-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, f5KHY40m7xE/jRq5Pj2jGmSB46CjN8wbogVC7GMnMmniyMCfeeKChfU4qx26bd4J RaBNTkMfHMXRR6dUnBFt8w== 0000023426-94-000060.txt : 19941111 0000023426-94-000060.hdr.sgml : 19941111 ACCESSION NUMBER: 0000023426-94-000060 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19940930 FILED AS OF DATE: 19941110 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: CONNECTICUT LIGHT & POWER CO CENTRAL INDEX KEY: 0000023426 STANDARD INDUSTRIAL CLASSIFICATION: 4911 IRS NUMBER: 060303850 STATE OF INCORPORATION: CT FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-00404 FILM NUMBER: 94558789 BUSINESS ADDRESS: STREET 1: 707 SELDEN ST CITY: BERLIN STATE: CT ZIP: 06037-1616 BUSINESS PHONE: 2036655000 10-Q 1 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549-1004 [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 1994 ------------------ OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to ------ ------ Commission File Number 0-404 ----- THE CONNECTICUT LIGHT AND POWER COMPANY --------------------------------------- (Exact name of registrant as specified in its charter) CONNECTICUT 06-0303850 ----------- ------------ (State or other jurisdiction (I.R.S. Employer of incorporation or organization) Identification No.) SELDEN STREET, BERLIN, CONNECTICUT 06037-1616 - ------------------------------------------------------------------- (Address of principal executive offices) (Zip Code) (203) 665-5000 -------------- (Registrant's telephone number, including area code) Not Applicable -------------- (Former name, former address and former fiscal year, if changed since last report) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No ___ ___ Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date. Class Outstanding at October 31, 1994 ----- ------------------------------- Common Shares, $10.00 par value 12,222,930 shares THE CONNECTICUT LIGHT AND POWER COMPANY TABLE OF CONTENTS Page No. -------- Part I. Financial Information Item 1. Financial Statements Balance Sheets - September 30, 1994 and December 31, 1993 2 Statements of Income - Three and Nine Months Ended September 30, 1994 and 1993 4 Statements of Cash Flows - Nine Months Ended September 30, 1994 and 1993 5 Notes to Financial Statements 6 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 10 Part II. Other Information Item 1. Legal Proceedings 18 Item 5. Other Information 18 Item 6. Exhibits and Reports on Form 8-K 19 Signatures 20 PART I. FINANCIAL INFORMATION THE CONNECTICUT LIGHT AND POWER COMPANY BALANCE SHEETS (Unaudited)
September 30, December 31, 1994 1993 ------------- ------------- (Thousands of Dollars) ASSETS - ------ Utility Plant, at original cost: Electric................................................ $ 6,026,889 $ 5,936,344 Less: Accumulated provision for depreciation......... 2,152,805 2,010,962 ------------- ------------- 3,874,084 3,925,382 Construction work in progress........................... 102,441 121,177 Nuclear fuel, net....................................... 154,495 156,878 ------------- ------------- Total net utility plant............................. 4,131,020 4,203,437 ------------- ------------- Other Property and Investments: Nuclear decommissioning trusts, at market in 1994 and at cost in 1993 (Note 2)........................... 170,779 147,657 Investments in regional nuclear generating companies and subsidiary companies, at equity.......... 54,955 53,951 Other, at cost.......................................... 14,742 14,184 ------------- ------------- 240,476 215,792 ------------- ------------- Current Assets: Cash and special deposits............................... 809 2,283 Receivables, net........................................ 214,725 210,805 Accounts receivable from affiliated companies........... 4,125 29,687 Accrued utility revenues................................ 69,865 97,662 Fuel, materials, and supplies, at average cost.......... 62,641 60,247 Recoverable energy costs, net--current portion.......... 1,568 9,985 Prepayments and other................................... 45,166 33,697 ------------- ------------- 398,899 444,366 ------------- ------------- Deferred Charges: Regulatory asset--income taxes, net..................... 990,087 1,026,046 Deferred costs--nuclear plants.......................... 122,925 185,909 Unrecovered contract obligation--YAEC (Note 4)...... 74,539 84,526 Deferred conservation and load-management costs......... 106,453 111,442 Deferred DOE assessment................................. 37,226 39,279 Recoverable energy costs, net........................... 24,481 26,311 Unamortized debt expense................................ 8,094 8,971 Amortizable property investment......................... 4,360 6,228 Other................................................... 80,597 45,073 ------------- ------------- 1,448,762 1,533,785 ------------- ------------- Total Assets........................................ $ 6,219,157 $ 6,397,380 ============= =============
See accompanying notes to financial statements. THE CONNECTICUT LIGHT AND POWER COMPANY BALANCE SHEETS (Unaudited)
September 30, December 31, 1994 1993 ------------- ------------- (Thousands of Dollars) CAPITALIZATION AND LIABILITIES - ------------------------------ Capitalization: Common stock--$10 par value. Authorized 24,500,000 shares; outstanding 12,222,930 shares............................................... $ 122,229 $ 122,229 Capital surplus, paid in.............................. 631,685 630,271 Retained earnings..................................... 771,169 750,719 ------------- ------------- Total common stockholder's equity............ 1,525,083 1,503,219 Preferred stock not subject to mandatory redemption........................................... 166,200 166,200 Preferred stock subject to mandatory redemption....... 230,000 230,000 Long-term debt........................................ 1,677,811 1,743,260 ------------- ------------- Total capitalization......................... 3,599,094 3,642,679 ------------- ------------- Obligations Under Capital Leases........................ 118,274 121,892 ------------- ------------- Current Liabilities: Notes payable to banks................................ 60,000 95,000 Notes payable to affiliated company................... 82,500 1,250 Commercial paper...................................... 39,000 - Long-term debt and preferred stock--current portion.............................................. 177,546 314,020 Obligations under capital leases--current portion.............................................. 59,038 55,526 Accounts payable...................................... 83,221 117,858 Accounts payable to affiliated companies.............. 19,801 52,179 Accrued taxes......................................... 46,065 36,114 Accrued interest...................................... 29,486 29,669 Other................................................. 29,382 32,287 ------------- ------------- 626,039 733,903 ------------- ------------- Deferred Credits: Accumulated deferred income taxes..................... 1,557,260 1,575,965 Accumulated deferred investment tax credits........... 149,346 154,701 Deferred contract obligation--YAEC (Note 4)....... 74,539 84,526 Deferred DOE obligation............................... 28,702 31,523 Other................................................. 65,903 52,191 ------------- ------------- 1,875,750 1,898,906 ------------- ------------- Commitments and Contingencies (Note 5) ------------- ------------- Total Capitalization and Liabilities......... $ 6,219,157 $ 6,397,380 ============= =============
See accompanying notes to financial statements. THE CONNECTICUT LIGHT AND POWER COMPANY STATEMENTS OF INCOME (Unaudited)
Three Months Ended Nine Months Ended September 30, September 30, ------------------- ----------------------- 1994 1993 1994 1993 --------- --------- ----------- ----------- (Thousands of Dollars) Operating Revenues................................. $598,706 $604,343 $1,769,656 $1,791,371 --------- --------- ----------- ----------- Operating Expenses: Operation -- Fuel, purchased and net interchange power..... 148,118 157,217 436,496 516,387 Other......................................... 158,826 180,202 442,261 482,463 Maintenance...................................... 52,013 44,746 143,933 134,719 Depreciation..................................... 58,801 54,853 171,392 164,561 Amortization of regulatory assets, net........... 9,017 29,461 68,839 84,037 Federal and state income taxes................... 53,458 38,989 152,862 104,603 Taxes other than income taxes.................... 44,833 40,554 133,247 131,304 --------- --------- ----------- ----------- Total operating expenses................... 525,066 546,022 1,549,030 1,618,074 --------- --------- ----------- ----------- Operating Income................................... 73,640 58,321 220,626 173,297 --------- --------- ----------- ----------- Other Income: Deferred nuclear plants return--other funds...... 3,338 5,400 10,276 18,606 Equity in earnings of regional nuclear generating companies........................... 1,905 1,544 5,556 4,378 Other, net....................................... (3,278) 6,437 2,173 (3,161) Income taxes--credit............................. 4,128 716 7,443 3,651 --------- --------- ----------- ----------- Other income, net.......................... 6,093 14,097 25,448 23,474 --------- --------- ----------- ----------- Income before interest charges............. 79,733 72,418 246,074 196,771 --------- --------- ----------- ----------- Interest Charges: Interest on long-term debt....................... 29,170 33,474 89,586 101,784 Other interest................................... 2,121 3,258 4,377 9,254 Deferred nuclear plants return--borrowed funds... (1,749) (3,382) (5,832) (10,959) --------- --------- ----------- ----------- Interest charges, net...................... 29,542 33,350 88,131 100,079 --------- --------- ----------- ----------- Income before cumulative effect of accounting change................................ 50,191 39,068 157,943 96,692 Cumulative effect of accounting change............. - - - 47,747 --------- --------- ----------- ----------- Net Income......................................... $ 50,191 $ 39,068 $ 157,943 $ 144,439 ========= ========= =========== ===========
See accompanying notes to financial statements. THE CONNECTICUT LIGHT and POWER COMPANY STATEMENTS OF CASH FLOWS (Unaudited) Nine Months Ended
September 30, ---------------------- 1994 1993 ---------- ---------- (Thousands of Dollars) Cash Flows From Operations: Net Income ................................................. $ 157,943 $ 144,439 Adjusted for the following: Depreciation ............................................. 171,392 164,561 Deferred income taxes and investment tax credits, net..... 8,332 (33,484) Deferred nuclear plants return, net of amortization....... 61,538 52,550 Deferred energy costs, net of amortization................ 10,247 113,571 Deferred conservation and load-management costs, net of amortization..................................... 4,989 (5,774) Other sources of cash..................................... 26,350 59,232 Other uses of cash........................................ (36,772) (16,033) Changes in working capital: Receivables and accrued utility revenues................ 49,439 (21,429) Fuel, materials, and supplies........................... (2,394) 14,633 Accounts payable........................................ (67,015) 9,569 Accrued taxes........................................... 9,951 (47,239) Other working capital (excludes cash)................... (14,557) (1,864) ---------- ---------- Net cash flows from operations................................ 379,443 432,732 ---------- ---------- Cash Flows Used For Financing Activities: Issuance of long-term debt.................................. 395,000 615,500 Net increase (decrease) in short-term debt.................. 85,250 (16,740) Reacquisitions and retirements of long-term debt and preferred stock....................................... (600,389) (458,314) Cash dividends on preferred stock........................... (18,075) (22,032) Cash dividends on common stock.............................. (119,418) (120,275) ---------- ---------- Net cash flows used for financing activities.................. (257,632) (1,861) ---------- ---------- Investment Activities: Investment in plant: Electric utility plant.................................... (101,292) (99,985) Nuclear fuel.............................................. 837 (6,799) ---------- ---------- Net cash flows used for investments in plant................ (100,455) (106,784) Other investment activities, net............................ (22,830) (18,680) ---------- ---------- Net cash flows used for investments........................... (123,285) (125,464) ---------- ---------- Net Increase (Decrease) In Cash for the Period................ (1,474) 305,407 Cash and special deposits - beginning of period............... 2,283 12,104 ---------- ---------- Cash and special deposits - end of period..................... $ 809 $ 317,511 ========== ==========
See accompanying notes to financial statements. THE CONNECTICUT LIGHT AND POWER COMPANY NOTES TO FINANCIAL STATEMENTS (UNAUDITED) 1. General The accompanying unaudited financial statements should be read in conjunction with the Annual Report of The Connecticut Light and Power Company (the company or CL&P), a wholly-owned subsidiary of Northeast Utilities (NU) on Form 10-K for the year ended December 31, 1993 (1993 Form 10-K). In the opinion of the company, the accompanying financial statements contain all adjustments necessary to present fairly the financial position as of September 30, 1994, the results of operations for the three and nine months ended September 30, 1994 and 1993, and the statements of cash flows for the nine months ended September 30, 1994 and 1993. The results of operations for the three and nine months ended September 30, 1994 and 1993 are not necessarily indicative of the results expected for a full year. Certain amounts in the accompanying financial statements of the company for the period ended September 30, 1993 have been reclassified to conform with the September 30, 1994 presentation. 2. Changes in Accounting Principles Statement of Financial Accounting Standards No. 115 (SFAS 115): In May 1993, the Financial Accounting Standards Board (FASB) issued SFAS 115, "Accounting for Certain Investments in Debt and Equity Securities." SFAS 115 addresses the accounting and reporting for certain investments in debt and equity securities, and expands the use of fair value accounting for these securities. SFAS 115 is applicable to CL&P with respect to its investments in nuclear decommissioning trusts. SFAS 115 requires investments in decommissioning trusts to be presented at fair value and was adopted by CL&P on a prospective basis in the first quarter of 1994. As a result of the adoption of SFAS 115, CL&P's investment in nuclear decommissioning trusts increased by approximately $1.9 million as of September 30, 1994, with a corresponding offset to the accumulated provision for depreciation. The $1.9 million increase represents cumulative gross unrealized holding gains of $4.1 million offset by cumulative gross unrealized holding losses of $2.2 million. There was no change in funding requirements of the trusts, nor any impact on earnings as a result of the adoption of SFAS 115. Statement of Financial Accounting Standards No. 119 (SFAS 119): In October 1994, the FASB issued SFAS 119, "Disclosure about Derivative Financial Instruments and Fair Value of Financial Instruments." SFAS 119 requires disclosures about derivative financial instruments - futures, forward, swap, and option contracts, and other financial instruments with similar characteristics. CL&P has entered into fossil fuel hedging contracts to minimize its exposure under certain fixed rate contracts. Currently, the differential between the market value of fossil fuel and the fossil fuel prices included in these contracts is not considered to be material. 3. Capitalization On October 12, 1994, CL&P issued $140 million of First and Refunding Mortgage Bonds, 1994 Series D (the Bonds). The Bonds bear interest at an annual rate of 7.875 percent, and will mature on October 1, 2024. The Bonds have a one-time put feature which allows bondholders to put the Bonds back to CL&P for repayment at par on October 1, 2001. The net proceeds from the issue and sale of the Bonds were used to repay a portion of the short-term debt which was incurred to repay the CL&P 4.25 percent Series WW Bonds ($170 million) on their maturity date of October 1, 1994. 4. Yankee Atomic Electric Company (YAEC) YAEC owns a 185-MW nuclear power plant in Rowe, Massachusetts. CL&P has a 24.5 percent equity investment approximating $6.3 million in YAEC. CL&P had relied on YAEC for less than one percent of its capacity. YAEC's owners voted to permanently shut down the YAEC unit in February 1992. Under the terms of the contracts with YAEC, the shareholders-sponsors are responsible for their proportionate share of the operating costs of the unit, including decommissioning. The nuclear decommissioning costs of YAEC are included as part of CL&P's cost of power. YAEC has begun decommissioning its nuclear facility. On June 1, 1992, YAEC filed a rate filing to obtain Federal Energy Regulatory Commission (FERC) authorization to collect the closing and decommissioning costs and to recover the remaining investment in the YAEC nuclear power plant over the remaining period of the plant's Nuclear Regulatory Commission (NRC) operating license. The bulk of these costs has been agreed to by the YAEC joint owners and approved, as a settlement, by the FERC. At September 30, 1994, CL&P's share of the estimated remaining costs is approximately $74.5 million. Management expects that CL&P will continue to be allowed to recover such FERC-approved costs from its customers. Accordingly, CL&P has recognized these costs as a regulatory asset, with a corresponding obligation, on its Balance Sheets. On October 26, 1994, YAEC submitted a revised decommissioning cost estimate as part of its decommissioning plan with the NRC. Following the receipt of NRC approval, this estimate will be filed with the FERC. This revised cost estimate is expected to increase CL&P's share of estimated remaining costs by $32.9 million over the $74.5 million that is currently recorded. For additional information regarding YAEC, see the Notes to Financial Statements in CL&P's 1993 Form 10-K. 5. Commitments and Contingencies Construction Program: For information regarding CL&P's construction program, see the Notes to Financial Statements in CL&P's 1993 Form 10-K. Nuclear Performance: For information regarding the termination of the Connecticut Department of Public Utility Control's (DPUC) prudence review of the 1992 Millstone 2 steam generator replacement project, see Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A) in CL&P's June 1994 and March 1994 Form 10-Qs. For further information regarding the performance of CL&P's nuclear units, see the Notes to Financial Statements in CL&P's 1993 Form 10-K. Environmental Matters: On a periodic basis, CL&P reviews known waste disposal sites, and related reserves, for which the company expects to bear legal liability. As a result of its latest review, CL&P increased the liability recorded for its estimated environmental remediation costs, excluding any insurance recoveries or recoveries from third parties, from $2.9 million to $7.4 million. In the event that it becomes necessary to effect remedies that are not currently considered probable, it is reasonably possible that the upper limit of the company's environmental liability range could be approximately $10.1 million. For additional information regarding environmental matters, see "Part II. Other Information - Item 5. Other Information" in CL&P's June 1994 Form 10-Q and the Notes to Financial Statements in CL&P's 1993 Form 10-K. Nuclear Insurance Contingencies: The Price-Anderson Act currently limits public liability from a single incident at a nuclear power plant to $8.8 billion. The first $200 million of liability would be provided by purchasing the maximum amount of commercially available insurance. Additional coverage of up to a total of $8.4 billion would be provided by an assessment of $75.5 million per incident, levied on each of the 111 nuclear units that are currently subject to the Secondary Financial Protection Program in the United States, subject to a maximum assessment of $10 million per incident per nuclear unit in any year. In addition, if the sum of all public liability claims and legal costs arising from any nuclear incident exceeds the maximum amount of financial protection, each reactor operator can be assessed an additional five percent, up to $3.8 million, or $419.0 million in total, for all 111 nuclear units. The maximum assessment is to be adjusted at least every five years to reflect inflationary changes. Based on the ownership interests in Millstone 1, 2, and 3 and in Seabrook 1, CL&P's maximum liability would be $173.6 million per incident. In addition, through contracts with the three Yankee regional nuclear generating companies with operating plants, CL&P would be responsible for up to an additional $44.4 million per incident. Payments for CL&P's ownership interest in nuclear generating facilities would be limited to a maximum of $27.5 million per incident per year. For additional information regarding nuclear insurance contingencies, see the Notes to Financial Statements in CL&P's 1993 Form 10-K. Financing Arrangements for the Regional Nuclear Generating Companies: For information regarding financing arrangements for the regional nuclear generating companies, see the Notes to Financial Statements in CL&P's 1993 Form 10-K. Purchased Power Arrangements: For information regarding purchased power arrangements, see the Notes to Financial Statements in CL&P's 1993 Form 10- K. Hydro-Quebec: For information regarding Hydro-Quebec, see the Notes to Financial Statements in CL&P's 1993 Form 10-K. Great Bay Power Corporation (GBPC): For information regarding GBPC's bankruptcy proceedings, see the MD&A in this Form 10-Q, "Part II. Other Information - Item 1. Legal Proceedings" in CL&P's June 1994 Form 10-Q and the Notes to Financial Statements in CL&P's 1993 Form 10-K. Property Taxes: For information on property taxes, see the Notes to Financial Statements in CL&P's 1993 Form 10-K. THE CONNECTICUT LIGHT AND POWER COMPANY Management's Discussion and Analysis of Financial Condition and Results of Operations This section contains management's assessment of The Connecticut Light and Power Company s (CL&P or the company) financial condition and the principal factors having an impact on the results of operations. The company is a wholly-owned subsidiary of Northeast Utilities (NU). This discussion should be read in conjunction with the company's financial statements and footnotes and the 1993 Form 10-K and the First and Second Quarter 1994 Form 10-Qs. FINANCIAL CONDITION Overview The company's net income increased to approximately $140 million for the nine months ended September 30, 1994, from approximately $122 million for the same period in 1993. The 1993 earnings reflect the cumulative effect of a change in the method of accounting for Connecticut municipal property tax expense adopted by the company in the first quarter of 1993. This change resulted in a one-time contribution to 1993 net income of approximately $48 million. Net income increased to approximately $44 million for three months ended September 30, 1994, from approximately $32 million for the same period in 1993. The increases in net income from 1993 for the three- and nine-month periods, before the effect of the one-time accounting change, are primarily attributable to the costs of a work force reduction program in the third quarter of 1993 which reduced 1993 net income by approximately $10 million. In addition, earnings for the three- and nine- month periods were impacted by higher retail sales resulting from a colder winter and an unusually hot June in 1994 and an improvement in the Connecticut economy, increased revenues from the July 1993 retail rate increases, lower operation expenses, lower interest costs and the deferral of cogeneration expenses in Connecticut. These increases were partially offset by lower 1994 revenues from sales to other utilities, higher maintenance expenses, and additional amounts reserved for the environmental exposures. The nine-month earnings in 1993 were also reduced by disallowances in 1993 resulting from the company s rate decision. Retail Wheeling and Utility Restructuring See Part II. Other Information - Item 5. Legal Proceedings. for information concerning retail wheeling and utility restructuring. Regulatory Matters Connecticut CL&P has a mechanism that has been in operation since 1979 designed to recover or refund certain non-nuclear fuel costs if the nuclear units do not operate at a predetermined capacity factor (the Generation Utilization Adjustment Clause or GUAC). On August 31, 1994, the DPUC delayed inclusion of CL&P s GUAC recovery for the 1993-1994 period, amounting to $23.7 million, until CL&P had revised the calculation to true up for actual booked fuel expense for the same period. The true up, which reduces the GUAC recovery by $7.9 million, was filed on September 13, 1994. A final decision ordering the true-up is expected in late November 1994. If the DPUC orders this offset, CL&P plans to appeal. For additional information on this matter, see CL&P s 1993 Form 10-K, under the caption Item 1. Business - CL&P Adjustment Clauses and CL&P s Quarterly Report on Form 10-Q for the quarter ended June 30, 1994. Unrecovered conservation and load management (C&LM) costs at September 30, 1994, were approximately $106 million. These costs are being recovered over periods ranging from 3.85 to 8 years. On October 31, 1994, CL&P filed its 1995 recovery mechanism (CAM) for 1995 C&LM costs and programs. The filing proposes 1995 C&LM expenditures of $36.7 million to be recovered over 3.93 years and a zero CAM rate. Nuclear Matters The composite capacity factor of the five nuclear generating units that the NU System operates (including the Connecticut Yankee nuclear unit (CY)) was 64.3 percent for the nine months ended September 30, 1994, as compared with 81.0 percent for the same period in 1993. The lower 1994 capacity factor was primarily the result of extended refueling and maintenance outages for Millstone 1 and Seabrook. CY, Seabrook and Millstone 2 were also out of service for varying lengths of time in the first nine months of 1994 because of some unexpected technical and operating difficulties. These difficulties included a manual shutdown of CY when both service water headers were declared inoperable, an automatic trip from 100 percent power for Seabrook when a main steam isolation valve closed during quarterly surveillance testing and a Millstone Unit 2 shutdown to replace a degraded lower seal on a reactor coolant pump. On October 1, 1994, Millstone Unit 2 was shut down for a planned refueling and maintenance outage that was originally scheduled for 63 days. The outage has encountered several unexpected difficulties which will lengthen the duration of the outage. The magnitude of the schedule impact is currently under review. On November 4, 1994, the plan of reorganization of Great Bay Power Corporation (GBPC)(formerly known as EUA Power Corporation), a joint owner of Seabrook Station along with CL&P and North Atlantic Energy Corporation, both wholly owned subsidiaries of NU, and other non- System entities, was confirmed by the United States Bankruptcy Court. The confirmation order will become final on November 11, 1994. The closing of the plan of reorganization financing, which consists of the purchase of 60 percent of the common stock of GBPC by Omega Advisors and Elliott Associates is expected to close on November 15, 1994, if all of the conditions precedent to closing have been satisfied. The conditions include the absence of any material adverse change and a requirement that Seabrook be operating at full reactor power on the morning of the closing date. At the time of closing, CL&P will be repaid by GBPC for the outstanding principal and accrued interest on the debtor-in-possession loans made by CL&P during the bankruptcy proceeding. At present, the outstanding principal amount of these loans by CL&P total approximately $7.3 million. For additional information on this matter, CL&P s Quarterly Report on Form 10-Q for the quarter ended June 30, 1994 under the caption Part II. Other Information - Item 1. Legal Proceedings. LIQUIDITY AND CAPITAL RESOURCES Cash provided from operations decreased approximately $53 million for the first nine months of 1994, as compared with the same period in 1993, primarily due to decreased revenues from replacement power costs under the GUAC. Cash used for financing activities was approximately $256 million higher in 1994, as compared with 1993, primarily due to higher reacquisitions and retirements of long-term debt, partially offset by an increase in short-term debt. The company has an ongoing program to use excess cash to reduce long-term debt levels. The company s construction program expenditures amounted to approximately $101 million for the first nine months of 1994, as compared to approximately $100 million during the same period in 1993. The system companies have entered into interest-rate cap contracts to reduce the potential impact of upward changes in interest rates on certain variable-rate tax-exempt pollution control revenue bonds held by the company, Public Service Company of New Hampshire (PSNH)and Western Massachusetts Electric Company, as well as a portion of the PSNH variable-rate term loan. A total of $567 million of outstanding long-term variable-rate debt is hedged by these interest-rate caps. The fair market value of outstanding interest-rate cap contracts as of September 30, 1994 is approximately $2.3 million. RESULTS OF OPERATIONS Comparison of the Third Quarter of 1994 with the Third Quarter of - ------------------------------------------------------------------- 1993 - ---- Operating revenues decreased approximately $6 million in the third quarter of 1994, as compared with 1993. The components of the change in operating revenues are as follows: Changes in Operating Revenues Increase/(Decrease) - ----------------------------- ------------------- (Millions of Dollars) Regulatory decisions $ 9 Fuel and purchased power cost recoveries 3 Retail sales volume 7 Sales to Other Utilities (22) Other revenues (3) ____ Total revenue change $ (6) ==== Revenues related to regulatory decisions increased primarily because of retail rate increases in July 1994 and July 1993, partially offset by lower 1994 conservation revenues. Fuel and purchased power cost recoveries increased primarily due to higher fuel expense. Sales volume increased primarily as a result of higher retail sales due to an unusually hot June in 1994. Sales to other utilities decreased primarily because of the expiration of some capacity sales contracts. Fuel, purchased, and net interchange power expense decreased approximately $9 million in the third quarter of 1994, as compared with 1993, primarily because of the timing in the recognition of fuel expenses under the provisions of the company s GUAC mechanism partially offset by a higher level of energy purchased from other utilities. Other operation and maintenance expenses decreased approximately $14 million in the third quarter of 1994, as compared with 1993, primarily due to the one time charge associated with a work force reduction plan in 1993, lower 1994 payroll and benefits costs and lower Yankee capacity charges from the regional nuclear generating units, partially offset by higher 1994 costs associated with the operation and maintenance activities of the nuclear units, the establishment of a reserve for excess/obsolete inventory in 1994, and 1994 charges associated with a targeted early retirement program. Amortization of regulatory assets, net decreased approximately $20 million in the third quarter of 1994, as compared with 1993, primarily because of the deferral of cogeneration expenses beginning in July 1994 and the amortization in 1993 of costs paid to the developers of two wood-to-energy plants. Taxes other than income taxes increased approximately $4 million in the third quarter of 1994, as compared to 1993, primarily due to an adjustment in 1993 as a result of a favorable settlement with the State of Connecticut over disputed sales taxes. Federal and state income taxes increased approximately $11 million in the third quarter of 1994, as compared with 1993, primarily because of higher book taxable income. Deferred nuclear plants return decreased approximately $4 million in the third quarter of 1994, as compared with 1993, primarily because additional Millstone 3 investment was phased into rates on January 1, 1994. Other, income decreased approximately $10 million in the third quarter of 1994 as compared with 1993, primarily because of an increase to the environmental reserve in 1994 and a 1993 gain on the sale of property. Interest charges decreased approximately $5 million in the third quarter of 1994, as compared with 1993, primarily because of lower average interest rates as a result of the company's refinancing activities, lower 1994 debt levels and interest accrued in 1993 associated with a potential Connecticut sales tax assessment. Comparison of the First Nine Months of 1994 with the First Nine Months - -------------------------------------------------------------------- of 1993 - ------- Operating revenues decreased approximately $22 million in the first nine months of 1994, as compared with 1993. The components of the change in operating revenues are as follows: Changes in Operating Revenues Increase/(Decrease) - ----------------------------- ------------------- (Millions of Dollars) Regulatory decisions $ 23 Fuel and purchased power cost recoveries (36) Retail sales volume 44 Sales to Other Utilities (53) ____ Total revenue change $(22) ==== Revenues related to regulatory decisions increased primarily because of retail rate increases in July 1994 and July 1993, partially offset by lower 1994 Conservation revenues. Fuel and purchased power cost recoveries decreased primarily due to lower GUAC recoveries. Retail sales volume increased primarily as a result of higher retail sales from a colder winter and an unusually hot June in 1994 and an improvement in the Connecticut economy. Retail sales increased 4.6 percent for the first nine months of 1994, as compared with 1993 of which approximately 3.8 percent is attributable to improvement in the Connecticut economy. Sales to other utilities decreased primarily because of the expiration of some capacity sales contracts. Fuel, purchased, and net interchange power expense decreased approximately $80 million in the first nine months of 1994, as compared with 1993, primarily because of the timing in the recognition of fuel expenses under the provisions of the company s GUAC mechanism and previously deferred replacement power costs that were determined not to be recoverable in 1993 as a result of nuclear outage prudence regulatory reviews in Connecticut, partially offset by a higher level of energy purchases from other utilities. Other operation and maintenance expenses decreased approximately $31 million in the first nine months of 1994, as compared with 1993, primarily due to the one time charge associated with a work force reduction program in 1993, lower 1994 payroll and benefit costs, lower fossil unit costs and lower capacity charges from the regional nuclear generating units, partially offset by higher 1994 costs associated with the operation and maintenance activities of the nuclear units, a higher reserve for excess/obsolete inventory in 1994 and 1994 charges associated with a targeted early retirement program. Amortization of regulatory assets, net decreased approximately $15 million in the first nine months of 1994, as compared with 1993, primarily because of the deferral of cogeneration expenses beginning in July 1994, and lower 1994 expenses associated with the recovery of Hydro-Quebec support payments, partially offset by the amortization through June 1994 of costs paid by the company to the developers of two wood-to-energy plants and higher 1994 amortization of Millstone 3 and Seabrook 1 phase-in costs. Federal and state income taxes increased approximately $44 million in the first nine months of 1994, as compared with 1993, primarily because of higher book taxable income. Deferred nuclear plants return decreased approximately $13 million in the first nine months of 1994, as compared with 1993, primarily because additional Millstone 3 investment was phased into rates on January 1, 1994. Interest charges decreased approximately $17 million in the first nine months of 1994, as compared with 1993, primarily because of lower average interest rates as a result of the company's refinancing activities, lower 1994 debt levels and interest accrued in 1993 associated with a potential Connecticut sales tax assessment. The cumulative effect of the accounting change of approximately $48 million in 1993 represents the one-time change in the method of accounting for Connecticut municipal property tax expense recognized in the first quarter of 1993. PART II. OTHER INFORMATION Item 1. Legal Proceedings 1. On October 18, 1994, the NRC responded to Northeast Nuclear Energy Company's (NNEC0) response in the Millstone Unit 1 Feedwater Coolant Injection System (FWCI) matter, stating that, upon reconsideration by the NRC, the violation's severity level and calculation of the civil penalty would not change. The NRC also decided that further action against the NNECO manager was not warranted. NNECO is a wholly-owned subsidiary of NU. For additional information on this matter, see "Part II. Other Information - Item 1. Legal Proceedings," in CL&P s June 1994 Form 10-Q. 2. With respect to proceedings at the FERC on the 30th Amendment to the New England Power Pool Agreement and related issues concerning transmission access and discounted rates for pool-planned units, on August 3, 1994 FERC granted a motion filed by certain of the parties seeking to suspend the procedural schedule pending the filing of terms of a settlement reached by the parties. The parties have agreed to file joint status reports of their progress. For additional information on this matter, see "Part II. Other Information - Item 1. Legal Proceedings," in CL&P s March 1994 and June 1994 Form 10-Qs. Item 5. Other Information 1. On September 9, 1994, the DPUC issued its final retail wheeling decision. This concluded a proceeding initiated in October 1993 to investigate whether retail wheeling should be permitted in Connecticut. The proceeding was intended as a follow-up and an update to a 1987 report of the DPUC to the legislature concluding that retail wheeling would be inadvisable for Connecticut. The September 1994 decision noted the potential for retail wheeling or other forms of more intense competition in the future. However, it concluded that because of the need to first deal with issues associated with a transition to more intense competition for retail sales such as the need to reallocate public policy and stranded costs, if retail wheeling is authorized, it should not be introduced prior to Connecticut's utilities' year of need, which for CL&P is 2007. The DPUC also recommended that utilities continue to contain costs and work with customers to keep Connecticut's electric rates competitive in order to attract and retain business in the state. For additional information on this matter, see "Item 1. Business - Retail Wheeling," in CL&P's 1993 Form 10-K and the MD&As in CL&P s March 1994 and June 1994 Form 10-Qs. Item 6. Exhibits and Reports on Form 8-K (a) Listing of Exhibits: Exhibit Number Description ------- ----------- 27 Financial Data Schedule (b) Reports on Form 8-K: No reports on Form 8-K have been filed during this reporting period. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. THE CONNECTICUT LIGHT AND POWER COMPANY --------------------------------------- Registrant Date November 9, 1994 By /s/ Bernard M. Fox -------------------- ------------------------------ Bernard M. Fox Vice Chairman and Director Date November 9, 1994 By /s/ John W. Noyes -------------------- ----------------------------- John W. Noyes Vice President and Controller EX-27 2
UT 0000023426 THE CONNECTICUT LIGHT AND POWER COMPANY 1,000 QTR-3 DEC-31-1994 SEP-30-1994 PER-BOOK 4,131,020 240,476 398,899 1,448,762 0 6,219,157 122,229 631,685 771,169 1,525,083 230,000 166,200 1,677,811 142,500 0 39,000 177,546 0 118,274 59,038 2,083,705 6,219,157 1,769,656 145,419 1,396,168 1,549,030 220,626 18,005 246,074 88,131 157,943 18,075 139,868 119,418 0 379,443 0.00 0.00
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