10-QPeriod: Q3 FY2008

EVERSOURCE ENERGY Quarterly Report for Q3 Ended Sep 30, 2008

Filed November 10, 2008For Securities:ES

Summary

Eversource Energy (ES), operating as Northeast Utilities (NU) in 2008, reported solid financial results for the third quarter and first nine months of 2008. The company's net income increased significantly year-over-year, driven by higher earnings from its regulated utility segments, particularly the transmission business which benefited from increased investment and favorable regulatory treatment. The company reiterated its full-year 2008 earnings guidance and provided 2009 guidance, projecting stable performance despite economic headwinds. Key initiatives include ongoing significant investments in transmission infrastructure, particularly in Connecticut, to enhance reliability. NU is also actively engaged in regulatory proceedings related to transmission incentives and rate adjustments across its operating companies. Despite current financial market volatility, the company expressed confidence in its liquidity position and its ability to fund operations and capital plans. Management highlighted the progress on major transmission projects and outlined a substantial capital investment pipeline for the coming years.

Key Highlights

  • 1Net income for the third quarter of 2008 was $72.7 million ($0.47/share), up from $50.2 million ($0.32/share) in Q3 2007.
  • 2Nine-month net income was $188.9 million ($1.21/share), an increase from $173.8 million ($1.12/share) in the same period of 2007, though this excludes a $29.8 million after-tax charge related to a litigation settlement.
  • 3Regulated utility segments, particularly transmission, showed strong earnings growth driven by increased investment and favorable regulatory outcomes.
  • 4The company reiterated its full-year 2008 earnings guidance of $1.60-$1.75 per share and provided 2009 guidance of $1.80-$2.00 per share.
  • 5Significant capital expenditures are planned for transmission infrastructure improvements, with over $3.4 billion projected for transmission projects through 2013.
  • 6Eversource Energy's liquidity position was deemed adequate despite financial market volatility, with stable credit outlooks from rating agencies.
  • 7The company is actively managing its derivative contracts and associated market risks, with fair value adjustments for regulated contracts largely offset by regulatory assets and liabilities.

Frequently Asked Questions

The primary driver for the increase in net income was the strong performance of the regulated utility segments, particularly the transmission business, which benefited from increased investments and favorable regulatory decisions, as well as higher distribution segment revenues due to rate increases and recovery of expenses.

Eversource Energy (Northeast Utilities) believes its liquidity position is adequate. The company utilizes its bank credit facilities for short-term funding, does not rely on commercial paper, and has stable credit outlooks. While some collateral requirements exist, they are considered modest, and the company has sufficient borrowing availability to meet its near-term needs.

The company's key capital investment priorities are focused on strengthening its transmission infrastructure to meet regional reliability needs. Significant investments are planned for major transmission projects in Connecticut and Massachusetts, with over $3.4 billion projected for transmission projects through 2013.

The company is involved in various legal and regulatory matters. Notably, a litigation settlement with Con Edison resulted in a significant after-tax charge in the first nine months of 2008. Additionally, the company is actively engaged in regulatory proceedings regarding transmission incentives and rate adjustments across its operating jurisdictions, which could affect future earnings.