01—Abstract
Summary
Summary of the 10-K filed February 28, 2013. Cited figures are marked; the original filing is the authoritative source.
Eversource Energy (ES), formerly Northeast Utilities, reported its fiscal year 2012 results, highlighting the significant impact of its merger with NSTAR, which closed on April 10, 2012.
The company's financial performance was boosted by the inclusion of NSTAR's operations, contributing positively to earnings and operating revenues. Despite facing challenges such as warmer-than-normal weather impacting electric sales and increased pension and healthcare costs, Eversource Energy demonstrated resilience, with improved earnings driven by merger synergies and higher transmission segment earnings due to infrastructure investments. The company is actively investing in its infrastructure, projecting approximately $5 billiona in capital expenditures from 2013 through 2015, with a substantial portion allocated to electric and natural gas distribution and electric transmission segments.
Eversource Energy also addressed significant storm restoration costs related to Tropical Storm Irene, the October 2011 snowstorm, and Hurricane Sandy, which were deferred for future regulatory recovery. Regulatory proceedings, particularly concerning transmission return on equity (ROE) at FERC and storm cost recovery in various states, remain key areas to monitor for potential impacts on future earnings and financial position.
02—Key points
Key Highlights
- Completed merger with NSTAR on April 10, 2012, significantly expanding the company's scale and geographic reach across Connecticut, Massachusetts, and New Hampshire.
- Reported 2012 earnings of $525.9 million, or $1.89 per share, with adjusted earnings (excluding merger-related costs) of $2.28 per share, showing a substantial improvement over 2011's $394.7 million.
- Projected capital expenditures of approximately $5 billion from 2013 through 2015, focusing on electric and natural gas distribution and transmission infrastructure upgrades.
- Managed significant storm restoration costs totaling approximately $570.2 million as of December 31, 2012, related to Tropical Storm Irene, the October 2011 snowstorm, and Hurricane Sandy, which are deferred for future regulatory recovery.
- Transmission segment earnings increased due to higher investments, while the electric distribution segment saw improved results primarily from the inclusion of NSTAR's operations.
- Navigated regulatory proceedings at FERC concerning transmission ROE and storm cost recovery mechanisms, with outcomes potentially impacting future financial performance.
- Maintained compliance with financial covenants in credit facilities and indentures, demonstrating ongoing financial stability.
03—One dollar
04—Financials
Financial Highlights
Figures from 10-KFY2012filed February 28, 2013Financial Statements
FY2012 against FY2011
| Line item | FY2012FY2011 | Change |
|---|---|---|
| Revenue | $6.27B$4.47B | +40.5% |
| Operating Expenses | $5.16B$3.67B | +40.4% |
| Operating Income | $1.12B$794.18M | +40.8% |
| Interest Expense | $329.94M$250.43M | +31.8% |
| Net Income | $533.08M$400.51M | +33.1% |
| EPS (Basic) | $1.90$2.22 | −14.4% |
| EPS (Diluted) | $1.89$2.22 | −14.9% |
| Shares Outstanding (Basic) | 277.21M177.41M | +56.3% |
| Shares Outstanding (Diluted) | 277.99M177.80M | +56.3% |
05—Questions
Frequently Asked Questions
How did the merger with NSTAR impact Eversource Energy's 2012 financial results?
The merger with NSTAR, completed on April 10, 2012, significantly impacted Eversource Energy's 2012 results by adding NSTAR's operations, which contributed $182.9 million to earnings in the period from April 10 to December 31, 2012. This inclusion boosted operating revenues and earnings, partially offsetting merger-related costs and higher operating expenses.
What are the major capital expenditure plans for Eversource Energy in the near future?
Eversource Energy projected approximately $5 billion in capital expenditures from 2013 through 2015. The primary focus of these investments is on its electric and natural gas distribution segments ($2.5 billion) and its electric transmission segment ($2.3 billion).
How did the company manage significant storm restoration costs?
Eversource Energy incurred substantial storm restoration costs from major events like Tropical Storm Irene, the October 2011 snowstorm, and Hurricane Sandy, totaling approximately $570.2 million as of December 31, 2012. These costs were deferred as regulatory assets, and the company expected to recover them through future regulatory rate processes, though specific settlement agreements, like CL&P's waiver of $40 million in costs, had a minor impact.
What are the key regulatory risks and proceedings impacting Eversource Energy?
Key regulatory risks include proceedings at the FERC concerning the base Return on Equity (ROE) for transmission services, which could lead to refunds retroactive to October 2011. Additionally, state-level regulatory decisions in Connecticut, Massachusetts, and New Hampshire regarding storm cost recovery, rate structures, and compliance with environmental regulations are critical for future financial performance.
06—Continue