8-KOther Events

EVERSOURCE ENERGY 8-K Report (Jun 17, 2002)

Filed June 17, 2002For Securities:ES

Summary

Eversource Energy (formerly Northeast Utilities) issued a Form 8-K on June 17, 2002, to report a significant negative development impacting its subsidiary, The Connecticut Light & Power Company (CL&P). The Connecticut Department of Public Utility Control (DPUC) denied CL&P's request to increase the standard offer generation service charge for its customers. This decision is expected to adversely affect CL&P's earnings and is particularly impactful for NU's unregulated subsidiary, Select Energy, which supplies 50% of CL&P's standard offer requirements under a contract that continues until December 2003. Northeast Utilities has lowered its earnings estimates for 2002, stating that the higher end of its previously forecast range of $1.40 to $1.65 per share is now unachievable. The company expressed disappointment with the DPUC's decision, believing it did not align with the best interests of customers and could jeopardize the continued supply of energy. The DPUC's ruling found no legal or factual basis to re-open proceedings on the standard offer, despite market prices for electricity being substantially higher than the current generation charge.

Key Highlights

  • 1Connecticut Light & Power Company (CL&P), a subsidiary of Northeast Utilities (NU), had its request to increase generation service charges denied by the Connecticut Department of Public Utility Control (DPUC).
  • 2This DPUC decision is expected to negatively impact NU's 2002 earnings, leading to a reduction in the previously issued earnings per share guidance.
  • 3NU anticipates that its unregulated subsidiary, Select Energy, will continue to experience adverse impacts on its earnings due to existing contracts for supplying CL&P's standard offer service.
  • 4The DPUC found no statutory or legal basis to modify the standard offer agreement or reopen proceedings related to power supply contracts for CL&P and The United Illuminating Company.
  • 5CL&P had sought to increase the generation service charge by one cent per kilowatt hour to ensure its ability to deliver energy and foster retail competition.
  • 6The denial comes at a time when market electricity prices are substantially higher than the current generation charge, raising concerns about supplier viability and potential market purchases by CL&P.
  • 7The company's Chairman and CEO expressed strong disappointment with the DPUC's decision.

Frequently Asked Questions

Northeast Utilities lowered its earnings estimates primarily because its subsidiary, The Connecticut Light & Power Company (CL&P), was denied a requested increase in its standard offer generation service charge by the Connecticut Department of Public Utility Control (DPUC). This decision prevents CL&P from recovering higher costs, impacting profitability.

The DPUC's decision directly impacts NU's unregulated subsidiary, Select Energy, which supplies 50% of CL&P's standard offer requirements. Select Energy is expected to continue to face adverse earnings impacts due to its existing contract, which remains in effect until December 2003 at rates below current market prices.

CL&P had requested to increase the standard offer generation service charge by one cent per kilowatt hour. This increase was intended to protect the company's ability to continue delivering energy to customers and to promote retail competition in the energy market. CL&P also proposed a mechanism for future market price adjustments.

If suppliers like NRG or Select Energy are unable to continue providing service, CL&P could be forced to purchase electricity on the open market at potentially higher prices to meet customer demand. Under the restructuring law, CL&P may be able to recover these unknown costs from its customers, but this creates uncertainty.