01—Abstract
Summary
Summary of the 10-K filed February 24, 2012. Cited figures are marked; the original filing is the authoritative source.
Northeast Utilities (NU), operating as Eversource Energy (ES), filed its 2011 10-K Annual Report detailing its financial performance and strategic initiatives.
The company reported net income attributable to controlling interests of $394.7 milliona, or $2.22 per share, a slight increase from the previous year. Key drivers for the improved results included favorable electric distribution rate case decisions and higher investments in transmission infrastructure. However, the report highlights significant storm-related restoration costs totaling $354.1 million, most of which is deferred for future recovery from customers, though $30 million was expensed by CL&P as a storm fund reserve.
The most significant strategic development is the pending merger with NSTAR, which was extended to April 16, 2012, and awaited regulatory approvals from PURA and the DPU. The company's capital expenditures in 2011 were approximately $1.2 billionb, primarily focused on maintaining and expanding its regulated electric transmission, distribution, and natural gas systems, with substantial investments planned for major transmission projects like NEEWS and Northern Pass.
02—Key points
Key Highlights
- Northeast Utilities (NU) reported net income of $394.7 million ($2.22/share) for 2011, up from $387.9 million ($2.19/share) in 2010, driven by rate case decisions and transmission investments.
- The company incurred $354.1 million in storm restoration costs from Tropical Storm Irene and an unprecedented October snowstorm, with $311.7 million deferred for future regulatory recovery.
- The significant event of 2011 was the pending merger with NSTAR, subject to regulatory approvals from PURA and DPU, with an expected closing date of April 16, 2012.
- Capital expenditures in 2011 totaled $1.2 billion, with a focus on grid modernization and expansion, including major transmission projects like NEEWS ($1.3 billion) and Northern Pass ($1.1 billion).
- NU's regulated utility operations form the core of its business, with the distribution segment contributing approximately 53% of earnings and the electric transmission segment approximately 47%.
- The company's liquidity remained sound, with cash and cash equivalents totaling $6.6 million at year-end 2011, and robust operating cash flows of $901.1 million.
- Regulatory developments included rate case decisions impacting CL&P, PSNH, and WMECO, and a pending FERC proceeding challenging the base ROE for New England transmission projects.
03—One dollar
04—Financials
Financial Highlights
Figures from 10-KFY2011filed February 24, 2012Financial Statements
FY2011 against FY2010
| Line item | FY2011FY2010 | Change |
|---|---|---|
| Revenue | $4.47B$4.90B | −8.8% |
| Operating Expenses | $3.67B$4.10B | −10.4% |
| Operating Income | $794.18M$799.89M | −0.7% |
| Interest Expense | $250.43M$237.29M | +5.5% |
| Net Income | $400.51M$387.95M | +3.2% |
| EPS (Basic) | $2.22$2.20 | +0.9% |
| EPS (Diluted) | $2.22$2.19 | +1.4% |
| Shares Outstanding (Basic) | 177.41M176.64M | +0.4% |
| Shares Outstanding (Diluted) | 177.80M176.89M | +0.5% |
05—Questions
Frequently Asked Questions
What was the primary financial performance metric for Northeast Utilities in 2011?
Northeast Utilities reported net income attributable to controlling interests of $394.7 million, or $2.22 per share, for 2011, an increase from $387.9 million, or $2.19 per share, in 2010. Excluding merger-related costs and a storm fund reserve charge, adjusted net income was $423.9 million, or $2.38 per share.
What was the impact of the 2011 storms on the company's financials?
Northeast Utilities incurred significant restoration costs of $354.1 million from Tropical Storm Irene and an October snowstorm. While most of these costs ($311.7 million) were deferred for future recovery from customers, CL&P recorded a $30 million pre-tax storm fund reserve that was not recovered in rates. The company believes its storm response was prudent and expects most deferred costs to be recoverable.
What is the status of the NSTAR merger?
The merger with NSTAR was pending throughout 2011, with the termination date extended to April 16, 2012. It required regulatory approvals from PURA (Connecticut) and DPU (Massachusetts), with decisions expected in early April 2012. If approvals are granted, the merger was expected to close by April 16, 2012.
What are the company's major capital expenditure plans?
In 2011, NU's capital expenditures totaled $1.2 billion. Key future investments include the NEEWS transmission project ($1.3 billion aggregate cost for CL&P and WMECO) and the Northern Pass transmission line project (NU's 75% share estimated at $830 million). The company also plans significant investments in its electric distribution and natural gas infrastructure.
06—Continue