10-QPeriod: Q2 FY2007

EVERSOURCE ENERGY Quarterly Report for Q2 Ended Jun 30, 2007

Filed August 7, 2007For Securities:ES

Summary

Northeast Utilities (NU) reported a significant increase in earnings for the second quarter and first half of 2007 compared to the same periods in 2006. This improvement was driven primarily by the regulated segments of the business, particularly the transmission segments, which saw higher earnings due to increased investment and associated rate base growth. CL&P's distribution segment also benefited from rate increases and higher sales, though offset by increased expenses. NU Enterprises continued its wind-down, showing improved results compared to the prior year's losses, largely due to favorable contract resolutions and reduced negative mark-to-market impacts from its diminishing wholesale portfolio. The company reaffirmed its 2007 earnings guidance and signaled continued dividend growth, subject to future earnings and cash requirements. Capital expenditures remain significant, with a focus on transmission infrastructure upgrades, particularly at CL&P in Southwest Connecticut, and planned investments in new generation and efficiency programs. The company also highlighted ongoing regulatory proceedings, including rate case filings and potential adjustments to transmission rate refunds.

Key Highlights

  • 1Northeast Utilities (NU) reported a substantial earnings increase for Q2 2007 ($48.5 million, $0.31/share) and H1 2007 ($123.6 million, $0.80/share) compared to the prior year, driven by improved performance in regulated segments.
  • 2Transmission segment earnings saw significant growth due to increased investments and higher rate base, particularly CL&P's projects in Southwest Connecticut.
  • 3CL&P's distribution segment earnings improved due to rate increases and higher sales, partially offset by increased operating expenses.
  • 4NU Enterprises, in its wind-down phase, reported improved results, moving from losses to profits, benefiting from favorable contract resolutions and reduced negative impacts from its wholesale portfolio.
  • 5NU reaffirmed its 2007 earnings guidance and indicated a continued dividend increase policy.
  • 6Capital expenditures remain robust, with a strong emphasis on transmission infrastructure upgrades and planned investments in generation and energy efficiency programs.
  • 7The company is actively managing regulatory proceedings, including rate case filings for CL&P, PSNH, and Yankee Gas, and addressing potential adjustments to transmission rate refunds from FERC.

Frequently Asked Questions

The significant earnings improvement was primarily driven by the regulated segments of the business, especially the transmission segments, which benefited from increased investments and resulting rate base growth. Higher sales and rate increases in CL&P's distribution segment also contributed.

NU Enterprises is in the process of winding down its remaining wholesale contracts and energy services activities. While still reporting some negative mark-to-market impacts from its diminished wholesale portfolio, its results improved significantly compared to the prior year, showing a profit in Q2 and H1 2007, a reversal from the losses reported in the same periods of 2006.

Capital expenditures remain a significant focus for NU, with a strong emphasis on upgrading its transmission infrastructure. Key projects include CL&P's significant investments in Southwest Connecticut, planned upgrades for the New England East-West Solution (NEEWS), and the Springfield 115 KV Upgrade. Investments are also being made in distribution infrastructure and energy efficiency programs.

Yes, NU is actively involved in several regulatory proceedings. This includes rate case filings for its operating companies (CL&P, PSNH, Yankee Gas) aimed at recovering costs and achieving authorized returns. Additionally, the company is addressing potential adjustments to transmission rate refunds from the FERC and navigating new energy efficiency legislation in Connecticut. There are also ongoing legal matters, such as the Consolidated Edison merger litigation and disputes related to NRG Energy.