8-KOther Events

EVERSOURCE ENERGY 8-K Report, Corporate Update (Dec 7, 2011)

Filed December 7, 2011For Securities:ES

Summary

This Form 8-K from Northeast Utilities (NU), filed on December 7, 2011, primarily addresses the impact of the October 2011 snowstorm and provides an update on the pending merger with NSTAR. For its subsidiary The Connecticut Light and Power Company (CL&P), NU announced a fund of up to $30 million to assist residential customers affected by power outages and provide charitable contributions. CL&P expects to record an $18 million after-tax charge for this fund in Q4 2011, which will not be recovered through rates. Furthermore, the report indicates that the merger with NSTAR, originally expected to close by year-end 2011, is now anticipated in early 2012 due to delays in receiving final regulatory approvals, specifically from the Massachusetts Department of Public Utilities (DPU). This delay also leads to a revised estimate for 2011 merger-related expenses, now projected at $0.10 per share instead of $0.20 per share. The company is maintaining its full-year consolidated recurring earnings guidance, with adjusted projections reflecting both the reduced merger expenses and the storm fund costs.

Key Highlights

  • 1Northeast Utilities (NU) establishes a $30 million fund to assist CL&P residential customers impacted by the October 2011 snowstorm and for charitable contributions in Connecticut.
  • 2CL&P will record an $18 million after-tax charge related to the storm fund in Q4 2011, which is not recoverable through customer rates.
  • 3Total storm-related costs for NU's operating companies (CL&P, PSNH, WMECO) are estimated at $202.45 million, with $178.65 million expected to be deferred for future regulatory review.
  • 4The previously expected year-end 2011 closing of the merger with NSTAR is now projected for early 2012 due to pending regulatory approvals.
  • 52011 merger-related expenses are now estimated at $0.10 per share, down from a previous estimate of $0.20 per share, due to the merger closing delay.
  • 6NU maintains its full-year 2011 consolidated recurring earnings guidance of $2.30-$2.40 per share (non-GAAP), with GAAP earnings projected at $2.10-$2.20 per share, reflecting both storm fund costs and revised merger expenses.

Frequently Asked Questions

Northeast Utilities expects to record an $18 million after-tax charge in the fourth quarter of 2011 for a $30 million customer assistance and charitable fund established by its subsidiary CL&P. While storm restoration costs total approximately $202.45 million across its operating companies, a significant portion ($178.65 million) is expected to be deferred for future regulatory review or capitalized, mitigating the immediate impact on earnings, except for the CL&P storm fund charge which is not recoverable in rates.

The merger between Northeast Utilities and NSTAR, initially anticipated to close by the end of 2011, is now expected to be consummated in early 2012. This delay is primarily due to pending regulatory approvals from the Massachusetts Department of Public Utilities (DPU) and the Nuclear Regulatory Commission (NRC).

The delay in the NSTAR merger closing has led to a reduction in the estimated merger-related expenses for 2011, now projected at $0.10 per share instead of $0.20 per share. This reduction offsets the $0.10 per share charge related to the CL&P storm fund. Consequently, NU is maintaining its consolidated recurring earnings guidance for 2011 in the range of $2.30 to $2.40 per share (non-GAAP), with GAAP diluted EPS projected between $2.10 and $2.20 per share.

Yes, CL&P will establish a fund of up to $30 million to assist residential customers who were without power after noon on Saturday, November 5, 2011, following the October snowstorm. An estimated 200,000 eligible customers are expected to receive a one-time bill credit in the first quarter of 2012. However, CL&P will record an $18 million after-tax charge for this fund, which will not be recovered in customer rates.