10-QPeriod: Q2 FY2006

EVERSOURCE ENERGY Quarterly Report for Q2 Ended Jun 30, 2006

Filed August 7, 2006For Securities:ES

Summary

Eversource Energy (formerly Northeast Utilities) reported a net income of $22.2 million, or $0.14 per share, for the second quarter of 2006, a significant improvement from a net loss of $27.7 million, or $0.21 per share, in the same period of 2005. This turnaround was largely driven by improved performance in the Utility Group, which includes the regulated electric and gas distribution and transmission businesses, while the NU Enterprises segment continued to experience losses. The company continues to execute its strategy to exit its competitive businesses. Progress has been made with the sale of the retail marketing business and significant steps taken towards the sale of the competitive generation business, which is expected to result in a substantial gain upon completion. Capital expenditures remain focused on utility infrastructure, particularly transmission investments, with the Utility Group expecting to spend approximately $900 million in 2006. Management has revised its 2006 earnings guidance upwards, reflecting improved utility operations and the anticipated sale of generation assets.

Key Highlights

  • 1Net income for Q2 2006 was $22.2 million ($0.14/share), compared to a net loss of $27.7 million ($0.21/share) in Q2 2005.
  • 2The company is actively exiting its competitive NU Enterprises businesses, with significant progress made on sales and divestitures.
  • 3The Utility Group, which includes regulated electric and gas operations, showed improved earnings, driven by distribution and transmission segments.
  • 4Capital expenditures for 2006 are projected to be around $900 million, primarily for transmission infrastructure upgrades.
  • 5NU revised its 2006 earnings guidance upwards to $1.57-$1.70 per share, reflecting improved utility performance and an anticipated gain from asset sales.
  • 6A significant gain of approximately $300 million (after-tax) is expected from the sale of the competitive generation business, projected to close by year-end 2006.
  • 7The company is managing its market risk exposure through divestitures and hedging strategies, with a continued focus on stabilizing operations during the exit from competitive segments.

Frequently Asked Questions

Eversource Energy (Northeast Utilities) reported a net income of $22.2 million, or $0.14 per share, for the second quarter of 2006, a significant improvement from a net loss of $27.7 million, or $0.21 per share, in the same period of 2005. This turnaround was driven by improved performance in the regulated Utility Group, which offset losses in the NU Enterprises segment.

The company is actively executing a strategy to exit all aspects of its competitive NU Enterprises businesses. This includes the sale of wholesale marketing, retail marketing, and competitive generation assets. Progress has been made with the sale of the retail marketing business and significant steps are underway for the sale of the competitive generation business, which is expected to result in a substantial gain.

Capital expenditures are focused on strengthening the regulated utility infrastructure, particularly transmission investments. The Utility Group expects to spend approximately $900 million in 2006, with CL&P alone projected to spend around $600 million, primarily on transmission projects aimed at improving reliability and capacity.

Management has revised its 2006 earnings guidance upwards to a range of $1.57 to $1.70 per share. This upward revision reflects improved utility operations and an anticipated after-tax gain of approximately $300 million from the sale of the competitive generation business, expected to close by the end of 2006.