10-QPeriod: Q2 FY2001

EVERSOURCE ENERGY Quarterly Report for Q2 Ended Jun 30, 2001

Filed August 10, 2001For Securities:ES

Summary

Eversource Energy (ES), formerly Northeast Utilities (NU), reported a significant increase in net income for the six months ended June 30, 2001, compared to the same period in 2000. This improvement was largely driven by substantial gains from the sale of its Millstone nuclear units and the securitization of stranded costs, which collectively provided over $3.3 billion in cash proceeds. These proceeds were strategically used to reduce debt, buy out high-cost power contracts, and return capital to shareholders, strengthening the company's liquidity and financial position. The company also saw improved performance from its competitive energy subsidiaries, which contributed positively to earnings. Despite a slight reduction in projected full-year earnings per share due to delayed share repurchases, NU increased its quarterly dividend by 25%, signaling confidence in its financial outlook. The company is actively managing its regulatory and market risks while investing in transmission infrastructure enhancements.

Key Highlights

  • 1Significant increase in net income for the six months ended June 30, 2001, driven by Millstone sale and securitization proceeds.
  • 2Strong liquidity position bolstered by over $3.3 billion in cash from asset sales and securitization.
  • 3Strategic use of proceeds for debt reduction, power contract buyouts, and share repurchases.
  • 4Improved earnings from competitive energy subsidiaries contributed positively.
  • 525% increase in quarterly dividend declared, reflecting management's confidence.
  • 6Active investment in transmission grid enhancement projects in Connecticut.
  • 7Managing regulatory changes in Connecticut, New Hampshire, and Massachusetts, including rate adjustments and competition implementation.

Frequently Asked Questions

The primary driver for the significant increase in net income for the first six months of 2001 was the gain realized from the sale of the Millstone nuclear units and the securitization of stranded costs, which generated substantial cash proceeds and improved the company's overall financial health.

The company strategically deployed the cash proceeds to strengthen its financial position by buying out or reducing high-cost, long-term purchased-power contracts, repaying debt obligations (including preferred stock and mortgage bonds), and repurchasing common shares. These actions improved liquidity and reduced financial risk.

Eversource Energy (NU) projected operating earnings between $1.35 and $1.50 per share for 2001, excluding nonrecurring items. This projection was revised downwards from a previous range due to a delay in the timing of additional share repurchases, which impacts the projected average share count for the year.

Eversource Energy's (NU) competitive energy subsidiaries manage market risks, such as commodity price fluctuations, through a portfolio of contracts, including forward contracts, futures, swap agreements, and options. They employ strict policies and risk management disciplines, including mark-to-market accounting for trading activities and cash flow hedge accounting for nontrading activities, to mitigate potential losses.