10-QPeriod: Q2 FY2009

EVERSOURCE ENERGY Quarterly Report for Q2 Ended Jun 30, 2009

Filed August 7, 2009For Securities:ES

Summary

Eversource Energy (ES), operating as Northeast Utilities and Subsidiaries, reported a net income of $82.9 million ($0.47 per share) for the second quarter of 2009, a significant increase from $57.8 million ($0.37 per share) in the same period of 2008. This improvement was driven by higher earnings in both the regulated distribution and transmission segments, largely due to rate increases, favorable tax issue resolutions, and diligent cost management. Despite a 5.3% decrease in retail electric sales for CL&P, rate adjustments helped offset this impact. PSNH and WMECO also saw positive earnings growth, with PSNH's Clean Air Project progressing on schedule. The company reaffirmed its 2009 earnings guidance, projecting between $1.80 and $1.90 per share, reflecting a narrowed range due to economic conditions impacting sales and increasing uncollectible expenses.

Key Highlights

  • 1Reported net income of $82.9 million ($0.47/share) for Q2 2009, up from $57.8 million ($0.37/share) in Q2 2008.
  • 2Regulated companies (CL&P, PSNH, WMECO, Yankee Gas) earned $80 million in Q2 2009, an increase from $60.8 million in Q2 2008, driven by rate increases and cost controls.
  • 3Transmission segment earnings increased significantly due to higher investments in infrastructure projects.
  • 4CL&P's retail electric sales decreased by 5.3% in Q2 2009 compared to Q2 2008, but rate adjustments largely mitigated the revenue impact.
  • 5Eversource Energy reaffirmed its 2009 earnings guidance of $1.80 to $1.90 per share, narrowing the range due to economic conditions impacting sales.
  • 6The company is pursuing federal stimulus funding for a $253 million smart grid project involving advanced metering technology.
  • 7PSNH filed for a distribution rate increase of approximately $51 million annually, with a temporary increase of $25.6 million approved.

Frequently Asked Questions

The primary driver for the increase in net income was higher earnings from the regulated companies, particularly in the distribution and transmission segments. This was supported by rate increases, favorable resolutions of routine tax issues, and successful cost management initiatives.

The weak economic conditions in the Northeast led to lower retail electric sales, especially in the industrial sector, and increased the risk of uncollectible accounts. While this negatively impacted sales volumes, rate adjustments and recovery mechanisms helped to mitigate the impact on revenues and earnings for the regulated businesses.

The company is progressing with its New England East-West Solutions (NEEWS) series of transmission projects, including the Greater Springfield Reliability Project (GSRP). Regulatory and siting approvals are ongoing, with construction expected to commence in late 2010/early 2011 and completion projected for late 2013. The company also filed an application for federal stimulus funding for a significant smart grid project.

Due to market performance in 2008, the pension plan's funded ratio decreased. However, revised IRS guidance allowed for an estimated contribution of approximately $50 million for the plan year beginning January 1, 2009, to be made by the third quarter of 2010. This is a reduction from previous estimates.