10-QPeriod: Q3 FY2005

EVERSOURCE ENERGY Quarterly Report for Q3 Ended Sep 30, 2005

Filed November 7, 2005For Securities:ES

Summary

Eversource Energy (ES), operating as Northeast Utilities and its subsidiaries, reported a net loss of $94.5 million, or $0.73 per share, for the third quarter of 2005, a significant decline from the $7.9 million net loss, or $0.06 per share, in the same period of 2004. The company is undergoing a strategic shift, announcing its decision to exit its competitive wholesale marketing, energy services, retail marketing, and competitive generation businesses. This move aims to simplify the business model, increase earnings predictability, and reduce operating risk, with divestitures expected to be completed in 2006. The substantial losses are largely attributable to charges within the NU Enterprises segment, driven by mark-to-market accounting adjustments on wholesale energy contracts slated for divestiture and restructuring and impairment charges related to exiting these businesses. While the regulated Utility Group demonstrated stable performance with increased earnings driven by higher rates and sales, the company's overall financial results were heavily impacted by the challenging transition in its competitive segments. Management is actively pursuing strategic initiatives to enhance liquidity and deleverage the balance sheet through asset sales and potential equity offerings.

Key Highlights

  • 1Eversource Energy (ES) reported a significant net loss of $94.5 million for Q3 2005, a sharp increase from the prior year's loss.
  • 2The company announced a strategic decision to exit all competitive business segments, including wholesale marketing, energy services, retail marketing, and competitive generation.
  • 3NU Enterprises incurred substantial charges, primarily due to mark-to-market accounting on wholesale contracts and restructuring/impairment charges related to business exits.
  • 4The regulated Utility Group showed stable performance, with earnings slightly up year-over-year, supported by rate increases and higher sales.
  • 5The company is focused on divesting competitive assets to simplify its structure, reduce risk, and improve financial flexibility.
  • 6Liquidity is being managed through asset sales, potential equity offerings, and credit facility adjustments to fund ongoing capital expenditures and debt obligations.
  • 7Significant investments are being made in the regulated transmission infrastructure, particularly in Connecticut, to enhance reliability and meet growing demand.

Frequently Asked Questions

The substantial net loss was primarily driven by significant charges within the NU Enterprises segment. These charges were mainly due to mark-to-market accounting adjustments on wholesale energy contracts that the company is in the process of divesting and restructuring and impairment charges related to exiting these competitive businesses.

Eversource Energy (Northeast Utilities) is strategically exiting all of its competitive business segments, including wholesale marketing, energy services, retail marketing, and competitive generation. This decision is aimed at simplifying the company's business model, reducing operating risk, and enhancing financial flexibility by focusing solely on its regulated utility operations.

The company is managing its liquidity through a combination of strategic asset divestitures, potential equity offerings, and adjustments to its credit facilities. These actions are intended to fund ongoing capital expenditures in the regulated businesses and to address debt obligations arising from the exit of competitive contracts.

The regulated Utility Group is expected to perform stably, with projected earnings in a range of $1.22 to $1.30 per share for 2005 and $1.21 to $1.31 per share for 2006. Performance is driven by rate increases, higher sales, and significant investments in transmission infrastructure, particularly in Connecticut.