10-QPeriod: Q2 FY2008

EVERSOURCE ENERGY Quarterly Report for Q2 Ended Jun 30, 2008

Filed August 7, 2008For Securities:ES

Summary

Eversource Energy (ES), operating as Northeast Utilities and subsidiaries, reported improved net income for the second quarter of 2008, reaching $57.8 million, or $0.37 per share, compared to $48.5 million, or $0.31 per share, in the same period of 2007. This growth was primarily driven by strong performance in the transmission segments across its regulated utilities, particularly The Connecticut Light and Power Company (CL&P), and a favorable FERC decision on transmission project returns. However, for the first six months of 2008, net income slightly decreased to $116.2 million ($0.75 per share) from $123.6 million ($0.80 per share) in the prior year, largely due to a significant litigation settlement charge. Excluding this one-time charge, adjusted earnings for the first half were $146 million or $0.94 per share. The company also updated its 2008 earnings projection, now expecting between $1.60 and $1.75 per share (including the settlement charge), an increase from previous guidance. This upward revision reflects stronger-than-expected transmission segment performance and improved operational results from competitive businesses. Capital expenditures remain robust, with a focus on transmission infrastructure upgrades across Connecticut and Massachusetts, signaling continued investment in grid modernization and reliability. The company reaffirmed its long-term EPS growth target of 8-11% annually.

Key Highlights

  • 1Net income increased to $57.8 million ($0.37/share) in Q2 2008 from $48.5 million ($0.31/share) in Q2 2007, driven by transmission segment growth and favorable regulatory decisions.
  • 2First half 2008 net income decreased to $116.2 million ($0.75/share) from $123.6 million ($0.80/share) in the prior year, primarily due to a $29.8 million after-tax litigation settlement charge.
  • 3Excluding the litigation settlement, adjusted first half 2008 earnings were $146 million ($0.94/share).
  • 4Company raised its full-year 2008 earnings guidance to $1.60-$1.75 per share (GAAP), up from $1.45-$1.70.
  • 5Capital expenditures were strong at $625.1 million for the first half of 2008, primarily driven by transmission projects at CL&P, with full-year consolidated capital expenditures projected at $1.3 billion for regulated companies.
  • 6The company reaffirms its long-term EPS growth projection of 8-11% annually, supported by investments in transmission and distribution infrastructure and expected regulatory approvals.
  • 7Yankee Gas received a DPUC order requiring a refund of approximately $5.8 million in previous gas cost recoveries, impacting Q2 2008 earnings.

Frequently Asked Questions

The increase in net income for Q2 2008 was primarily driven by strong performance in the transmission segments of its regulated utilities, especially The Connecticut Light and Power Company (CL&P), and a favorable Federal Energy Regulatory Commission (FERC) decision regarding returns on transmission projects.

A litigation settlement with Con Edison resulted in a significant after-tax charge of $29.8 million ($0.19 per share) in the first half of 2008, which negatively impacted the reported net income for that period. Excluding this one-time charge, the company's adjusted earnings for the first half were stronger.

Eversource Energy (Northeast Utilities) raised its full-year 2008 earnings guidance to between $1.60 and $1.75 per share (GAAP). This upward revision reflects stronger transmission segment performance and improved operational results from its competitive businesses, partially offset by the litigation settlement charge.

Capital investments remain robust, with a significant focus on transmission infrastructure upgrades across Connecticut and Massachusetts. The company is investing in projects like the Middletown-Norwalk, Glenbrook Cables, and Long Island Replacement Cable projects, underscoring its commitment to grid modernization and reliability.