope and severity of a national and global economic slowdown, risk of inflation, governmental and regulatory actions, the maintenance of a strong regional and national healthcare system, and the continued spread of the virus, which is mitigated through social distancing measures.
Operational: We provide a critical service to our customers and have taken extensive measures to maintain its reliability. We have implemented our company-wide pandemic plan, which guides our emergency response, business continuity, and the precautionary measures we are taking to ensure the safety, health, and well-being of our employees, our customers, and our communities. We continue to adjust our company-wide pandemic plan to assume various scenarios, including reduced workforce levels and limited mutual aid in the event of a significant storm event, and have implemented protective measures to mitigate the impact of COVID-19 on our workforce. We have implemented work from home policies where appropriate, resulting in nearly half of our employees working remotely. For our employees performing essential functions that are required onsite, such as field crews and system operations, we have taken significant safety measures, including establishing social distancing measures, enabling critical operations to be shifted to different control center locations if necessary, and increasing facility sanitization efforts and promoting both the availability and use of personal protective equipment. We have suspended non-critical work inside customer premises, which includes energy audits inside our customers’ homes and businesses; however, as of the date of our filing, we do not expect a significant impact on our 2020 energy efficiency program spending and efforts. At this time, our workforce staffing levels continue to enable us to safely and reliably deliver our critical services to customers. As of May 7, 2020, we had 31 confirmed employee cases of COVID-19. We had a total of 547 quarantined employees, of which 442 employees have returned to the workforce.
Financial: Overall, our future financial position, results of operations, and cash flows could be negatively impacted by COVID-19 as it relates to the valuation of customer receivables, collectibility estimates and customer payment plans, elimination of late payment revenues, lower sales volumes primarily from PSNH's thermalcommercial and hydroelectric power generation assetsindustrial customers, market volatility on our equity and debt securities, access to, as well as cost of, capital resources, and the ability of various third-party vendors and suppliers to fulfill their obligations.
As of March 31, 2020, our allowance for uncollectible customer receivable balance of $262.1 million, of which $172.2 million relates to hardship accounts that are specifically recovered in rates charged to customers, adequately reflected the collection risk and net realizable value for our receivables and has not been materially impacted by COVID-19. We will continue to evaluate the adequacy of the uncollectible allowance in future reporting periods based on an ongoing assessment of accounts receivable collections, delinquency statistics, COVID-19 developments, and analysis of aging-based quantitative assessments. We are working closely with our state regulatory commissions and consumer advocates to develop several customer assistance measures, including more flexible and new payment plan options in order to mitigate the impact on customer rates in the future, as well as financial hardship and arrearage management programs for those customers who are unable to pay their utility bills. We are developing these long-term solutions for customers in order to help minimize the extent of the impact of COVID-19 on customer receivable balances and customers’ affordability in light of the current financial impact they may experience. In Connecticut, Massachusetts and New Hampshire, to private investorsbeginning in March, there is presently a moratorium on disconnections of residential and commercial customers for a combined purchase price totaling $258 million.
On October 29, 2017, a storm delivered high winds and rain, causing extensive damage to our electric distribution systems across all three states. We estimate that more than 800,000non-payment. As of the date of our electric distributionfiling, although our operating companies are beginning to experience some lower cash collections from customers were without power during or followingbecause of the storm. Restoration costsmoratorium on disconnections and the economic slowdown, it is not a significant reduction in customer payments. The ultimate amount and duration cannot be estimated at this time.time; however we anticipate that any potential reduction in operating cash flows will be mitigated by the use of our short-term borrowing facilities. We believe that we will be able to develop a successful structure with our state regulatory commissions to recover our costs associated with COVID-19, while balancing the impact on our customers’ bills and our operating cash flows. As a resultsuch, as of the extentdate of our filing, our uncollectible accounts have not been materially impacted.
An extended economic slowdown could result in lower demand for electricity, natural gas and/or water by our commercial and industrial customers. However, fluctuations in retail sales volumes for CL&P, NSTAR Electric, Yankee Gas, NSTAR Gas and our Connecticut water distribution business are not expected to materially impact earnings due to their respective state regulatory commission-approved distribution revenue decoupling mechanisms. Overall, we believe our risk of exposure to lower demand and resulting lost sales revenues is limited as our regulated utilities, with the exception of PSNH, are under cost-of-service rates with revenue decoupling mechanisms, allowing for a true-up to occur as part of each company’s annual decoupling filing, and a significant portion of uncollectible expenses are tracked for ultimate recovery.
As of March 31, 2020, we did not have indicators of triggering events for impairments to our goodwill, long-lived assets, available-for-sale debt securities, or equity method investment carrying values. As of the damages,date of our filing, based on information we expecthave available and the storm restoration costs will be material and will exceed the criteria to be declared a major storm in Connecticut, New Hampshire, and Massachusetts and, as a result,current market trends, we do not expect an impairment to these assets for the stormremainder of 2020.
We continue to monitor Eversource’s and our operating companies’ ability to access the global capital and credit markets. At the onset of the pandemic in the United States, liquidity in the commercial paper credit market began to deteriorate rapidly. However, federal legislative actions, including actions taken by the Federal Reserve, have provided sufficient liquidity and stabilization of the credit markets. An extended economic slowdown could result in Eversource and our operating companies finding difficulty in accessing necessary capital resources and incurring higher costs for those capital resources. As of the date of our filing, based on information we have available and the current market trends, we believe we will continue to have access to liquidity and capital resources to successfully execute our projected 2020 capital expenditures and strategies. In addition, the successful execution of our timeline for developing our offshore wind projects is based on several factors, including state and federal
siting and permitting approvals. Currently, we are developing mitigation plans to address permitting delays due to COVID-19 restrictions on our offshore wind projects. For further information, see "Business Development and Capital Expenditures - Offshore Wind Business" included in this Management’s Discussion and Analysis.
Pension and PBOP plan assets and obligations are remeasured annually using a December 31st measurement date. Our future pension and PBOP obligations are highly dependent on benefit plan asset returns, interest rates, and discount rates, all of which could be materially impacted by the extended economic slowdown. Should these financial metrics be negatively impacted by COVID-19 as of December 31, 2020, it could result in the underperformance of our pension and PBOP plan investments, an increase in pension and PBOP obligations and employee benefit plan costs, and in a minimum pension funding requirement due by March 31, 2022 for the 2021 Plan year. We continue to monitor federal legislative pension developments that could provide additional pension funding relief. As of the date of our filing, it is difficult to determine whether the pandemic will have a material impact onto our resultsfuture pension and PBOP obligations and plan costs and minimum funding requirements. NSTAR Electric and NSTAR Gas recover qualified pension and PBOP expenses through a rate reconciling mechanism that fully tracks the change in net pension and PBOP expenses each year. Our electric transmission companies' rates provide for an annual true-up of operations.estimated to actual costs, which include pension and PBOP expenses.
Earnings Overview
Consolidated: Below is a summary of our earnings by business, which also reconciles the non-GAAP financial measuremeasures of consolidated non-GAAP earnings and EPS, as well as EPS by business, to the most directly comparable GAAP measuremeasures of consolidated Net Income Attributable to Common Shareholders and diluted EPS, for the third quarter and the first nine months of 2017 and 2016. EPS.
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | For the Three Months Ended September 30, | | For the Nine Months Ended September 30, |
| | 2017 | | 2016 | | 2017 | | 2016 |
| (Millions of Dollars, Except Per-Share Amounts) | Amount | | Per Share | | Amount | | Per Share | | Amount | | Per Share | | Amount | | Per Share |
Net Income Attributable to Common Shareholders (GAAP) | $ | 260.4 |
| | $ | 0.82 |
| | $ | 265.3 |
| | $ | 0.83 |
| | $ | 750.6 |
| | $ | 2.36 |
| | $ | 713.1 |
| | $ | 2.24 |
|
| Regulated Companies | $ | 250.2 |
| | $ | 0.79 |
| | $ | 251.5 |
| | $ | 0.79 |
| | $ | 732.1 |
| | $ | 2.30 |
| | $ | 699.8 |
| | $ | 2.20 |
|
| Eversource Parent and Other Companies | 10.2 |
| | 0.03 |
| | 13.8 |
| | 0.04 |
| | 18.5 |
| | 0.06 |
| | 13.3 |
| | 0.04 |
|
| Net Income Attributable to Common Shareholders (GAAP) | $ | 260.4 |
| | $ | 0.82 |
| | $ | 265.3 |
|
| $ | 0.83 |
| | $ | 750.6 |
| | $ | 2.36 |
| | $ | 713.1 |
| | $ | 2.24 |
|
|
| | | | | | | | | | | | | | | |
| | For the Three Months Ended March 31, |
| | 2020 | | 2019 |
| (Millions of Dollars, Except Per Share Amounts) | Amount | | Per Share | | Amount | | Per Share |
Net Income Attributable to Common Shareholders (GAAP) | $ | 334.8 |
| | $ | 1.01 |
| | $ | 308.7 |
| | $ | 0.97 |
|
| | | | | | | | |
| Regulated Companies | $ | 343.4 |
| | $ | 1.03 |
| | $ | 315.7 |
| | $ | 0.99 |
|
| Eversource Parent and Other Companies | (5.1 | ) | | (0.01 | ) | | (7.0 | ) | | (0.02 | ) |
| Non-GAAP Earnings | $ | 338.3 |
| | $ | 1.02 |
| | $ | 308.7 |
| | $ | 0.97 |
|
Acquisition-Related Costs (after-tax) (1) | (3.5 | ) | | (0.01 | ) | | — |
| | — |
|
Net Income Attributable to Common Shareholders (GAAP) | $ | 334.8 |
| | $ | 1.01 |
| | $ | 308.7 |
| | $ | 0.97 |
|
(1) These costs are associated with our pending acquisition of the assets of Columbia Gas of Massachusetts.
Our consolidated earnings also include pre-tax COVID-19 related-charges of $2.1 million incurred in the first quarter of 2020.
Regulated Companies: Our Regulatedregulated companies consist ofcomprise the electric distribution, electric transmission, and natural gas distribution segments. Generation activities of PSNH and WMECO are included in our electricwater distribution segment.segments. A summary of our segment earnings and EPS for the third quarter and the first nine months of 2017 and 2016 is as follows:
| | | | For the Three Months Ended September 30, | | For the Nine Months Ended September 30, | For the Three Months Ended March 31, |
| | 2017 | | 2016 | | 2017 | | 2016 | 2020 | | 2019 |
| (Millions of Dollars, Except Per-Share Amounts) | Amount | | Per Share | | Amount | | Per Share | | Amount | | Per Share | | Amount | | Per Share | |
| (Millions of Dollars, Except Per Share Amounts) | | Amount | | Per Share | | Amount | | Per Share |
| Net Income - Regulated Companies | | $ | 343.4 |
| | $ | 1.03 |
| | $ | 315.7 |
| | $ | 0.99 |
|
| | | | | | | | | |
| Electric Distribution | $ | 157.4 |
| | $ | 0.50 |
| | $ | 170.1 |
| | $ | 0.53 |
| | $ | 393.4 |
| | $ | 1.24 |
| | $ | 381.3 |
| | $ | 1.20 |
| $ | 130.1 |
| | $ | 0.39 |
| | $ | 120.1 |
| | $ | 0.38 |
|
| Electric Transmission | 99.0 |
| | 0.31 |
| | 88.4 |
| | 0.28 |
| | 289.6 |
| | 0.91 |
| | 266.6 |
| | 0.84 |
| 126.8 |
| | 0.38 |
| | 118.2 |
| | 0.37 |
|
| Natural Gas Distribution | (6.2 | ) | | (0.02 | ) | | (7.0 | ) | | (0.02 | ) | | 49.1 |
| | 0.15 |
| | 51.9 |
| | 0.16 |
| 84.4 |
| | 0.25 |
| | 76.5 |
| | 0.24 |
|
| Water Distribution | | 2.1 |
| | 0.01 |
| | 0.9 |
| | — |
|
| Net Income - Regulated Companies | $ | 250.2 |
| | $ | 0.79 |
| | $ | 251.5 |
| | $ | 0.79 |
| | $ | 732.1 |
| | $ | 2.30 |
| | $ | 699.8 |
| | $ | 2.20 |
| $ | 343.4 |
| | $ | 1.03 |
| | $ | 315.7 |
| | $ | 0.99 |
|
Our electric distribution segment earnings decreased $12.7 million in the third quarter of 2017, as compared to the third quarter of 2016, due primarily to lower sales volumes and demand revenues driven by the mild summer weather during the third quarter of 2017, primarily at NSTAR Electric, as well as higher property tax, depreciation and interest expense.
Our electric distribution segment earnings increased $12.1$10.0 million in the first nine monthsquarter of 2017,2020, as compared to the first nine monthsquarter of 2016,2019, due primarily tobase distribution rate increases at CL&P effective May 1, 2019, at NSTAR Electric effective January 1, 2020, and at PSNH effective July 1, 2019, higher earnings from CL&P's capital tracker mechanism due to increased electric system improvements, and lower operations and maintenance expense,expense. The earnings increase was partially offset by lower sales volumeshigher depreciation expense, higher interest expense, the absence of the first quarter 2019 recognition of carrying charges on PSNH's 2013 through 2016 storm costs approved for recovery, investment loss in 2020, as compared to investment income in 2019 driven by the mild summer weather during the third quarter of 2017, primarily at NSTAR Electric,market volatility, and higher depreciation and interest expense, and lower generation earnings.property tax expense.
Our electric transmission segment earnings increased $10.6 million and $23.0$8.6 million in the thirdfirst quarter and first nine months of 2017, respectively,2020, as compared to the thirdfirst quarter and first nine months of 2016,2019, due primarily to a higher transmission rate base as a result of our continued investment in our transmission infrastructure, partially offset by a lower benefit in the second quarter of 2017 related to the annual billing and cost reconciliation filing with the FERC.infrastructure.
Our natural gas distribution segment results improved $0.8 million in the third quarter of 2017, as compared to the third quarter of 2016, and earnings decreased $2.8increased $7.9 million in the first nine monthsquarter of 2017,2020, as compared to the first nine monthsquarter of 2016. The decrease in the first nine months of 2017 was2019, due primarily to a base distribution rate increase at Yankee Gas effective January 1, 2020 and higher depreciation expense,earnings from capital tracker mechanisms due to continued investments in natural gas infrastructure. The earnings increase was partially offset by higher operations and maintenance expense and lower demand revenueshigher depreciation expense.
Our water distribution segment earnings increased $1.2 million in Connecticut driven by lower peak usage in 2017, asthe first quarter of 2020, compared to 2016, as a resultthe first quarter of milder winter weather.2019 due primarily to higher revenues from Connecticut's capital tracker mechanism due to increased infrastructure improvements and lower depreciation expense.
Eversource Parent and Other Companies: Eversource parent and other companies earned $10.2had a net loss of $8.6 million, in the third quarter of 2017 and $18.5 millionor $0.02 per share, in the first nine monthsquarter of 2017,2020, compared with $13.8a net loss of $7.0 million, in the third quarter of 2016 and $13.3 millionor $0.02 per share, in the first nine monthsquarter of 2016.2019. The improved year-to-date results were largelyincreased loss was due primarily to increased gains on investments recorded in 2017,acquisition costs related to the pending acquisition of the assets of Columbia Gas of Massachusetts of $3.5 million, or $0.01 per share, partially offset by a higher interest expense.
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 volumesreturn 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.
Fluctuations in natural gas sales volumes in Connecticut impact earnings ("Traditional" in the table below). In Massachusetts, fluctuations in natural gas sales volumes do not impact earnings due to the DPU-approved natural gas distribution revenue decoupling mechanism approved in the last rate case decision ("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.
A summary of our retail electric GWh sales volumes and our firm natural gas MMcf sales volumes, as well as percentage changes, is as follows:
|
| | | | | | | | | | | | | | | | | |
| | For the Three Months Ended September 30, 2017 Compared to 2016 | | For the Nine Months Ended September 30, 2017 Compared to 2016 |
| | Sales Volumes (GWh) | | Percentage | | Sales Volumes (GWh) | | Percentage |
| Electric | 2017 | | 2016 | | Decrease | | 2017 | | 2016 | | Decrease |
| Traditional: | | | | | | | | | | | |
| Residential | 2,583 |
| | 2,910 |
| | (11.2 | )% | | 7,126 |
| | 7,407 |
| | (3.8 | )% |
| Commercial | 4,291 |
| | 4,525 |
| | (5.2 | )% | | 12,058 |
| | 12,376 |
| | (2.6 | )% |
| Industrial | 671 |
| | 696 |
| | (3.6 | )% | | 1,856 |
| | 1,948 |
| | (4.7 | )% |
| Total – Traditional | 7,545 |
| | 8,131 |
| | (7.2 | )% | | 21,040 |
| | 21,731 |
| | (3.2 | )% |
| | | | | | | | | | | | |
| Decoupled: | | | | | | | | | | | |
| Residential | 2,972 |
| | 3,398 |
| | (12.5 | )% | | 8,334 |
| | 8,750 |
| | (4.8 | )% |
| Commercial | 2,849 |
| | 3,039 |
| | (6.3 | )% | | 8,003 |
| | 8,315 |
| | (3.8 | )% |
| Industrial | 730 |
| | 776 |
| | (5.9 | )% | | 2,054 |
| | 2,170 |
| | (5.3 | )% |
| Total – Decoupled | 6,551 |
| | 7,213 |
| | (9.2 | )% | | 18,391 |
| | 19,235 |
| | (4.4 | )% |
| Total Sales Volumes | 14,096 |
| | 15,344 |
| | (8.1 | )% | | 39,431 |
| | 40,966 |
| | (3.7 | )% |
|
| | | | | | | | | | | | | | | | | |
| | For the Three Months Ended September 30, 2017 Compared to 2016 | | For the Nine Months Ended September 30, 2017 Compared to 2016 |
| | Sales Volumes (MMcf) | | Percentage | | Sales Volumes (MMcf) | | Percentage |
| Firm Natural Gas | 2017 | | 2016 | | Increase/(Decrease) | | 2017 | | 2016 | | Increase/(Decrease) |
| Traditional: | | | | | | | | | | | |
| Residential | 1,036 |
| | 956 |
| | 8.4 | % | | 10,138 |
| | 10,109 |
| | 0.3 | % |
| Commercial | 2,482 |
| | 2,350 |
| | 5.6 | % | | 14,432 |
| | 13,864 |
| | 4.1 | % |
| Industrial | 2,032 |
| | 1,964 |
| | 3.5 | % | | 7,663 |
| | 7,597 |
| | 0.9 | % |
| Total – Traditional | 5,550 |
| | 5,270 |
| | 5.3 | % | | 32,233 |
| | 31,570 |
| | 2.1 | % |
| | | | | | | | | | | | |
| Decoupled: | | | | | | | | | | | |
| Residential | 1,244 |
| | 1,308 |
| | (4.9 | )% | | 14,593 |
| | 13,848 |
| | 5.4 | % |
| Commercial | 2,314 |
| | 2,147 |
| | 7.8 | % | | 15,072 |
| | 15,019 |
| | 0.4 | % |
| Industrial | 1,270 |
| | 990 |
| | 28.3 | % | | 4,293 |
| | 4,163 |
| | 3.1 | % |
| Total – Decoupled | 4,828 |
| | 4,445 |
| | 8.6 | % | | 33,958 |
| | 33,030 |
| | 2.8 | % |
Special Contracts (1) | 1,147 |
| | 1,208 |
| | (5.0 | )% | | 3,495 |
| | 3,507 |
| | (0.3 | )% |
| Total – Decoupled and Special Contracts | 5,975 |
| | 5,653 |
| | 5.7 | % | | 37,453 |
| | 36,537 |
| | 2.5 | % |
| Total Sales Volumes | 11,525 |
| | 10,923 |
| | 5.5 | % | | 69,686 |
| | 68,107 |
| | 2.3 | % |
| |
(1)
| Special contracts are unique to the 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. |
For the third quarter and the first nine months of 2017, retail electric sales volumes at our electric utilities with a traditional rate structure (NSTAR Electric and PSNH) were lower, as compared to the third quarter and first nine months of 2016. Sales volumes were negatively impacted by the mild summer weather in the third quarter of 2017, as compared to the same period in 2016, and lower customer usage driven by the impact of increased customer energy conservation efforts. Cooling degree days for the first nine months of 2017 were 17.8 percent lower in the Boston metropolitan area and 24.8 percent lower in New Hampshire, as compared to the same period in 2016.
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 volumeService as a result of successful energy efficiency programs. LBR is recovered from retail customers through current rates. NSTAR Electric recognized LBR of $18.8 millionincreased investments in property, plant and $54.7 million in the third quarterequipment and first nine months of 2017, respectively, compared to $17.4 million and $44.1 million in the third quarter and first nine months of 2016, respectively.lower interest expense.
Our firm natural gas sales volumes are subject to many of the same influences as our retail electric sales volumes. In addition, they have benefited from customer growth in both of our natural gas distribution companies. Consolidated firm natural gas sales volumes were higher in the first nine months of 2017, as compared to the first nine months of 2016, due primarily to improved economic conditions across our service territories, partially offset by increased customer energy conservation efforts. The first quarter of 2017 mild winter weather was more than offset by colder than normal weather in the second quarter of 2017. Heating degree days for the first nine months of 2017 were 2.2 percent higher in Connecticut, as compared to the same period in 2016.
Major Storm: On October 29, 2017, a storm delivered high winds and rain, causing extensive damage to our electric distribution systems across all three states. We estimate that more than 800,000 of our electric distribution customers were without power during or following the storm. Restoration costs cannot be estimated at this time. As a result of the extent of the damages, we expect the storm restoration costs will be material and will exceed the criteria to be declared a major storm in Connecticut, New Hampshire, and Massachusetts and that each operating company will seek recovery of these costs through its applicable regulatory recovery process. As a result, all qualifying expenses prudently incurred during the storm will be deferred and recovered from customers. We do not expect the storm to have a material impact to the results of operations of CL&P, NSTAR Electric, PSNH or WMECO.
Liquidity
Consolidated: Cash and cash equivalents totaled $125.8$47.4 million as of September 30, 2017,March 31, 2020, compared with $30.3$15.4 million as of December 31, 2016.2019.
Long-TermShort-Term Debt Issuances: In August 2017, CL&P issued $225 million of 4.30 percent 2014 Series A First and Refunding Mortgage Bonds due to mature in 2044. These bonds are part of the same series of CL&P’s existing 4.30 percent bonds that were initially issued in 2014. The aggregate outstanding principal amount for these bonds is now $475 million. The proceeds, net of issuance costs, were used to refinance short-term debt and fund capital expenditures and working capital.
In September 2017, Yankee Gas issued $75 million of 3.02 percent Series N First Mortgage Bonds due to mature in 2027. The proceeds, net of issuance costs, were used to repay short-term borrowings.
In October 2017, Eversource parent issued $450 million 2.75 percent Series K Senior Notes due to mature in 2022. These senior notes are part of the same series of Eversource parent’s existing 2.75 percent Series K Senior Notes that were initially issued in March 2017. The aggregate outstanding principal amount for the Series K Senior Notes is now $750 million. In addition, Eversource parent issued $450 million of 2.90 percent 2017 Series L Senior Notes due to mature in 2024. The proceeds, net of issuance costs, were used to repay short-term borrowings.
In October 2017, NSTAR Electric issued $350 million of 3.20 percent Debentures due to mature in 2027. The debentures are part of the same series of NSTAR Electric’s existing 3.20 percent Debentures that were initially issued in May 2017. The aggregate outstanding principal amount for the 3.20 percent Debentures is now $700 million. The proceeds, net of issuance costs, will be used to redeem long-term debt due to mature on November 15, 2017.
Long-Term Debt Repayments: In September 2017, CL&P repaid at maturity $100 million of 5.75 percent 2007 Series C First Mortgage Bonds and PSNH repaid at maturity $70 million of 6.15 percent 2007 Series N First Mortgage Bonds.
In October 2017, NSTAR Gas repaid at maturity $25 million of 7.04 percent Series M First Mortgage Bonds.
- Commercial Paper Programs and Credit Agreements: Eversource parent has a $1.45 billion commercial paper program allowing Eversource parent to issue commercial paper as a form of short-term debt. As of September 30, 2017 and December 31, 2016, Eversource parent had $917.0 million and approximately $1.0 billion, respectively, in short-term borrowings outstanding under the Eversource parent commercial paper program, leaving $533.0 million and $428.0 million of available borrowing capacity as of September 30, 2017 and December 31, 2016, respectively. The weighted-average interest rate on these borrowings as of September 30, 2017 and December 31, 2016 was 1.34 percent and 0.88 percent, respectively. As of September 30, 2017, there were intercompany loans from Eversource parent of $202.3 million to PSNH, and $96.9 million to WMECO. As of December 31, 2016, there were intercompany loans from Eversource parent of $80.1 million to CL&P, $160.9 million to PSNH and $51.0 million to WMECO. Eversource parent, CL&P, PSNH, WMECO, NSTAR Gas, and Yankee Gas and Aquarion Water Company of Connecticut are also parties to a five-year $1.45 billion revolving credit facility. The revolving credit facility, which terminates on September 4, 2021.December 6, 2024. The revolving credit facility serves to backstop Eversource parent's $1.45 billion commercial paper program. There were no borrowings outstanding on the revolving credit facility as of September 30, 2017 and December 31, 2016.
Except as described below, amounts outstanding under the commercial paper programs are included in Notes Payable for Eversource and are classified in current liabilities on the balance sheets as all borrowings are outstanding for no more than 364 days at one time.
As a result of the October 2017 Eversource parent long-term debt issuances, the net proceeds of which were used to repay short-term borrowings outstanding under the Eversource parent commercial paper program, $898.8 million of short-term debt was reclassified to Long-Term Debt as of September 30, 2017.
NSTAR Electric has a $450$650 million commercial paper program allowing NSTAR Electric to issue commercial paper as a form of short-term debt. As of September 30, 2017, NSTAR Electric had no short-term borrowings outstanding and as of December 31, 2016, NSTAR Electric had $126.5 million in short-term borrowings outstanding under its commercial paper program, leaving $450.0 million and $323.5 million of available borrowing capacity as of September 30, 2017 and December 31, 2016, respectively. The weighted-average interest rate on these borrowings as of December 31, 2016 was 0.71 percent. NSTAR Electric is also a party to a five-year $450$650 million revolving credit facility. The revolving credit facility, which terminates on September 4, 2021.December 6, 2024. The revolving credit facility serves to backstop NSTAR Electric's $450$650 million commercial paper program.
The amount of borrowings outstanding and available under the commercial paper programs were as follows:
|
| | | | | | | | | | | | | | | | | | | | | |
| | Borrowings Outstanding as of | | Available Borrowing Capacity as of | | Weighted-Average Interest Rate as of |
| | March 31, 2020 | | December 31, 2019 | | March 31, 2020 | | December 31, 2019 | | March 31, 2020 | | December 31, 2019 |
| (Millions of Dollars) | | | | | |
| Eversource Parent Commercial Paper Program | $ | 738.4 |
| | $ | 1,224.9 |
| | $ | 711.6 |
| | $ | 225.1 |
| | 3.38 | % | | 1.98 | % |
| NSTAR Electric Commercial Paper Program | 88.0 |
| | 10.5 |
| | 562.0 |
| | 639.5 |
| | 1.25 | % | | 1.63 | % |
There were no borrowings outstanding on either the Eversource parent or NSTAR Electric revolving credit facilityfacilities as of September 30, 2017 andMarch 31, 2020 or December 31, 2016.2019.
Amounts outstanding under the commercial paper programs and revolving credit facilities are included in Notes Payable and classified in current liabilities on the Eversource and NSTAR Electric balance sheets, as all borrowings are outstanding for no more than 364 days at one time. As a result of the NSTAR Gas long-term debt issuances in May 2020, $25.0 million of the current portion of long-term debt and $165.0 million of commercial paper borrowings under the Eversource parent commercial paper program were classified as Long-Term Debt as of March 31, 2020.
Intercompany Borrowings: Eversource parent uses its available capital resources to provide loans to its subsidiaries to assist in meeting their short-term borrowing needs. Eversource parent records intercompany interest income from its loans to subsidiaries, which is eliminated in consolidation. Intercompany loans from Eversource parent to its subsidiaries are eliminated in consolidation on Eversource's balance sheets. As of March 31, 2020, there were intercompany loans from Eversource parent to CL&P of $219.0 million, to PSNH of $84.7 million, and to a subsidiary of NSTAR Electric of $38.4 million. As of December 31, 2019, there were intercompany loans from Eversource parent to CL&P of $63.8 million, to PSNH of $27.0 million, and to a subsidiary of NSTAR Electric of $30.3 million. Intercompany loans from Eversource parent are included in Notes Payable to Eversource Parent and classified in current liabilities on the respective subsidiary's balance sheets.
Long-Term Debt:The following table summarizes long-term debt issuances and repayments:
|
| | | | | | | | | |
| (Millions of Dollars) | Issuance/(Repayment) | | Issue Date or Repayment Date | | Maturity Date | | Use of Proceeds for Issuance/
Repayment Information |
| NSTAR Electric: | | | | | | | |
| 3.95% 2020 Debentures | $ | 400.0 |
| | March 2020 | | April 2030 | | Refinanced investments in eligible green expenditures, which were previously financed in 2018 and 2019 |
| 5.10% Series E Senior Notes | (95.0 | ) | | March 2020 | | March 2020 | | Paid at maturity |
| Other: | | | | | | | |
| Eversource Parent 3.45% Series P Senior Notes | 350.0 |
| | January 2020 | | January 2050 | | Paid short-term borrowings |
| NSTAR Gas 4.46% Series N First Mortgage Bonds | (125.0 | ) | | January 2020 | | January 2020 | | Paid at maturity |
| Yankee Gas 4.87% Series K First Mortgage Bonds | (50.0 | ) | | April 2020 | | April 2020 | | Paid at maturity |
| NSTAR Gas 2.33% Series R First Mortgage Bonds | 75.0 |
| | May 2020 | | May 2025 | | Refinanced existing indebtedness, funded capital expenditures and for general corporate purposes |
| NSTAR Gas 3.15% Series S First Mortgage Bonds | 115.0 |
| | May 2020 | | May 2050 | | Refinanced existing indebtedness, funded capital expenditures and for general corporate purposes |
Long-Term Debt Issuance Authorization: On January 27, 2020, the DPU approved NSTAR Gas' request for authorization to issue up to $270 million in long-term debt through December 31, 2021.
Rate Reduction Bonds: PSNH's RRB payments consist of principal and interest and are paid semi-annually. PSNH paid $21.6 million of RRB principal payments and $10.3 million of interest payments in the first quarter of 2020 and paid $30.7 million of RRB principal payments and $16.2 million of interest payments in the first quarter of 2019.
Common Share Issuance and Forward Sale Agreement: In June 2019, Eversource completed an equity offering consisting of 5,980,000 common shares issued directly by the Company and 11,960,000 common shares issuable pursuant to a forward sale agreement with an investment bank. Under the forward sale agreement, 11,960,000 common shares were borrowed from third parties and sold by the underwriters. The forward sale agreement allowed Eversource, at its election and prior to May 29, 2020, to physically settle the forward sale agreement by issuing common shares in exchange for net proceeds at the then-applicable forward sale price specified by the agreement (initially, $71.48 per share) or, alternatively, to settle the forward sale agreement in whole or in part through the delivery or receipt of shares or cash. The forward sale price was subject to adjustment daily based on a floating interest rate factor and would decrease in respect of certain fixed amounts specified in the agreement, such as dividends.
Eversource previously issued 6,000,000 common shares under the forward sale agreement in December 2019. On March 23, 2020, Eversource physically settled a portion of the forward sale agreement by delivering 1,500,000 common shares in exchange for net proceeds of $105.7 million. Subsequently, on March 26, 2020, Eversource physically settled the remaining portion of the forward sale agreement by delivering 4,460,000 common shares in exchange for net proceeds of $314.1 million. The forward sale price used to determine the cash proceeds received by Eversource was calculated based on the initial forward sale price of $71.48 per share, as adjusted in accordance with the forward sale agreement.
The 2020 issuances of 5,960,000 common shares resulted in proceeds of $419.8 million, net of issuance costs and were reflected in shareholders' equity and as financing activities on the statement of cash flows.
Issuances of shares under the forward sale agreement are classified as equity transactions. Accordingly, no amounts relating to the forward sale agreement were recorded in the financial statements until settlements took place. Prior to any settlements, the only impact to the financial statements was the inclusion of incremental shares within the calculation of diluted EPS using the treasury stock method. See Note 14, "Earnings Per Share," to the financial statements for information on the forward sale agreement’s impact on the calculation of diluted EPS.
Eversource used the net proceeds received upon the direct issuance of common shares and the net proceeds received upon settlement of the forward sale agreement to repay short-term debt under the commercial paper program, to fund capital spending and clean energy initiatives, and for general corporate purposes.
Cash Flows: Cash flows provided by operating activities totaled $1.49 billion$420.3 million in the first nine monthsquarter of 2017,2020, compared with $1.65 billion$381.4 million in the first nine monthsquarter of 2016.2019. The decreaseincrease in operating cash flows was due primarily to the $200.7 million net unfavorable impact as a resulttiming of cash collections on our accounts receivables, partially offset by the change intiming of accounts payable cash payments and lower income tax payments made, or refunds received in 2017 when compared to 2016. This unfavorable impact was primarily the result2020 of the December 2015 legislation, which extended the accelerated deduction of depreciation from 2015 to 2019. The legislation resulted in a significant refund of approximately $275 million, which we received in the first quarter of 2016. Additionally, there was an increase of $76.0 million in Pension and PBOP Plan cash contributions made in the first nine months of 2017, as compared to the same period in 2016. Partially offsetting these unfavorable impacts was the benefit related to the timing of regulatory recoveries and the timing of collections and payments of our working capital items, including accounts receivable and accounts payable.$12.2 million.
On SeptemberMay 6, 2017,2020, our Board of Trustees approved a common share dividend payment of $0.475$0.5675 per share, payable on June 30, 2020 to shareholders of record as of May 20, 2020. On February 5, 2020, our Board of Trustees approved a common share dividend payment of $0.5675 per share, which was paid on September 29, 2017March 31, 2020 to shareholders of record as of September 19, 2017.March 4, 2020. In the first quarter of 2020, we paid cash dividends of $181.6 million and issued non-cash dividends of $5.9 million in the form of treasury shares, totaling dividends of $187.5 million, compared with cash dividends paid of $169.8 million in the first quarter of 2019.
Eversource issues treasury shares to satisfy awards under the Company's incentive plans, shares issued under the dividend reinvestment and share purchase plan, and matching contributions under the Eversource 401k Plan.
In the first nine monthsquarter of 2017,2020, CL&P, NSTAR Electric and PSNH and WMECO paid $205.2$69.5 million, $186.0 million, $23.9$196.5 million, and $28.5$22.3 million, respectively, in common stock dividends to 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 and deferred portions of pension and PBOP expense. In the first nine monthsquarter of 2017,2020, investments for Eversource, CL&P, NSTAR Electric, and PSNH and WMECO were $1.64 billion, $621.9$725.5 million, $358.0$212.4 million, $215.5$247.5 million, and $109.2$88.7 million, respectively.
We expect the future operating cash flows of Eversource, CL&P, NSTAR Electric and PSNH, along with our existing borrowing availability and access to both debt and equity markets, will be sufficient to meet any working capital and future operating requirements, and capital investment forecasted opportunities.
Business Development and Capital Expenditures
Aquarion: On June 2, 2017, Eversource announced that it had entered into an agreement to acquire Aquarion from Macquarie Infrastructure Partners for $1.675 billion, consisting of approximately $880 million in cash and $795 million of assumed Aquarion debt. The transaction requires approval from PURA, the DPU, the NHPUC, the Maine PUC, and the Federal Communications Commission, and is also subject to a review under the Hart-Scott-Rodino Act. On June 29, 2017, Eversource and Aquarion filed joint applications with regulatory agencies in Connecticut, Massachusetts, New Hampshire and Maine requesting approval of the transaction. With the exception of Massachusetts, all state and federal regulatory agency approvals have been received and the related review period has expired. The transaction is expected to close by December 31, 2017.
Bay State Wind: Bay State Wind is a proposed offshore wind project being jointly developed by Eversource and Denmark-based Ørsted (formerly known as DONG Energy). Bay State Wind will be located in a 300-square-mile area approximately 15 to 25 miles south of Martha's Vineyard that has the ultimate potential to generate more than 2,000 MW of energy. Both Eversource and Ørsted hold a 50 percent ownership interest in Bay State Wind. In August 2016, Massachusetts passed clean energy legislation that requires EDCs to jointly solicit RFPs and enter into long-term contracts for offshore wind, creating RFP opportunities for projects like Bay State Wind. On June 29, 2017, the Bureau of Ocean Energy Management ("BOEM") approved the project’s Site Assessment Plan ("SAP"), the first BOEM approval of an offshore wind SAP in the U.S.
On June 29, 2017, the Massachusetts RFP was issued, seeking bids for a minimum of 400 MW of offshore wind capacity. The RFP states that bids of up to 800 MW would be considered, provided they demonstrate significant net economic benefits to customers. Bay State Wind submitted a Notice of Intent to Bid on July 26, 2017, and will submit a proposal by the December 20, 2017 due date.
Consolidated Capital Expenditures:Our consolidated capital expenditures, including amounts incurred but not paid, cost of removal, AFUDC, and the capitalized and deferred portions of pension and PBOP expense (all of which are non-cash factors), totaled $1.69 billion in the first nine months of 2017, compared to $1.43 billion in the first nine months of 2016. These amounts included $97.8 million and $87.1$655.7 million in the first nine monthsquarter of 20172020, compared to $603.1 million in the first quarter of 2019. These amounts included $55.4 million and 2016,$49.3 million in the first quarter of 2020 and 2019, respectively, related to information technology and facilities upgrades and enhancements, primarily at Eversource Service and The Rocky River Realty Company.
Electric Transmission Business:
Our consolidated electric transmission business capital expenditures increased by $40.9$3.6 million in the first nine monthsquarter of 2017,2020, as compared to the first nine monthsquarter of 2016.2019. 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) | 2017 | | 2016 | 2020 | | 2019 |
| CL&P | $ | 300.7 |
| | $ | 211.8 |
| $ | 84.8 |
| | $ | 112.2 |
|
| NSTAR Electric | 108.5 |
| | 162.6 |
| 76.7 |
| | 59.3 |
|
| PSNH | 87.4 |
| | 80.2 |
| 46.3 |
| | 27.7 |
|
| WMECO | 70.9 |
| | 75.7 |
| |
| NPT | 32.1 |
| | 28.4 |
| — |
| | 5.0 |
|
| Total Electric Transmission Segment | $ | 599.6 |
| | $ | 558.7 |
| $ | 207.8 |
| | $ | 204.2 |
|
Northern Pass: Northern Pass is a 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 April 13, 2017, the New Hampshire Site Evaluation Committee ("NH SEC") commenced final adjudicative hearings that, on August 31, 2017, were extended and will result in the issuance of a final order by March 31, 2018.
On August 10, 2017, the DOE issued the final Environmental Impact Statement for Northern Pass concluding that the proposed Northern Pass route is the preferred alternative, providing substantial benefits with only minimal impacts. Siting and permitting at both the state and federal levels is well advanced and the DOE is expected to issue the Presidential Permit for Northern Pass during the fourth quarter of 2017. Northern Pass is expected to be placed in service in the second half of 2020.
In August 2016,Eastern Massachusetts enacted clean energy legislation that requires EDCs to solicit proposals jointly and enter into long-term contracts for energy, such as hydropower. The RFP was issued on March 31, 2017 and on July 27, 2017, Eversource Energy Transmission Ventures, Inc. and HQ jointly submitted proposals for Northern Pass into the Massachusetts clean energy RFP.
Greater Boston Reliability Solution: In February 2015, ISO-NE selected the Greater Boston and New Hampshire Solution (the "Solution"), proposed by Eversource and National Grid, to satisfy the requirements identified in the Greater Boston study. The Solution consistsProjects: These projects consist of a portfolio of electric transmission upgrades coveringin southern New Hampshire, and northern Massachusetts and continuing into the greater Boston metropolitan area, of which 28 upgrades are in Eversource's service territory.territory (two in New Hampshire and 26 in Massachusetts). The NH SEC issued its written order approving thetwo New Hampshire upgrades, on October 4, 2016. We are currently pursuingincluding the necessary regulatoryMerrimack Valley Reliability Project, have been placed in service, and siting application approvals20 Massachusetts upgrades have been placed in Massachusetts. To date, we have received approval for two of these projects fromservice. On December 17, 2019, the Massachusetts Energy Facilities Siting Board. Construction has also begunBoard issued a favorable decision on several smaller projects notthe Sudbury-Hudson Reliability Project, the last project requiring sitingsuch approval. AllOn January 17, 2020, the Town of Sudbury and Protect Sudbury, a community group, appealed the decision to the Massachusetts Supreme Judicial Court and oral arguments were conducted on March 17, 2020. The majority of the remaining upgrades are under construction and are expected to be completed by the end of 2019.placed in service in 2021. We estimate our portion of the investment in the Solution will be approximately $560$750 million, of which $186.3$449.9 million has been spent and capitalized through September 30, 2017.March 31, 2020.
GHCCHartford-Area Transmission Projects: The Greater Hartford Central Connecticut ("GHCC")These projects which have been approved by ISO-NE, consist of 27 projects in the Hartford, Connecticut area with an expected investment of approximately $350 million thatmillion. As of March 31, 2020, 25 projects have been placed in service, and two projects are in active construction and are expected to be placed in service through 2019. Sixteen projects have been placed in service, and eight projects are in active construction.the fourth quarter of 2020. As of September 30, 2017,March 31, 2020, CL&P had spent and capitalized $192.3$281.9 million in costs associated with GHCC.these projects.
Seacoast Reliability Project: On April 12, 2016, PSNH filed a siting application with the NH SEC for theThe Seacoast Reliability Project consists of a 13-mile, 115kV transmission line within several New Hampshire communities, which proposes to useusing a combination of overhead, underground and underwater line designdesigns to help meet the growing demand for electricity in the Seacoast region. In June 2016,On December 10, 2018, the NH SEC accepted our application as complete. Due to delaysNHSEC indicated its unanimous approval of the project, and subsequently issued its written decision on January 31, 2019. On May 13, 2019, two appeals of the NHSEC's approval orders were filed with the siting hearings, we now expectNew Hampshire Supreme Court. On December 17, 2019, the NH SEC decision in mid-2018,Conservation Law Foundation requested the Court to withdraw its appeal, and thisthe Court granted the request on December 20, 2019. For the pending appeal by a small group of property owners located adjacent to the project, oral arguments were conducted on March 10, 2020. This project is now expectedunder construction and is scheduled to be completed byin the endsecond quarter of 2019.2020. We estimate ourthe investment in this project towill be approximately $84$125 million, of which through September 30, 2017, PSNH had spent and capitalized $19.7$103.7 million in costs.costs through March 31, 2020.
All project costs are anticipated to be fully recoverable through transmission rates.
Distribution Business:
A summary of distribution capital expenditures is as follows:
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | For the Nine Months Ended September 30, |
| (Millions of Dollars) | CL&P | | NSTAR Electric | | PSNH | | WMECO | | Total Electric | | Natural Gas | | Total Electric and Natural Gas Distribution Segment |
| 2017 | | | | | | | | | | | | | |
| Basic Business | $ | 161.8 |
| | $ | 110.3 |
| | $ | 52.5 |
| | $ | 16.4 |
| | $ | 341.0 |
| | $ | 51.3 |
| | $ | 392.3 |
|
| Aging Infrastructure | 127.4 |
| | 49.6 |
| | 63.9 |
| | 16.3 |
| | 257.2 |
| | 149.6 |
| | 406.8 |
|
Load Growth (1) | 41.0 |
| | 53.2 |
| | 14.1 |
| | (1.5 | ) | | 106.8 |
| | 30.6 |
| | 137.4 |
|
| Total Distribution | 330.2 |
| | 213.1 |
| | 130.5 |
| | 31.2 |
| | 705.0 |
| | 231.5 |
| | 936.5 |
|
Generation (2) | — |
| | 24.6 |
| | 6.7 |
| | 20.9 |
| | 52.2 |
| | — |
| | 52.2 |
|
| Total Electric and Natural Gas Distribution Segment | $ | 330.2 |
| | $ | 237.7 |
| | $ | 137.2 |
| | $ | 52.1 |
| | $ | 757.2 |
| | $ | 231.5 |
| | $ | 988.7 |
|
| | | | | | | | | | | | | | |
| 2016 | | | | | | | | | | | | | |
| Basic Business | $ | 127.0 |
| | $ | 87.7 |
| | $ | 46.8 |
| | $ | 10.7 |
| | $ | 272.2 |
| | $ | 48.9 |
| | $ | 321.1 |
|
| Aging Infrastructure | 97.4 |
| | 57.8 |
| | 61.9 |
| | 17.6 |
| | 234.7 |
| | 103.0 |
| | 337.7 |
|
Load Growth (1) | 31.9 |
| | 48.1 |
| | 11.8 |
| | (2.5 | ) | | 89.3 |
| | 28.3 |
| | 117.6 |
|
| Total Distribution | 256.3 |
| | 193.6 |
| | 120.5 |
| | 25.8 |
| | 596.2 |
| | 180.2 |
| | 776.4 |
|
| Generation | — |
| | — |
| | 8.5 |
| | — |
| | 8.5 |
| | — |
| | 8.5 |
|
| Total Electric and Natural Gas Distribution Segment | $ | 256.3 |
| | $ | 193.6 |
| | $ | 129.0 |
| | $ | 25.8 |
| | $ | 604.7 |
| | $ | 180.2 |
| | $ | 784.9 |
|
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | For the Three Months Ended March 31, |
| (Millions of Dollars) | CL&P | | NSTAR Electric | | PSNH | | Total Electric | | Natural Gas | | Water | | Total |
| 2020 | | | | | | | | | | | | | |
| Basic Business | $ | 43.7 |
| | $ | 59.6 |
| | $ | 9.8 |
| | $ | 113.1 |
| | $ | 20.0 |
| | $ | 1.9 |
| | $ | 135.0 |
|
| Aging Infrastructure | 44.1 |
| | 54.4 |
| | 22.5 |
| | 121.0 |
| | 67.3 |
| | 15.8 |
| | 204.1 |
|
| Load Growth and Other | 15.0 |
| | 24.0 |
| | 3.1 |
| | 42.1 |
| | 10.8 |
| | 0.1 |
| | 53.0 |
|
| Total Distribution | 102.8 |
| | 138.0 |
| | 35.4 |
| | 276.2 |
| | 98.1 |
| | 17.8 |
| | 392.1 |
|
| Solar | — |
| | 0.4 |
| | — |
| | 0.4 |
| | — |
| | — |
| | 0.4 |
|
| Total | $ | 102.8 |
| | $ | 138.4 |
| | $ | 35.4 |
| | $ | 276.6 |
| | $ | 98.1 |
| | $ | 17.8 |
| | $ | 392.5 |
|
| 2019 | | | | | | | | | | | | | |
| Basic Business | $ | 33.3 |
| | $ | 66.8 |
| | $ | 8.1 |
| | $ | 108.2 |
| | $ | 11.2 |
| | $ | 2.1 |
| | $ | 121.5 |
|
| Aging Infrastructure | 45.2 |
| | 43.0 |
| | 25.4 |
| | 113.6 |
| | 53.2 |
| | 13.0 |
| | 179.8 |
|
| Load Growth and Other | 14.3 |
| | 17.4 |
| | 3.9 |
| | 35.6 |
| | 10.0 |
| | 0.4 |
| | 46.0 |
|
| Total Distribution | 92.8 |
| | 127.2 |
| | 37.4 |
| | 257.4 |
| | 74.4 |
| | 15.5 |
| | 347.3 |
|
| Solar | — |
| | 2.3 |
| | — |
| | 2.3 |
| | — |
| | — |
| | 2.3 |
|
| Total | $ | 92.8 |
| | $ | 129.5 |
| | $ | 37.4 |
| | $ | 259.7 |
| | $ | 74.4 |
| | $ | 15.5 |
| | $ | 349.6 |
|
(1) For the nine months ended September 30, 2017 and September 30, 2016, WMECO had $11.0 million and $6.4 million, respectively, of total contributions in aid of construction, which were credits to capital expenditures for those periods.
(2) In 2017, NSTAR Electric and WMECO incurred capital expenditures related to the construction of solar generation facilities.
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 and other includes requests for new business and capacity additions on distribution lines and substation additions and expansions.
For the natural gas distribution segment,business, 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 and other reflects growth in existing service territories including new developments, installation of services, and expansion.
TheFor the water distribution business, basic business addresses daily operational needs including periodic meter replacement, water main relocation, facility maintenance, and tools. Aging infrastructure relates to reliability and the replacement of water mains, regulators, storage tanks, pumping stations, wellfields, reservoirs, and treatment facilities. Load growth and other reflects growth in our service territory, including improvements of acquisitions, installation of new services, and interconnections of systems.
Pending Acquisition of Assets of Columbia Gas of Massachusetts: On February 26, 2020, Eversource and NiSource Inc. entered into an asset purchase agreement (the Agreement) pursuant to which Eversource would acquire certain assets that comprise NiSource’s local natural gas distribution segment'sbusiness in Massachusetts, which is doing business as Columbia Gas of Massachusetts (CMA). The purchase price of $1.1 billion includes a target working capital spending program increased by $51.3 million inamount that is subject to adjustment to reflect actual working capital as of the first nine months of 2017, as compared to the first nine months of 2016, primarily due to an increased investment in system replacementclosing date. Eversource would acquire approximately 330,000 residential, commercial, and reliability,industrial natural gas customers, as well as upgradesover 5,000 miles of natural gas distribution pipeline across more than 60 communities in Massachusetts.
The liabilities to be assumed by Eversource under the Agreement specifically exclude any liabilities (past or future) arising out of, or related to, the fires and explosions that occurred on September 13, 2018 in Lawrence, Andover and North Andover, Massachusetts related to the delivery of natural gas by CMA, including certain subsequent events, all as described and in the DPU's Order on Scope dated December 23, 2019 (D.P.U. 19-141) (the Greater Lawrence Incident or GLI). The liabilities to be assumed also exclude any further emergency events prior to the closing of the acquisition related to the restoration and reconstruction with respect to the GLI, including any losses arising out of, or related to, any litigation, demand, cause of action, claim, suit, investigation, proceeding, indemnification agreements or rights. Eversource is not assuming any of CMA's or NiSource Inc.'s debt.
The transaction requires approval from the DPU, the Maine Public Utilities Commission, the FERC, and the Federal Communications Commission, and it is subject to review under the Hart-Scott-Rodino Act, for which the relevant review period has expired. The resulting rate plan also requires DPU approval. Eversource expects to finance the asset acquisition through a combination of debt and equity issuances in a ratio that is consistent with our current consolidated capital structure. The transaction is expected to close by the end of the third quarter of 2020.
Offshore Wind Business: Our offshore wind business includes ownership interests in North East Offshore and Bay State Wind, which together hold PPAs and contracts for the Revolution Wind, South Fork Wind and Sunrise Wind projects, as well as offshore leases through BOEM. Our offshore wind projects are being developed and constructed through a joint and equal partnership with Ørsted. This partnership also participates in new procurement opportunities for offshore wind energy in the Northeast U.S.
Eversource has a 50 percent ownership interest in North East Offshore, which holds the Revolution Wind and South Fork Wind projects, as well as a 257 square-mile lease off the coasts of Massachusetts and Rhode Island. Eversource also has a 50 percent ownership interest in Bay State Wind, which holds the Sunrise Wind project. Bay State Wind's separate 300-square-mile ocean lease is located approximately 25 miles south of the coast of Massachusetts adjacent to the North East Offshore area. In aggregate, the Bay State Wind and the North East Offshore lease sites jointly-owned by Eversource and Ørsted could eventually develop at least 4,000 MW of clean, renewable offshore wind energy. As of March 31, 2020, Eversource's total equity investment balance in its offshore wind business was $655.0 million.
Currently we are concluding on final offshore and onshore project designs and advancing the appropriate federal, state and local siting and permitting processes, all of which is competitively sensitive. Subject to finalization of these designs and processes, all of which are subject to change and modification as a result of our investment decisions, permit approval timelines and final design decisions, we currently expect to make investments in our offshore wind business of approximately $300 million to $400 million during 2020.
The following table provides a summary of the Eversource and Ørsted major projects with announced contracts:
|
| | | | | | |
| Wind Project | State Servicing | Size (MW) | Term (Years) | Price per MWh | Pricing Terms | Contract Status |
| Revolution Wind | Rhode Island | 400 | 20 | $98.43 | Fixed price contract; no price escalation | Approved |
| Revolution Wind | Connecticut | 304 | 20 | (1) | Fixed price contracts; no price escalation | Approved |
| South Fork Wind | New York (LIPA) | 90 | 20 | $160.33 | 2 percent average price escalation | Approved |
| South Fork Wind | New York (LIPA) | 40 | 20 | $86.25 | 2 percent average price escalation | (3) |
| Sunrise Wind | New York (NYSERDA) | 880 | 25 | $110.37 (2) | Fixed price contract; no price escalation | Approved |
| |
(1) | The pricing for the Revolution Wind contracts in Connecticut has not been publicly disclosed. |
| |
(2) | Index Offshore Wind Renewable Energy Certificate (OREC) strike price. |
| |
(3) | The Long Island Power Authority (LIPA) agreed to expand the original 20-year PPA from 90 MW to 130 MW through an amendment to the original agreement. Negotiations are currently underway, and a final amendment is expected in the second quarter of 2020. |
The completion dates for these projects are subject to federal permitting through BOEM, engineering, state siting and permitting in New York and Rhode Island, and finalizing a PPA amendment in New York. Significant delays in the siting and permitting process, including the timing of obtaining BOEM approval and the impact of COVID-19, could adversely impact the timing of these projects' in-service dates. At this time, we are unable to predict the impact of delays on the projects' in-service dates.
Currently, BOEM has indicated it will complete its Cumulative Impact Study as part of the Draft Supplemental Environmental Impact Statement (EIS) for a non-affiliated offshore wind project during the second quarter of 2020. The study is designed to assess the overall environmental impact of all offshore wind projects that are planned to be located in waters off of Rhode Island and Massachusetts.
Federal siting and permitting have commenced for the South Fork Wind project, as it has filed its Construction Operations Plan (COP) application with BOEM. South Fork Wind is designated as a “Covered Project” pursuant to Title 41 of the Fixing America’s Surface Transportation Act (“FAST41”) and a Major Infrastructure Project under Section 3(e) of Executive Order 13807, which provides greater federal attention on meeting the project’s permitting timelines. South Fork Wind previously filed federal and state applications in 2018. Although we have received BOEM's Notice of Intent for the South Fork Wind project (the first important milestone towards receiving the final permit), we have not received a confirmed permit schedule from BOEM outlining when the COP will be received.
On April 8, 2020, the state of New York Administrative Law Judge granted a 10-week delay to the South Fork Wind evidentiary hearing schedule, until September 30, 2020, due to ongoing COVID-19 work and travel restrictions. In addition, field work for South Fork Wind and Sunrise Wind in New York has been suspended due to COVID-19 restrictions. Currently, we are developing mitigation plans to address permitting delays due to COVID-19 restrictions on our offshore wind projects, which include delays in New York state for performing offshore site investigations, and onshore environmental and geotechnical surveys, in order to limit the impact and risk to our LNG facilities. We expectproject siting and permit filing timelines.
Given that we have not received a confirmed permit schedule from BOEM outlining when the LNG facility upgradesSouth Fork Wind COP will be received and that BOEM has not completed its Cumulative Impact Study, combined with impacts from the COVID-19 related shut-downs in New York, these impacts will very likely delay the in-service date of the South Fork Wind project to cost approximately $200 millionbeyond the projected end of 2022 in-service date.
Revolution Wind filed its COP application with BOEM in March 2020 and will seek FAST41 designation by the end of 2020. Sunrise Wind's COP filing is planned in 2020. State agencies also will review siting applications for Revolution Wind and Sunrise Wind in New York and Rhode Island, with application filings planned in 2020. For Revolution Wind, we are awaiting BOEM to be placed in service in late 2019.issue its Notice of Intent, which will outline the timeline for COP approval. For Sunrise Wind, we are currently unable to progress our offshore site surveys due to COVID-19 restrictions, which adversely impacts our COP application process. At this time, for the Revolution Wind and Sunrise Wind projects, we are unable to predict the impact of delays on their projected in-service dates of end of 2023 and end of 2024, respectively.
FERC Regulatory Matters
FERC ROE Complaints: Four separate complaints have beenwere filed at the FERC by combinations of New England state attorneys general, state regulatory commissions, consumer advocates, consumer groups, municipal parties and other parties (collectively, the "Complainants")Complainants). In each of the first three complaints, filed on October 1, 2011, December 27, 2012, and July 31, 2014, respectively, the Complainants challenged the NETOs' base ROE of 11.14 percent that had been utilized since 2005 and sought an order to reduce it prospectively from the date of the final FERC order and for the separate 15-month complaint periods. In the fourth complaint, filed April 29, 2016, the Complainants challenged the NETOs' base ROE billed of 10.57 percent and the maximum ROE for transmission incentive ("incentive cap")(incentive cap) of 11.74 percent, asserting that these ROEs were unjust and unreasonable.
In response to appealsThe ROE originally billed during the period October 1, 2011 (beginning of the FERC decision in the first complaint filed by the NETOs and the Complainants, the U.S. Court of Appeals for the D.C. Circuit (the "Court") issued a decision on April 14, 2017 vacating and remanding the FERC's decision. The Court found that the FERC failed to make an explicit finding that the 11.14 percent base ROE was unjust and unreasonable, as required under Section 206 of the Federal Power Act, before it set a new base ROE. The Court also found that the FERC did not provide a rational connection between the record evidence and its decision to select the midpoint of the upper half of the zone of reasonableness for the new base ROE.
On May 26, 2017, the Chief Administrative Law Judge ("ALJ") issued an order that the fourth complaint will continue to trial in December 2017 with an ALJ initial decision expected in March of 2018.
A summary of the four separate complaints and the base ROEs pertinent to those complaints are as follows:
|
| | | | | | |
| Complaint | 15-Month Time Period of Complaint (Beginning as of Complaint Filing Date) | Original Base ROE Authorized by FERC at Time of Complaint Filing Date (1) | Base ROE Subsequently Authorized by FERC for First Complaint Period and also Effective from October 16, 2014 through April 14, 2017 (1) | Reserve (Pre-Tax and Excluding Interest) as of September 30, 2017 (in millions) | | FERC ALJ Recommendation of Base ROE on Second and Third Complaints (Issued March 22, 2016) |
| First | 10/1/2011 - 12/31/2012 | 11.14% | 10.57% | $— | (2) | N/A |
| Second | 12/27/2012 - 3/26/2014 | 11.14% | N/A | 39.1 | (3) | 9.59% |
| Third | 7/31/2014 - 10/30/2015 | 11.14% | 10.57% | — | | 10.90% |
| Fourth | 4/29/2016 - 7/28/2017 | 10.57% | 10.57% | — | | N/A |
(1) The billed ROE (base plus incentives) between October 1, 2011 andperiod) through October 15, 2014 was withinconsisted of a rangebase ROE of 11.14 percent and incentives up to 13.1 percent. On October 16, 2014, the FERC set the base ROE at 10.57 percent and the incentive cap at 11.74 percent for the first complaint period andperiod. This was also effective fromfor all prospective billings to customers beginning October 16, 2014 through2014. This FERC order was vacated on April 14, 2017 by the date on whichU.S. Court of Appeals for the Court vacated this FERC order.D.C. Circuit (the Court).
(2) CL&P, NSTAR Electric, PSNH and WMECO have refunded allAll amounts associated with the first complaint period totaling $38.9have been refunded. Eversource has recorded a reserve of $39.1 million (pre-tax and excluding interest) at Eversource (consistingfor the second complaint period as of $22.4 million at CL&P, $8.4 million at NSTAR Electric, $2.8 million at PSNH,March 31, 2020 and $5.3 million at WMECO), reflecting both the base ROE and incentive cap prescribed by the FERC order.
(3) TheDecember 31, 2019. This reserve represents the difference between the ROEs billed rates during the second complaint period and a 10.57 percent base ROE and 11.74 percent incentive cap. The reserve consisted of $21.4 million for CL&P, $8.5$14.6 million for NSTAR Electric and $3.1 million for PSNH and $6.1 million for WMECO as of September 30, 2017.March 31, 2020 and December 31, 2019.
On June 5, 2017,October 16, 2018, FERC issued an order on all four complaints describing how it intends to address the issues that were remanded by the Court. FERC proposed a new framework to determine (1) whether an existing ROE is unjust and unreasonable and, if so, (2) how to calculate a replacement ROE. Initial briefs were filed by the NETOs, including Eversource, submitted a filing toComplainants and FERC Trial Staff on January 11, 2019 and reply briefs were filed on March 8, 2019. The NETOs' brief was supportive of the overall ROE methodology determined in the October 16, 2018 order provided the FERC to reinstatedoes not change the proposed methodology or alter its implementation in a manner that has a material impact on the results.
The FERC order included illustrative calculations for the first complaint using FERC's proposed frameworks with financial data from that complaint. Those illustrative calculations indicated that for the first complaint period, for the NETOs, which FERC concludes are of average financial risk, the preliminary just and reasonable base ROE of 11.14is 10.41 percent with an associated ROEand the preliminary incentive cap on total ROE is 13.08 percent.
If the results of 13.5 percent effective June 8, 2017, as thesethe illustrative calculations were the last ROEs lawfullyincluded in effect for transmission billing purposes prior to thea final FERC order vacated byfor each of the Court on April 14, 2017. On October 6, 2017, the FERC did not accept the NETOs filing, temporarily leaving in place the ROEs (10.57complaint periods, then a 10.41 percent base ROE with an 11.74and a 13.08 percent incentive cap ROE) set inwould not have a significant impact on our financial statements for all of the first complaint proceeding untilperiods. These preliminary calculations are not binding and do not represent what we believe to be the most likely outcome of a final FERC addresses the Court’s decision.order.
On November 21, 2019, FERC issued an order concerning the transmission ROEs for the Midcontinent ISO transmission owners (MISO). In that order, FERC adopted another new methodology for determining base ROEs for MISO, which differed significantly from the methodology and framework set forth in its October 5, 201716, 2018 FERC order on the NETOs’ ROE dockets. On December 23, 2019, the NETOs filed a series of motions, requesting thatSupplemental Paper Hearing Brief and a Motion to supplement the record in the NETO ROE dockets to respond to the new methodology proposed in the MISO order, as there is uncertainty to whether it may be applied to the NETOs’ cases. On January 21, 2020, the FERC dismississued an order granting rehearing for further consideration to give the FERC more time to act on the substantive issues of the MISO ROE proceedings. Further changes to the methodology by FERC are possible as a result of the arguments in both the MISO and NETO proceedings.
Given the significant uncertainty relating to the October 2018 FERC order, the November 2019 FERC order to MISO, and the FERC's rehearing of the MISO order, the Company is unable to predict the potential effect of the MISO order on the NETO complaints or the outcome of the four complaints and concluded that there is no reasonable basis for a change to the reserve or recognized ROEs for any of the complaint proceedings. Alternatively, if the FERC does not dismiss the proceedings, the NETOs requested that the FERC consolidate all four complaint proceedings for expeditious resolution and/or stay the trial in the fourth complaint proceeding and resolve it based on the standards set in the April 14, 2017 Court decision.
Atperiods at this time,time. Further, the Company cannot reasonably estimate a range of gain or loss for the complaint proceedings. The April 14, 2017 Court decision did not provide a reasonable basis for a change to the reserve balance of $39.1 million (pre-tax, excluding interest) for the second complaint period, and the Company has not changed its reserve or recognized ROEs for any of the four complaint periods.proceedings.
Management cannot at this time predict the ultimate effect of the Court decision or future FERC action on any of the complaint periods or the estimated impacts on the financial position, results of operations or cash flows of Eversource, CL&P, NSTAR Electric and PSNH or WMECO.currently record revenues at the 10.57 percent base ROE and incentive cap at 11.74 percent established in the October 16, 2014 FERC order.
The average impactA change of a 10 basis point changepoints to the base ROE used to establish the reserves would impact Eversource's after-tax earnings by an average of approximately $3 million for each of the four 15-month complaint periods wouldperiods.
FERC Notice of Inquiry on ROE: On March 21, 2019, FERC issued a Notice of Inquiry (NOI) seeking comments from all stakeholders on FERC's policies for evaluating ROEs for electric public utilities, and interstate natural gas and oil pipelines. On June 26, 2019, the NETOs jointly filed comments supporting the methodology established in the FERC’s October 16, 2018 order with minor enhancements going forward. The NETOs jointly filed reply comments in the FERC ROE NOI on July 26, 2019. At this time, Eversource cannot predict how this proceeding will affect Eversource's after-tax earnings by approximately $3 million.its transmission ROEs.
FERC Notice of Inquiry and Proposed Rulemaking on Transmission Incentives: On March 21, 2019, FERC issued a NOI seeking comments on FERC's policies for implementing electric transmission incentives. On June 26, 2019, Eversource filed comments requesting that FERC retain policies that have been effective in encouraging new transmission investment and remain flexible enough to attract investment in new and emerging transmission technologies. Eversource filed reply comments on August 26, 2019. On March 20, 2020, FERC issued a Notice of Proposed Rulemaking (NOPR) on transmission incentives. The NOPR intends to revise FERC’s electric transmission incentive policies to reflect competing uses of transmission due to generation resource mix, technological innovation and shifts in load patterns. FERC proposes to grant transmission incentives based on measurable project economics and reliability benefits to consumers rather than its current project risks and
challenges framework. Comments from interested parties on the NOPR are due July 1, 2020. At this time, Eversource cannot predict how these proceedings will affect its transmission incentives.
FERC Transmission Rate Settlement: On December 28, 2015, FERC initiated a proceeding to review the NETOs' regional and local transmission formula rates due to a lack of transparency, finding that the formula rates appeared to lack sufficient details to determine how costs are derived and recovered in rates. This proceeding was set for hearing but held in abeyance to provide time for settlement judge procedures. On August 17, 2018, a signed Settlement Agreement between twenty-eight parties, including all six New England state regulatory commissions, the NETOs (including CL&P, NSTAR Electric and WMECO MergerPSNH) and other settling parties, was filed at the FERC. The Settlement Agreement included, among other things, a new formula rate template in which all regional and local transmission revenue requirements will be determined through a single formula rate. The Settlement Agreement was contested by a group of municipal entities and the FERC Filings:Trial Staff. On May 22, 2019, FERC rejected the Settlement Agreement and remanded the proceeding for hearings. The parties have been engaged in further settlement negotiations and reached an agreement in principle on October 22, 2019. The FERC Chief Administrative Law Judge has approved three suspensions of the schedule for the NETOs to review the terms with other active parties and finalize the settlement. The procedural schedule has been suspended to June 8, 2020.
U.S. Federal Corporate Income Taxes: Effective January 13, 2017, Eversource made two filings with1, 2018, the local transmission service rates were updated to reflect the lower U.S. federal corporate income tax rate that resulted from the Tax Cuts and Jobs Act. On June 28, 2018, FERC granted a one-time waiver of tariff provisions related to the proposed mergerfederal corporate income tax rate so that, effective June 1, 2018, the regional transmission service rates also reflected the reduced federal corporate income tax rate of WMECO into NSTAR Electric21 percent. The local and regional transmission service rates do not currently reflect amortization of excess ADIT (EDIT) balances that resulted from the Act. On November 15, 2018, FERC issued a Policy Statement and a separate Notice of Proposed Rulemaking addressing accounting and rate issues related to ADIT changes resulting from the Act. On November 21, 2019, FERC issued its final rule requiring public utilities with an anticipated effective date of Decembertransmission formula rates to make adjustments to ADIT and EDIT. On February 24, 2020, FERC granted Eversource’s motion for extension to July 31, 2017. One filing requests FERC approval of the merger, and the other filing requests FERC approval of NSTAR Electric's assumption of WMECO's short-term debt obligations. The FERC approved the merger on March 2, 2017 and will act on the assumption of debt filing by the end of 2017.2020 to submit compliance filings.
Regulatory Developments and Rate Matters
Electric, and Natural Gas and Water Utility Base Distribution Rates:
The Regulatedregulated 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 nine monthsquarter of 2017,2020, changes made to the Regulatedregulated 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 20162019 Form 10-K.
COVID-19 Regulatory Dockets: Beginning in March 2020, in Connecticut, Massachusetts and New Hampshire, there is presently a moratorium on disconnections of residential and commercial customers for non-payment of utility service. Our operating companies have also eliminated late payment charges. In general, these moratoriums will remain in place until the declared COVID-19 state of emergency is lifted by each respective state Governor or further direction is provided by the respective state regulatory commissions.
In Connecticut, PURA opened a docket to address COVID-19 developments, including issuing an order on March 18, 2020 and April 29, 2020 that authorized electric, natural gas and water utilities to establish a regulatory asset for COVID-19 uncollectible customer receivable expenses and related costs. PURA’s order on April 29, 2020 also allowed the inclusion of working capital costs in the regulatory asset, and authorized electric, natural gas and water utilities to establish a payment plan program designed to assist any customer who requests financial assistance during the COVID-19 pandemic. Additionally, on April 17, 2020, PURA issued a letter to Connecticut’s Congressional delegation explaining that reliable utility services are critical services paramount to the economic performance of the state and advocated in favor of directing stimulus funds to regulated public service companies that would be used to directly offset uncollectible customer receivable expenses.
In Massachusetts, on March 31, 2020, the DPU issued a request for comments on, among other things, best practices that regulated utilities should utilize when customer shut-off activities resume. On April 17, 2020, a coalition of electric, natural gas and water utilities submitted a comprehensive response to the DPU that would enable the state’s utilities to provide flexible payment arrangements to those customers who need financial assistance, while simultaneously maintaining the financial integrity necessary to continue to conduct and finance utility operations through appropriate ratemaking treatment and the establishment of a regulatory asset for COVID-19 related expenses, including uncollectible customer receivable expenses, among other proposals.
Consistent with the above-described developments in Connecticut and Massachusetts, Eversource is working closely with the NHPUC on COVID-19 developments impacting our New Hampshire electric and water utilities, including the proposed establishment of flexible payment plan options for those customers who need financial assistance in order to mitigate the size of the uncollectible customer receivable balances that would be borne by all customers in the future.
Massachusetts:
NSTAR Electric Distribution Rates: As part of an inflation-based mechanism, NSTAR Electric submitted its second annual Performance Based Rate Adjustment filing on September 16, 2019 and the DPU approved a $33.6 million increase to base distribution rates on December 19, 2019 for effect on January 1, 2020.
Connecticut:
NSTAR Gas Rate Case: On April 20, 2017, PURA approvedNovember 8, 2019, NSTAR Gas filed its application with the joint request of CL&P, the Connecticut Office of Consumer Counsel and the Connecticut Attorney General to amend the deadline to establish new electricDPU, which sought a distribution rates in the 2012 Connecticut merger settlement agreement from "no later than December 1, 2017" to "no later than July 1, 2018." On October 27, 2017, CL&P filed a letter of intent with PURA to request a rate increase of $255.8 million, $45 million and $36 million effective May 1, 2018, 2019, and 2020, respectively.
Massachusetts:
Eversource and NSTAR Electric Boston Harbor Civil Action: On July 15, 2016, the United States Attorney on behalf of the United States Army Corps of Engineers filed a civil action in the United States District Court for the District of Massachusetts under provisions of the Rivers and Harbors Act of 1899 and the Clean Water Act against NSTAR Electric, Harbor Electric Energy Company, a wholly-owned subsidiary of NSTAR Electric ("HEEC"), and the Massachusetts Water Resources Authority (together with NSTAR Electric and HEEC, the "Defendants"). The action alleged that the Defendants failed to comply with certain permitting requirements related to the placement of the HEEC-owned electric distribution cable beneath Boston Harbor. The action sought an order to compel HEEC to comply with cable depth requirements in the United States Army Corps of Engineers' permit or alternatively to remove the electric distribution cable and cease unauthorized work in U.S. waterways. The action also sought civil penalties and other costs.
After substantial negotiations, the parties reached a settlement whereby HEEC will install a new 115kV distribution cable across Boston Harbor to Deer Island, utilizing a different route, and will remove portions of the existing cable. Upon the installation and completion of the new cable and the removal of the portions of the existing cable, all issues surrounding the current permit from the United States Army Corps of Engineers are expected to be resolved, and such litigation is expected to be dismissed with prejudice.
In 2017, as a result of the settlement, NSTAR Electric expensed $4.9 million (pre-tax) of previously incurred capitalized costs associated with engineering work performed on the existing cable that will no longer be used. In addition, NSTAR Electric agreed to provide a rate base credit of $17.5 million to the Massachusetts Water Resources Authority for the new cable. This negotiated credit will result in the initial $17.5 million of construction costs on the new cable to be expensed as incurred. Construction of the new cable is expected to be completed in 2019.
Massachusetts RFPs: On March 31, 2017, pursuant to a comprehensive energy law enacted in 2016, "An Act to Promote Energy Diversity," (the "Act") the Massachusetts EDCs, including NSTAR Electric and WMECO, and the DOER issued a joint RFP for 9.45 terawatt hours of clean energy per year, such as hydropower, land-based wind or solar. The RFP seeks proposals for long-term contracts of 15 to 20 years to provide the state's electric distribution companies with clean energy generation. The proposal submission due date was July 27, 2017. Contracts will be selected in January 2018, with an expectation to submit executed long-term contracts to the DPU for final approval in April 2018. On July 27, 2017, Eversource Energy Transmission Ventures, Inc. and HQ jointly submitted proposals for Northern Pass into the Massachusetts clean energy RFP. Northern Pass is expected to be placed in service in the second half of 2020.
On June 29, 2017, pursuant to the Act, the Massachusetts EDCs, including NSTAR Electric and WMECO, and the DOER issued a joint RFP for long-term contracts for offshore wind energy projects, seeking bids for a minimum of 400 MW of offshore wind capacity. The Offshore Wind Energy RFP states that bids of up to 800 MW would be considered, provided they demonstrate significant net economic benefits to customers. Bay State Wind submitted a Notice of Intent to Bid on July 26, 2017 and will submit a proposal by the December 20, 2017 due date.
NSTAR Electric and WMECO Rate Case: On January 17, 2017, NSTAR Electric and WMECO jointly filed an application (the "Joint Applicants") with the DPU for approval of a combined $96 million increase in base distribution rates, effective January 1, 2018.$38.0 million. As part of this filing, NSTAR Gas also proposed to continue its ongoing Gas System Enhancement Program (GSEP), include the Joint Applicants are presenting a grid-wise performance plan, including the implementation ofGSEP investments since 2015 into base rates, and implement a performance-based rate-making mechanism in conjunction with a grid modernization base commitment of $400 million in incremental capital investment over a period of five years, commencing January 1, 2018. In addition, the Joint Applicants proposed to streamline and align rate classifications between NSTAR Electric and WMECO, and requested a revenue decoupling rate mechanism for NSTAR Electric. WMECO has a revenue decoupling mechanism in place. The DPU will also be reviewing the proposed December 31, 2017 merger of NSTAR Electric and WMECO as part of the rate case.ratemaking plan. A final decision from the DPU is expected in late 2017,by October 30, 2020, with new rates anticipated to be effective JanuaryNovember 1, 2018.2020.
New Hampshire:
Generation Divestiture: Distribution Rates: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 NHPUC staff, the Office of Consumer Advocate, two State Senators, and several other parties. Under the terms of the Agreement, PSNH agreed to divest its generation assets, subject to NHPUC approval. The Agreement provided for a resolution of issues pertaining to PSNH's generation assets in pending regulatory proceedings before the NHPUC. The Agreement provided 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 agreed to forego recovery of $25 million of the equity return related to the Clean Air Project.
On July 1, 2016, the NHPUC approved the Agreement in an order that, among other things, instructed PSNH to begin the process of divesting its generation assets. The NHPUC selected an auction adviser to assist with the divestiture, and the final plan and auction process were approved by the NHPUC in November 2016.
On October 11, 2017, PSNH entered into two Purchase and Sale Agreements ("Agreements") to sell its thermal and hydroelectric generation assets to private investors at purchase prices of $175 million and $83 million, respectively, subject to adjustments as set forth in each Agreement.
On October 12, 2017,April 26, 2019, PSNH filed an application with the NHPUC requestingfor approval of a temporary annual base distribution rate increase, effective July 1, 2019. On June 27, 2019, the Agreements. We expectNHPUC approved a settlement agreement that was reached by PSNH, the NHPUC Staff, the Office of the Consumer Advocate, and another settling party, to receive approvalsimplement a temporary annual base distribution rate increase of $28.3 million. Although new rates were implemented on August 1, 2019 to customers, the provisions of the temporary base distribution rate increase were effective July 1, 2019. The settlement agreement also permits PSNH to recover approximately $68.5 million in unrecovered storm costs over a five-year period beginning August 1, 2019, with debt carrying charges, which is included in the temporary rate increase.
On May 28, 2019, PSNH filed an application with the NHPUC for a permanent increase in base distribution rates of approximately $70 million, effective July 1, 2020, which includes the temporary rate increase request. The temporary rates are subject to reconciliation based on the outcome of the permanent rate case now before the NHPUC. The NHPUC is permitted up to twelve months to adjudicate the permanent rate application from the date of filing. On April 24, 2020, Governor Sununu issued an emergency order, which extends the maximum adjudication period by six months, for a maximum of 18 months. A decision by the NHPUC is now expected in the fourth quarter of 2020. Temporary rates will remain in effect with a reconciliation of permanent rates retroactive to July 1, 2019 once permanent rates are set.
Draft Audit Report of Generation Asset Divestiture-Related Costs: On May 4, 2020, the NHPUC Audit Staff issued a draft report on the audit of PSNH’s generation asset divestiture-related costs and other necessary regulatory agencies by late December 2017 or early 2018,resulting securitized and stranded costs. Responses are due no later than May 12, 2020, with a final NHPUC audit report expected on May 15, 2020. We are currently evaluating the transactionsNHPUC audit findings and continue to be completed shortly thereafter. Upon completion, full recoverybelieve the amounts deferred are probable of PSNH's generation assets will occur through a combination of cash flows during the remaining operating period, sales proceeds, and recovery of stranded costs via bonds that will be secured by a non-bypassable charge or through recoveries in future rates billed to PSNH's customers. recovery.
As of September 30, 2017, PSNH's energy service rate base balance was approximately $594 million, and the carrying value of PSNH's total generation assets subject to divestiture was approximately $767 million.
Legislative and Policy Matters
Federal:On August 11, 2017, Massachusetts issued final legislation, pursuantMarch 27, 2020, President Trump signed the $2.2 trillion bipartisan Coronavirus Aid, Relief, and Economic Security (CARES) Act. Among other provisions, the CARES Act provides for loans and other benefits to Executive Order 569, which established volumetric limitssmall and large businesses, expanded unemployment insurance, direct payments to those with wages middle-income and below, new appropriations funding for health care and other priorities, and tax changes like deferrals of employer payroll tax liabilities coupled with an employee retention tax credit and rollbacks of Tax Cuts and Jobs Act limitations on multiple greenhouse emission sources to ensure reductions are realized by deadlines established in the Massachusetts Global Warming Solutions Act enacted in 2008. Under this legislation, the initial target date for reduction in greenhouse gas emissions has been established innet operating losses and certain business interest limitation. For the year 2020. The legislation isended December 31, 2020, we expect an estimated cash flow benefit of about $35 million related to the deferral of employer payroll tax liability provision. We will continue to evaluate the CARES Act impact; however, other than the cash flow benefit described, we do not expectedexpect the CARES Act to have a material impact on the financial statements of Eversource, NSTAR Electric or WMECO.impact.
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 20162019 Form 10-K. There have been no material changes with regard to these critical accounting policies.
Other Matters
Accounting Standards: For information regarding new accounting standards, see Note 1B, "Summary of Significant Accounting Policies –Accounting– Accounting Standards," to the financial statements.
Contractual Obligations and Commercial 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 20162019 Form 10-K.
Web Site: Additional financial information is available through our website at 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'sPSNH'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.
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, 2017March 31, 2020 and 20162019 included in this combined Quarterly Report on Form 10-Q:
| | | | For the Three Months Ended September 30, | | For the Nine Months Ended September 30, | For the Three Months Ended March 31, |
| (Millions of Dollars) | 2017 | | 2016 | | Increase/
(Decrease) | | Percent | | 2017 | | 2016 | | Increase/
(Decrease) | | Percent | 2020 | | 2019 | | Increase/
(Decrease) |
| Operating Revenues | $ | 1,988.5 |
| | $ | 2,039.7 |
| | $ | (51.2 | ) | | (2.5 | )% | | $ | 5,856.5 |
| | $ | 5,862.5 |
| | $ | (6.0 | ) | | (0.1 | )% | $ | 2,373.7 |
| | $ | 2,415.8 |
| | $ | (42.1 | ) |
| Operating Expenses: | |
| | |
| | |
| | |
| | | | |
| | |
| | |
| | | |
| | |
|
| Purchased Power, Fuel and Transmission | 651.8 |
| | 665.8 |
| | (14.0 | ) | | (2.1 | ) | | 1,955.1 |
| | 2,001.9 |
| | (46.8 | ) | | (2.3 | ) | 876.5 |
| | 974.9 |
| | (98.4 | ) |
| Operations and Maintenance | 300.4 |
| | 324.7 |
| | (24.3 | ) | | (7.5 | ) | | 933.4 |
| | 965.6 |
| | (32.2 | ) | | (3.3 | ) | 342.1 |
| | 335.6 |
| | 6.5 |
|
| Depreciation | 194.5 |
| | 181.3 |
| | 13.2 |
| | 7.3 |
| | 571.2 |
| | 531.8 |
| | 39.4 |
| | 7.4 |
| 236.2 |
| | 214.9 |
| | 21.3 |
|
| Amortization of Regulatory Assets, Net | 41.8 |
| | 43.9 |
| | (2.1 | ) | | (4.8 | ) | | 58.1 |
| | 56.2 |
| | 1.9 |
| | 3.4 |
| |
| Amortization | | 49.8 |
| | 71.0 |
| | (21.2 | ) |
| Energy Efficiency Programs | 129.2 |
| | 149.1 |
| | (19.9 | ) | | (13.3 | ) | | 391.8 |
| | 406.0 |
| | (14.2 | ) | | (3.5 | ) | 148.4 |
| | 140.1 |
| | 8.3 |
|
| Taxes Other Than Income Taxes | 168.2 |
| | 165.0 |
| | 3.2 |
| | 1.9 |
| | 479.6 |
| | 479.2 |
| | 0.4 |
| | 0.1 |
| 181.5 |
| | 184.6 |
| | (3.1 | ) |
| Total Operating Expenses | 1,485.9 |
| | 1,529.8 |
| | (43.9 | ) | | (2.9 | ) | | 4,389.2 |
| | 4,440.7 |
| | (51.5 | ) | | (1.2 | ) | 1,834.5 |
| | 1,921.1 |
| | (86.6 | ) |
| Operating Income | 502.6 |
| | 509.9 |
| | (7.3 | ) | | (1.4 | ) | | 1,467.3 |
| | 1,421.8 |
| | 45.5 |
| | 3.2 |
| 539.2 |
| | 494.7 |
| | 44.5 |
|
| Interest Expense | 108.7 |
| | 99.9 |
| | 8.8 |
| | 8.8 |
| | 319.5 |
| | 298.6 |
| | 20.9 |
| | 7.0 |
| 134.7 |
| | 131.7 |
| | 3.0 |
|
| Other Income, Net | 21.2 |
| | 13.6 |
| | 7.6 |
| | 55.9 |
| | 56.3 |
| | 23.7 |
| | 32.6 |
| | (a) |
| 24.1 |
| | 31.0 |
| | (6.9 | ) |
| Income Before Income Tax Expense | 415.1 |
| | 423.6 |
| | (8.5 | ) | | (2.0 | ) | | 1,204.1 |
| | 1,146.9 |
| | 57.2 |
| | 5.0 |
| 428.6 |
| | 394.0 |
| | 34.6 |
|
| Income Tax Expense | 152.8 |
| | 156.4 |
| | (3.6 | ) | | (2.3 | ) | | 447.9 |
| | 428.2 |
| | 19.7 |
| | 4.6 |
| 91.9 |
| | 83.4 |
| | 8.5 |
|
| Net Income | 262.3 |
| | 267.2 |
| | (4.9 | ) | | (1.8 | ) | | 756.2 |
| | 718.7 |
| | 37.5 |
| | 5.2 |
| 336.7 |
| | 310.6 |
| | 26.1 |
|
| Net Income Attributable to Noncontrolling Interests | 1.9 |
| | 1.9 |
| | — |
| | — |
| | 5.6 |
| | 5.6 |
| | — |
| | — |
| 1.9 |
| | 1.9 |
| | — |
|
| Net Income Attributable to Common Shareholders | $ | 260.4 |
| | $ | 265.3 |
| | $ | (4.9 | ) | | (1.8 | )% | | $ | 750.6 |
| | $ | 713.1 |
| | $ | 37.5 |
| | 5.3 | % | $ | 334.8 |
| | $ | 308.7 |
| | $ | 26.1 |
|
(a) Percent greater than 100 not shown as it is not meaningful.
Operating Revenues
A summary of our Operating Revenues by segment is as follows:
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | For the Three Months Ended September 30, | | For the Nine Months Ended September 30, |
| (Millions of Dollars) | 2017 | | 2016 | | Increase/
(Decrease) | | Percent | | 2017 | | 2016 | | Increase/
(Decrease) | | Percent |
| Electric Distribution | $ | 1,547.1 |
| | $ | 1,623.4 |
| | $ | (76.3 | ) | | (4.7 | )% | | $ | 4,224.2 |
| | $ | 4,362.6 |
| | $ | (138.4 | ) | | (3.2 | )% |
| Natural Gas Distribution | 109.2 |
| | 99.2 |
| | 10.0 |
| | 10.1 |
| | 698.8 |
| | 622.3 |
| | 76.5 |
| | 12.3 |
|
| Electric Transmission | 328.5 |
| | 306.8 |
| | 21.7 |
| | 7.1 |
| | 970.0 |
| | 892.5 |
| | 77.5 |
| | 8.7 |
|
| Other and Eliminations | 3.7 |
| | 10.3 |
| | (6.6 | ) | | (64.1 | ) | | (36.5 | ) | | (14.9 | ) | | (21.6 | ) | | (a) |
|
| Total Operating Revenues | $ | 1,988.5 |
| | $ | 2,039.7 |
| | $ | (51.2 | ) | | (2.5 | )% | | $ | 5,856.5 |
| | $ | 5,862.5 |
| | $ | (6.0 | ) | | (0.1 | )% |
(a) Percent greater than 100 not shown as it is not meaningful.
Sales Volumes:A summary of our retail electric GWh sales volumes, and our firm natural gas MMcf sales volumes, in MMcf wereand our water MG sales volumes, and percentage changes, is as follows:
|
| | | | | | | | | | | | | | | | | | | | | | | |
| | For the Three Months Ended September 30, | | For the Nine Months Ended September 30, |
| | 2017 | | 2016 | | Increase/ (Decrease) | | Percent | | 2017 | | 2016 | | Increase/ (Decrease) | | Percent |
| Electric | | | | | | | | | | | | | | | |
| Traditional | 7,545 |
| | 8,131 |
| | (586 | ) | | (7.2 | )% | | 21,040 |
| | 21,731 |
| | (691 | ) | | (3.2 | )% |
| Decoupled | 6,551 |
| | 7,213 |
| | (662 | ) | | (9.2 | ) | | 18,391 |
| | 19,235 |
| | (844 | ) | | (4.4 | ) |
| Total Electric | 14,096 |
| | 15,344 |
| | (1,248 | ) | | (8.1 | ) | | 39,431 |
| | 40,966 |
| | (1,535 | ) | | (3.7 | ) |
| | | | | | | | | | | | | | | | |
| Firm Natural Gas | | | | | |
| | | | | | | | |
| | |
| Traditional | 5,550 |
| | 5,270 |
| | 280 |
| | 5.3 |
| | 32,233 |
| | 31,570 |
| | 663 |
| | 2.1 |
|
| Decoupled and Special Contracts | 5,975 |
| | 5,653 |
| | 322 |
| | 5.7 |
| | 37,453 |
| | 36,537 |
| | 916 |
| | 2.5 |
|
| Total Firm Natural Gas | 11,525 |
| | 10,923 |
| | 602 |
| | 5.5 | % | | 69,686 |
| | 68,107 |
| | 1,579 |
| | 2.3 | % |
|
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Electric | | Firm Natural Gas | | Water |
| | Sales Volumes (GWh) | | Percentage
Decrease | | Sales Volumes (MMcf) | | Percentage
Decrease | | Sales Volumes (MG) | | Percentage
Decrease |
| Three Months Ended March 31: | 2020 | | 2019 | | | 2020 | | 2019 | | | 2020 | | 2019 | |
| Traditional | 1,906 |
| | 1,968 |
| | (3.2 | )% | | — |
| | — |
| | — | % | | 434 |
| | 451 |
| | (3.8 | )% |
Decoupled and Special Contracts (1) | 10,465 |
| | 11,183 |
| | (6.4 | )% | | 39,062 |
| | 45,376 |
| | (13.9 | )% | | 4,372 |
| | 4,378 |
| | (0.1 | )% |
| Total Sales Volumes | 12,371 |
| | 13,151 |
| | (5.9 | )% | | 39,062 |
| | 45,376 |
| | (13.9 | )% | | 4,806 |
| | 4,829 |
| | (0.5 | )% |
| |
(1) | Special contracts are unique to Yankee Gas 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. |
Three Months Ended:
Operating Revenues, which primarily consist of baseWeather, fluctuations in energy supply costs, conservation measures (including utility-sponsored energy efficiency programs), and economic conditions affect customer energy usage and water consumption. Industrial sales volumes are less sensitive to temperature variations than residential and commercial sales volumes. In our service territories, weather impacts both electric and water 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 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 PSNH impact earnings ("Traditional" in the table above). For CL&P, NSTAR Electric, Yankee Gas, NSTAR Gas and our Connecticut water distribution business, fluctuations in retail sales volumes do not materially impact earnings due to their respective regulatory commission-approved distribution revenue decoupling mechanisms ("Decoupled" in the table above). These distribution revenues are decoupled from their customer sales volumes, which breaks the relationship between sales volumes and tracked revenues further described below, decreasedrecognized.
Operating Revenues: Operating Revenues by $51.2 millionsegment increased/(decreased) for the three months ended September 30, 2017,March 31, 2020, as compared to the same period in 2016. 2019, as follows:
|
| | | |
| (Millions of Dollars) | Three Months Ended |
| Electric Distribution | $ | (28.6 | ) |
| Natural Gas Distribution | (20.3 | ) |
| Electric Transmission | 29.2 |
|
| Water Distribution | 1.4 |
|
| Other | 36.5 |
|
| Eliminations | (60.3 | ) |
| Total Operating Revenues | $ | (42.1 | ) |
Electric and Natural Gas Distribution Revenues:
Base electric and natural gas distribution revenues: Distribution Revenues:
Base electric distribution segment revenues excluding LBR, decreased $21.0increased $31.8 million for the three months ended September 30, 2017,March 31, 2020, as compared to the same period in 2016,2019, due primarily to a decrease in sales volumesthe impact of CL&P's base distribution rate increase effective May 1, 2019, which includes recovery of storm costs and lower demand revenues driven by the mild summer weather during the third quarter of 2017 atcertain other items that do not impact earnings, an NSTAR Electric base distribution rate increase effective January 1, 2020, and PSNH. LBRa PSNH temporary base distribution rate increase effective July 1, 2019, which includes recovery of storm costs and certain other items that do not impact earnings.
Base natural gas distribution revenues increased $1.5$8.6 million for the three months ended September 30, 2017,March 31, 2020, as compared to the same period in 2016.
Base natural gas distribution revenues remained relatively unchanged for the three months ended September 30, 2017, as compared2019, due primarily to the same period in 2016.
Fluctuations in CL&P's, WMECO's and NSTAR Gas' sales volumes do not impact the level ofa base distribution revenue realized or earnings due to their respective regulatory commission approved revenue decoupling mechanisms. The revenue decoupling mechanisms permit recovery of a base amount of distribution revenues and break the relationship between sales volumes and revenues recognized. Revenue decoupling mechanisms result in the recovery of our approved base distribution revenue requirements. rate increase at Yankee Gas effective January 1, 2020.
Tracked Distribution Revenues:Tracked distribution revenues: Tracked revenues consist of certain costs that are recovered from customers in retail rates through regulatory commission-approved cost tracking mechanisms and therefore, haverecovery of these costs has 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 customers, retail transmission charges, energy efficiency program costs, and restructuring and stranded cost recovery revenues. In addition, certainHowever, tracked revenues do include certain incentives earned, return on rate base, and carrying charges that are billed in rates to customers. Tracked natural gas distribution segment revenues increased as a result of an increase incustomers, which do impact earnings. Costs recovered through cost tracking mechanisms include, among others, energy supply and natural gas supply procurement and other energy-related costs, ($7.6 million) and an increase inelectric retail transmission charges, energy efficiency program revenues ($2.2 million). Trackedcosts, electric distribution revenues decreased as a result of a decrease in retail electric transmission charges ($39.8 million), a decrease inrestructuring and stranded cost recovery revenues ($16.9 million)(including securitized RRB charges), a decrease in energy efficiency program revenues ($13.9 million) and a decrease inadditionally for NSTAR Electric, pension rate adjustment mechanisms ($7.1 million). Partially offsetting these decreases were increases in tracked electric distribution revenues related to electric energy supply costs ($7.3 million), revenues related to renewable energy requirements ($10.8 million),and PBOP benefits and net metering for distributed generation. Tracked revenues ($7.0 million)also include wholesale market sales transactions, such as sales of energy and federally-mandated congestion charges ($2.8 million).
Electric transmission revenues: The electric transmission segment revenues increased by $21.7 million due primarily toenergy-related products into the recovery of higher revenue requirements associated with ongoing investments in our transmission infrastructure.
Other: Other revenues decreased due primarily toISO-NE wholesale electricity market and the sale of Eversource's unregulated telecommunication business on December 31, 2016 ($5.0 million).RECs to various counterparties.
Nine Months Ended:
Operating Revenues decreased by $6.0 millionTracked distribution revenues increased/(decreased) for the ninethree months ended September 30, 2017,March 31, 2020, as compared to the same period in 2016. 2019, due primarily to the following:
Base electric and natural gas distribution revenues: Base |
| | | | | | | |
| | Electric Distribution | | Natural Gas Distribution |
| (Millions of Dollars) | Three Months Ended | | Three Months Ended |
| Retail Tariff Tracked Revenues: | | | |
| Energy supply procurement | $ | (111.0 | ) | | $ | (27.9 | ) |
| Retail transmission | (13.3 | ) | | N/A |
|
| Other distribution tracking mechanisms | 12.4 |
| | 10.8 |
|
| Wholesale Market Sales Revenue | 39.5 |
| | (8.5 | ) |
The decrease in energy supply procurement within electric distribution segmentwas driven primarily by lower average sales volumes and lower average prices. The increase in wholesale market sales revenue within electric distribution was due primarily to a new zero-carbon PPA entered into by CL&P in 2019, as required by regulation, from which the energy purchased from Millstone Nuclear Power Station (Millstone) was sold into the market beginning in the fourth quarter of 2019.
Electric Transmission Revenues: Electric transmission revenues excluding LBR, decreased $13.2increased $29.2 million for the ninethree months ended September 30, 2017,March 31, 2020, as compared to the same period in 2016,2019, due primarily to a decreasecontinued investment in sales volumes driven byour transmission infrastructure.
Other Revenues and Eliminations: Other revenues primarily include the mild summer weather duringrevenues of Eversource's service company, most of which are eliminated in consolidation. Eliminations are also primarily related to the third quarterEversource electric transmission revenues that are derived from ISO-NE regional transmission charges to the distribution businesses of 2017 atCL&P, NSTAR Electric and PSNH. LBR increased $10.6 million forPSNH that recover the nine months ended September 30, 2017, as compared tocosts of the same period in 2016. wholesale transmission business.
Base natural gas distribution revenues remained relatively unchanged for the nine months ended September 30, 2017, as compared to the same period in 2016. The impact of higher firm natural gas sales volumes was offset by lower demand revenues in Connecticut driven by lower peak usage in 2017, as compared to 2016.
Tracked distribution revenues: Tracked natural gas distribution segment revenues increased as a result of an increase in natural gas supply costs ($57.8 million) and an increase in energy efficiency program revenues ($17.1 million). Tracked electric distribution revenues decreased as a result of a decrease in electric energy supply costs ($81.0 million), driven by decreased average retail prices and lower sales volumes, a decrease in retail electric transmission charges ($45.9 million), a decrease in transition and stranded cost recovery revenues ($33.1 million), a decrease in pension rate adjustment mechanisms ($16.2 million), and a decrease in energy efficiency program revenues ($8.8 million). Partially offsetting these decreases were increases in tracked electric distribution revenues related to federally-mandated congestion charges ($23.0 million), net metering revenues ($22.4 million) and revenues related to renewable energy requirements and the sale of PSNH's RECs ($14.7 million).
Electric transmission revenues: The electric transmission segment revenues increased by $77.5 million due primarily to 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 telecommunication business on December 31, 2016 ($15.0 million).
Purchased Power, Fuel and Transmissionexpense includes costs associated with purchasing electricity and natural gas on behalf of our customers. These energyelectric and natural gas supply costs are recovered from customers in rates through commission-approved cost tracking mechanisms, which have no impact on earnings (tracked costs). Total Purchased Power, Fuel and Transmission expense decreased for the three and nine months ended September 30, 2017,March 31, 2020, as compared to the same periodsperiod in 2016,2019, due primarily to the following:
| | | (Millions of Dollars) | Three Months Ended Increase/(Decrease) | | Nine Months Ended
Increase/(Decrease) | Three Months Ended |
| Electric Distribution | $ | (0.4 | ) | | $ | (109.1 | ) | $ | (23.9 | ) |
| Natural Gas Distribution | 7.0 |
| | 50.1 |
| (34.6 | ) |
| Transmission | (20.6 | ) | | 12.2 |
| (14.3 | ) |
| Eliminations | | (25.6 | ) |
| Total Purchased Power, Fuel and Transmission | $ | (14.0 | ) | | $ | (46.8 | ) | $ | (98.4 | ) |
The decrease in purchased power expense at the electric distribution business for the ninethree months ended September 30, 2017,March 31, 2020, as compared to the same period in 2016,2019, was driven primarily by lower average sales volumes and lower average prices associated with the procurement of energy supply, and lower sales volumes.partially offset by the impact of energy purchases from the new Millstone PPA. The increasedecrease in purchased power expensenatural gas supply costs at theour natural gas distribution business for each of the periods presentedthree months ended March 31, 2020, as compared to the same period in 2019, was due primarily to higherlower average natural gas pricessales volumes and higher sales volumes. prices.
The decrease in transmission costs for the three months ended September 30, 2017,March 31, 2020, as compared to the same period in 2016,2019, 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. The increase in transmission costs for the nine months ended September 30, 2017, as compared to the same period in 2016, was primarily the result of an increasecustomers, and a decrease in costs billed by ISO-NE that support regional grid investment, andinvestments. This was partially offset by an increase in Local Network Service charges, which reflectreflects the cost of transmission service provided by Eversource over our local transmission network. This was partially offset by a decrease in the retail transmission cost deferral.
Operations and Maintenance expense includes tracked costs and costs that are part of base electric, and natural gas and water distribution rates with changes impacting earnings (non-tracked costs). Operations and Maintenance expense decreasedincreased/(decreased) for the three and nine months ended September 30, 2017,March 31, 2020, as compared to the same periodsperiod in 2016,2019, due primarily to the following:
|
| | | | | | | |
| (Millions of Dollars) | Three Months Ended Increase/(Decrease) | | Nine Months Ended Increase/(Decrease) |
| Base Electric Distribution: | | | |
| Employee-related expenses, including labor and benefits | $ | (15.0 | ) | | $ | (46.2 | ) |
| Bad debt expense | (2.6 | ) | | (15.3 | ) |
| Shared corporate costs (including computer software depreciation at Eversource Service) | 5.4 |
| | 15.0 |
|
| Storm restoration costs | (4.0 | ) | | 3.1 |
|
| Boston Harbor civil action settlement charge recorded in the second quarter of 2017 | — |
| | 4.9 |
|
| Other operations and maintenance | 9.1 |
| | 15.7 |
|
| Total Base Electric Distribution | (7.1 | ) | | (22.8 | ) |
| Total Base Natural Gas Distribution: | | | |
| Shared corporate costs (including computer software depreciation at Eversource Service) | 1.2 |
| | 3.6 |
|
| Other operations and maintenance | (4.1 | ) | | (1.5 | ) |
| Total Base Natural Gas Distribution | (2.9 | ) | | 2.1 |
|
| Total Tracked costs (Electric Distribution, Electric Transmission and Natural Gas Distribution) | (5.5 | ) | | 7.2 |
|
| Other and eliminations: | | | |
| Eversource Parent and Other Companies | (1.1 | ) | | 0.8 |
|
| Eliminations | (7.7 | ) | | (19.5 | ) |
| Total Operations and Maintenance | $ | (24.3 | ) | | $ | (32.2 | ) |
|
| | | |
| (Millions of Dollars) | Three Months Ended |
| Base Electric Distribution (Non-Tracked Costs): | |
| Storm Restoration Costs | $ | (8.6 | ) |
| Employee-related expenses, including labor and benefits | (2.4 | ) |
| Operations-related expenses, including vegetation management, vehicles, and outside services | 0.5 |
|
| Shared corporate costs (including computer software depreciation at Eversource Service) | 5.2 |
|
| Other non-tracked operations and maintenance | 3.4 |
|
| Total Base Electric Distribution (Non-Tracked Costs) | (1.9 | ) |
| Base Natural Gas Distribution (Non-Tracked Costs) | 1.2 |
|
| Water Distribution | (0.3 | ) |
| Tracked Costs (Electric Distribution, Electric Transmission and Natural Gas Distribution) - Increase due primarily to higher electric transmission expenses and employee-related costs | 10.7 |
|
| Other and eliminations: | |
| Eversource Parent and Other Companies - other operations and maintenance | 26.5 |
|
| Acquisition costs related to our planned purchase of the assets of CMA | 4.9 |
|
| Eliminations | (34.6 | ) |
| Total Operations and Maintenance | $ | 6.5 |
|
Depreciation expense increased for the three and nine months ended September 30, 2017,March 31, 2020, as compared to the same periodsperiod in 2016,2019, due primarily to higher utility plant in service balances.
Amortization of Regulatory Assets, Net expense includes the deferral of energy supply, energy-related costs and other costs that are included in certain regulatory commission-approved cost tracking mechanisms, and the amortization of certain costs as those costs are collected in rates. This deferral adjusts expense to match the corresponding revenues. Energy supply and energy-related costs are recovered from customers in rates and have no impact on earnings. Amortization decreased for the three months ended March 31, 2020, as compared to the same period in 2019, due primarily to the deferral of energy supply and energy-related costs and an increase in the recovery of PSNH storm costs.
Energy Efficiency Programs expense increased for the three months ended March 31, 2020, as compared to the same period in 2019, due primarily to higher spending for CL&P's and PSNH's energy efficiency programs, partially offset by a decrease in spending on certain large energy efficiency projects in 2020 compared to 2019 at NSTAR Electric due to timing. The costs for the majority of the 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 decreased for the three months ended March 31, 2020, as compared to the same period in 2019, due primarily to a decrease of $10.7 million related to CL&P's remittance of energy efficiency funds to the State of Connecticut. Energy efficiency funds collected from customers after July 1, 2019 are no longer subject to remittance to the State of Connecticut. The decrease is partially offset by an increase in property taxes as a result of higher utility plant balances.
Interest Expense increased for the three months ended March 31, 2020, as compared to the same period in 2019, due primarily to an increase in interest on long-term debt as a result of new debt issuances ($6.8 million). Partially offsetting this increase was an increase in AFUDC related to debt funds and other capitalized interest ($3.1 million) and a decrease in interest on notes payable ($2.2 million).
Other Income, Net decreased for the three months ended March 31, 2020, as compared to the same period in 2019, due primarily to the absence in 2020 of the recognition of the equity component of the carrying charges related to PSNH storm costs recorded in interest income in 2019 ($5.2 million), and investment losses in 2020, as compared to investment income in 2019 driven by market volatility ($5.5 million). Partially offsetting these decreases was an increase related to pension, SERP and PBOP non-service income components ($5.3 million),
Income Tax Expense increased for the three months ended March 31, 2020, as compared to the same period in 2019, due primarily to higher pre-tax earnings ($7.3 million), higher state taxes ($4.5 million), and items that impact our tax rate as a result of regulatory treatment (flow-through items) and permanent differences ($3.1 million), partially offset by an increase in share-based payment excess tax benefits ($4.8 million) and an increase in amortization of EDIT ($1.6 million).
RESULTS OF OPERATIONS –
THE CONNECTICUT LIGHT AND POWER COMPANY
NSTAR ELECTRIC COMPANY AND SUBSIDIARY
PUBLIC SERVICE COMPANY OF NEW HAMPSHIRE AND SUBSIDIARIES
The following provides the amounts and variances in operating revenues and expense line items in the statements of income for CL&P, NSTAR Electric and PSNH for the three months ended March 31, 2020 and 2019 included in this combined Quarterly Report on Form 10-Q:
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | For the Three Months Ended March 31, |
| | CL&P | | NSTAR Electric | | PSNH |
| (Millions of Dollars) | 2020 | | 2019 | | Increase/
(Decrease) | | 2020 | | 2019 | | Increase/ (Decrease) | | 2020 | | 2019 | | Increase/ (Decrease) |
| Operating Revenues | $ | 899.7 |
| | $ | 849.2 |
| | $ | 50.5 |
| | $ | 733.8 |
| | $ | 797.6 |
| | $ | (63.8 | ) | | $ | 276.4 |
| | $ | 276.4 |
| | $ | — |
|
| Operating Expenses: | |
| | |
| | |
| | | | | | |
| | | | | | |
|
| Purchased Power and Transmission | 374.7 |
| | 319.8 |
| | 54.9 |
| | 242.4 |
| | 330.1 |
| | (87.7 | ) | | 94.1 |
| | 113.5 |
| | (19.4 | ) |
| Operations and Maintenance | 135.6 |
| | 130.6 |
| | 5.0 |
| | 122.3 |
| | 113.0 |
| | 9.3 |
| | 47.1 |
| | 52.6 |
| | (5.5 | ) |
| Depreciation | 78.4 |
| | 73.3 |
| | 5.1 |
| | 78.3 |
| | 72.6 |
| | 5.7 |
| | 24.3 |
| | 22.9 |
| | 1.4 |
|
| Amortization of Regulatory Assets, Net | 6.6 |
| | 35.7 |
| | (29.1 | ) | | 27.0 |
| | 22.6 |
| | 4.4 |
| | 20.1 |
| | 13.7 |
| | 6.4 |
|
| Energy Efficiency Programs | 35.5 |
| | 26.0 |
| | 9.5 |
| | 68.7 |
| | 76.7 |
| | (8.0 | ) | | 9.4 |
| | 6.7 |
| | 2.7 |
|
| Taxes Other Than Income Taxes | 83.0 |
| | 92.0 |
| | (9.0 | ) | | 48.8 |
| | 44.8 |
| | 4.0 |
| | 19.8 |
| | 17.3 |
| | 2.5 |
|
| Total Operating Expenses | 713.8 |
| | 677.4 |
| | 36.4 |
| | 587.5 |
| | 659.8 |
| | (72.3 | ) | | 214.8 |
| | 226.7 |
| | (11.9 | ) |
| Operating Income | 185.9 |
| | 171.8 |
| | 14.1 |
| | 146.3 |
| | 137.8 |
| | 8.5 |
| | 61.6 |
| | 49.7 |
| | 11.9 |
|
| Interest Expense | 37.8 |
| | 35.8 |
| | 2.0 |
| | 30.9 |
| | 27.9 |
| | 3.0 |
| | 14.5 |
| | 14.4 |
| | 0.1 |
|
| Other Income, Net | 1.9 |
| | 3.9 |
| | (2.0 | ) | | 12.2 |
| | 11.1 |
| | 1.1 |
| | 3.2 |
| | 7.0 |
| | (3.8 | ) |
| Income Before Income Tax Expense | 150.0 |
| | 139.9 |
| | 10.1 |
| | 127.6 |
| | 121.0 |
| | 6.6 |
| | 50.3 |
| | 42.3 |
| | 8.0 |
|
| Income Tax Expense | 31.3 |
| | 29.4 |
| | 1.9 |
| | 27.2 |
| | 27.0 |
| | 0.2 |
| | 10.7 |
| | 9.5 |
| | 1.2 |
|
| Net Income | $ | 118.7 |
| | $ | 110.5 |
| | $ | 8.2 |
| | $ | 100.4 |
| | $ | 94.0 |
| | $ | 6.4 |
| | $ | 39.6 |
| | $ | 32.8 |
| | $ | 6.8 |
|
Operating Revenues
Sales Volumes: A summary of our retail electric GWh sales volumes is as follows:
|
| | | | | | | | | | | |
| | For the Three Months Ended March 31, |
| | 2020 | | 2019 | | Decrease | | Percentage Decrease |
| CL&P | 4,941 |
| | 5,350 |
| | (409 | ) | | (7.6 | )% |
| NSTAR Electric | 5,524 |
| | 5,833 |
| | (309 | ) | | (5.3 | )% |
| PSNH | 1,906 |
| | 1,968 |
| | (62 | ) | | (3.2 | )% |
Fluctuations in retail electric sales volumes at PSNH impact earnings. For CL&P and NSTAR Electric, fluctuations in retail electric sales volumes do not impact earnings due to their respective regulatory commission-approved distribution revenue decoupling mechanisms.
Operating Revenues: Operating Revenues, which consist of base distribution revenues and tracked revenues further described below, increased $50.5 million at CL&P, decreased $63.8 million at NSTAR Electric and was unchanged at PSNH, for the three months ended March 31, 2020, as compared to the same period in 2019.
Base Distribution Revenues:
CL&P's distribution revenues increased $13.4 million due primarily to the impact of its base distribution rate increase effective May 1, 2019, which includes recovery of storm costs and certain other items that do not impact earnings.
NSTAR Electric's distribution revenues increased $7.6 million due primarily to the impact of its base distribution rate increase effective January 1, 2020.
PSNH's distribution revenues increased $10.8 million due primarily to the impact of its temporary base distribution rate increase effective July 1, 2019, which includes recovery of storm costs and certain other items that do not impact earnings.
Tracked Revenues: Tracked distribution revenues consist of certain costs that are recovered from customers in retail rates through regulatory commission-approved cost tracking mechanisms and therefore, recovery of these costs has no impact on earnings. However, tracked revenues do include certain incentives earned, return on rate base, and carrying charges that are billed in rates to customers, which do impact earnings. Costs recovered through cost tracking mechanisms include, among others, energy supply procurement and other energy-related costs, retail transmission charges, energy efficiency program costs, electric restructuring and stranded cost recovery revenues (including securitized RRB charges), and additionally for NSTAR Electric, pension and PBOP benefits and net metering for distributed generation. Tracked revenues also include wholesale market sales transactions, such as sales of energy and energy-related products into the ISO-NE wholesale electricity market and the sale of RECs to various counterparties.
Tracked revenues increased/(decreased) for the three months ended March 31, 2020, as compared to the same period in 2019, due primarily to the following:
|
| | | | | | | | | | | |
| (Millions of Dollars) | CL&P | | NSTAR Electric | | PSNH |
| Retail Tariff Tracked Revenues: | | | | | |
| Energy supply procurement | $ | (40.4 | ) | | $ | (57.1 | ) | | $ | (13.5 | ) |
| Retail transmission | (10.5 | ) | | (4.9 | ) | | 2.1 |
|
| Other distribution tracking mechanisms | 30.4 |
| | (14.7 | ) | | (3.3 | ) |
| Wholesale Market Sales Revenue | 51.0 |
| | (10.0 | ) | | (1.5 | ) |
The decrease in energy supply procurement reflects both lower average sales volumes and lower average prices for the three months ended March 31, 2020, as compared to the same period in 2019.
Revenues from CL&P's other distribution tracking mechanisms include higher earnings from its capital tracker mechanism due to increased electric system improvements. CL&P's wholesale market sales revenue increased due primarily to energy sold in the wholesale market resulting from energy purchased from the new Millstone PPA.
Transmission Revenues: Transmission revenues increased $11.4 million at CL&P, $12.3 million at NSTAR Electric, and $5.5 million at PSNH for the three months ended March 31, 2020, as compared to the same period in 2019, due primarily to continued investment in our transmission infrastructure.
Eliminations: Eliminations are primarily related to the Eversource electric transmission revenues that are derived from ISO-NE regional transmission charges to the distribution businesses of CL&P, NSTAR Electric and PSNH that recover the costs of the wholesale transmission business. The impact of eliminations decreased revenues by $5.5 million at CL&P, $8.0 million at NSTAR Electric and $0.4 million at PSNH for the three months ended March 31, 2020, as compared to the same period in 2019.
Purchased Power and Transmission expense includes costs associated with purchasing electricity on behalf of CL&P, NSTAR Electric and PSNH's customers. These energy supply costs are recovered from customers in rates through commission-approved cost tracking mechanisms, which have no impact on earnings (tracked costs). Purchased Power and Transmission expense increased/(decreased) for the three months ended March 31, 2020, as compared to the same period in 2019, due primarily to the following:
|
| | | | | | | | | | | |
| (Millions of Dollars) | CL&P | | NSTAR Electric | | PSNH |
| Purchased Power Costs | $ | 71.2 |
| | $ | (74.7 | ) | | $ | (20.4 | ) |
| Transmission Costs | (10.8 | ) | | (4.9 | ) | | 1.4 |
|
| Eliminations | (5.5 | ) | | (8.1 | ) | | (0.4 | ) |
| Total Purchased Power and Transmission | $ | 54.9 |
| | $ | (87.7 | ) | | $ | (19.4 | ) |
Purchased Power Costs: Included in purchased power costs are the costs associated with providing electric generation service supply to all customers who have not migrated to third party suppliers and the cost of energy purchase contracts, as required by regulation.
The increase at CL&P was due primarily to the new Millstone PPA energy purchases, partially offset by lower average sales volumes and lower average prices associated with the procurement of energy supply.
The decrease at both NSTAR Electric and PSNH was due primarily to lower average sales volumes of power procured on behalf of our customers, as well as lower average prices associated with the procurement of energy supply.
Transmission Costs: Included in transmission costs are charges that recover the cost of transporting electricity over high-voltage lines from generation facilities to substations, including costs allocated by ISO-NE to maintain the wholesale electric market.
The decrease in transmission costs at CL&P and NSTAR Electric was due primarily to a reduction to the retail transmission cost deferral, which reflects the actual costs of transmission service compared to estimated amounts billed to customers and a decrease in costs billed by ISO-NE that support regional grid investments. This was partially offset by an increase in Local Network Service charges, which reflects the cost of transmission service provided by Eversource over our local transmission network.
The increase in transmission costs at PSNH was primarily the result of an increase in Local Network Service charges. This was partially offset by a decrease in costs billed by ISO-NE that support regional grid investments.
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/(decreased) for the three months ended March 31, 2020, as compared to the same period in 2019, due primarily to the following:
|
| | | | | | | | | | | |
| (Millions of Dollars) | CL&P | | NSTAR Electric | | PSNH |
| Base Electric Distribution (Non-Tracked Costs): | | | | | |
| Storm restoration costs | $ | (2.4 | ) | | $ | (4.4 | ) | | $ | (1.8 | ) |
| Employee-related expenses, including labor and benefits | 0.2 |
| | (3.0 | ) | | 0.4 |
|
| Operations-related expenses, including vegetation management, vehicles, and outside services | 3.7 |
| | 0.8 |
| | (4.0 | ) |
| Shared corporate costs (including computer software depreciation at Eversource Service) | 2.1 |
| | 2.4 |
| | 0.7 |
|
| Other non-tracked operations and maintenance | (2.1 | ) | | 4.3 |
| | 1.2 |
|
| Total Base Electric Distribution (Non-Tracked Costs) | 1.5 |
| | 0.1 |
| | (3.5 | ) |
| Tracked Costs: | | | | | |
| Transmission expenses | (0.1 | ) | | 4.2 |
| | (0.9 | ) |
| Other tracked operations and maintenance | 3.6 |
| | 5.0 |
| | (1.1 | ) |
| Total Tracked Costs | 3.5 |
| | 9.2 |
| | (2.0 | ) |
| Total Operations and Maintenance | $ | 5.0 |
| | $ | 9.3 |
| | $ | (5.5 | ) |
Depreciation increased for the three months ended March 31, 2020, as compared to the same period in 2019, for CL&P, NSTAR Electric and PSNH due to higher net plant in service balances.
Amortization of Regulatory Assets, Net expense includes the deferral of energy supply, energy-related costs and other costs that are included in certain regulatory-approved cost tracking mechanisms, and the amortization of certain costs. Thecosts as those costs are collected in rates. This deferral adjusts expense to match the corresponding revenues. Energy supply and energy-related costs are recovered from customers in rates and have no impact on earnings. Amortization of Regulatory Assets, Net increased/decreased for the three months ended September 30, 2017 and increased for the nine months ended September 30, 2017,March 31, 2020, as compared to the same periodsperiod in 2016,2019, due primarily to the following:
The decrease at CL&P was driven primarily by the deferral of energy supply and energy-related costs, which can fluctuate from period to period based on the timing of costs incurred and the related rate changes to recover these costs. Energy
| |
| • | The increase at NSTAR Electric was driven primarily by the deferral of energy supply and energy-related costs, and an increase in the recovery of costs associated with low-income customer programs. |
The increase at PSNH was due primarily to the deferral of energy supply and energy-related costs, at CL&P, NSTAR Electric, PSNH and WMECO, which are the primary driversan increase in amortization,storm cost recovery.
Energy Efficiency Programs expenseincludes costs of various state energy policy initiatives and expanded energy efficiency programs that are recovered from customers in rates, andmost of which have no impact on earnings.
Energy Efficiency Programs expense decreased for the three and nine months ended September 30, 2017, as compared to the same periods in 2016, due primarily to deferral adjustments at CL&P, NSTAR Electric and WMECO, partially offset by deferral adjustments at the natural gas businesses, which reflect the actual costs of energy efficiency programs compared to the estimated amounts billed to customers. The deferral adjusts costs incurred to match energy efficiency revenue billed to customers and the timing of the recovery of energy efficiency costs. The costs for various state policy initiatives are recovered from customers in rates and have no impact on earnings.
Interest Expense increased for the three and nine months ended September 30, 2017, as compared to the same periods in 2016, due primarily to higher interest on long-term debt ($5.8 million and $15.9 million, respectively) as a result of new debt issuances, and higher interest on short-term debt ($2.4 million and $4.8 million, respectively).
Other Income, Net increased for the three and nine months ended September 30, 2017, as compared to the same periods in 2016, due primarily to increased gains on investments ($4.2 million and $24.9 million, respectively), primarily related to Eversource's investment in a renewable energy fund, market value changes related to the deferred compensation plans ($2.9 million and $5.1 million, respectively) and higher AFUDC related to equity funds ($1.2 million and $5.0 million, respectively).
Income Tax Expenseincreased/decreased for the three months ended September 30, 2017,March 31, 2020, as compared to the same period in 2016,2019, due primarily to lowerthe following:
The increase at CL&P and PSNH was due to higher spending for energy efficiency programs.
The decrease at NSTAR Electric was due to the timing of spending on certain large energy efficiency projects in 2020, as compared to 2019.
Taxes Other Than Income Taxes increased/decreased for the three months ended March 31, 2020, as compared to the same period in 2019, due primarily to the following:
The decrease at CL&P was related to a $10.7 million decrease in the remittance of energy efficiency funds to the State of Connecticut. Energy efficiency funds collected from customers after July 1, 2019 are no longer subject to remittance to the State of Connecticut. The decrease was partially offset by higher property taxes as a result of higher utility plant balances.
The increases at NSTAR Electric and PSNH were due to higher property taxes as a result of higher utility plant balances.
Interest Expense increased for the three months ended March 31, 2020, as compared to the same period in 2019, due primarily to the following:
The increase at CL&P was due to higher interest on long-term debt ($3.5 million), partially offset by a decrease in interest expense on regulatory deferrals ($0.3 million) and an increase in AFUDC related to debt funds ($0.4 million).
| |
| • | Theincrease at NSTAR Electric was due to higher interest on long-term debt ($3.1 million). |
Other Income, Net increased/decreased for the three months ended March 31, 2020, as compared to the same period in 2019, due primarily to the following:
The decrease at CL&P was due to investment losses in 2020, as compared to investment income in 2019 driven by market volatility ($5.1 million), partially offset by an increase related to pension, SERP and PBOP non-service income components ($1.7 million) and an increase in AFUDC related to equity funds ($1.3 million).
The increase at NSTAR Electric was due to an increase in AFUDC related to equity funds ($1.0 million) and an increase related to pension, SERP and PBOP non-service income components ($0.9 million), partially offset by investment losses in 2020, as compared to investment income in 2019 driven by market volatility ($1.0 million).
The decrease at PSNH was due to the absence in 2020 of the recognition of the equity component of the carrying charges related to storm costs recorded in interest income in 2019 ($5.2 million) and investment losses in 2020, as compared to investment income in 2019 driven by market volatility ($0.9 million). Partially offsetting these decreases were an increase related to pension, SERP and PBOP non-service income components ($1.4 million) and an increase in AFUDC related to equity funds ($1.3 million).
Income Tax Expense increased for the three months ended March 31, 2020, as compared to the same period in 2019, due primarily to the following:
The increase at CL&P was due to higher pre-tax earnings ($2.42.0 million), higher state taxes ($1.0 million) and items that impact our tax rate as a result of regulatory treatment (flow-through items) and permanent differences ($0.5 million), partially offset by an increase in share-based payment excess tax benefits ($1.6 million).
The increase at NSTAR Electric was due to higher pre-tax earnings ($1.2 million), higher state taxes ($0.5 million) and flow-through items and permanent differences ($0.2 million), partially offset by an increase in share-based payment excess tax benefits ($1.7 million).
The increase at PSNH was due to higher pre-tax earnings ($1.9 million) and higher state taxes ($0.5 million), partially offset by an increase in share-based payment excess tax benefits ($0.6 million) and flow-through items and permanent differences ($0.6 million).
Income Tax Expense
EARNINGS SUMMARY
CL&P's earnings increased $8.2 millionfor the ninethree months ended September 30, 2017,March 31, 2020, as compared to the same period in 2016, due primarily to higher pre-tax earnings ($20.6 million), the absence of a tax credit in 2017 ($2.4 million), and higher state taxes ($1.3 million), partially offset by flow-through items and permanent differences ($4.6 million).
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, 2017 and 2016 included in this combined Quarterly Report on Form 10-Q:
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | For the Three Months Ended September 30, | | For the Nine Months Ended September 30, |
| (Millions of Dollars) | 2017 | | 2016 | | Increase/
(Decrease) | | Percent | | 2017 | | 2016 | | Increase/ (Decrease) | | Percent |
| Operating Revenues | $ | 774.8 |
| | $ | 760.0 |
| | $ | 14.8 |
| | 1.9 | % | | $ | 2,173.6 |
| | $ | 2,175.1 |
| | $ | (1.5 | ) | | (0.1 | )% |
| Operating Expenses: | |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
|
| Purchased Power and Transmission | 259.0 |
| | 253.5 |
| | 5.5 |
| | 2.2 |
| | 711.2 |
| | 760.6 |
| | (49.4 | ) | | (6.5 | ) |
| Operations and Maintenance | 123.1 |
| | 123.0 |
| | 0.1 |
| | 0.1 |
| | 359.8 |
| | 356.4 |
| | 3.4 |
| | 1.0 |
|
| Depreciation | 63.7 |
| | 57.7 |
| | 6.0 |
| | 10.4 |
| | 184.3 |
| | 172.2 |
| | 12.1 |
| | 7.0 |
|
| Amortization of Regulatory Assets, Net | 34.6 |
| | 23.4 |
| | 11.2 |
| | 47.9 |
| | 58.8 |
| | 30.3 |
| | 28.5 |
| | 94.1 |
|
| Energy Efficiency Programs | 37.7 |
| | 44.4 |
| | (6.7 | ) | | (15.1 | ) | | 106.5 |
| | 118.0 |
| | (11.5 | ) | | (9.7 | ) |
| Taxes Other Than Income Taxes | 79.2 |
| | 81.9 |
| | (2.7 | ) | | (3.3 | ) | | 223.4 |
| | 227.9 |
| | (4.5 | ) | | (2.0 | ) |
| Total Operating Expenses | 597.3 |
| | 583.9 |
| | 13.4 |
| | 2.3 |
| | 1,644.0 |
| | 1,665.4 |
| | (21.4 | ) | | (1.3 | ) |
| Operating Income | 177.5 |
| | 176.1 |
| | 1.4 |
| | 0.8 |
| | 529.6 |
| | 509.7 |
| | 19.9 |
| | 3.9 |
|
| Interest Expense | 36.3 |
| | 36.1 |
| | 0.2 |
| | 0.6 |
| | 106.6 |
| | 108.6 |
| | (2.0 | ) | | (1.8 | ) |
| Other Income, Net | 7.5 |
| | 3.7 |
| | 3.8 |
| | (a) |
| | 14.1 |
| | 10.9 |
| | 3.2 |
| | 29.4 |
|
| Income Before Income Tax Expense | 148.7 |
| | 143.7 |
| | 5.0 |
| | 3.5 |
| | 437.1 |
| | 412.0 |
| | 25.1 |
| | 6.1 |
|
| Income Tax Expense | 52.6 |
| | 57.1 |
| | (4.5 | ) | | (7.9 | ) | | 159.5 |
| | 155.4 |
| | 4.1 |
| | 2.6 |
|
| Net Income | $ | 96.1 |
| | $ | 86.6 |
| | $ | 9.5 |
| | 11.0 | % | | $ | 277.6 |
| | $ | 256.6 |
| | $ | 21.0 |
| | 8.2 | % |
(a) Percent greater than 100 not shown as it is not meaningful.
Operating Revenues
CL&P's retail sales volumes were as follows:
|
| | | | | | | | | | | | | | | | | | | | | | | |
| | For the Three Months Ended September 30, | | For the Nine Months Ended September 30, |
| | 2017 | | 2016 | | Decrease | | Percent | | 2017 | | 2016 | | Decrease | | Percent |
| Retail Sales Volumes in GWh | 5,644 |
| | 6,225 |
| | (581 | ) | | (9.3 | )% | | 15,812 |
| | 16,541 |
| | (729 | ) | | (4.4 | )% |
Three Months Ended:
CL&P's Operating Revenues, which consist of base distribution revenues and tracked revenues further described below, increased by $14.8 million for the three months ended September 30, 2017, as compared to the same period in 2016.
Fluctuations in CL&P's sales volumes do not impact the level of base distribution revenue realized or earnings due to the PURA-approved revenue decoupling mechanism. CL&P's revenue decoupling mechanism permits recovery of a base amount of distribution revenues ($1.059 billion annually) and breaks the relationship between sales volumes and revenues recognized. The revenue decoupling mechanism results 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 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 and restructuring and stranded cost recovery revenues. In addition, certain tracked revenues include incentives earned and carrying charges that are billed in rates to customers. Tracked distribution revenues increased primarily as a result of an increase in energy supply costs ($27.1 million) driven by increased average retail prices. Partially offsetting this increase was a decrease in stranded cost recovery revenues ($7.6 million) and a decrease in retail transmission charges ($7.6 million).
Transmission revenues increased by $6.3 million2019, due primarily to the recovery of higher revenue requirements associated with ongoing investments in our transmission infrastructure.
Nine Months Ended:
CL&P's Operating Revenues decreased by $1.5 million for the nine months ended September 30, 2017, as compared to the same period in 2016.
Tracked distribution revenues decreased primarily as a result of a decrease in energy supply costs ($25.0 million) driven by decreased average retail prices and lower sales volumes. In addition, there was a $17.8 million decrease in stranded cost recovery revenues. Partially offsetting these decreases was an increase in federally-mandated congestion charges ($23.0 million).
Transmission revenues increased by $27.2 million due primarily to higher revenue requirements associated with ongoing investments in our transmission infrastructure.
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 rates through PURA-approved cost tracking mechanisms, which have no impact on earnings (tracked costs). Total Purchased Power and Transmission expense increased for the three months ended September 30, 2017, and decreased for the nine months ended September 30, 2017, as compared to the same periods in 2016, due primarily to the following:
|
| | | | | | | |
| (Millions of Dollars) | Three Months Ended Increase/(Decrease) | | Nine Months Ended Increase/(Decrease) |
| Purchased Power Costs | $ | 5.7 |
| | $ | (68.1 | ) |
| Transmission Costs | (0.2 | ) | | 18.7 |
|
| Total Purchased Power and Transmission | $ | 5.5 |
| | $ | (49.4 | ) |
Included in purchased power costs are the costs associated with CL&P's GSC, CTA and FMCC tracking mechanisms and deferred energy supply costs. The increase in purchased power costs for the three months ended September 30, 2017, as compared to the same period in 2016, was due primarily to GSC-related purchased power expenses. The GSC recovers energy-related costs incurred as a result of providing electric generation service supply to all customers who have not migrated to third party suppliers. The decrease in purchased power costs for the nine months ended September 30, 2017, as compared to the same period in 2016, was due primarily to a decrease in the price of standard offer supply also associated with the GSC, and lower sales volumes. The increase in transmission costs for the nine months ended September 30, 2017, as compared to the same period in 2016, was primarily the result of an increase in costs billed by ISO-NE that support regional grid investment, and Local Network Service charges, which reflect the cost of transmission service. This was partially offset by 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 Maintenance expense includes tracked costs and costs that are part of base distribution rates with changes impactingrate increase effective May 1, 2019, higher earnings (non-tracked costs). Operationsfrom its capital tracker mechanism, and Maintenance expense increased for the three months ended September 30, 2017, as compared to the same period in 2016, driven by a $0.4 million increase in non-tracked costs, which was primarily attributable to higher shared corporate costs, partially offset by lower employee-related expenses, lower storm restoration costs and lower vegetation management costs. The increase in non-tracked costs was partially offset by a $0.3 million decrease in tracked costs, which was primarily attributable to lower tracked system resiliency, lower bad debt expense and lower employee-related costs, partially offset by higher transmission expenses.
Operations and Maintenance expense increased for the nine months ended September 30, 2017, as compared to the same period in 2016, driven by a $6.5 million increase in tracked costs, which was primarily attributable to higher transmission expenses, partially offset by lower tracked bad debt expense. Non-tracked costs decreased $3.0 million, which was primarily attributable to lower employee-related expenses, lower bad debt expense and lower vegetation management costs, partially offset by higher shared corporate costs, higher storm restoration costs, and higher system resiliency project costs.
Depreciation expense increased for the three and nine months ended September 30, 2017, as compared to the same periods in 2016, due primarily to higher utility plant in service balances.
Amortization of Regulatory Assets, Net expense includes the deferral of energy supply and energy-related costs and the amortization of certain costs, which are recovered from customers in rates and have no impact on earnings. The deferral adjusts expense to match the corresponding revenues. The increase for the three and nine months ended September 30, 2017, as compared to the same periods in 2016, was due primarily to the fluctuation of the deferral, which can fluctuate from period to period based on the timing of costs incurred and related rate changes to recover these costs.
Energy Efficiency Programs expense decreased for the three and nine months ended September 30, 2017, as compared to the same periods in 2016, due primarily to the deferral adjustment, which reflects the actual cost of energy efficiency programs compared to the estimated amounts billed to customers and the timing of the recovery of energy efficiency costs. The deferral adjusts costs incurred to match energy efficiency revenue billed to customers. The costs for various state policy initiatives are recovered from customers in rates and have no impact on earnings.
Taxes Other Than Income Taxes expensedecreased for the three and nine months ended September 30, 2017, as compared to the same periods in 2016, due primarily to a decrease in gross earnings taxes, partially offset by an increase in property taxes due to higher plant balances. Gross earnings taxes are tracked costs and have no impact on earnings.
Income Tax Expense decreased for the three months ended September 30, 2017, as compared to the same period in 2016, due primarily to the true-up of the return to provision impacts ($4.7 million) and items that impact our tax rate as a result of regulatory treatment (flow-through items) and permanent differences ($1.5 million), partially offset by higher pre-tax earnings ($1.7 million).
Income Tax Expense increased for the nine months ended September 30, 2017, as compared to the same period in 2016, due primarily to higher pre-tax earnings ($8.8 million) and higher state taxes ($2.6 million), partially offset by the true-up of the return to provision impacts ($4.7 million) and flow-through items and permanent differences ($2.6 million).
EARNINGS SUMMARY
CL&P's earnings increased $9.5 millionfor the three months ended September 30, 2017, as compared to the same period in 2016, due primarily to a lower effective tax rate, an increase in transmission earnings driven by a higher transmission rate base, and higher distribution revenues due in part to a higher rate base for the system resiliency program,base. The earnings increase was partially offset by investment loss in 2020 compared to investment income in 2019 driven by market volatility, higher depreciation expense, higher operations and maintenance expense, and higher interest expense.
CL&P'sNSTAR Electric's earnings increased $21.0$6.4 million for the ninethree months ended September 30, 2017,March 31, 2020, as compared to the same period in 2016,2019, due primarily to the base distribution rate increase effective January 1, 2020 and an increase in transmission earnings driven by a higher transmission rate base, higher distribution revenues due in part to a higher rate base for the system resiliency program, and lower non-tracked operations and maintenance expense. These favorablebase. The earnings impacts wereincrease was partially offset by higher interest expense, higher depreciation expense, and higher property tax expense.
LIQUIDITY
Cash totaled $9.4 million as of September 30, 2017, compared with $6.6 million as of December 31, 2016.
CL&P had cash flows provided by operating activities of $623.3PSNH's earnings increased $6.8 million for the ninethree months ended September 30, 2017, as compared to $614.4 million in the same period of 2016. The increase in operating cash flows was due primarily to the favorable impact of the timing of regulatory recoveries and the timing of collections and payments of our working capital items, including accounts receivable and accounts payable. Partially offsetting these favorable impacts were the income tax payments of $19.8 million made in 2017, compared to the income tax refunds of $128.5 million received in 2016.
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 September 30, 2017 and DecemberMarch 31, 2016 was 1.34 percent and 0.88 percent, respectively. There were no intercompany loans from Eversource parent to CL&P as of September 30, 2017. As of December 31, 2016, there were intercompany loans from Eversource parent to CL&P of $80.1 million. Eversource parent, and certain of its subsidiaries, including CL&P, are parties to a five-year $1.45 billion revolving credit facility. The revolving credit facility terminates on September 4, 2021. The revolving credit facility serves to backstop Eversource parent's $1.45 billion commercial paper program. There were no borrowings outstanding on the revolving credit facility as of September 30, 2017 and December 31, 2016.
In August 2017, CL&P issued $225 million of 4.30 percent 2014 Series A First and Refunding Mortgage Bonds due to mature in 2044. These bonds are part of the same series of CL&P’s existing 4.30 percent bonds that were initially issued in 2014. The aggregate outstanding principal amount for these bonds is now $475 million. The proceeds, net of issuance costs, were used to refinance short-term debt and fund capital expenditures and working capital.
In September 2017, CL&P repaid at maturity $100 million of 5.75 percent 2007 Series C First Mortgage Bonds.
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. CL&P's investments in property, plant and equipment totaled $621.9 million for the nine months ended September 30, 2017.
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 nine months ended September 30, 2017 and 2016 included in this combined Quarterly Report on Form 10-Q:
|
| | | | | | | | | | | | | | |
| | For the Nine Months Ended September 30, |
| (Millions of Dollars) | 2017 | | 2016 | | Increase/
(Decrease) | | Percent |
| Operating Revenues | $ | 1,913.5 |
| | $ | 1,986.0 |
| | $ | (72.5 | ) | | (3.7 | )% |
| Operating Expenses: | | | | | |
| | |
|
| Purchased Power and Transmission | 689.8 |
| | 764.9 |
| | (75.1 | ) | | (9.8 | ) |
| Operations and Maintenance | 266.2 |
| | 279.9 |
| | (13.7 | ) | | (4.9 | ) |
| Depreciation | 167.6 |
| | 159.2 |
| | 8.4 |
| | 5.3 |
|
| Amortization of Regulatory Assets, Net | 17.8 |
| | 18.3 |
| | (0.5 | ) | | (2.7 | ) |
| Energy Efficiency Programs | 198.8 |
| | 212.9 |
| | (14.1 | ) | | (6.6 | ) |
| Taxes Other Than Income Taxes | 99.0 |
| | 101.8 |
| | (2.8 | ) | | (2.8 | ) |
| Total Operating Expenses | 1,439.2 |
| | 1,537.0 |
| | (97.8 | ) | | (6.4 | ) |
| Operating Income | 474.3 |
| | 449.0 |
| | 25.3 |
| | 5.6 |
|
| Interest Expense | 70.0 |
| | 62.2 |
| | 7.8 |
| | 12.5 |
|
| Other Income, Net | 8.7 |
| | 7.6 |
| | 1.1 |
| | 14.5 |
|
| Income Before Income Tax Expense | 413.0 |
| | 394.4 |
| | 18.6 |
| | 4.7 |
|
| Income Tax Expense | 161.3 |
| | 154.5 |
| | 6.8 |
| | 4.4 |
|
| Net Income | $ | 251.7 |
| | $ | 239.9 |
| | $ | 11.8 |
| | 4.9 | % |
Operating Revenues
NSTAR Electric's retail sales volumes were as follows:
|
| | | | | | | | | | | |
| | For the Nine Months Ended September 30, |
| | 2017 | | 2016 | | Decrease | | Percent |
| Retail Sales Volumes in GWh | 15,204 |
| | 15,746 |
| | (542 | ) | | (3.4 | )% |
NSTAR Electric's Operating Revenues, which consist of base distribution revenues and tracked revenues further described below, decreased by $72.5 million for the nine months ended September 30, 2017,2020, as compared to the same period in 2016.
Base distribution revenues: Base distribution revenues, excluding LBR, decreased $11.2 million for the nine months ended September 30, 2017, as compared to the same period in 2016, as a result of lower sales volumes in 2017, as compared to 2016 driven by the mild summer weather during the third quarter of 2017. LBR increased $10.6 million for the nine months ended September 30, 2017, as compared to the same period in 2016.
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 procurement and other energy-related costs, retail transmission charges, energy efficiency program costs, net metering for distributed generation and transition cost recovery revenues. In addition, certain tracked revenues include incentives earned and carrying charges that are billed in rates to customers. Tracked distribution revenues decreased primarily as a result of a decrease in energy supply costs ($44.1 million) driven by decreased average retail prices and lower sales volumes, a decrease in retail transmission charges ($53.9 million), a decrease in the pension rate adjustment mechanism ($14.7 million), and a decrease in transition cost recovery revenues ($11.9 million). Partially offsetting these decreases were an increase in net metering revenues ($20.2 million) and an increase in revenues related to renewable energy requirements ($23.4 million).
Transmission revenues increased by $20.6 million2019, due primarily to the recovery of higher revenue requirements associated with ongoing investments in our transmission infrastructure.
Purchased Power and Transmission expense includes costs associated with purchasing electricity on behalf of NSTAR Electric's customers. These energy supply costs are recovered from customers in rates through DPU-approved cost tracking mechanisms, which have no impact on earnings (tracked costs). Total Purchased Power and Transmission expense decreased for the nine months ended September 30, 2017, as compared to the same period in 2016, due primarily to the following:
|
| | | |
| (Millions of Dollars) | Decrease |
| Purchased Power Costs | $ | (42.3 | ) |
| Transmission Costs | (32.8 | ) |
| Total Purchased Power and Transmission | $ | (75.1 | ) |
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 who have not migrated to third party suppliers. The decrease in purchased power costs was due primarily to lower prices associated with the procurement of energy supply and lower sales volumes. The decrease in transmission costs 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.
Operations and Maintenance expense includes tracked costs and costs that are part oftemporary base distribution rates with changes impacting earnings (non-tracked costs). Operations and Maintenance expense decreased for the nine months ended September 30, 2017, as compared to the same period in 2016, driven by a $13.0 million decrease in non-tracked costs, which was primarily attributable to lower employee-related expenses, lower bad debt expense and lower storm restoration costs, partially offset by higher shared corporate costs, a $4.9 million charge recorded in the second quarter of 2017 related to the Boston Harbor civil action settlement, and higher vegetation management costs. Tracked costs decreased $0.7 million, which was primarily attributable to lower tracked employee-related expenses, partially offset by higher transmission expenses and higher tracked bad debt expense.
Depreciation expense increased for the nine months ended September 30, 2017, as compared to the same period in 2016, due primarily to higher utility plant in service balances.
Energy Efficiency Programs expense decreased for the nine months ended September 30, 2017, as compared to the same period in 2016, due primarily to the deferral adjustment, which reflects the actual cost of energy efficiency programs compared to the estimated amounts billed to customers and the timing of the recovery of energy efficiency costs. The deferral adjusts costs incurred to match energy efficiency revenue billed to customers. The costs for various state policy initiatives are recovered from customers in rates and have no impact on earnings.
Taxes Other Than Income Taxes expense decreased for the nine months ended September 30, 2017, as compared to the same period in 2016, due primarily to a decrease in property tax rates and lower employment-related taxes.
Interest Expense increased for the nine months ended September 30, 2017, as compared to the same period in 2016, due primarily to new debt issuances.
Income Tax Expense increased for the nine months ended September 30, 2017, as compared to the same period in 2016, due primarily to higher pre-tax earnings ($6.9 million), partially offset by items that impact our tax rate as a result of regulatory treatment (flow-through items) and permanent differences ($0.1 million).
EARNINGS SUMMARY
NSTAR Electric's earnings increased $11.8 million for the nine months ended September 30, 2017, as compared to the same period in 2016, due primarily to lower operations and maintenance expense and lower property tax expense, partially offset by lower sales volumes driven by the mild summer weather during the third quarter of 2017, and higher interest and depreciation expense.
LIQUIDITY
NSTAR Electric had cash flows provided by operating activities of $413.0 million for the nine months ended September 30, 2017, as compared to $564.3 million in the same period of 2016. The decrease in operating cash flows was due primarily to a decrease in regulatory recoveries, which were significantly impacted by the timing of collections of purchased power and transmission costs, an increase of $56.3 million in Pension and PBOP Plan cash contributions, and the income tax payments of $23.9 million made in 2017, compared to the income tax refunds of $28.1 million received in 2016. Partially offsetting these decreases was a favorable impact related to the timing of collections of accounts receivable.
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 September 30, 2017, NSTAR Electric had no short-term borrowings outstanding and as of December 31, 2016, NSTAR Electric had $126.5 million in short-term borrowings outstanding under its commercial paper program, leaving $450.0 million and $323.5 million of available borrowing capacity as of September 30, 2017 and December 31, 2016, respectively. The weighted-average interest rate on these borrowings as of December 31, 2016 was 0.71 percent. NSTAR Electric is a party to a five-year $450 million revolving credit facility. The revolving credit facility terminates on September 4, 2021. The revolving credit facility serves to backstop NSTAR Electric's $450 million commercial paper program. There were no borrowings outstanding on the revolving credit facility as of September 30, 2017 and December 31, 2016.
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 nine months ended September 30, 2017 and 2016 included in this combined Quarterly Report on Form 10-Q:
|
| | | | | | | | | | | | | | |
| | For the Nine Months Ended September 30, |
| (Millions of Dollars) | 2017 | | 2016 | | Increase/
(Decrease) | | Percent |
| Operating Revenues | $ | 733.6 |
| | $ | 727.8 |
| | $ | 5.8 |
| | 0.8 | % |
| Operating Expenses: | |
| | |
| | |
| | |
|
| Purchased Power, Fuel and Transmission | 179.3 |
| | 155.7 |
| | 23.6 |
| | 15.2 |
|
| Operations and Maintenance | 191.2 |
| | 187.2 |
| | 4.0 |
| | 2.1 |
|
| Depreciation | 95.3 |
| | 86.5 |
| | 8.8 |
| | 10.2 |
|
| Amortization of Regulatory (Liabilities)/Assets, Net | (10.7 | ) | | 14.5 |
| | (25.2 | ) | | (a) |
|
| Energy Efficiency Programs | 11.0 |
| | 10.9 |
| | 0.1 |
| | 0.9 |
|
| Taxes Other Than Income Taxes | 67.0 |
| | 64.5 |
| | 2.5 |
| | 3.9 |
|
| Total Operating Expenses | 533.1 |
| | 519.3 |
| | 13.8 |
| | 2.7 |
|
| Operating Income | 200.5 |
| | 208.5 |
| | (8.0 | ) | | (3.8 | ) |
| Interest Expense | 38.7 |
| | 37.4 |
| | 1.3 |
| | 3.5 |
|
| Other Income, Net | 2.9 |
| | 1.0 |
| | 1.9 |
| | (a) |
|
| Income Before Income Tax Expense | 164.7 |
| | 172.1 |
| | (7.4 | ) | | (4.3 | ) |
| Income Tax Expense | 65.1 |
| | 66.3 |
| | (1.2 | ) | | (1.8 | ) |
| Net Income | $ | 99.6 |
| | $ | 105.8 |
| | $ | (6.2 | ) | | (5.9 | )% |
(a) Percent greater than 100 not shown as it is not meaningful.
Operating Revenues
PSNH's retail sales volumes were as follows:
|
| | | | | | | | | | | |
| | For the Nine Months Ended September 30, |
| | 2017 | | 2016 | | Decrease | | Percent |
| Retail Sales Volumes in GWh | 5,835 |
| | 5,985 |
| | (150 | ) | | (2.5 | )% |
PSNH's Operating Revenues, which consist of base distribution revenues and tracked revenues further described below, increased by $5.8 million for the nine months ended September 30, 2017, as compared to the same period in 2016.
Base distribution revenues: Base distribution revenues decreased $2.0 million for the nine months ended September 30, 2017, as compared to the same period in 2016, due primarily to a 2.5 percent decrease in sales volumes driven by the mild summer weather during the third quarter of 2017.
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 procurement and energy-related costs, costs associated with the generation of electricity for customers, retail transmission charges, energy efficiency program costs and stranded cost recovery revenues. In addition, certain tracked revenues include incentives earned and carrying charges that are billed in rates to customers. Tracked distribution revenues decreased primarily as a result of a decrease in revenues related to the timing of the sale of RECs ($15.3 million) and a decrease in the energy service rate ($5.1 million). Partially offsetting these decreases was an increase in retail transmission charges ($7.2 million) and an increase in wholesale generation revenues ($4.0 million).
Transmission revenues increased by $17.6 million due primarily to the recovery of higher revenue requirements associated with ongoing investments in our transmission infrastructure.
Purchased Power, Fuel and Transmission expense 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 rates through NHPUC-approved cost tracking mechanisms, which have no impact on earnings (tracked costs). Total Purchased Power, Fuel and Transmission expense increased for the nine months ended September 30, 2017, as compared to the same period in 2016, due primarily to the following:
|
| | | |
| (Millions of Dollars) | Increase |
| Purchased Power and Generation Fuel Costs | $ | 5.1 |
|
| Transmission Costs | 18.5 |
|
| Total Purchased Power, Fuel and Transmission | $ | 23.6 |
|
In order to meet the demand of customers who have not migrated to third party suppliers, PSNH procures power through power supply contracts and spot purchases in the competitive New England wholesale power market and/or produces power through its own generation. The increase in purchased power and generation fuel costs was due primarily to higher purchased power energy expenses that are recovered as a component of the Energy Service rate, and Regional Greenhouse Gas Initiative related expenses recovered in the SCRC. The increase in transmission costs was primarily the result of an increase in costs billed by ISO-NE that support regional grid investment, and Local Network Service charges, which reflect the cost of transmission service, as well as the retail transmission cost deferral, which reflects actual costs of transmission service compared to estimated amounts billed to customers.
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 for the nine months ended September 30, 2017, as compared to the same period in 2016, driven by a $2.1 million increase in tracked costs, which was primarily attributable to higher transmission expenses, partially offset by lower employee-related expenses. Non-tracked costs increased by $1.9 million, which was primarily attributable to higher shared corporate costs and higher vegetation management costs, partially offset by lower employee-related expenses.
Depreciation expense increased for the nine months ended September 30, 2017, as compared to the same period in 2016, due primarily to higher utility plant in service balances.
Amortization of Regulatory (Liabilities)/Assets, Net expense includes the deferral of energy supply and energy-related costs and the amortization of certain costs, which are recovered from customers in rates and have no impact on earnings. The deferral adjusts expense to match the corresponding revenues. The decrease for the nine months ended September 30, 2017, as compared to the same period in 2016, was due primarily to the fluctuation of the deferral, which can fluctuate from period to period based on the timing of costs incurred and related rate changes to recover these costs.
Taxes Other Than Income Taxes expense increased for the nine months ended September 30, 2017, as compared to the same period in 2016, due primarily to an increase in property taxes due to higher plant balances.
Income Tax Expense decreased for the nine months ended September 30, 2017, as compared to the same period in 2016, due primarily to lower pre-tax earnings ($2.6 million) and items that impact our tax rate as a result of regulatory treatment (flow-through items) and permanent differences ($1.0 million), partially offset by the absence of a tax credit in 2017 ($2.4 million).
EARNINGS SUMMARY
PSNH's earnings decreased $6.2 million for the nine months ended September 30, 2017, as compared to the same period in 2016, due primarily to lower generation earnings, higher property tax and depreciation expense and lower sales volumes driven by the mild summer weather during the third quarter of 2017. These unfavorable earnings impacts were partially offset by an increase in transmission earnings driven by a higher transmission rate base.
LIQUIDITY
PSNH had cash flows provided by operating activities of $264.0 million for the nine months ended September 30, 2017, as compared to $306.0 million in the same period of 2016. The decrease in operating cash flows was due primarily to the income tax payments of $11.8 million made in 2017, compared to the income tax refunds of $41.3 million received in 2016. Partially offsetting this decrease was $16.2 million of lower Pension Plan contributions made in 2017, as compared to 2016, and the favorable impacts related to the timing of regulatory recoveries.
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 nine months ended September 30, 2017 and 2016 included in this combined Quarterly Report on Form 10-Q:
|
| | | | | | | | | | | | | | |
| | For the Nine Months Ended September 30, |
| (Millions of Dollars) | 2017 | | 2016 | | Increase/ (Decrease) | | Percent |
| Operating Revenues | $ | 377.2 |
| | $ | 368.5 |
| | $ | 8.7 |
| | 2.4 | % |
| Operating Expenses: | |
| | |
| | |
| | |
|
| Purchased Power and Transmission | 109.6 |
| | 104.4 |
| | 5.2 |
| | 5.0 |
|
| Operations and Maintenance | 65.8 |
| | 68.0 |
| | (2.2 | ) | | (3.2 | ) |
| Depreciation | 36.8 |
| | 34.4 |
| | 2.4 |
| | 7.0 |
|
| Amortization of Regulatory Assets/(Liabilities), Net | (0.6 | ) | | 3.3 |
| | (3.9 | ) | | (a) |
|
| Energy Efficiency Programs | 29.7 |
| | 33.6 |
| | (3.9 | ) | | (11.6 | ) |
| Taxes Other Than Income Taxes | 31.4 |
| | 30.4 |
| | 1.0 |
| | 3.3 |
|
| Total Operating Expenses | 272.7 |
| | 274.1 |
| | (1.4 | ) | | (0.5 | ) |
| Operating Income | 104.5 |
| | 94.4 |
| | 10.1 |
| | 10.7 |
|
| Interest Expense | 18.8 |
| | 18.3 |
| | 0.5 |
| | 2.7 |
|
| Other Income, Net | 1.4 |
| | 0.1 |
| | 1.3 |
| | (a) |
|
| Income Before Income Tax Expense | 87.1 |
| | 76.2 |
| | 10.9 |
| | 14.3 |
|
| Income Tax Expense | 34.7 |
| | 30.1 |
| | 4.6 |
| | 15.3 |
|
| Net Income | $ | 52.4 |
| | $ | 46.1 |
| | $ | 6.3 |
| | 13.7 | % |
(a) Percent greater than 100 not shown as it is not meaningful.
Operating Revenues
WMECO's retail sales volumes were as follows:
|
| | | | | | | | | | | |
| | For the Nine Months Ended September 30, |
| | 2017 | | 2016 | | Decrease | | Percent |
| Retail Sales Volumes in GWh | 2,579 |
| | 2,695 |
| | (116 | ) | | (4.3 | )% |
WMECO's Operating Revenues, which consist of base distribution revenues and tracked revenues further described below, increased by $8.7 million for the nine months ended September 30, 2017, as compared to the same period in 2016.
Fluctuations in WMECO's sales volumes do not impact the level of base distribution revenue realized or earnings due to the DPU-approved revenue decoupling mechanism. WMECO's revenue decoupling mechanism permits recovery of a base amount of distribution revenues ($132.4 million annually) and breaks the relationship between sales volumes and revenues recognized. The revenue decoupling mechanism results 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 procurement and other energy-related costs, retail transmission charges, energy efficiency program costs, low income assistance programs, and restructuring and stranded cost recovery revenues. In addition, certain tracked revenues include incentives earned and carrying charges that are billed in rates to customers. Tracked distribution revenues decreased due primarily to a decrease in energy supply costs ($10.8 million) driven by decreased average retail prices and lower sales volumes, partially offset by increases in revenues related to renewable energy requirements ($6.6 million).
Transmission revenues increased by $12.0 million due primarily to the recovery of higher revenue requirements associated with ongoing investments in our transmission infrastructure.
Purchased Power and Transmission expense includes costs associated with purchasing electricity on behalf of WMECO's customers. These energy supply costs are recovered from customers in rates through DPU-approved cost tracking mechanisms, which have no impact on earnings (tracked costs). Total Purchased Power and Transmission expense increased for the nine months ended September 30, 2017, as compared to the same period in 2016, due primarily to the following:
|
| | | |
| (Millions of Dollars) | Increase/(Decrease) |
| Purchased Power Costs | $ | (2.6 | ) |
| Transmission Costs | 7.8 |
|
| Total Purchased Power and Transmission | $ | 5.2 |
|
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 who have not migrated to third party suppliers. The decrease in purchased power costs for the nine months ended September 30, 2017, as compared to the same period in 2016, was due primarily to lower prices associated with the procurement of energy supply and lower sales volumes. The increase in transmission costs for the nine months ended September 30, 2017, as compared to the same period in 2016, was primarily the result of an increase in costs billed by ISO-NE that support regional grid investment, and Local Network Service charges, which reflect the cost of transmission service, as well as the retail transmission cost deferral, which reflects actual costs of transmission service compared to estimated amounts billed to customers.
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 decreased for the nine months ended September 30, 2017, as compared to the same period in 2016, driven by a decrease in non-tracked costs of $1.9 million, which was primarily attributable to lower employee-related expenses, partially offset by higher shared corporate costs. Tracked costs also decreased by $0.3 million, which was primarily attributable to lower tracked employee-related expenses, and a lower deferral adjustment for RECs generated and sold by the WMECO solar program, partially offset by higher transmission expenses.
Depreciation expense increased for the nine months ended September 30, 2017, as compared to the same period in 2016, due primarily to higher utility plant in service balances.
Amortization of Regulatory Assets/(Liabilities), Net expense decreased for the nine months ended September 30, 2017, as compared to the same period in 2016, due to the timing of refunds or recovery of tracked costs to/from customers in rates. These costs have no impact on earnings.
Energy Efficiency Programs expense decreased for the nine months ended September 30, 2017, as compared to the same period in 2016, due primarily to the deferral adjustment, which reflects the actual cost of energy efficiency programs compared to the estimated amounts billed to customers and the timing of the recovery of energy efficiency costs. The deferral adjusts costs incurred to match energy efficiency revenue billed to customers. The costs for various state policy initiatives are recovered from customers in rates and have no impact on earnings.
Income Tax Expense increased for the nine months ended September 30, 2017, as compared to the same period in 2016, due primarily to higher pre-tax earnings ($3.8 million) and items that impact our tax rate as a result of regulatory treatment (flow-through items) and permanent differences ($0.8 million).
EARNINGS SUMMARY
WMECO's earnings increased $6.3 million for the nine months ended September 30, 2017, as compared to the same period in 2016, due primarily toeffective July 1, 2019, an increase in transmission earnings driven by a higher transmission rate base, and lower operations and maintenance expense. The earnings increase was partially offset by the absence of the first quarter 2019 recognition of carrying charges on its 2013 through 2016 storm costs approved for recovery.
LIQUIDITY
WMECOCash Flows: CL&P had cash flows provided by operating activities of $92.0$132.2 million for the ninethree months ended September 30, 2017,March 31, 2020, as compared to $124.8$198.3 million in the same period of 2016.2019. The decrease in operating cash flows was due primarily to the timing of cash payments made on our accounts payable. Partially offsetting this unfavorable impact was the timing of cash collections for regulatory tracking mechanisms, the timing of collections on our accounts receivable, the timing of other working capital items and lower income tax refunds received of $5.2 million in 2020.
NSTAR Electric had cash flows provided by operating activities of $61.7 million for the three months ended March 31, 2020, as compared to $137.0 million in the same period of 2019. The decrease in operating cash flows was due primarily to the timing of cash collections on our accounts receivable, the timing of cash payments made on our accounts payable and other working capital items, and the timing of collections for regulatory tracking mechanisms. In addition, there were lower income tax refunds received of $13.2 million in 2020.
PSNH had cash flows provided by operating activities of $58.5 million for the three months ended March 31, 2020, as compared to $86.1 million in the same period of 2019. The decrease in operating cash flows was due primarily to income tax payments of $2.0$1.2 million made in 2017,the first quarter of 2020, as compared to the income tax refunds received of $21.6$20.3 million received in 2016,the same period in 2019, and the unfavorable impacts related to the timing of collectionscash payments made on our accounts payable.
For further information on CL&P's, NSTAR Electric's and paymentsPSNH's liquidity and capital resources, see "Liquidity" and "Business Development and Capital Expenditures" included in this Management's Discussion and Analysis of our working capital items, including accounts receivable. Partially offsetting these unfavorable impacts was the benefit related to the timingFinancial Condition and Results of regulatory recoveries.Operations.
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| ITEM 3. | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK |
Market Risk Information
Commodity Price Risk Management: Our Regulatedregulated companies enter into energy contracts to serve our customers, and the economic impacts of those contracts are passed on to our customers. Accordingly, the Regulatedregulated 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 scalelarge-scale energy related transactions entered into by its Regulatedregulated 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. procedures.
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 natural 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 Regulatedregulated companies are subject to credit risk from certain long-term or high-volume supply contracts with energy marketing companies. Our Regulatedregulated companies manage the credit risk with these counterparties in accordance with established credit risk practices and monitor contractingcontracting risks, including credit risk. As of September 30, 2017,March 31, 2020, our Regulatedregulated companies did not holdheld collateral (letters of credit)credit or cash) of $15.0 million from counterparties related to our standard service contracts. As of September 30, 2017,March 31, 2020, Eversource had $24.5$19.3 million of cash postedposted with ISO-NE related to energy 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 20162019 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 20162019 Form 10-K.
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| ITEM 4. | CONTROLS AND PROCEDURES |
Management, on behalf of Eversource, CL&P, NSTAR Electric PSNH and WMECO,PSNH, evaluated the design and operation of the disclosure controls and procedures as of September 30, 2017March 31, 2020 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 WMECOPSNH 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.
During the third quarter of 2017, Eversource implemented a new supply chain management system resulting in a material change in internal controls over financial reporting. This new supply chain system consisted of both modern software tools and revised processes that consolidated and standardized all supply chain processes and practices across all of Eversource, including CL&P, NSTAR Electric, PSNH, and WMECO. Pre-implementation testing and post-implementation reviews were conducted by management to ensure that internal controls surrounding the system implementation process, the applications, and the closing process were properly designed to prevent material financial statement errors. Such procedures included the review of required documents, user acceptance testing, change management procedures, access controls, data migration strategies and reconciliations, application interface testing and other standard application controls.
Except as described above, thereThere have been no changes in internal controls over financial reporting for Eversource, CL&P, NSTAR Electric PSNH and WMECOPSNH during the quarter ended September 30, 2017March 31, 2020 that have materially affected, or are reasonably likely to materially affect, internal controls over financial reporting.
PART II. OTHER INFORMATION
We are parties to various legal proceedings. We have disclosed thesecertain legal proceedings in Part I, Item 3, "Legal Proceedings," and elsewhere in our 20162019 Form 10-K. These disclosures are incorporated herein by reference.
On May 22, 2017, each of the Yankee Companies filed subsequent lawsuits against the DOE in the Court of Federal Claims seeking damages totaling approximately $100 million for CYAPC, YAEC and MYAPC, covering the years from 2013 to 2016 (“DOE Phase IV”). The DOE Phase IV trial is expected to begin in 2018. For a further discussion of the Yankee Companies v. U.S. Department of Energy, see Part I, Item 3, “Legal Proceedings” of our 2016 Form 10-K.
Other than as set forth above, thereThere have been no additional material legal proceedings identified and no further material changes with regard to the legal proceedings previously disclosed in our 20162019 Form 10-K.
We are subject to a variety of significant risks in addition to the matters set forth under "Forward-Looking Statements,"our forward-looking statements section 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 20162019 Form 10-K, which risk factors are incorporated herein by reference. These risk factors should be considered carefully in evaluating our risk profile. ThereThe following risk factor should be read in conjunction with the risk factors described in the 2019 Form 10-K.
The global pandemic of the 2019 novel coronavirus (COVID-19) has resulted in widespread disruption to the many systems and processes of daily life, as well as the overall economic market and outlook, which could cause various unfavorable impacts to our customers, vendors, employees, regulators, and operations and could adversely affect our financial position, results of operations and cash flows.
We are responding to COVID-19 by taking steps to mitigate the potential risks to Eversource posed by its spread. We provide a critical service to our customers, which means it is paramount that we keep our employees who operate our businesses safe and minimize unnecessary risk of exposure to COVID-19. We have updated and implemented our company-wide pandemic plan to address specific aspects of the COVID-19 pandemic. This plan guides our emergency response, business continuity, and the precautionary measures we are taking on behalf of employees and the public. As part of our pandemic plan, we are taking extra precautions to mitigate an adverse material impact to the following risk factors that we believe could continue to be impacted by COVID-19:
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| • | Cybersecurity attacks: We have seen an increase in perimeter scanning for vulnerabilities, which can be leveraged to compromise a system, as well as phishing attempts targeted at our employees by outside parties to gain control of our systems and network. We continue to implement strong cybersecurity measures and educate our employees to ensure that our systems remain functional in order to both serve our operational needs with a remote workforce and keep them running to ensure uninterrupted service to our customers. |
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| • | Access to, or cost of, capital resources: We utilize the commercial paper market extensively for our short-term borrowing needs. At the onset of the pandemic in the United States, there had been reduced liquidity in the commercial paper credit market. However, federal legislative actions, as well as increased liquidity and the reduction in the federal funds rate by the Federal Reserve, have enabled the credit markets to function. We continue to monitor the ability for us to access the global capital and credit markets; however, we may find it difficult in the future should the economic slowdown continue. |
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| • | Actions of regulators: In Connecticut, Massachusetts and New Hampshire, there is presently a moratorium on disconnections of residential and commercial customers for non-payment. We also eliminated late payment charges across all our operating companies. We are working closely with our state regulatory commissions and consumer advocates to develop several customer assistance measures, including more flexible and new payment plan options in order to mitigate the impact on customer rates in the future, as well as financial hardship and arrearage management programs for those customers who are unable to pay their utility bills. We are developing these long-term solutions for customers in order to help minimize the extent of the impact of COVID-19 on customer receivable balances and customers’ affordability in light of the current financial impact they may experience. We believe that we will be able to develop a successful structure with our state regulatory commissions to recover our costs associated with COVID-19, while balancing the impact on our customers’ bills. |
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| • | Timing of strategic development opportunities: The successful execution of our timeline for developing our offshore wind projects is based on several factors, including state and federal siting and permitting approvals. Currently, there are delays in New York state for performing offshore site investigations, and onshore environmental and geotechnical surveys, which could have an impact on our project siting and permit filing timelines. On April 8, 2020, the state of New York Administrative Law Judge granted a ten-week delay until September 30, 2020 to the start of the South Fork Wind evidentiary hearing schedule due to ongoing COVID-19 work and travel restrictions. At this time, although we are unable to predict the impact of delays on our offshore wind projects, we are currently developing mitigation plans to address permitting delays due to COVID-19 restrictions on our offshore wind projects. |
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| • | Suppliers and Vendors: We have instituted measures to ensure our supply chain remains open to us; however, there could be global shortages that will impact our maintenance, capital programs, and storm response that we currently cannot anticipate. |
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| • | Loss of key personnel: We continue to adjust our pandemic plan to assume various scenarios including reduced workforce levels and limited mutual aid in the event of a significant storm event. We have implemented remote work arrangements for our workforce by enabling nearly half of our employees to work from home and taking extra precautions for our field-based employees. We have taken significant safety measures to ensure adequate social distancing for our field crews to safely provide essential services to our customers. We have also adopted protocols to ensure the safety and health of those employees who work onsite in critical facilities. We continue to monitor COVID-19 developments affecting our workforce and will take additional precautions that we determine are necessary in order to mitigate the impacts. |
Although to date our workforce continues to be able to safely and reliably deliver our critical services to customers, we are unable to predict the extent of the impact of COVID-19 on our employees.
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| • | Impact to Benefit Plans: As of March 31, 2020, under the Pension Protection Act, the funded status of our pension plan was approximately 100 percent, as compared to 111 percent as of December 31, 2019. The pension and PBOP plans' funded status is highly dependent on benefit plan asset returns, interest rates, and discount rates, all of which could be materially impacted by the extended economic slowdown. Should these financial metrics be negatively impacted by COVID-19 as of December 31, 2020, it could result in the underperformance of our pension and PBOP plan investments, an increase in pension and PBOP obligations and employee benefit plan costs, and in a minimum pension funding requirement due by March 31, 2022 for the 2021 Plan year. We continue to monitor federal legislative pension developments that could provide additional pension funding relief. |
We currently cannot estimate the potential impact of COVID-19 to our financial position, results of operations and cash flows.
Other than as set forth above, there have been no additional risk factors identified and no material changes with regard to the risk factors previously disclosed in our 20162019 Form 10-K.
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| 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.
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| | | | | | | | | |
| Period | Total Number of Shares Purchased | Average Price Paid per Share | Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs | Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans and Programs (at month end) |
| July 1 - July 31, 2017 | 99,090 |
| $ | 60.76 |
| — |
| — |
|
| August 1 - August 31, 2017 | 4,802 |
| 62.08 |
| — |
| — |
|
| September 1 - September 30, 2017 | 74,148 |
| 60.77 |
| — |
| — |
|
| Total | 178,040 |
| $ | 60.80 |
| — |
| — |
|
|
| | | | | | | | | |
| Period | Total Number of Shares Purchased | Average Price Paid per Share | Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs | Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans and Programs (at month end) |
| January 1 - January 31, 2020 | — |
| $ | — |
| — |
| — |
|
| February 1 - February 29, 2020 | — |
| — |
| — |
| — |
|
| March 1 - March 31, 2020 | 2,428 |
| 79.71 |
| — |
| — |
|
| Total | 2,428 |
| $ | 79.71 |
| — |
| — |
|
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.
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| | | |
| | Exhibit No. | | Description |
| | | | |
| | Listing of Exhibits (Eversource) |
| * | 4 | | |
| | | | ThirteenTwelfth Supplemental Indenture of Mortgage and Deed of Trust between Yankee Gas Services CompanyEversource Energy and The Bank of New York Mellon Trust Company N.A., successor as Trustee, to The Bank of New York, as successor to Fleet National Bank (formerly known as The Connecticut National Bank), dated as of SeptemberJanuary 1, 2017
2020, relating to $350 million of Senior Notes, Series P, Due 2050 (Exhibit 4.1, Eversource Energy Current Report on Form 8-K filed January 16, 2020, File No. 001-05324)
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| | | | |
| | 31 | | Ratio of Earnings to Fixed Charges |
| | | |
| | | | Certification by the Chief Executive Officer of Eversource Energy pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 |
| | | | |
| | | | |
| | | | |
| | | | |
| | | | |
| | Listing of Exhibits (CL&P) |
| | | | |
* | 31 | | Supplemental Indenture (2017 Series A Bonds) between CL&P and Deutsche Bank Trust Company Americas, as Trustee dated as of August 1, 2017 (incorporated by reference to Exhibit 4.1, CL&P Current Report on Form 8-K filed August 23, 2017, File No. 000-00404)
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| | | |
| | | Ratio of Earnings to Fixed Charges |
| | | |
| | | Certification by the Chairman of The Connecticut Light and Power Company pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 |
| | | | |
| | | | |
| | | | |
| | | | |
| | | | |
| | Listing of Exhibits (NSTAR Electric Company) |
| * | 4 | | |
| | | | Ratio of Earnings to Fixed Charges |
| | | | |
| | | | |
| | | | |
| | | | |
| | | | |
| | | | |
| | | | |
| | Listing of Exhibits (PSNH) |
| | 31 | | |
| | | | Ratio of Earnings to Fixed Charges |
| | | |
| | | Certification by the Chairman of Public Service Company of New Hampshire pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 |
| | | | |
| | | | |
|
| | | |
| | | | |
| | | | |
| | | |
| Listing of Exhibits (WMECO) |
| | | |
| | | Ratio of Earnings to Fixed Charges |
| | | |
| | | Certification by the Chairman of Western Massachusetts Electric Company pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 |
| | | |
| | | Certification by the Chief Financial Officer of Western Massachusetts Electric Company pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 |
| | | |
| | | Certification by the Chairman and the 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 |
| | | | |
| | Listing of Exhibits (Eversource, CL&P, NSTAR Electric, PSNH, WMECO) |
| | | PSNH) |
| | 101.INS | | Inline XBRL Instance Document - the instance document does not appear in the interactive data file because its XBRL tags are embedded within the inline XBRL document |
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| | 101.SCH | | Inline XBRL Taxonomy Extension Schema |
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| | 101.CAL | | Inline XBRL Taxonomy Extension Calculation |
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| | 101.DEF | | Inline XBRL Taxonomy Extension Definition |
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| | 101.LAB | | Inline XBRL Taxonomy Extension Labels |
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| | 101.PRE | | Inline XBRL Taxonomy Extension Presentation |
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| 104 | | The cover page from the Quarterly Report on Form 10-Q for the quarter ended March 31, 2020, formatted in Inline XBRL |
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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| | | |
| | | EVERSOURCE ENERGY |
| | | | |
November 3, 2017May 8, 2020 | | 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.
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| | | |
| | | THE CONNECTICUT LIGHT AND POWER COMPANY |
| | | | |
November 3, 2017May 8, 2020 | | 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.
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| | | |
| | | NSTAR ELECTRIC COMPANY |
| | | | |
November 3, 2017May 8, 2020 | | 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.
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| | | |
| | | PUBLIC SERVICE COMPANY OF NEW HAMPSHIRE |
| | | | |
November 3, 2017May 8, 2020 | | 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.
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| | | |
| | WESTERN MASSACHUSETTS ELECTRIC COMPANY |
| | | |
November 3, 2017 | | By: | /s/ Jay S. Buth |
| | | Jay S. Buth |
| | | Vice President, Controller and Chief Accounting Officer |
