10-QPeriod: Q3 FY2001

EVERSOURCE ENERGY Quarterly Report for Q3 Ended Sep 30, 2001

Filed November 9, 2001For Securities:ES

Summary

Eversource Energy (formerly Northeast Utilities) reported its third-quarter and year-to-date results for the period ending September 30, 2001. The company experienced a notable decline in net income for the third quarter compared to the previous year, primarily due to the sale of its Millstone nuclear units, industry restructuring, and rate reductions impacting its regulated businesses. Despite these challenges, higher regulated electric sales and a reduced share count from ongoing repurchases provided some offset. For the nine-month period, net income was boosted by a significant after-tax gain from the Millstone sale, though recurring earnings showed a decline compared to the prior year. The company is actively managing its financial condition and pursuing growth opportunities. Key developments include the ongoing restructuring of its electric utility companies, with further divestitures expected. Eversource Energy anticipates earning towards the lower end of its projected range for 2001 and has provided initial earnings guidance for 2002. Liquidity remains strong, supported by asset sales and securitization efforts. The company also highlighted plans for substantial capital investments in transmission and gas distribution infrastructure in Connecticut, subject to regulatory approval.

Key Highlights

  • 1Third-quarter net income decreased significantly year-over-year, impacted by the sale of Millstone nuclear units and industry restructuring.
  • 2Nine-month net income was bolstered by a $124.8 million after-tax gain from the sale of Millstone units.
  • 3Regulated retail electric sales increased by 4.7% for the third quarter and 3.0% for the nine-month period, partially offsetting lower earnings.
  • 4The company expects full-year 2001 earnings to be at the lower end of its previously announced range.
  • 5Eversource Energy provided 2002 earnings guidance of $1.40 to $1.65 per share.
  • 6Liquidity remains strong, with no subsidiary borrowing under credit lines during the quarter.
  • 7Significant capital investment plans for transmission and gas distribution infrastructure are underway, contingent on regulatory approval.

Frequently Asked Questions

The primary drivers for the decline in third-quarter earnings were the expected decline in earnings from regulated businesses due to industry restructuring and rate reductions, the sale of the Millstone nuclear units, and losses at competitive energy subsidiaries. The prior year's strong performance was also boosted by positive nuclear operations from the Millstone units.

The sale of the Millstone units resulted in a significant after-tax gain of $124.8 million in the first quarter of 2001, boosting the nine-month net income. However, it also removed the earnings contribution from these units in the third quarter of 2001, which had positively impacted the prior year's results.

For 2001, Eversource Energy expects to earn towards the lower end of its guidance range due to a higher average share count. For 2002, the company anticipates earnings between $1.40 and $1.65 per share. Growth is expected from expanding regulated businesses and investments in unregulated ventures, including proposed capital projects for transmission and gas distribution infrastructure. The performance of competitive energy subsidiaries like Select Energy is a key variable.

Liquidity remains strong, supported by proceeds from asset sales (like Millstone) and securitization of stranded costs. The company had ample cash to fund its short-term borrowing needs and did not draw on its credit lines during the quarter. Plans are in place to renew significant revolving credit lines and potential refinancing of debt is being considered to reduce interest costs.