The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
EVERSOURCE ENERGY AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWSINCOME
(Unaudited)
| | | | | | | | | | | | | | | | | | | | | | | |
| For the Three Months Ended September 30, | | For the Nine Months Ended September 30, |
(Thousands of Dollars, Except Share Information) | 2021 | | 2020 | | 2021 | | 2020 |
| | | | | | | |
Operating Revenues | $ | 2,432,794 | | | $ | 2,343,642 | | | $ | 7,381,172 | | | $ | 6,670,497 | |
| | | | | | | |
Operating Expenses: | | | | | | | |
Purchased Power, Fuel and Transmission | 880,639 | | | 806,254 | | | 2,529,217 | | | 2,312,957 | |
Operations and Maintenance | 389,065 | | | 332,031 | | | 1,265,754 | | | 1,006,148 | |
Depreciation | 276,846 | | | 244,453 | | | 822,197 | | | 721,179 | |
Amortization | 45,236 | | | 57,515 | | | 158,860 | | | 130,687 | |
Energy Efficiency Programs | 143,796 | | | 145,047 | | | 460,814 | | | 408,794 | |
Taxes Other Than Income Taxes | 213,881 | | | 197,112 | | | 623,827 | | | 556,726 | |
Total Operating Expenses | 1,949,463 | | | 1,782,412 | | | 5,860,669 | | | 5,136,491 | |
Operating Income | 483,331 | | | 561,230 | | | 1,520,503 | | | 1,534,006 | |
Interest Expense | 147,962 | | | 134,066 | | | 431,162 | | | 403,067 | |
Other Income, Net | 43,768 | | | 29,218 | | | 124,588 | | | 83,565 | |
Income Before Income Tax Expense | 379,137 | | | 456,382 | | | 1,213,929 | | | 1,214,504 | |
Income Tax Expense | 94,091 | | | 108,242 | | | 294,461 | | | 275,621 | |
Net Income | 285,046 | | | 348,140 | | | 919,468 | | | 938,883 | |
Net Income Attributable to Noncontrolling Interests | 1,880 | | | 1,880 | | | 5,639 | | | 5,639 | |
Net Income Attributable to Common Shareholders | $ | 283,166 | | | $ | 346,260 | | | $ | 913,829 | | | $ | 933,244 | |
| | | | | | | |
Basic Earnings Per Common Share | $ | 0.82 | | | $ | 1.01 | | | $ | 2.66 | | | $ | 2.77 | |
| | | | | | | |
Diluted Earnings Per Common Share | $ | 0.82 | | | $ | 1.01 | | | $ | 2.65 | | | $ | 2.76 | |
| | | | | | | |
Weighted Average Common Shares Outstanding: | | | | | | | |
Basic | 344,023,846 | | | 343,076,614 | | | 343,848,905 | | | 337,375,172 | |
Diluted | 344,669,782 | | | 343,773,602 | | | 344,480,056 | | | 338,424,100 | |
|
| | | | | | | |
| For the Nine Months Ended September 30, |
(Thousands of Dollars) | 2017 | | 2016 |
|
|
|
|
Operating Activities: | |
| |
Net Income | $ | 756,216 |
|
| $ | 718,762 |
|
Adjustments to Reconcile Net Income to Net Cash Flows Provided by Operating Activities: | |
| |
Depreciation | 571,152 |
|
| 531,781 |
|
Deferred Income Taxes | 374,863 |
|
| 301,413 |
|
Pension, SERP and PBOP Expense, Net | 16,891 |
|
| 31,627 |
|
Pension and PBOP Contributions | (197,900 | ) |
| (121,854 | ) |
Regulatory Overrecoveries, Net | 185,952 |
|
| 152,808 |
|
Amortization of Regulatory Assets, Net | 58,058 |
|
| 56,223 |
|
Other | (148,741 | ) |
| (27,671 | ) |
Changes in Current Assets and Liabilities: | |
| |
Receivables and Unbilled Revenues, Net | (107,473 | ) |
| (191,454 | ) |
Fuel, Materials, Supplies and Inventory | 23,686 |
|
| 25,425 |
|
Taxes Receivable/Accrued, Net | 88,856 |
|
| 347,898 |
|
Accounts Payable | (96,551 | ) |
| (121,513 | ) |
Other Current Assets and Liabilities, Net | (32,874 | ) |
| (53,077 | ) |
Net Cash Flows Provided by Operating Activities | 1,492,135 |
|
| 1,650,368 |
|
|
|
|
|
Investing Activities: | |
| |
Investments in Property, Plant and Equipment | (1,642,280 | ) |
| (1,359,171 | ) |
Proceeds from Sales of Marketable Securities | 520,664 |
|
| 444,209 |
|
Purchases of Marketable Securities | (506,302 | ) |
| (437,197 | ) |
Other Investing Activities | (10,177 | ) |
| (9,463 | ) |
Net Cash Flows Used in Investing Activities | (1,638,095 | ) |
| (1,361,622 | ) |
|
|
|
|
Financing Activities: | |
| |
Cash Dividends on Common Shares | (451,562 | ) |
| (423,471 | ) |
Cash Dividends on Preferred Stock | (5,639 | ) |
| (5,639 | ) |
Decrease in Notes Payable | (231,500 | ) |
| (426,453 | ) |
Issuance of Long-Term Debt | 1,250,000 |
|
| 800,000 |
|
Retirements of Long-Term Debt | (320,000 | ) |
| (200,000 | ) |
Other Financing Activities | 171 |
|
| (17,074 | ) |
Net Cash Flows Provided by/(Used in) Financing Activities | 241,470 |
|
| (272,637 | ) |
Net Increase in Cash and Cash Equivalents | 95,510 |
|
| 16,109 |
|
Cash and Cash Equivalents - Beginning of Period | 30,251 |
|
| 23,947 |
|
Cash and Cash Equivalents - End of Period | $ | 125,761 |
|
| $ | 40,056 |
|
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
THE CONNECTICUT LIGHT AND POWER COMPANY
CONDENSED BALANCE SHEETS
(Unaudited)
|
| | | | | | | |
(Thousands of Dollars) | As of September 30, 2017 | | As of December 31, 2016 |
| | | |
ASSETS | | | |
Current Assets: | | | |
Cash | $ | 9,364 |
| | $ | 6,579 |
|
Receivables, Net | 404,065 |
| | 359,132 |
|
Accounts Receivable from Affiliated Companies | 29,287 |
| | 16,851 |
|
Unbilled Revenues | 48,625 |
| | 50,373 |
|
Materials, Supplies and Inventory | 44,516 |
| | 52,050 |
|
Regulatory Assets | 274,982 |
| | 335,526 |
|
Prepaid Property Taxes | 55,375 |
| | 19,678 |
|
Prepayments and Other Current Assets | 13,832 |
| | 32,992 |
|
Total Current Assets | 880,046 |
| | 873,181 |
|
| | | |
Property, Plant and Equipment, Net | 8,107,957 |
| | 7,632,392 |
|
| | | |
Deferred Debits and Other Assets: | | | |
Regulatory Assets | 1,312,191 |
| | 1,391,564 |
|
Other Long-Term Assets | 145,246 |
| | 137,907 |
|
Total Deferred Debits and Other Assets | 1,457,437 |
| | 1,529,471 |
|
| | | |
Total Assets | $ | 10,445,440 |
| | $ | 10,035,044 |
|
| | | |
LIABILITIES AND CAPITALIZATION | | | |
Current Liabilities: | | | |
Notes Payable to Eversource Parent | $ | — |
| | $ | 80,100 |
|
Long-Term Debt – Current Portion | 300,000 |
| | 250,000 |
|
Accounts Payable | 292,234 |
| | 289,532 |
|
Accounts Payable to Affiliated Companies | 80,899 |
| | 88,075 |
|
Obligations to Third Party Suppliers | 52,865 |
| | 55,520 |
|
Accrued Taxes | 64,332 |
| | 16,090 |
|
Regulatory Liabilities | 69,296 |
| | 47,055 |
|
Derivative Liabilities | 59,895 |
| | 77,765 |
|
Other Current Liabilities | 99,467 |
| | 104,309 |
|
Total Current Liabilities | 1,018,988 |
| | 1,008,446 |
|
| | | |
Deferred Credits and Other Liabilities: | | | |
Accumulated Deferred Income Taxes | 2,089,480 |
| | 1,987,661 |
|
Regulatory Liabilities | 98,777 |
| | 100,138 |
|
Derivative Liabilities | 391,758 |
| | 412,750 |
|
Accrued Pension, SERP and PBOP | 297,492 |
| | 300,208 |
|
Other Long-Term Liabilities | 134,870 |
| | 123,244 |
|
Total Deferred Credits and Other Liabilities | 3,012,377 |
| | 2,924,001 |
|
| | | |
Capitalization: | | | |
Long-Term Debt | 2,758,851 |
| | 2,516,010 |
|
| | | |
Preferred Stock Not Subject to Mandatory Redemption | 116,200 |
| | 116,200 |
|
| | | |
Common Stockholder's Equity: | | | |
Common Stock | 60,352 |
| | 60,352 |
|
Capital Surplus, Paid In | 2,110,752 |
| | 2,110,714 |
|
Retained Earnings | 1,367,650 |
| | 1,299,374 |
|
Accumulated Other Comprehensive Income/(Loss) | 270 |
| | (53 | ) |
Common Stockholder's Equity | 3,539,024 |
| | 3,470,387 |
|
Total Capitalization | 6,414,075 |
| | 6,102,597 |
|
| | | |
Total Liabilities and Capitalization | $ | 10,445,440 |
| | $ | 10,035,044 |
|
The accompanying notes are an integral part of these unaudited condensed financial statements.
THE CONNECTICUT LIGHT AND POWER COMPANY
CONDENSED STATEMENTS OF INCOME
(Unaudited)
|
| | | | | | | | | | | | | | | |
| For the Three Months Ended September 30, | | For the Nine Months Ended September 30, |
(Thousands of Dollars) | 2017 | | 2016 | | 2017 | | 2016 |
| | | | | | | |
Operating Revenues | $ | 774,762 |
| | $ | 760,037 |
| | $ | 2,173,629 |
| | $ | 2,175,141 |
|
| | | | | | | |
Operating Expenses: | | | | | | | |
Purchased Power and Transmission | 259,005 |
| | 253,509 |
| | 711,154 |
| | 760,613 |
|
Operations and Maintenance | 123,107 |
| | 123,034 |
| | 359,834 |
| | 356,409 |
|
Depreciation | 63,727 |
| | 57,675 |
| | 184,275 |
| | 172,175 |
|
Amortization of Regulatory Assets, Net | 34,574 |
| | 23,418 |
| | 58,799 |
| | 30,308 |
|
Energy Efficiency Programs | 37,739 |
| | 44,381 |
| | 106,483 |
| | 117,969 |
|
Taxes Other Than Income Taxes | 79,067 |
| | 81,948 |
| | 223,482 |
| | 227,981 |
|
Total Operating Expenses | 597,219 |
| | 583,965 |
| | 1,644,027 |
| | 1,665,455 |
|
Operating Income | 177,543 |
| | 176,072 |
| | 529,602 |
| | 509,686 |
|
Interest Expense | 36,313 |
| | 36,083 |
| | 106,577 |
| | 108,561 |
|
Other Income, Net | 7,509 |
| | 3,669 |
| | 14,070 |
| | 10,881 |
|
Income Before Income Tax Expense | 148,739 |
| | 143,658 |
| | 437,095 |
| | 412,006 |
|
Income Tax Expense | 52,595 |
| | 57,026 |
| | 159,450 |
| | 155,453 |
|
Net Income | $ | 96,144 |
| | $ | 86,632 |
| | $ | 277,645 |
| | $ | 256,553 |
|
The accompanying notes are an integral part of these unaudited condensed financial statements.
CONDENSEDCONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Unaudited)
| | | | | | | | | | | | | | | | | | | | | | | |
| For the Three Months Ended September 30, | | For the Nine Months Ended September 30, |
(Thousands of Dollars) | 2021 | | 2020 | | 2021 | | 2020 |
| | | | | | | |
Net Income | $ | 285,046 | | | $ | 348,140 | | | $ | 919,468 | | | $ | 938,883 | |
Other Comprehensive Income, Net of Tax: | | | | | | | |
Qualified Cash Flow Hedging Instruments | 115 | | | 602 | | | 967 | | | 1,218 | |
Changes in Unrealized (Losses)/Gains on Marketable Securities | (106) | | | (134) | | | (569) | | | 295 | |
Changes in Funded Status of Pension, SERP and PBOP Benefit Plans | 2,468 | | | 1,693 | | | 4,148 | | | 3,149 | |
Other Comprehensive Income, Net of Tax | 2,477 | | | 2,161 | | | 4,546 | | | 4,662 | |
Comprehensive Income Attributable to Noncontrolling Interests | (1,880) | | | (1,880) | | | (5,639) | | | (5,639) | |
Comprehensive Income Attributable to Common Shareholders | $ | 285,643 | | | $ | 348,421 | | | $ | 918,375 | | | $ | 937,906 | |
|
| | | | | | | | | | | | | | | |
| For the Three Months Ended September 30, | | For the Nine Months Ended September 30, |
(Thousands of Dollars) | 2017 | | 2016 | | 2017 | | 2016 |
| | | | | | | |
Net Income | $ | 96,144 |
| | $ | 86,632 |
| | $ | 277,645 |
| | $ | 256,553 |
|
Other Comprehensive Income, Net of Tax: | | | | | | | |
Qualified Cash Flow Hedging Instruments | 96 |
| | 111 |
| | 298 |
| | 333 |
|
Changes in Unrealized (Losses)/Gains on Marketable Securities | (64 | ) | | 33 |
| | 25 |
| | 78 |
|
Other Comprehensive Income, Net of Tax | 32 |
| | 144 |
| | 323 |
| | 411 |
|
Comprehensive Income | $ | 96,176 |
| | $ | 86,776 |
| | $ | 277,968 |
| | $ | 256,964 |
|
The accompanying notes are an integral part of these unaudited condensed financial statements.
THE CONNECTICUT LIGHT AND POWER COMPANY
CONDENSED STATEMENTS OF CASH FLOWS
(Unaudited)
|
| | | | | | | |
| For the Nine Months Ended September 30, |
(Thousands of Dollars) | 2017 | | 2016 |
| | | |
Operating Activities: | | | |
Net Income | $ | 277,645 |
| | $ | 256,553 |
|
Adjustments to Reconcile Net Income to Net Cash Flows Provided by Operating Activities: | | | |
Depreciation | 184,275 |
| | 172,175 |
|
Deferred Income Taxes | 90,132 |
| | 109,637 |
|
Pension, SERP, and PBOP Expense, Net of PBOP Contributions | 4,546 |
| | 4,825 |
|
Regulatory Overrecoveries, Net | 71,413 |
| | 33,492 |
|
Amortization of Regulatory Assets, Net | 58,799 |
| | 30,308 |
|
Other | (22,113 | ) | | (14,873 | ) |
Changes in Current Assets and Liabilities: | | | |
Receivables and Unbilled Revenues, Net | (70,936 | ) | | (100,074 | ) |
Taxes Receivable/Accrued, Net | 69,335 |
| | 197,422 |
|
Accounts Payable | (1,649 | ) | | (30,168 | ) |
Other Current Assets and Liabilities, Net | (38,111 | ) | | (44,908 | ) |
Net Cash Flows Provided by Operating Activities | 623,336 |
| | 614,389 |
|
| | | |
Investing Activities: | | | |
Investments in Property, Plant and Equipment | (621,882 | ) | | (438,518 | ) |
Proceeds from the Sale of Property, Plant and Equipment | — |
| | 9,047 |
|
Other Investing Activities | 185 |
| | 310 |
|
Net Cash Flows Used in Investing Activities | (621,697 | ) | | (429,161 | ) |
| | | |
Financing Activities: | | | |
Cash Dividends on Common Stock | (205,200 | ) | | (149,700 | ) |
Cash Dividends on Preferred Stock | (4,169 | ) | | (4,169 | ) |
Capital Contributions from Eversource Parent | — |
| | 145,700 |
|
Issuance of Long-Term Debt | 525,000 |
| | — |
|
Retirement of Long-Term Debt | (250,000 | ) | | — |
|
Decrease in Notes Payable to Eversource Parent | (80,100 | ) | | (168,900 | ) |
Premium on Issuance of Long-Term Debt | 21,937 |
| | — |
|
Other Financing Activities | (6,322 | ) | | (609 | ) |
Net Cash Flows Provided by/(Used in) Financing Activities | 1,146 |
| | (177,678 | ) |
Net Increase in Cash | 2,785 |
| | 7,550 |
|
Cash - Beginning of Period | 6,579 |
| | 1,057 |
|
Cash - End of Period | $ | 9,364 |
| | $ | 8,607 |
|
The accompanying notes are an integral part of these unaudited condensed financial statements.
NSTAR ELECTRIC COMPANY AND SUBSIDIARY
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
|
| | | | | | | |
(Thousands of Dollars) | As of September 30, 2017 | | As of December 31, 2016 |
| | | |
ASSETS | |
| | |
|
Current Assets: | | | |
Cash and Cash Equivalents | $ | 89,915 |
| | $ | 3,494 |
|
Receivables, Net | 322,193 |
| | 257,557 |
|
Accounts Receivable from Affiliated Companies | 13,632 |
| | 8,581 |
|
Unbilled Revenues | 39,160 |
| | 31,632 |
|
Taxes Receivable | — |
| | 39,738 |
|
Materials, Supplies and Inventory | 53,203 |
| | 62,288 |
|
Regulatory Assets | 230,620 |
| | 289,400 |
|
Prepayments and Other Current Assets | 16,550 |
| | 14,906 |
|
Total Current Assets | 765,273 |
| | 707,596 |
|
| | | |
Property, Plant and Equipment, Net | 6,268,689 |
| | 6,051,835 |
|
| | | |
Deferred Debits and Other Assets: | | | |
Regulatory Assets | 1,049,324 |
| | 1,057,746 |
|
Prepaid PBOP | 115,367 |
| | 95,073 |
|
Other Long-Term Assets | 79,653 |
| | 60,572 |
|
Total Deferred Debits and Other Assets | 1,244,344 |
| | 1,213,391 |
|
| | | |
Total Assets | $ | 8,278,306 |
| | $ | 7,972,822 |
|
| | | |
LIABILITIES AND CAPITALIZATION | | | |
Current Liabilities: | | | |
Notes Payable | $ | — |
| | $ | 126,500 |
|
Long-Term Debt – Current Portion | 43,814 |
| | 400,000 |
|
Accounts Payable | 198,251 |
| | 232,599 |
|
Accounts Payable to Affiliated Companies | 81,953 |
| | 91,532 |
|
Obligations to Third Party Suppliers | 86,346 |
| | 55,863 |
|
Renewable Portfolio Standards Compliance Obligations | 69,527 |
| | 75,571 |
|
Accrued Taxes | 32,021 |
| | 3,922 |
|
Regulatory Liabilities | 65,520 |
| | 63,653 |
|
Other Current Liabilities | 58,628 |
| | 67,200 |
|
Total Current Liabilities | 636,060 |
| | 1,116,840 |
|
| | | |
Deferred Credits and Other Liabilities: | | | |
Accumulated Deferred Income Taxes | 1,910,328 |
| | 1,836,292 |
|
Regulatory Liabilities | 392,851 |
| | 391,823 |
|
Accrued Pension and SERP | 39,830 |
| | 111,827 |
|
Other Long-Term Liabilities | 135,613 |
| | 123,194 |
|
Total Deferred Credits and Other Liabilities | 2,478,622 |
| | 2,463,136 |
|
| | | |
Capitalization: | | | |
Long-Term Debt | 2,382,392 |
| | 1,678,116 |
|
| | | |
Preferred Stock Not Subject to Mandatory Redemption | 43,000 |
| | 43,000 |
|
| | | |
Common Stockholder's Equity: | | | |
Common Stock | — |
| | — |
|
Capital Surplus, Paid In | 1,047,678 |
| | 1,045,378 |
|
Retained Earnings | 1,690,198 |
| | 1,625,984 |
|
Accumulated Other Comprehensive Income | 356 |
| | 368 |
|
Common Stockholder's Equity | 2,738,232 |
| | 2,671,730 |
|
Total Capitalization | 5,163,624 |
| | 4,392,846 |
|
| | | |
Total Liabilities and Capitalization | $ | 8,278,306 |
|
| $ | 7,972,822 |
|
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
NSTAR ELECTRIC COMPANY AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
|
| | | | | | | | | | | | | | | |
| For the Three Months Ended September 30, | | For the Nine Months Ended September 30, |
(Thousands of Dollars) | 2017 | | 2016 | | 2017 | | 2016 |
| | | | | | | |
Operating Revenues | $ | 725,701 |
| | $ | 780,462 |
| | $ | 1,913,548 |
| | $ | 1,985,979 |
|
| | | | | | | |
Operating Expenses: | |
| | |
| | |
| | |
|
Purchased Power and Transmission | 259,400 |
| | 291,382 |
| | 689,784 |
| | 764,907 |
|
Operations and Maintenance | 92,571 |
| | 96,282 |
| | 266,203 |
| | 279,932 |
|
Depreciation | 56,200 |
| | 54,695 |
| | 167,598 |
| | 159,151 |
|
Amortization of Regulatory Assets, Net | 9,845 |
| | 9,621 |
| | 17,806 |
| | 18,275 |
|
Energy Efficiency Programs | 71,615 |
| | 84,717 |
| | 198,803 |
| | 212,882 |
|
Taxes Other Than Income Taxes | 37,052 |
| | 35,050 |
| | 99,090 |
| | 101,800 |
|
Total Operating Expenses | 526,683 |
| | 571,747 |
| | 1,439,284 |
| | 1,536,947 |
|
Operating Income | 199,018 |
| | 208,715 |
| | 474,264 |
| | 449,032 |
|
Interest Expense | 24,488 |
| | 21,101 |
| | 69,962 |
| | 62,206 |
|
Other Income, Net | 3,426 |
| | 5,022 |
| | 8,703 |
| | 7,524 |
|
Income Before Income Tax Expense | 177,956 |
| | 192,636 |
| | 413,005 |
| | 394,350 |
|
Income Tax Expense | 69,796 |
| | 75,440 |
| | 161,320 |
| | 154,493 |
|
Net Income | $ | 108,160 |
| | $ | 117,196 |
| | $ | 251,685 |
| | $ | 239,857 |
|
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
EVERSOURCE ENERGY AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOMECOMMON SHAREHOLDERS' EQUITY
(Unaudited)
| | | | | | | | | | | | | | | | | | | | | | | |
| For the Nine Months Ended September 30, 2021 |
| Common Shares | Capital Surplus, Paid In | Retained Earnings | Accumulated Other Comprehensive Loss | Treasury Stock | Total Common Shareholders' Equity |
(Thousands of Dollars, Except Share Information) | Shares | Amount |
Balance as of January 1, 2021 | 342,954,023 | | $ | 1,789,092 | | $ | 8,015,663 | | $ | 4,613,201 | | $ | (76,411) | | $ | (277,979) | | $ | 14,063,566 | |
Net Income | | | | 368,023 | | | | 368,023 | |
Dividends on Common Shares - $0.6025 Per Share | | | | (206,913) | | | | (206,913) | |
Dividends on Preferred Stock | | | | (1,880) | | | | (1,880) | |
Long-Term Incentive Plan Activity | | | (15,727) | | | | | (15,727) | |
Issuance of Treasury Shares | 480,275 | | | 16,182 | | | | 8,981 | | 25,163 | |
| | | | | | | |
Other Comprehensive Income | | | | | 1,188 | | | 1,188 | |
Balance as of March 31, 2021 | 343,434,298 | | 1,789,092 | | 8,016,118 | | 4,772,431 | | (75,223) | | (268,998) | | 14,233,420 | |
Net Income | | | | 266,400 | | | | 266,400 | |
Dividends on Common Shares - $0.6025 Per Share | | | | (206,893) | | | | (206,893) | |
Dividends on Preferred Stock | | | | (1,880) | | | | (1,880) | |
Long-Term Incentive Plan Activity | | | 6,162 | | | | | 6,162 | |
Issuance of Treasury Shares | 166,805 | | | 10,679 | | | | 3,120 | | 13,799 | |
| | | | | | | |
Other Comprehensive Income | | | | | 881 | | | 881 | |
Balance as of June 30, 2021 | 343,601,103 | | 1,789,092 | | 8,032,959 | | 4,830,058 | | (74,342) | | (265,878) | | 14,311,889 | |
Net Income | | | | 285,046 | | | | 285,046 | |
Dividends on Common Shares - $0.6025 Per Share | | | | (207,073) | | | | (207,073) | |
Dividends on Preferred Stock | | | | (1,880) | | | | (1,880) | |
Long-Term Incentive Plan Activity | | | 6,478 | | | | | 6,478 | |
Issuance of Treasury Shares | 173,221 | | | 11,435 | | | | 3,239 | | 14,674 | |
Other Comprehensive Income | | | | | 2,477 | | | 2,477 | |
Balance as of September 30, 2021 | 343,774,324 | | $ | 1,789,092 | | $ | 8,050,872 | | $ | 4,906,151 | | $ | (71,865) | | $ | (262,639) | | $ | 14,411,611 | |
|
| | | | | | | | | | | | | | | |
| For the Three Months Ended September 30, | | For the Nine Months Ended September 30, |
(Thousands of Dollars) | 2017 | | 2016 | | 2017 | | 2016 |
| | | | | | | |
Net Income | $ | 108,160 |
| | $ | 117,196 |
| | $ | 251,685 |
| | $ | 239,857 |
|
Other Comprehensive Loss, Net of Tax: | | | | | | | |
Changes in Funded Status of SERP Benefit Plan | (4 | ) | | (10 | ) | | (12 | ) | | (31 | ) |
Other Comprehensive Loss, Net of Tax | (4 | ) | | (10 | ) | | (12 | ) | | (31 | ) |
Comprehensive Income | $ | 108,156 |
| | $ | 117,186 |
| | $ | 251,673 |
| | $ | 239,826 |
|
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
NSTAR ELECTRIC COMPANYEVERSOURCE ENERGY AND SUBSIDIARYSUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWSCOMMON SHAREHOLDERS' EQUITY
(Unaudited)
| | | | | | | | | | | | | | | | | | | | | | | |
| For the Nine Months Ended September 30, 2020 |
| Common Shares | Capital Surplus, Paid In | Retained Earnings | Accumulated Other Comprehensive Loss | Treasury Stock | Total Common Shareholders' Equity |
(Thousands of Dollars, Except Share Information) | Shares | Amount |
Balance as of January 1, 2020 | 329,880,645 | | $ | 1,729,292 | | $ | 7,087,768 | | $ | 4,177,048 | | $ | (65,059) | | $ | (299,055) | | $ | 12,629,994 | |
Net Income | | | | 336,633 | | | | 336,633 | |
Dividends on Common Shares - $0.5675 Per Share | | | | (187,462) | | | | (187,462) | |
Dividends on Preferred Stock | | | | (1,880) | | | | (1,880) | |
Issuance of Common Shares - $5 par value | 5,960,000 | | 29,800 | | 402,300 | | | | | 432,100 | |
Long-Term Incentive Plan Activity | | | (15,295) | | | | | (15,295) | |
Issuance of Treasury Shares | 570,542 | | | 17,230 | | | | 10,516 | | 27,746 | |
Capital Stock Expense | | | (12,314) | | | | | (12,314) | |
Adoption of Accounting Standards Update 2016-13 | | | | (1,514) | | | | (1,514) | |
Other Comprehensive Income | | | | | 1,948 | | | 1,948 | |
Balance as of March 31, 2020 | 336,411,187 | | 1,759,092 | | 7,479,689 | | 4,322,825 | | (63,111) | | (288,539) | | 13,209,956 | |
Net Income | | | | 254,112 | | | | 254,112 | |
Dividends on Common Shares - $0.5675 Per Share | | | | (190,964) | | | | (190,964) | |
Dividends on Preferred Stock | | | | (1,880) | | | | (1,880) | |
Issuance of Common Shares - $5 par value | 6,000,000 | | 30,000 | | 487,560 | | | | | 517,560 | |
Long-Term Incentive Plan Activity | | | 7,694 | | | | | 7,694 | |
Issuance of Treasury Shares | 216,675 | | | 12,524 | | | | 4,024 | | 16,548 | |
Capital Stock Expense | | | (8,321) | | | | | (8,321) | |
Other Comprehensive Income | | | | | 553 | | | 553 | |
Balance as of June 30, 2020 | 342,627,862 | | 1,789,092 | | 7,979,146 | | 4,384,093 | | (62,558) | | (284,515) | | 13,805,258 | |
Net Income | | | | 348,140 | | | | 348,140 | |
Dividends on Common Shares - $0.5675 Per Share | | | | (194,493) | | | | (194,493) | |
Dividends on Preferred Stock | | | | (1,880) | | | | (1,880) | |
Long-Term Incentive Plan Activity | | | 6,921 | | | | | 6,921 | |
Issuance of Treasury Shares | 169,611 | | | 10,909 | | | | 3,001 | | 13,910 | |
Other Comprehensive Income | | | | | 2,161 | | | 2,161 | |
Balance as of September 30, 2020 | 342,797,473 | | $ | 1,789,092 | | $ | 7,996,976 | | $ | 4,535,860 | | $ | (60,397) | | $ | (281,514) | | $ | 13,980,017 | |
|
| | | | | | | |
| For the Nine Months Ended September 30, |
(Thousands of Dollars) | 2017 | | 2016 |
| | | |
Operating Activities: | |
| | |
|
Net Income | $ | 251,685 |
| | $ | 239,857 |
|
Adjustments to Reconcile Net Income to Net Cash Flows Provided by Operating Activities: | |
| | |
|
Depreciation | 167,598 |
| | 159,151 |
|
Deferred Income Taxes | 71,327 |
| | 40,960 |
|
Pension, SERP and PBOP (Benefits)/Expense, Net | (7,305 | ) | | 1,370 |
|
Pension and PBOP Contributions | (83,040 | ) | | (26,734 | ) |
Regulatory Overrecoveries, Net | 61,356 |
| | 131,774 |
|
Amortization of Regulatory Assets, Net | 17,806 |
| | 18,275 |
|
Other | (23,120 | ) | | (20,088 | ) |
Changes in Current Assets and Liabilities: | |
| | |
|
Receivables and Unbilled Revenues, Net | (95,398 | ) | | (103,444 | ) |
Materials, Supplies and Inventory | 9,086 |
| | 30,659 |
|
Taxes Receivable/Accrued, Net | 67,501 |
| | 141,379 |
|
Accounts Payable | (38,486 | ) | | (22,913 | ) |
Other Current Assets and Liabilities, Net | 13,961 |
| | (25,942 | ) |
Net Cash Flows Provided by Operating Activities | 412,971 |
| | 564,304 |
|
| | | |
Investing Activities: | |
| | |
|
Investments in Property, Plant and Equipment | (358,041 | ) | | (327,731 | ) |
Other Investing Activities | (3,617 | ) | | — |
|
Net Cash Flows Used in Investing Activities | (361,658 | ) | | (327,731 | ) |
| | | |
Financing Activities: | |
| | |
|
Cash Dividends on Common Stock | (186,000 | ) | | (278,300 | ) |
Cash Dividends on Preferred Stock | (1,470 | ) | | (1,470 | ) |
Capital Contributions from Eversource Parent | 2,300 |
| | 25,000 |
|
Decrease in Notes Payable | (126,500 | ) | | (26,500 | ) |
Issuance of Long-Term Debt | 350,000 |
| | 250,000 |
|
Retirements of Long-Term Debt | — |
| | (200,000 | ) |
Other Financing Activities | (3,222 | ) | | (2,495 | ) |
Net Cash Flows Provided by/(Used in) Financing Activities | 35,108 |
| | (233,765 | ) |
Increase in Cash and Cash Equivalents | 86,421 |
| | 2,808 |
|
Cash and Cash Equivalents - Beginning of Period | 3,494 |
| | 3,346 |
|
Cash and Cash Equivalents - End of Period | $ | 89,915 |
| | $ | 6,154 |
|
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
PUBLIC SERVICE COMPANY OF NEW HAMPSHIREEVERSOURCE ENERGY AND SUBSIDIARYSUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETSSTATEMENTS OF CASH FLOWS
|
| | | | | | | |
(Thousands of Dollars) | As of September 30, 2017 | | As of December 31, 2016 |
| | | |
ASSETS | | | |
Current Assets: | | | |
Cash | $ | 597 |
| | $ | 4,646 |
|
Receivables, Net | 93,299 |
| | 84,450 |
|
Accounts Receivable from Affiliated Companies | 24,331 |
| | 4,185 |
|
Unbilled Revenues | 37,133 |
| | 41,004 |
|
Fuel, Materials, Supplies and Inventory | 158,091 |
| | 162,354 |
|
Regulatory Assets | 112,465 |
| | 117,240 |
|
Prepayments and Other Current Assets | 3,797 |
| | 28,908 |
|
Total Current Assets | 429,713 |
| | 442,787 |
|
| | | |
Property, Plant and Equipment, Net | 3,167,905 |
| | 3,039,313 |
|
| | | |
Deferred Debits and Other Assets: | | | |
Regulatory Assets | 244,561 |
| | 245,525 |
|
Other Long-Term Assets | 51,740 |
| | 37,720 |
|
Total Deferred Debits and Other Assets | 296,301 |
| | 283,245 |
|
| | | |
Total Assets | $ | 3,893,919 |
| | $ | 3,765,345 |
|
| | | |
LIABILITIES AND CAPITALIZATION | | | |
Current Liabilities: | | | |
Notes Payable to Eversource Parent | $ | 202,300 |
| | $ | 160,900 |
|
Long-Term Debt – Current Portion | 110,000 |
| | 70,000 |
|
Accounts Payable | 92,201 |
| | 85,716 |
|
Accounts Payable to Affiliated Companies | 42,788 |
| | 29,154 |
|
Regulatory Liabilities | 7,923 |
| | 12,659 |
|
Other Current Liabilities | 61,210 |
| | 43,253 |
|
Total Current Liabilities | 516,422 |
| | 401,682 |
|
| | | |
Deferred Credits and Other Liabilities: | | | |
Accumulated Deferred Income Taxes | 827,412 |
| | 785,385 |
|
Regulatory Liabilities | 40,822 |
| | 44,779 |
|
Accrued Pension, SERP and PBOP | 98,553 |
| | 94,652 |
|
Other Long-Term Liabilities | 54,131 |
| | 49,442 |
|
Total Deferred Credits and Other Liabilities | 1,020,918 |
| | 974,258 |
|
| | | |
Capitalization: | | | |
Long-Term Debt | 892,581 |
| | 1,002,048 |
|
| | | |
Common Stockholder's Equity: | | | |
Common Stock | — |
| | — |
|
Capital Surplus, Paid In | 843,134 |
| | 843,134 |
|
Retained Earnings | 625,012 |
| | 549,286 |
|
Accumulated Other Comprehensive Loss | (4,148 | ) | | (5,063 | ) |
Common Stockholder's Equity | 1,463,998 |
| | 1,387,357 |
|
Total Capitalization | 2,356,579 |
| | 2,389,405 |
|
| | | |
Total Liabilities and Capitalization | $ | 3,893,919 |
| | $ | 3,765,345 |
|
| | | | | | | | | | | |
| For the Nine Months Ended September 30, |
(Thousands of Dollars) | 2021 | | 2020 |
| | | |
Operating Activities: | | | |
Net Income | $ | 919,468 | | | $ | 938,883 | |
Adjustments to Reconcile Net Income to Net Cash Flows Provided by Operating Activities: | | | |
Depreciation | 822,197 | | | 721,179 | |
Deferred Income Taxes | 191,346 | | | 156,795 | |
Uncollectible Expense | 39,690 | | | 31,101 | |
Pension, SERP and PBOP (Income)/Expense, Net | (10,882) | | | 9,153 | |
Pension and PBOP Contributions | (140,000) | | | (107,985) | |
Regulatory Over/(Under) Recoveries, Net | 87,455 | | | (29,287) | |
Charges at CL&P related to PURA Settlement Agreement and Storm Performance Penalty | 103,583 | | | — | |
Amortization | 158,860 | | | 130,687 | |
| | | |
| | | |
Other | (229,878) | | | (69,216) | |
Changes in Current Assets and Liabilities: | | | |
Receivables and Unbilled Revenues, Net | (158,205) | | | (193,895) | |
Fuel, Materials, Supplies and REC Inventory | 48,312 | | | 21,102 | |
Taxes Receivable/Accrued, Net | 44,003 | | | 89,759 | |
Accounts Payable | (258,509) | | | (121,034) | |
Other Current Assets and Liabilities, Net | (97,167) | | | (81,033) | |
Net Cash Flows Provided by Operating Activities | 1,520,273 | | | 1,496,209 | |
| | | |
Investing Activities: | | | |
Investments in Property, Plant and Equipment | (2,211,136) | | | (2,101,564) | |
Proceeds from Sales of Marketable Securities | 334,619 | | | 386,712 | |
Purchases of Marketable Securities | (313,961) | | | (391,368) | |
Proceeds from the Sale of Hingham Water System | — | | | 110,536 | |
Investments in Unconsolidated Affiliates, Net | (245,245) | | | (31,677) | |
Other Investing Activities | 17,436 | | | 17,647 | |
Net Cash Flows Used in Investing Activities | (2,418,287) | | | (2,009,714) | |
| | | |
Financing Activities: | | | |
Issuance of Common Shares, Net of Issuance Costs | — | | | 929,025 | |
Cash Dividends on Common Shares | (603,611) | | | (555,655) | |
Cash Dividends on Preferred Stock | (5,639) | | | (5,639) | |
Decrease in Notes Payable | (458,325) | | | (1,174,870) | |
Repayment of Rate Reduction Bonds | (43,210) | | | (43,210) | |
Issuance of Long-Term Debt | 3,150,000 | | | 2,360,000 | |
Retirement of Long-Term Debt | (1,142,500) | | | (302,236) | |
Other Financing Activities | (45,522) | | | 18,030 | |
Net Cash Flows Provided by Financing Activities | 851,193 | | | 1,225,445 | |
Net (Decrease)/Increase in Cash and Restricted Cash | (46,821) | | | 711,940 | |
Cash and Restricted Cash - Beginning of Period | 264,950 | | | 117,063 | |
Cash and Restricted Cash - End of Period | $ | 218,129 | | | $ | 829,003 | |
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
THE CONNECTICUT LIGHT AND POWER COMPANY
CONDENSED BALANCE SHEETS
(Unaudited)
| | | | | | | | | | | |
(Thousands of Dollars) | As of September 30, 2021 | | As of December 31, 2020 |
| | | |
ASSETS | | | |
Current Assets: | | | |
Cash | $ | 62,791 | | | $ | 90,801 | |
Receivables, Net (net of allowance for uncollectible accounts of $195,463 and $157,447 as of September 30, 2021 and December 31, 2020, respectively) | 549,144 | | | 459,214 | |
Accounts Receivable from Affiliated Companies | 38,544 | | | 17,486 | |
Unbilled Revenues | 52,589 | | | 57,407 | |
Materials and Supplies | 54,894 | | | 57,924 | |
Regulatory Assets | 325,268 | | | 345,622 | |
Prepaid Property Taxes | 76,829 | | | 25,779 | |
Prepayments and Other Current Assets | 47,402 | | | 58,171 | |
Total Current Assets | 1,207,461 | | | 1,112,404 | |
Property, Plant and Equipment, Net | 10,598,836 | | | 10,234,556 | |
Deferred Debits and Other Assets: | | | |
Regulatory Assets | 1,981,805 | | | 1,866,152 | |
Other Long-Term Assets | 267,312 | | | 242,862 | |
Total Deferred Debits and Other Assets | 2,249,117 | | | 2,109,014 | |
Total Assets | $ | 14,055,414 | | | $ | 13,455,974 | |
| | | |
LIABILITIES AND CAPITALIZATION | | | |
Current Liabilities: | | | |
| | | |
| | | |
Accounts Payable | $ | 473,287 | | | $ | 451,240 | |
Accounts Payable to Affiliated Companies | 98,298 | | | 51,118 | |
Obligations to Third Party Suppliers | 53,183 | | | 49,967 | |
Regulatory Liabilities | 311,269 | | | 137,166 | |
| | | |
Derivative Liabilities | 72,249 | | | 68,767 | |
Other Current Liabilities | 168,547 | | | 102,060 | |
Total Current Liabilities | 1,176,833 | | | 860,318 | |
Deferred Credits and Other Liabilities: | | | |
Accumulated Deferred Income Taxes | 1,495,407 | | | 1,408,343 | |
Regulatory Liabilities | 1,213,469 | | | 1,204,942 | |
Derivative Liabilities | 256,569 | | | 294,535 | |
Accrued Pension, SERP and PBOP | 313,206 | | | 478,325 | |
Other Long-Term Liabilities | 154,249 | | | 133,690 | |
Total Deferred Credits and Other Liabilities | 3,432,900 | | | 3,519,835 | |
Long-Term Debt | 4,215,096 | | | 3,914,835 | |
Preferred Stock Not Subject to Mandatory Redemption | 116,200 | | | 116,200 | |
Common Stockholder's Equity: | | | |
Common Stock | 60,352 | | | 60,352 | |
Capital Surplus, Paid In | 2,810,765 | | | 2,810,765 | |
Retained Earnings | 2,243,004 | | | 2,173,367 | |
Accumulated Other Comprehensive Income | 264 | | | 302 | |
Common Stockholder's Equity | 5,114,385 | | | 5,044,786 | |
Commitments and Contingencies (Note 9) | 0 | | 0 |
Total Liabilities and Capitalization | $ | 14,055,414 | | | $ | 13,455,974 | |
The accompanying notes are an integral part of these unaudited condensed financial statements.
THE CONNECTICUT LIGHT AND POWER COMPANY
CONDENSED STATEMENTS OF NEW HAMPSHIREINCOME
(Unaudited)
| | | | | | | | | | | | | | | | | | | | | | | |
| For the Three Months Ended September 30, | | For the Nine Months Ended September 30, |
(Thousands of Dollars) | 2021 | | 2020 | | 2021 | | 2020 |
| | | | | | | |
Operating Revenues | $ | 919,643 | | | $ | 994,270 | | | $ | 2,736,513 | | | $ | 2,711,394 | |
| | | | | | | |
Operating Expenses: | | | | | | | |
Purchased Power and Transmission | 392,301 | | | 399,117 | | | 1,073,712 | | | 1,089,232 | |
Operations and Maintenance | 137,816 | | | 147,487 | | | 465,630 | | | 417,717 | |
Depreciation | 85,304 | | | 80,583 | | | 253,132 | | | 238,735 | |
Amortization of Regulatory Assets, Net | 28,921 | | | 36,365 | | | 76,637 | | | 37,215 | |
Energy Efficiency Programs | 35,714 | | | 41,829 | | | 100,810 | | | 109,655 | |
Taxes Other Than Income Taxes | 99,901 | | | 97,715 | | | 275,178 | | | 260,571 | |
Total Operating Expenses | 779,957 | | | 803,096 | | | 2,245,099 | | | 2,153,125 | |
Operating Income | 139,686 | | | 191,174 | | | 491,414 | | | 558,269 | |
Interest Expense | 42,778 | | | 38,369 | | | 124,371 | | | 114,972 | |
Other Income, Net | 6,903 | | | 5,917 | | | 21,690 | | | 16,273 | |
Income Before Income Tax Expense | 103,811 | | | 158,722 | | | 388,733 | | | 459,570 | |
Income Tax Expense | 33,658 | | | 38,625 | | | 104,626 | | | 103,464 | |
Net Income | $ | 70,153 | | | $ | 120,097 | | | $ | 284,107 | | | $ | 356,106 | |
The accompanying notes are an integral part of these unaudited condensed financial statements.
CONDENSED STATEMENTS OF COMPREHENSIVE INCOME
(Unaudited)
| | | | | | | | | | | | | | | | | | | | | | | |
| For the Three Months Ended September 30, | | For the Nine Months Ended September 30, |
(Thousands of Dollars) | 2021 | | 2020 | | 2021 | | 2020 |
| | | | | | | |
Net Income | $ | 70,153 | | | $ | 120,097 | | | $ | 284,107 | | | $ | 356,106 | |
Other Comprehensive Loss, Net of Tax: | | | | | | | |
Qualified Cash Flow Hedging Instruments | (7) | | | (7) | | | (20) | | | (20) | |
Changes in Unrealized (Losses)/Gains on Marketable Securities | (2) | | | (4) | | | (18) | | | 11 | |
Other Comprehensive Loss, Net of Tax | (9) | | | (11) | | | (38) | | | (9) | |
Comprehensive Income | $ | 70,144 | | | $ | 120,086 | | | $ | 284,069 | | | $ | 356,097 | |
The accompanying notes are an integral part of these unaudited condensed financial statements.
THE CONNECTICUT LIGHT AND POWER COMPANY
CONDENSED STATEMENTS OF COMMON STOCKHOLDER'S EQUITY
(Unaudited)
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| For the Nine Months Ended September 30, 2021 |
| Common Stock | | Capital Surplus, Paid In | | Retained Earnings | | Accumulated Other Comprehensive Income | | Total Common Stockholder's Equity |
(Thousands of Dollars, Except Stock Information) | Stock | | Amount | | | | |
Balance as of January 1, 2021 | 6,035,205 | | | $ | 60,352 | | | $ | 2,810,765 | | | $ | 2,173,367 | | | $ | 302 | | | $ | 5,044,786 | |
Net Income | | | | | | | 98,398 | | | | | 98,398 | |
Dividends on Preferred Stock | | | | | | | (1,390) | | | | | (1,390) | |
Dividends on Common Stock | | | | | | | (70,100) | | | | | (70,100) | |
| | | | | | | | | | | |
Other Comprehensive Loss | | | | | | | | | (32) | | | (32) | |
Balance as of March 31, 2021 | 6,035,205 | | | 60,352 | | | 2,810,765 | | | 2,200,275 | | | 270 | | | 5,071,662 | |
Net Income | | | | | | | 115,556 | | | | | 115,556 | |
Dividends on Preferred Stock | | | | | | | (1,390) | | | | | (1,390) | |
Dividends on Common Stock | | | | | | | (70,100) | | | | | (70,100) | |
Other Comprehensive Income | | | | | | | | | 3 | | | 3 | |
Balance as of June 30, 2021 | 6,035,205 | | | 60,352 | | | 2,810,765 | | | 2,244,341 | | | 273 | | | 5,115,731 | |
Net Income | | | | | | | 70,153 | | | | | 70,153 | |
Dividends on Preferred Stock | | | | | | | (1,390) | | | | | (1,390) | |
Dividends on Common Stock | | | | | | | (70,100) | | | | | (70,100) | |
Other Comprehensive Loss | | | | | | | | | (9) | | | (9) | |
Balance as of September 30, 2021 | 6,035,205 | | | $ | 60,352 | | | $ | 2,810,765 | | | $ | 2,243,004 | | | $ | 264 | | | $ | 5,114,385 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| For the Nine Months Ended September 30, 2020 |
| Common Stock | | Capital Surplus, Paid In | | Retained Earnings | | Accumulated Other Comprehensive Income | | Total Common Stockholder's Equity |
(Thousands of Dollars, Except Stock Information) | Stock | | Amount | | | | |
Balance as of January 1, 2020 | 6,035,205 | | | $ | 60,352 | | | $ | 2,535,765 | | | $ | 1,791,392 | | | $ | 316 | | | $ | 4,387,825 | |
Net Income | | | | | | | 118,738 | | | | | 118,738 | |
Dividends on Preferred Stock | | | | | | | (1,390) | | | | | (1,390) | |
Dividends on Common Stock | | | | | | | (69,500) | | | | | (69,500) | |
Adoption of Accounting Standards Update 2016-13 | | | | | | | (900) | | | | | (900) | |
Other Comprehensive Loss | | | | | | | | | (1) | | | (1) | |
Balance as of March 31, 2020 | 6,035,205 | | | 60,352 | | | 2,535,765 | | | 1,838,340 | | | 315 | | | 4,434,772 | |
Net Income | | | | | | | 117,271 | | | | | 117,271 | |
Dividends on Preferred Stock | | | | | | | (1,390) | | | | | (1,390) | |
Other Comprehensive Income | | | | | | | | | 3 | | | 3 | |
Balance as of June 30, 2020 | 6,035,205 | | | 60,352 | | | 2,535,765 | | | 1,954,221 | | | 318 | | | 4,550,656 | |
Net Income | | | | | | | 120,097 | | | | | 120,097 | |
Dividends on Preferred Stock | | | | | | | (1,390) | | | | | (1,390) | |
Capital Contributions from Eversource Parent | | | | | 125,000 | | | | | | | 125,000 | |
Other Comprehensive Loss | | | | | | | | | (11) | | | (11) | |
Balance as of September 30, 2020 | 6,035,205 | | | $ | 60,352 | | | $ | 2,660,765 | | | $ | 2,072,928 | | | $ | 307 | | | $ | 4,794,352 | |
The accompanying notes are an integral part of these unaudited condensed financial statements.
THE CONNECTICUT LIGHT AND POWER COMPANY
CONDENSED STATEMENTS OF CASH FLOWS
(Unaudited)
| | | | | | | | | | | |
| For the Nine Months Ended September 30, |
(Thousands of Dollars) | 2021 | | 2020 |
| | | |
Operating Activities: | | | |
Net Income | $ | 284,107 | | | $ | 356,106 | |
Adjustments to Reconcile Net Income to Net Cash Flows Provided by Operating Activities: | | | |
Depreciation | 253,132 | | | 238,735 | |
Deferred Income Taxes | 77,147 | | | 92,590 | |
Uncollectible Expense | 10,183 | | | 10,013 | |
Pension, SERP, and PBOP Expense, Net | 4,478 | | | 8,629 | |
Pension Contributions | (78,913) | | | (23,200) | |
Regulatory Underrecoveries, Net | (19,404) | | | (32,051) | |
Charges related to PURA Settlement Agreement and Storm Performance Penalty | 103,583 | | | — | |
Amortization of Regulatory Assets, Net | 76,637 | | | 37,215 | |
Other | (74,179) | | | (63,525) | |
Changes in Current Assets and Liabilities: | | | |
Receivables and Unbilled Revenues, Net | (165,423) | | | (153,464) | |
Taxes Receivable/Accrued, Net | 45,762 | | | (1,515) | |
Accounts Payable | (54,226) | | | (1,976) | |
Other Current Assets and Liabilities, Net | (12,315) | | | (68,316) | |
Net Cash Flows Provided by Operating Activities | 450,569 | | | 399,241 | |
| | | |
Investing Activities: | | | |
Investments in Property, Plant and Equipment | (563,234) | | | (609,690) | |
Other Investing Activities | 251 | | | 496 | |
Net Cash Flows Used in Investing Activities | (562,983) | | | (609,194) | |
| | | |
Financing Activities: | | | |
Cash Dividends on Common Stock | (210,300) | | | (69,500) | |
Cash Dividends on Preferred Stock | (4,169) | | | (4,169) | |
Capital Contributions from Eversource Parent | — | | | 125,000 | |
Issuance of Long-Term Debt | 425,000 | | | — | |
Retirement of Long-Term Debt | (120,500) | | | — | |
Increase in Notes Payable to Eversource Parent | — | | | 172,100 | |
Other Financing Activities | (5,664) | | | (1,214) | |
Net Cash Flows Provided by Financing Activities | 84,367 | | | 222,217 | |
Net (Decrease)/Increase in Cash and Restricted Cash | (28,047) | | | 12,264 | |
Cash and Restricted Cash - Beginning of Period | 99,809 | | | 4,971 | |
Cash and Restricted Cash - End of Period | $ | 71,762 | | | $ | 17,235 | |
The accompanying notes are an integral part of these unaudited condensed financial statements.
NSTAR ELECTRIC COMPANY AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF INCOMEBALANCE SHEETS
(Unaudited)
| | | | | | | | | | | |
(Thousands of Dollars) | As of September 30, 2021 | | As of December 31, 2020 |
| | | |
ASSETS | | | |
Current Assets: | | | |
Cash | $ | 3,538 | | | $ | 102 | |
Receivables, Net (net of allowance for uncollectible accounts of $105,020 and $91,583 as of September 30, 2021 and December 31, 2020, respectively) | 489,503 | | | 403,045 | |
Accounts Receivable from Affiliated Companies | 27,417 | | | 30,095 | |
Unbilled Revenues | 47,844 | | | 38,342 | |
Materials, Supplies and REC Inventory | 83,667 | | | 133,894 | |
Taxes Receivable | — | | | 65,051 | |
Regulatory Assets | 388,408 | | | 399,882 | |
Prepayments and Other Current Assets | 22,490 | | | 21,833 | |
Total Current Assets | 1,062,867 | | | 1,092,244 | |
Property, Plant and Equipment, Net | 10,611,728 | | | 10,123,062 | |
Deferred Debits and Other Assets: | | | |
Regulatory Assets | 1,247,715 | | | 1,304,019 | |
Prepaid PBOP | 224,244 | | | 204,138 | |
Other Long-Term Assets | 185,555 | | | 162,836 | |
Total Deferred Debits and Other Assets | 1,657,514 | | | 1,670,993 | |
Total Assets | $ | 13,332,109 | | | $ | 12,886,299 | |
| | | |
LIABILITIES AND CAPITALIZATION | | | |
Current Liabilities: | | | |
Notes Payable | $ | 138,000 | | | $ | 195,000 | |
Notes Payable to Eversource Parent | 24,600 | | | 21,300 | |
Long-Term Debt – Current Portion | — | | | 250,000 | |
Accounts Payable | 338,369 | | | 383,558 | |
Accounts Payable to Affiliated Companies | 78,974 | | | 95,703 | |
Obligations to Third Party Suppliers | 137,211 | | | 98,572 | |
Renewable Portfolio Standards Compliance Obligations | 72,124 | | | 127,536 | |
Regulatory Liabilities | 205,771 | | | 164,761 | |
Other Current Liabilities | 118,747 | | | 72,118 | |
Total Current Liabilities | 1,113,796 | | | 1,408,548 | |
Deferred Credits and Other Liabilities: | | | |
Accumulated Deferred Income Taxes | 1,494,976 | | | 1,459,906 | |
Regulatory Liabilities | 1,561,572 | | | 1,550,390 | |
Accrued Pension and SERP | 110,752 | | | 172,571 | |
Other Long-Term Liabilities | 344,088 | | | 337,245 | |
Total Deferred Credits and Other Liabilities | 3,511,388 | | | 3,520,112 | |
Long-Term Debt | 3,984,724 | | | 3,393,221 | |
Preferred Stock Not Subject to Mandatory Redemption | 43,000 | | | 43,000 | |
Common Stockholder's Equity: | | | |
Common Stock | — | | | — | |
Capital Surplus, Paid In | 2,053,942 | | | 1,993,942 | |
Retained Earnings | 2,624,784 | | | 2,527,167 | |
Accumulated Other Comprehensive Income | 475 | | | 309 | |
Common Stockholder's Equity | 4,679,201 | | | 4,521,418 | |
Commitments and Contingencies (Note 9) | 0 | | 0 |
Total Liabilities and Capitalization | $ | 13,332,109 | | | $ | 12,886,299 | |
|
| | | | | | | | | | | | | | | |
| For the Three Months Ended September 30, | | For the Nine Months Ended September 30, |
(Thousands of Dollars) | 2017 | | 2016 | | 2017 | | 2016 |
| | | | | | | |
Operating Revenues | $ | 250,032 |
| | $ | 266,946 |
| | $ | 733,572 |
| | $ | 727,753 |
|
| | | | | | | |
Operating Expenses: | | | | | | | |
Purchased Power, Fuel and Transmission | 57,099 |
| | 59,833 |
| | 179,289 |
| | 155,700 |
|
Operations and Maintenance | 63,669 |
| | 64,183 |
| | 191,153 |
| | 187,184 |
|
Depreciation | 32,084 |
| | 29,646 |
| | 95,266 |
| | 86,524 |
|
Amortization of Regulatory Assets/(Liabilities), Net | 2,835 |
| | 14,158 |
| | (10,658 | ) | | 14,490 |
|
Energy Efficiency Programs | 4,007 |
| | 3,983 |
| | 11,040 |
| | 10,862 |
|
Taxes Other Than Income Taxes | 22,936 |
| | 20,460 |
| | 66,935 |
| | 64,543 |
|
Total Operating Expenses | 182,630 |
| | 192,263 |
| | 533,025 |
| | 519,303 |
|
Operating Income | 67,402 |
| | 74,683 |
| | 200,547 |
| | 208,450 |
|
Interest Expense | 12,896 |
| | 12,397 |
| | 38,676 |
| | 37,386 |
|
Other Income, Net | 1,229 |
| | 574 |
| | 2,883 |
| | 1,007 |
|
Income Before Income Tax Expense | 55,735 |
| | 62,860 |
| | 164,754 |
| | 172,071 |
|
Income Tax Expense | 22,012 |
| | 24,345 |
| | 65,128 |
| | 66,242 |
|
Net Income | $ | 33,723 |
| | $ | 38,515 |
| | $ | 99,626 |
| | $ | 105,829 |
|
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
NSTAR ELECTRIC COMPANY AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Unaudited)
| | | | | | | | | | | | | | | | | | | | | | | |
| For the Three Months Ended September 30, | | For the Nine Months Ended September 30, |
(Thousands of Dollars) | 2021 | | 2020 | | 2021 | | 2020 |
| | | | | | | |
Operating Revenues | $ | 918,698 | | | $ | 875,371 | | | $ | 2,343,116 | | | $ | 2,270,174 | |
| | | | | | | |
Operating Expenses: | | | | | | | |
Purchased Power and Transmission | 294,052 | | | 267,375 | | | 711,667 | | | 702,117 | |
Operations and Maintenance | 142,074 | | | 131,143 | | | 421,649 | | | 369,293 | |
Depreciation | 84,820 | | | 80,366 | | | 251,530 | | | 238,232 | |
Amortization of Regulatory Assets, Net | 8,073 | | | 22,527 | | | 23,963 | | | 69,139 | |
Energy Efficiency Programs | 86,699 | | | 85,244 | | | 226,071 | | | 210,666 | |
Taxes Other Than Income Taxes | 54,723 | | | 54,680 | | | 163,501 | | | 153,985 | |
Total Operating Expenses | 670,441 | | | 641,335 | | | 1,798,381 | | | 1,743,432 | |
Operating Income | 248,257 | | | 234,036 | | | 544,735 | | | 526,742 | |
Interest Expense | 37,329 | | | 31,029 | | | 106,829 | | | 95,000 | |
Other Income, Net | 20,215 | | | 12,802 | | | 58,941 | | | 38,152 | |
Income Before Income Tax Expense | 231,143 | | | 215,809 | | | 496,847 | | | 469,894 | |
Income Tax Expense | 53,692 | | | 50,081 | | | 114,560 | | | 106,309 | |
Net Income | $ | 177,451 | | | $ | 165,728 | | | $ | 382,287 | | | $ | 363,585 | |
|
| | | | | | | | | | | | | | | |
| For the Three Months Ended September 30, | | For the Nine Months Ended September 30, |
(Thousands of Dollars) | 2017 | | 2016 | | 2017 | | 2016 |
| | | | | | | |
Net Income | $ | 33,723 |
| | $ | 38,515 |
| | $ | 99,626 |
| | $ | 105,829 |
|
Other Comprehensive Income, Net of Tax: | | | | | | | |
Qualified Cash Flow Hedging Instruments | 291 |
| | 290 |
| | 872 |
| | 871 |
|
Changes in Unrealized (Losses)/Gains on Marketable Securities | (112 | ) | | 56 |
| | 43 |
| | 135 |
|
Other Comprehensive Income, Net of Tax | 179 |
| | 346 |
| | 915 |
| | 1,006 |
|
Comprehensive Income | $ | 33,902 |
| | $ | 38,861 |
| | $ | 100,541 |
| | $ | 106,835 |
|
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
PUBLIC SERVICE COMPANY OF NEW HAMPSHIRE AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWSCOMPREHENSIVE INCOME
(Unaudited)
| | | | | | | | | | | | | | | | | | | | | | | |
| For the Three Months Ended September 30, | | For the Nine Months Ended September 30, |
(Thousands of Dollars) | 2021 | | 2020 | | 2021 | | 2020 |
| | | | | | | |
Net Income | $ | 177,451 | | | $ | 165,728 | | | $ | 382,287 | | | $ | 363,585 | |
Other Comprehensive (Loss)/Income, Net of Tax: | | | | | | | |
Changes in Funded Status of SERP Benefit Plan | (40) | | | (43) | | | (122) | | | (129) | |
Qualified Cash Flow Hedging Instruments | 5 | | | 109 | | | 293 | | | 327 | |
Changes in Unrealized (Losses)/Gains on Marketable Securities | (1) | | | (1) | | | (5) | | | 2 | |
Other Comprehensive (Loss)/Income, Net of Tax | (36) | | | 65 | | | 166 | | | 200 | |
Comprehensive Income | $ | 177,415 | | | $ | 165,793 | | | $ | 382,453 | | | $ | 363,785 | |
|
| | | | | | | |
| For the Nine Months Ended September 30, |
(Thousands of Dollars) | 2017 | | 2016 |
| | | |
Operating Activities: | | | |
Net Income | $ | 99,626 |
| | $ | 105,829 |
|
Adjustments to Reconcile Net Income to Net Cash Flows Provided by Operating Activities: | | | |
Depreciation | 95,266 |
| | 86,524 |
|
Deferred Income Taxes | 43,217 |
| | 74,522 |
|
Regulatory Over/(Under) Recoveries, Net | 8,910 |
| | (4,289 | ) |
Amortization of Regulatory (Liabilities)/Assets, Net | (10,658 | ) | | 14,490 |
|
Other | (7,792 | ) | | (12,660 | ) |
Changes in Current Assets and Liabilities: | | | |
Receivables and Unbilled Revenues, Net | (30,276 | ) | | (28,754 | ) |
Fuel, Materials, Supplies and Inventory | 4,263 |
| | (4,014 | ) |
Taxes Receivable/Accrued, Net | 10,749 |
| | 33,589 |
|
Accounts Payable | 18,394 |
| | 14,508 |
|
Other Current Assets and Liabilities, Net | 32,296 |
| | 26,207 |
|
Net Cash Flows Provided by Operating Activities | 263,995 |
| | 305,952 |
|
| | | |
Investing Activities: | | | |
Investments in Property, Plant and Equipment | (215,470 | ) | | (215,804 | ) |
Other Investing Activities | 113 |
| | 272 |
|
Net Cash Flows Used in Investing Activities | (215,357 | ) | | (215,532 | ) |
| | | |
Financing Activities: | | | |
Cash Dividends on Common Stock | (23,900 | ) | | (58,200 | ) |
Capital Contributions from Eversource Parent | — |
| | 94,500 |
|
Retirements of Long-Term Debt | (70,000 | ) | | — |
|
Increase/(Decrease) in Notes Payable to Eversource Parent | 41,400 |
| | (123,800 | ) |
Other Financing Activities | (187 | ) | | (217 | ) |
Net Cash Flows Used in Financing Activities | (52,687 | ) | | (87,717 | ) |
Net (Decrease)/Increase in Cash | (4,049 | ) | | 2,703 |
|
Cash - Beginning of Period | 4,646 |
| | 1,733 |
|
Cash - End of Period | $ | 597 |
| | $ | 4,436 |
|
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
WESTERN MASSACHUSETTSNSTAR ELECTRIC COMPANY AND SUBSIDIARY
CONDENSED BALANCE SHEETSCONSOLIDATED STATEMENTS OF COMMON STOCKHOLDER'S EQUITY
(Unaudited)
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| For the Nine Months Ended September 30, 2021 |
| Common Stock | | Capital Surplus, Paid In | | Retained Earnings | | Accumulated Other Comprehensive Income | | Total Common Stockholder's Equity |
(Thousands of Dollars, Except Stock Information) | Stock | | Amount | | | | |
Balance as of January 1, 2021 | 200 | | | $ | — | | | $ | 1,993,942 | | | $ | 2,527,167 | | | $ | 309 | | | $ | 4,521,418 | |
Net Income | | | | | | | 93,924 | | | | | 93,924 | |
Dividends on Preferred Stock | | | | | | | (490) | | | | | (490) | |
Dividends on Common Stock | | | | | | | (206,400) | | | | | (206,400) | |
| | | | | | | | | | | |
Other Comprehensive Income | | | | | | | | | 61 | | | 61 | |
Balance as of March 31, 2021 | 200 | | | — | | | 1,993,942 | | | 2,414,201 | | | 370 | | | 4,408,513 | |
Net Income | | | | | | | 110,912 | | | | | 110,912 | |
Dividends on Preferred Stock | | | | | | | (490) | | | | | (490) | |
Dividends on Common Stock | | | | | | | (76,800) | | | | | (76,800) | |
Capital Contributions from Eversource Parent | | | | | 60,000 | | | | | | | 60,000 | |
Other Comprehensive Income | | | | | | | | | 141 | | | 141 | |
Balance as of June 30, 2021 | 200 | | | — | | | 2,053,942 | | | 2,447,823 | | | 511 | | | 4,502,276 | |
Net Income | | | | | | | 177,451 | | | | | 177,451 | |
Dividends on Preferred Stock | | | | | | | (490) | | | | | (490) | |
Other Comprehensive Loss | | | | | | | | | (36) | | | (36) | |
Balance as of September 30, 2021 | 200 | | | $ | — | | | $ | 2,053,942 | | | $ | 2,624,784 | | | $ | 475 | | | $ | 4,679,201 | |
|
| | | | | | | |
(Thousands of Dollars) | As of September 30, 2017 | | As of December 31, 2016 |
| | | |
ASSETS | | | |
Current Assets: | | | |
Receivables, Net | $ | 58,034 |
| | $ | 54,940 |
|
Accounts Receivable from Affiliated Companies | 23,440 |
| | 14,425 |
|
Unbilled Revenues | 15,000 |
| | 15,329 |
|
Materials, Supplies and Inventory | 6,221 |
| | 8,618 |
|
Regulatory Assets | 60,606 |
| | 64,123 |
|
Prepayments and Other Current Assets | 1,297 |
| | 2,595 |
|
Total Current Assets | 164,598 |
| | 160,030 |
|
| | | |
Property, Plant and Equipment, Net | 1,769,566 |
| | 1,678,262 |
|
| | | |
Deferred Debits and Other Assets: | | | |
Regulatory Assets | 121,796 |
| | 127,291 |
|
Other Long-Term Assets | 38,934 |
| | 29,062 |
|
Total Deferred Debits and Other Assets | 160,730 |
| | 156,353 |
|
| | | |
Total Assets | $ | 2,094,894 |
| | $ | 1,994,645 |
|
| | | |
LIABILITIES AND CAPITALIZATION | | | |
Current Liabilities: | | | |
Notes Payable to Eversource Parent | $ | 96,900 |
| | $ | 51,000 |
|
Accounts Payable | 58,518 |
| | 56,036 |
|
Accounts Payable to Affiliated Companies | 22,181 |
| | 19,478 |
|
Obligations to Third Party Suppliers | 9,736 |
| | 10,508 |
|
Renewable Portfolio Standards Compliance Obligations | 16,144 |
| | 20,383 |
|
Regulatory Liabilities | 10,236 |
| | 14,888 |
|
Other Current Liabilities | 13,020 |
| | 14,984 |
|
Total Current Liabilities | 226,735 |
| | 187,277 |
|
| | | |
Deferred Credits and Other Liabilities: | |
| | |
Accumulated Deferred Income Taxes | 519,998 |
| | 490,793 |
|
Regulatory Liabilities | 22,726 |
| | 17,227 |
|
Accrued Pension, SERP and PBOP | 18,038 |
| | 20,390 |
|
Other Long-Term Liabilities | 45,831 |
| | 41,308 |
|
Total Deferred Credits and Other Liabilities | 606,593 |
| | 569,718 |
|
| | | |
Capitalization: | |
| | |
Long-Term Debt | 566,172 |
| | 566,536 |
|
| | | |
Common Stockholder's Equity: | |
| | |
Common Stock | 10,866 |
| | 10,866 |
|
Capital Surplus, Paid In | 444,398 |
| | 444,398 |
|
Retained Earnings | 242,157 |
| | 218,212 |
|
Accumulated Other Comprehensive Loss | (2,027 | ) | | (2,362 | ) |
Common Stockholder's Equity | 695,394 |
| | 671,114 |
|
Total Capitalization | 1,261,566 |
| | 1,237,650 |
|
| | | |
Total Liabilities and Capitalization | $ | 2,094,894 |
| | $ | 1,994,645 |
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| For the Nine Months Ended September 30, 2020 |
| Common Stock | | Capital Surplus, Paid In | | Retained Earnings | | Accumulated Other Comprehensive Income | | Total Common Stockholder's Equity |
(Thousands of Dollars, Except Stock Information) | Stock | | Amount | | | | |
Balance as of January 1, 2020 | 200 | | | $ | — | | | $ | 1,813,442 | | | $ | 2,346,287 | | | $ | 155 | | | $ | 4,159,884 | |
Net Income | | | | | | | 100,390 | | | | | 100,390 | |
Dividends on Preferred Stock | | | | | | | (490) | | | | | (490) | |
Dividends on Common Stock | | | | | | | (196,500) | | | | | (196,500) | |
Adoption of Accounting Standards Update 2016-13 | | | | | | | (161) | | | | | (161) | |
Other Comprehensive Income | | | | | | | | | 67 | | | 67 | |
Balance as of March 31, 2020 | 200 | | | — | | | 1,813,442 | | | 2,249,526 | | | 222 | | | 4,063,190 | |
Net Income | | | | | | | 97,468 | | | | | 97,468 | |
Dividends on Preferred Stock | | | | | | | (490) | | | | | (490) | |
Other Comprehensive Income | | | | | | | | | 68 | | | 68 | |
Balance as of June 30, 2020 | 200 | | | — | | | 1,813,442 | | | 2,346,504 | | | 290 | | | 4,160,236 | |
Net Income | | | | | | | 165,728 | | | | | 165,728 | |
Dividends on Preferred Stock | | | | | | | (490) | | | | | (490) | |
Other Comprehensive Income | | | | | | | | | 65 | | | 65 | |
Balance as of September 30, 2020 | 200 | | | $ | — | | | $ | 1,813,442 | | | $ | 2,511,742 | | | $ | 355 | | | $ | 4,325,539 | |
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
WESTERN MASSACHUSETTS
NSTAR ELECTRIC COMPANY AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF INCOMECASH FLOWS
(Unaudited)
| | | | | | | | | | | |
| For the Nine Months Ended September 30, |
(Thousands of Dollars) | 2021 | | 2020 |
| | | |
Operating Activities: | | | |
Net Income | $ | 382,287 | | | $ | 363,585 | |
Adjustments to Reconcile Net Income to Net Cash Flows Provided by Operating Activities: | | | |
Depreciation | 251,530 | | | 238,232 | |
Deferred Income Taxes | 12,905 | | | 13,436 | |
Uncollectible Expense | 12,477 | | | 11,321 | |
Pension, SERP and PBOP Income, Net | (19,627) | | | (13,714) | |
Pension Contributions | (10,000) | | | (650) | |
Regulatory Over/(Under) Recoveries, Net | 86,111 | | | (20,047) | |
Amortization of Regulatory Assets, Net | 23,963 | | | 69,139 | |
Other | (71,005) | | | (25,508) | |
Changes in Current Assets and Liabilities: | | | |
Receivables and Unbilled Revenues, Net | (110,336) | | | (104,528) | |
Materials, Supplies and REC Inventory | 50,227 | | | 27,709 | |
Taxes Receivable/Accrued, Net | 109,561 | | | 55,405 | |
Accounts Payable | (85,431) | | | (57,300) | |
Other Current Assets and Liabilities, Net | (15,322) | | | (54,481) | |
Net Cash Flows Provided by Operating Activities | 617,340 | | | 502,599 | |
| | | |
Investing Activities: | | | |
Investments in Property, Plant and Equipment | (675,245) | | | (655,039) | |
Other Investing Activities | 70 | | | 138 | |
Net Cash Flows Used in Investing Activities | (675,175) | | | (654,901) | |
| | | |
Financing Activities: | | | |
Cash Dividends on Common Stock | (283,200) | | | (196,500) | |
Cash Dividends on Preferred Stock | (1,470) | | | (1,470) | |
Issuance of Long-Term Debt | 600,000 | | | 400,000 | |
Retirement of Long-Term Debt | (250,000) | | | (95,000) | |
Capital Contributions from Eversource Parent | 60,000 | | | — | |
Increase in Notes Payable to Eversource Parent | 3,300 | | | 6,300 | |
(Decrease)/Increase in Notes Payable | (57,000) | | | 50,000 | |
Other Financing Activities | (10,367) | | | (4,931) | |
Net Cash Flows Provided by Financing Activities | 61,263 | | | 158,399 | |
Net Increase in Cash and Restricted Cash | 3,428 | | | 6,097 | |
Cash and Restricted Cash - Beginning of Period | 17,410 | | | 6,312 | |
Cash and Restricted Cash - End of Period | $ | 20,838 | | | $ | 12,409 | |
|
| | | | | | | | | | | | | | | |
| For the Three Months Ended September 30, | | For the Nine Months Ended September 30, |
(Thousands of Dollars) | 2017 | | 2016 | | 2017 | | 2016 |
| | | | | | | |
Operating Revenues | $ | 126,335 |
| | $ | 124,042 |
| | $ | 377,214 |
| | $ | 368,533 |
|
| | | | | | | |
Operating Expenses: | | | | | | | |
Purchased Power and Transmission | 34,828 |
| | 32,178 |
| | 109,553 |
| | 104,406 |
|
Operations and Maintenance | 21,528 |
| | 24,125 |
| | 65,769 |
| | 68,018 |
|
Depreciation | 12,546 |
| | 11,567 |
| | 36,844 |
| | 34,414 |
|
Amortization of Regulatory Assets/(Liabilities), Net | 286 |
| | 1,102 |
| | (563 | ) | | 3,305 |
|
Energy Efficiency Programs | 10,996 |
| | 12,389 |
| | 29,739 |
| | 33,593 |
|
Taxes Other Than Income Taxes | 10,779 |
| | 10,609 |
| | 31,403 |
| | 30,440 |
|
Total Operating Expenses | 90,963 |
| | 91,970 |
| | 272,745 |
| | 274,176 |
|
Operating Income | 35,372 |
| | 32,072 |
| | 104,469 |
| | 94,357 |
|
Interest Expense | 6,321 |
| | 6,222 |
| | 18,752 |
| | 18,298 |
|
Other Income, Net | 1,060 |
| | 179 |
| | 1,409 |
| | 133 |
|
Income Before Income Tax Expense | 30,111 |
| | 26,029 |
| | 87,126 |
| | 76,192 |
|
Income Tax Expense | 12,504 |
| | 10,018 |
| | 34,680 |
| | 30,089 |
|
Net Income | $ | 17,607 |
| | $ | 16,011 |
| | $ | 52,446 |
| | $ | 46,103 |
|
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
PUBLIC SERVICE COMPANY OF NEW HAMPSHIRE AND SUBSIDIARIES
CONDENSED STATEMENTS OF COMPREHENSIVE INCOMECONSOLIDATED BALANCE SHEETS
(Unaudited) | | | | | | | | | | | |
(Thousands of Dollars) | As of September 30, 2021 | | As of December 31, 2020 |
| | | |
ASSETS | | | |
Current Assets: | | | |
Cash | $ | 3,869 | | | $ | 141 | |
Receivables, Net (net of allowance for uncollectible accounts of $16,996 and $17,157 as of September 30, 2021 and December 31, 2020, respectively) | 136,481 | | | 119,899 | |
Accounts Receivable from Affiliated Companies | 13,866 | | | 10,925 | |
Unbilled Revenues | 46,854 | | | 46,041 | |
| | | |
Materials, Supplies and REC Inventory | 24,789 | | | 26,829 | |
Regulatory Assets | 97,948 | | | 115,852 | |
Special Deposits | 18,605 | | | 36,767 | |
Prepaid Property Taxes | 5,987 | | | 26,257 | |
Prepayments and Other Current Assets | 2,851 | | | 10,788 | |
Total Current Assets | 351,250 | | | 393,499 | |
Property, Plant and Equipment, Net | 3,529,050 | | | 3,374,270 | |
Deferred Debits and Other Assets: | | | |
Regulatory Assets | 829,848 | | | 873,203 | |
Other Long-Term Assets | 22,684 | | | 23,733 | |
Total Deferred Debits and Other Assets | 852,532 | | | 896,936 | |
Total Assets | $ | 4,732,832 | | | $ | 4,664,705 | |
| | | |
LIABILITIES AND CAPITALIZATION | | | |
Current Liabilities: | | | |
Notes Payable to Eversource Parent | $ | 66,500 | | | $ | 46,300 | |
Long-Term Debt – Current Portion | — | | | 282,000 | |
Rate Reduction Bonds – Current Portion | 43,210 | | | 43,210 | |
Accounts Payable | 108,243 | | | 132,635 | |
Accounts Payable to Affiliated Companies | 25,055 | | | 43,397 | |
Regulatory Liabilities | 96,817 | | | 58,756 | |
| | | |
Other Current Liabilities | 61,883 | | | 58,487 | |
Total Current Liabilities | 401,708 | | | 664,785 | |
Deferred Credits and Other Liabilities: | | | |
Accumulated Deferred Income Taxes | 535,656 | | | 537,627 | |
Regulatory Liabilities | 389,426 | | | 383,183 | |
Accrued Pension, SERP and PBOP | 162,115 | | | 184,715 | |
Other Long-Term Liabilities | 35,564 | | | 37,874 | |
Total Deferred Credits and Other Liabilities | 1,122,761 | | | 1,143,399 | |
Long-Term Debt | 1,163,630 | | | 817,070 | |
Rate Reduction Bonds | 453,702 | | | 496,912 | |
Common Stockholder's Equity: | | | |
Common Stock | — | | | — | |
Capital Surplus, Paid In | 1,088,134 | | | 928,134 | |
Retained Earnings | 502,870 | | | 615,018 | |
Accumulated Other Comprehensive Income/(Loss) | 27 | | | (613) | |
Common Stockholder's Equity | 1,591,031 | | | 1,542,539 | |
Commitments and Contingencies (Note 9) | 0 | | 0 |
Total Liabilities and Capitalization | $ | 4,732,832 | | | $ | 4,664,705 | |
|
| | | | | | | | | | | | | | | |
| For the Three Months Ended September 30, | | For the Nine Months Ended September 30, |
(Thousands of Dollars) | 2017 | | 2016 | | 2017 | | 2016 |
| | | | | | | |
Net Income | $ | 17,607 |
| | $ | 16,011 |
| | $ | 52,446 |
| | $ | 46,103 |
|
Other Comprehensive Income, Net of Tax: | |
| | | | |
| | |
Qualified Cash Flow Hedging Instruments | 109 |
| | 109 |
| | 328 |
| | 328 |
|
Changes in Unrealized (Losses)/Gains on Marketable Securities | (18 | ) | | 9 |
| | 7 |
| | 22 |
|
Other Comprehensive Income, Net of Tax | 91 |
| | 118 |
| | 335 |
| | 350 |
|
Comprehensive Income | $ | 17,698 |
| | $ | 16,129 |
| | $ | 52,781 |
| | $ | 46,453 |
|
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
WESTERN MASSACHUSETTS ELECTRIC
PUBLIC SERVICE COMPANY OF NEW HAMPSHIRE AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWSINCOME
(Unaudited)
| | | | | | | | | | | | | | | | | | | | | | | |
| For the Three Months Ended September 30, | | For the Nine Months Ended September 30, |
(Thousands of Dollars) | 2021 | | 2020 | | 2021 | | 2020 |
| | | | | | | |
Operating Revenues | $ | 314,893 | | | $ | 283,669 | | | $ | 887,177 | | | $ | 815,261 | |
| | | | | | | |
Operating Expenses: | | | | | | | |
Purchased Power and Transmission | 107,353 | | | 96,612 | | | 279,475 | | | 273,311 | |
Operations and Maintenance | 57,041 | | | 50,657 | | | 168,242 | | | 151,802 | |
Depreciation | 30,169 | | | 25,410 | | | 89,462 | | | 74,494 | |
Amortization of Regulatory Assets, Net | 17,922 | | | 7,360 | | | 62,744 | | | 39,034 | |
Energy Efficiency Programs | 10,762 | | | 11,081 | | | 30,475 | | | 29,231 | |
Taxes Other Than Income Taxes | 24,038 | | | 18,174 | | | 69,639 | | | 58,331 | |
Total Operating Expenses | 247,285 | | | 209,294 | | | 700,037 | | | 626,203 | |
Operating Income | 67,608 | | | 74,375 | | | 187,140 | | | 189,058 | |
Interest Expense | 14,321 | | | 14,942 | | | 42,774 | | | 44,029 | |
Other Income, Net | 3,171 | | | 4,065 | | | 11,598 | | | 10,882 | |
Income Before Income Tax Expense | 56,458 | | | 63,498 | | | 155,964 | | | 155,911 | |
Income Tax Expense | 12,315 | | | 16,347 | | | 32,512 | | | 37,527 | |
Net Income | $ | 44,143 | | | $ | 47,151 | | | $ | 123,452 | | | $ | 118,384 | |
|
| | | | | | | |
| For the Nine Months Ended September 30, |
(Thousands of Dollars) | 2017 | | 2016 |
| | | |
Operating Activities: | | | |
Net Income | $ | 52,446 |
| | $ | 46,103 |
|
Adjustments to Reconcile Net Income to Net Cash Flows Provided by Operating Activities: | | | |
Depreciation | 36,844 |
| | 34,414 |
|
Deferred Income Taxes | 29,008 |
| | 15,587 |
|
Regulatory Overrecoveries, Net | 10,291 |
| | 323 |
|
Amortization of Regulatory (Liabilities)/Assets, Net | (563 | ) | | 3,305 |
|
Other | (10,182 | ) | | (2,532 | ) |
Changes in Current Assets and Liabilities: | | | |
Receivables and Unbilled Revenues, Net | (16,818 | ) | | 1,933 |
|
Taxes Receivable/Accrued, Net | 4,203 |
| | 36,658 |
|
Accounts Payable | (5,777 | ) | | (16,240 | ) |
Other Current Assets and Liabilities, Net | (7,482 | ) | | 5,277 |
|
Net Cash Flows Provided by Operating Activities | 91,970 |
| | 124,828 |
|
| | | |
Investing Activities: | | | |
Investments in Property, Plant and Equipment | (109,233 | ) | | (104,811 | ) |
Proceeds from Sales of Marketable Securities | 1,641 |
| | 1,934 |
|
Purchases of Marketable Securities | (1,590 | ) | | (1,894 | ) |
Net Cash Flows Used in Investing Activities | (109,182 | ) | | (104,771 | ) |
| | | |
Financing Activities: | | | |
Cash Dividends on Common Stock | (28,500 | ) | | (28,500 | ) |
Capital Contributions from Eversource Parent | — |
| | 53,000 |
|
Increase/(Decrease) in Notes Payable to Eversource Parent | 45,900 |
| | (95,200 | ) |
Issuance of Long-Term Debt | — |
| | 50,000 |
|
Other Financing Activities | (188 | ) | | (191 | ) |
Net Cash Flows Provided by/(Used in) Financing Activities | 17,212 |
| | (20,891 | ) |
Net Decrease in Cash | — |
| | (834 | ) |
Cash - Beginning of Period | — |
| | 834 |
|
Cash - End of Period | $ | — |
| | $ | — |
|
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Unaudited)
| | | | | | | | | | | | | | | | | | | | | | | |
| For the Three Months Ended September 30, | | For the Nine Months Ended September 30, |
(Thousands of Dollars) | 2021 | | 2020 | | 2021 | | 2020 |
| | | | | | | |
Net Income | $ | 44,143 | | | $ | 47,151 | | | $ | 123,452 | | | $ | 118,384 | |
Other Comprehensive Income, Net of Tax: | | | | | | | |
Qualified Cash Flow Hedging Instruments | 109 | | | 268 | | | 673 | | | 806 | |
Changes in Unrealized (Losses)/Gains on Marketable Securities | (6) | | | (8) | | | (33) | | | 17 | |
Other Comprehensive Income, Net of Tax | 103 | | | 260 | | | 640 | | | 823 | |
Comprehensive Income | $ | 44,246 | | | $ | 47,411 | | | $ | 124,092 | | | $ | 119,207 | |
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
PUBLIC SERVICE COMPANY OF NEW HAMPSHIRE AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF COMMON STOCKHOLDER'S EQUITY
(Unaudited)
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| For the Nine Months Ended September 30, 2021 |
| Common Stock | | Capital Surplus, Paid In | | Retained Earnings | | Accumulated Other Comprehensive (Loss)/Income | | Total Common Stockholder's Equity |
(Thousands of Dollars, Except Stock Information) | Stock | | Amount | | | | |
Balance as of January 1, 2021 | 301 | | | $ | — | | | $ | 928,134 | | | $ | 615,018 | | | $ | (613) | | | $ | 1,542,539 | |
Net Income | | | | | | | 44,676 | | | | | 44,676 | |
Dividends on Common Stock | | | | | | | (25,200) | | | | | (25,200) | |
| | | | | | | | | | | |
Other Comprehensive Income | | | | | | | | | 255 | | | 255 | |
Balance as of March 31, 2021 | 301 | | | — | | | 928,134 | | | 634,494 | | | (358) | | | 1,562,270 | |
Net Income | | | | | | | 34,633 | | | | | 34,633 | |
Dividends on Common Stock | | | | | | | (185,200) | | | | | (185,200) | |
Capital Contributions from Eversource Parent | | | | | 160,000 | | | | | | | 160,000 | |
Other Comprehensive Income | | | | | | | | | 282 | | | 282 | |
Balance as of June 30, 2021 | 301 | | | — | | | 1,088,134 | | | 483,927 | | | (76) | | | 1,571,985 | |
Net Income | | | | | | | 44,143 | | | | | 44,143 | |
Dividends on Common Stock | | | | | | | (25,200) | | | | | (25,200) | |
Other Comprehensive Income | | | | | | | | | 103 | | | 103 | |
Balance as of September 30, 2021 | 301 | | | $ | — | | | $ | 1,088,134 | | | $ | 502,870 | | | $ | 27 | | | $ | 1,591,031 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| For the Nine Months Ended September 30, 2020 |
| Common Stock | | Capital Surplus, Paid In | | Retained Earnings | | Accumulated Other Comprehensive Loss | | Total Common Stockholder's Equity |
(Thousands of Dollars, Except Stock Information) | Stock | | Amount | | | | |
Balance as of January 1, 2020 | 301 | | | $ | — | | | $ | 903,134 | | | $ | 490,306 | | | $ | (1,707) | | | $ | 1,391,733 | |
Net Income | | | | | | | 39,601 | | | | | 39,601 | |
Dividends on Common Stock | | | | | | | (22,300) | | | | | (22,300) | |
Adoption of Accounting Standards Update 2016-13 | | | | | | | (300) | | | | | (300) | |
Other Comprehensive Income | | | | | | | | | 278 | | | 278 | |
Balance as of March 31, 2020 | 301 | | | — | | | 903,134 | | | 507,307 | | | (1,429) | | | 1,409,012 | |
Net Income | | | | | | | 31,632 | | | | | 31,632 | |
Other Comprehensive Income | | | | | | | | | 285 | | | 285 | |
Balance as of June 30, 2020 | 301 | | | — | | | 903,134 | | | 538,939 | | | (1,144) | | | 1,440,929 | |
Net Income | | | | | | | 47,151 | | | | | 47,151 | |
Other Comprehensive Income | | | | | | | | | 260 | | | 260 | |
Balance as of September 30, 2020 | 301 | | | $ | — | | | $ | 903,134 | | | $ | 586,090 | | | $ | (884) | | | $ | 1,488,340 | |
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
PUBLIC SERVICE COMPANY OF NEW HAMPSHIRE AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
| | | | | | | | | | | |
| For the Nine Months Ended September 30, |
(Thousands of Dollars) | 2021 | | 2020 |
| | | |
Operating Activities: | | | |
Net Income | $ | 123,452 | | | $ | 118,384 | |
Adjustments to Reconcile Net Income to Net Cash Flows Provided by Operating Activities: | | | |
Depreciation | 89,462 | | | 74,494 | |
Deferred Income Taxes | (13,385) | | | 13,959 | |
Uncollectible Expense | 4,381 | | | 2,058 | |
Regulatory Over/(Under) Recoveries, Net | 29,029 | | | (22,203) | |
Amortization of Regulatory Assets, Net | 62,744 | | | 39,034 | |
Pension, SERP and PBOP Income, Net | (2,664) | | | (894) | |
Pension Contributions | — | | | (19,500) | |
Other | (22,738) | | | (7,545) | |
Changes in Current Assets and Liabilities: | | | |
Receivables and Unbilled Revenues, Net | (25,607) | | | (24,562) | |
Materials, Supplies and REC Inventory | 2,040 | | | (301) | |
Taxes Receivable/Accrued, Net | 22,286 | | | 1,313 | |
Accounts Payable | (42,654) | | | (29,388) | |
Other Current Assets and Liabilities, Net | 10,826 | | | 4,363 | |
Net Cash Flows Provided by Operating Activities | 237,172 | | | 149,212 | |
| | | |
Investing Activities: | | | |
Investments in Property, Plant and Equipment | (217,414) | | | (248,899) | |
Other Investing Activities | 431 | | | 1,969 | |
Net Cash Flows Used in Investing Activities | (216,983) | | | (246,930) | |
| | | |
Financing Activities: | | | |
Cash Dividends on Common Stock | (235,600) | | | (22,300) | |
Capital Contributions from Eversource Parent | 160,000 | | | — | |
Issuance of Long-Term Debt | 350,000 | | | 150,000 | |
Retirement of Long-Term Debt | (282,000) | | | — | |
Repayment of Rate Reduction Bonds | (43,210) | | | (43,210) | |
Increase in Notes Payable to Eversource Parent | 20,200 | | | 2,100 | |
Other Financing Activities | (2,961) | | | (2,965) | |
Net Cash Flows (Used in)/Provided by Financing Activities | (33,571) | | | 83,625 | |
Net Decrease in Cash and Restricted Cash | (13,382) | | | (14,093) | |
Cash and Restricted Cash - Beginning of Period | 39,555 | | | 36,688 | |
Cash and Restricted Cash - End of Period | $ | 26,173 | | | $ | 22,595 | |
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
EVERSOURCE ENERGY AND SUBSIDIARIES
THE CONNECTICUT LIGHT AND POWER COMPANY
NSTAR ELECTRIC COMPANY AND SUBSIDIARY
PUBLIC SERVICE COMPANY OF NEW HAMPSHIRE AND SUBSIDIARYSUBSIDIARIES
WESTERN MASSACHUSETTS ELECTRIC COMPANY
COMBINED NOTES TO CONDENSED FINANCIAL STATEMENTS (Unaudited)
Refer to the Glossary of Terms included in this combined Quarterly Report on Form 10-Q for abbreviations and acronyms used throughout the combined notes to the unaudited condensed financial statements.
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
A. Basis of Presentation
Eversource Energy is a public utility holding company primarily engaged, through its wholly-owned regulated utility subsidiaries, in the energy delivery business. Eversource Energy's wholly-owned regulated utility subsidiaries consist of CL&P, NSTAR Electric and PSNH WMECO,(electric utilities), Yankee Gas, NSTAR Gas and NSTAR Gas.Eversource Gas Company of Massachusetts (EGMA) (natural gas utilities) and Aquarion (water utilities). Eversource provides energy delivery and/or water service to approximately 3.74.3 million electric, and natural gas and water customers through these six9 regulated utilities in Connecticut, Massachusetts and New Hampshire.
On June 2, 2017, Eversource announced that it had entered into an agreement to acquire Aquarion from Macquarie Infrastructure Partners for $1.675 billion, consisting of approximately $880 million in cash and $795 million of assumed Aquarion debt. The transaction requires approval from PURA, the DPU, the NHPUC, the Maine PUC, and the Federal Communications Commission, and is also subject to a review under the Hart-Scott-Rodino Act. On June 29, 2017, Eversource and Aquarion filed joint applications with regulatory agencies in Connecticut, Massachusetts, New Hampshire and Maine requesting approval of the transaction. With the exception of Massachusetts, all state and federal regulatory agency approvals have been received and the related review period has expired. The transaction is expected to close by December 31, 2017.
The unaudited condensed consolidated financial statements of Eversource, NSTAR Electric and PSNH include the accounts of each of their respective subsidiaries. Intercompany transactions have been eliminated in consolidation. The accompanying unaudited condensed consolidated financial statements of Eversource, NSTAR Electric and PSNH and the unaudited condensed financial statements of CL&P and WMECO are herein collectively referred to as the "financial statements."
The combined notes to the financial statements have been prepared pursuant to the rules and regulations of the SEC. Certain information and footnote disclosures included in annual financial statements prepared in accordance with GAAP have been omitted pursuant to such rules and regulations. The accompanying financial statements should be read in conjunction with the Combined Notes to Financial Statements included in Item 8, "Financial Statements and Supplementary Data," of the Eversource 20162020 Form 10-K, which was filed with the SEC.SEC on February 17, 2021. The preparation of the financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent liabilities as of the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
The financial statements contain, in the opinion of management, all adjustments (including normal, recurring adjustments) necessary to present fairly Eversource's, CL&P's, NSTAR Electric's PSNH's and WMECO'sPSNH's financial position as of September 30, 20172021 and December 31, 2016,2020, and the results of operations, and comprehensive income and common shareholders' equity for the three and nine months ended September 30, 20172021 and 2016,2020 and the cash flows for the nine months ended September 30, 20172021 and 2016.2020. The results of operations and comprehensive income for the three and nine months ended September 30, 20172021 and 20162020 and the cash flows for the nine months ended September 30, 20172021 and 20162020 are not necessarily indicative of the results expected for a full year.
Eversource's consolidated financial information includes the results of the acquisition of the assets of Columbia Gas of Massachusetts (CMA) on October 9, 2020. The natural gas distribution assets acquired from CMA on October 9, 2020 were assigned to EGMA.
Eversource consolidates the operations of CYAPC and YAEC, both of which are inactive regional nuclear power companies engaged in the long-term storage of their spent nuclear fuel. Eversource consolidates CYAPC and YAEC because CL&P's, NSTAR Electric's PSNH's and WMECO'sPSNH's combined ownership interestand voting interests in each of these entities is greater than 50 percent. Intercompany transactions between CL&P, NSTAR Electric, PSNH and WMECO and the CYAPC and YAEC companies have been eliminated in consolidation of the Eversource financial statements.
Eversource holds several equity ownership interests that are not consolidated and are accounted for under the equity method.
Eversource's utility subsidiaries' electric, natural gas and water distribution (including generation assets) and transmission businesses are subject to rate-regulation that is based on cost recovery and meets the criteria for application of accounting guidance for entities with rate-regulated operations, which considers the effect of regulation on the differences in the timing of the recognition of certain revenues and expenses from those of other businesses and industries. See Note 2, "Regulatory Accounting," for further information.
COVID-19 has adversely affected customers, workers and the U.S. economy. We provide a critical service to our customers and have taken extensive measures to maintain its safety and reliability. We continue to address the impacts of the COVID-19 pandemic and how the related developments affect Eversource. We are in the re-entry phase of our pandemic response plan, in which the majority of our employees under remote work arrangements have transitioned back to the workplace. We have not experienced significant impacts directly related to the pandemic that have materially affected our current operations, our workforce, or results of operations. The extent of the impact to us in the future will vary, and depend on the duration, scope and severity of the pandemic and the resulting impact on economic, health care and capital market conditions. The future impact will also depend on the outcome of future proceedings before our state regulatory commissions to recover our incremental costs associated with COVID-19, which include uncollectible customer receivable expenses.
Based on the status of our COVID-19 regulatory dockets, communications with our state regulatory commissions, and policies and practices in the jurisdictions in which we operate, we believe our state regulatory commissions in Connecticut and Massachusetts will allow us to recover our incremental costs associated with COVID-19, which include uncollectible customer receivable expenses, while balancing the impact on our customers’ bills and our operating cash flows. See Note 1C, "Summary of Significant Accounting Policies - Allowance for Uncollectible Accounts," for discussion of our evaluation of the allowance for doubtful accounts as of September 30, 2021 in light of the COVID-19 pandemic and Note 2, "Regulatory Accounting," for the amount of net incremental COVID-19 costs deferred on our balance sheets.
Certain reclassifications of prior period data were made in the accompanying financial statements to conform to the current period presentation.
B. Accounting Standards
Accounting Standards Issued but Not Yet Effective: In May 2014,Recently Adopted: On January 1, 2021, the Financial Accounting Standards Board ("FASB") issued anCompany adopted Accounting Standards Update ("ASU") 2014-09, Revenue from Contracts with Customers(ASU) 2019-12, Income Taxes (Topic 740) - Simplifying the Accounting for Income Taxes, which amends existing revenue recognitioneliminates certain exceptions to the general principles of current income tax guidance in ASC 740 and is requiredsimplifies and improves consistency in application of that income tax guidance through clarifications of and amendments to be applied retrospectively (either to each reporting period presented or cumulatively at the date of initial application). The Company will implement the standard in the first quarter of 2018 cumulatively at the date of initial application. Implementation of the ASU is not expected to have a material effect on the financial statements of Eversource, CL&P, NSTAR Electric, PSNH or WMECO.
In January 2016, the FASB issued ASU 2016-01, Financial Instruments - Overall: Recognition and Measurement of Financial Assets and Liabilities, which is required to be implemented in the first quarter of 2018.ASC 740. The ASU will remove the available-for-sale designation for equity securities, whereby changes in fair value are recorded in accumulated other comprehensive income within shareholders' equity, and will require changes in fair value of all equity securities to be recorded in earnings beginning on January 1, 2018, with the unrealized gain or loss on available-for-sale equity securities as of that date reclassified to retained earnings as a cumulative effect of adoption. The fair value of available-for-sale equity securities subject to this guidance as of September 30, 2017 was approximately $51 million with an unrealized gain of $1.7 million. The remaining available-for-sale equity securities included in marketable securities on the balance sheet are held in nuclear decommissioning trusts and are subject to regulatory accounting treatment and willdid not be impacted by this guidance. Implementation of the ASU for other financial instruments is not expected to have a material impact on the financial statements of Eversource, CL&P, NSTAR Electric PSNH or WMECO.and PSNH.
In February 2016, the FASB issued ASU 2016-02, Leases, which changes existing lease accounting guidance and is required to be applied in the first quarter of 2019, with earlier application permitted. The ASU lease criteria are required to be applied to leases and lease renewals entered into effective January 1, 2019, and leases entered into before that date are required to be recognized and measured using a modified retrospective approach. The Company is reviewing the requirements of ASU 2016-02, including balance sheet recognition of leases previously deemed to be operating leases, and expects to implement the ASU in the first quarter of 2019.
In March 2017, the FASB issued ASU 2017-07, Compensation – Retirement Benefits: Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost, required to be implemented in the first quarter of 2018. The ASU requires separate presentation of service cost from other components of net pension and PBOP costs, with the other components presented as non-operating income and not subject to capitalization. The ASU is required to be applied retrospectively for the separate presentation in the income statement of service costs and other components and prospectively in the balance sheet for the capitalization of only the service cost component. The implementation of the ASU will not have an impact on the net income of Eversource, CL&P, NSTAR Electric, PSNH or WMECO.
C. ProvisionAllowance for Uncollectible Accounts
Eversource, including CL&P, NSTAR Electric, PSNHReceivables, Net on the balance sheets primarily includes trade receivables from retail customers and WMECO, presents itscustomers related to wholesale transmission contracts, wholesale market sales, sales of RECs and property rentals. Receivables, Net also includes customer receivables for the purchase of electricity from a competitive third party supplier, the current portion of customer energy efficiency loans, property damage receivables and other miscellaneous receivables. There is no material concentration of receivables. Receivables are recorded at amortized cost, net of a credit loss provision (or allowance for uncollectible accounts).
Receivables are presented net of expected credit losses at estimated net realizable value by maintaining a provisionan allowance for uncollectible accounts. The current expected credit loss (CECL) model is applied to receivables for purposes of calculating the allowance for uncollectible accounts. This provisionmodel is based on expected losses and results in the recognition of estimated expected credit losses, including uncollectible amounts for both billed and unbilled revenues, over the life of the receivable at the time a receivable is recorded.
The allowance for uncollectible accounts is determined based upon a variety of judgments and factors, including the application of an estimated uncollectible percentage to each receivable aging category. The estimate is based uponFactors in determining credit loss include historical collection, and write-off experience, and management's assessment of collectability from customers.customers, including current conditions, reasonable forecasts, and expectations of future collectability and collection efforts. Management continuously assesses the collectability of receivables and adjusts collectability estimates based on actual experience.experience and future expectations based on economic indicators, collection efforts and other factors. Management also monitors the aging analysis of receivables to determine if there are changes in the collections of accounts receivable. Receivable balances are written off against the provisionallowance for uncollectible accounts when the customer accounts are terminatedno longer in service and these balances are deemed to be uncollectible.
As of September 30, 2021, management evaluated the adequacy of the allowance for uncollectible accounts in light of the COVID-19 pandemic and the related economic downturn. This evaluation included an analysis of collection and customer payment trends, economic conditions, delinquency statistics, aging-based quantitative assessments, the impact on residential customer bills because of energy usage and change in rates, flexible payment plans and financial hardship arrearage management programs being offered to customers, and COVID-19 developments, including any potential federal governmental pandemic relief programs and the expansion of unemployment benefit initiatives, which help to mitigate the potential for increasing customer account delinquencies. Additionally, management considered past economic declines and corresponding uncollectible reserves as part of the current assessment.
This evaluation has shown that our operating companies have experienced an increase in aged receivables and lower cash collections from customers because of the length of the moratorium on disconnections in Connecticut and Massachusetts, and the economic slowdown resulting from the COVID-19 pandemic. In Connecticut, the moratorium on disconnections of commercial and non-hardship residential customers ended in June 2021 and September 2021, respectively, but is still in place for hardship residential customers. In Massachusetts, the moratorium on disconnections of commercial customers and residential customers ended in September 2020 and July 2021, respectively. Disconnection activities have resumed after these moratoria have expired, which has resulted in recent improved collection experience and more customers applying for, and receiving, hardship status. On July 7, 2021, the NHPUC issued an order to New Hampshire utilities that concluded that recovery of incremental bad debt or waived late fees related to the COVID-19 pandemic would be addressed in a future rate case to the extent those costs are relevant at that time. As a result of the order, in the first nine months of 2021, PSNH removed its $0.6 million deferral of net incremental COVID-19 costs. In New Hampshire, the moratorium on disconnections of non-hardship residential and commercial customers ended in late 2020 and for hardship residential customers ended in May 2021 and PSNH has resumed disconnection activities, which has resulted in improved collection of outstanding customer receivable balances.
Based upon the evaluation performed, in the first nine months of 2021, management increased the allowance for uncollectible accounts for amounts incurred as a result of COVID-19 by $25.8 million for Eversource (increase of $16.3 million for CL&P and $12.5 million at our natural gas businesses, and decrease of $1.8 million at NSTAR Electric). In the third quarter of 2021, the COVID-19 related allowance for uncollectible accounts decreased by $6.5 million at Eversource (increased $4.0 million at CL&P, and decreased $8.3 million at NSTAR Electric and $2.2 million at our natural gas businesses). The COVID-19 related uncollectible amounts were deferred either as incremental regulatory costs at our Connecticut and Massachusetts utilities or deferred through existing regulatory tracking mechanisms that recover uncollectible energy supply costs, as management believes it is probable that these costs will ultimately be recovered from customers in future rates. As of September 30, 2021, the total amount incurred as a result of COVID-19 included in the allowance for uncollectible accounts was $57.0 million at Eversource ($20.1 million at CL&P, $8.5 million at NSTAR Electric, and $27.4 million at our natural gas businesses).
Management concluded that the reserve balance as of September 30, 2021 adequately reflected the collection risk and net realizable value for Eversource’s receivables. Management will continue to evaluate the adequacy of the uncollectible allowance in future reporting periods based on an ongoing assessment of accounts receivable collections, delinquency statistics, and analysis of aging-based quantitative assessments.
The PURA allows CL&P and Yankee Gas to accelerate the recovery of accounts receivable balances attributable to qualified customers under financial or medical duress (uncollectible hardship accounts receivable) outstanding for greater than 180 days and 90 days, respectively. The DPU allows WMECO andNSTAR Electric, NSTAR Gas alsoand EGMA to recover in rates amounts associated with certain uncollectible hardship accounts receivable. Certain of NSTAR Electric'sThese uncollectible hardship accounts receivable are expected to be recovered in future rates, similar to WMECO and NSTAR Gas. These uncollectible customer account balances are included in Regulatory Assets or Other Long-Term Assets on the balance sheets.
Hardship customers are protected from shut-off in certain circumstances, and historical collection experience has reflected a higher default risk as compared to the rest of the receivable population. Management uses a higher credit risk profile for this pool of trade receivables as compared to non-hardship receivables. The total provision for uncollectible accounts andallowance for uncollectible hardship accounts which is included in the total provision,uncollectible allowance balance.
The total allowance for uncollectible accounts is included in Receivables, Net on the balance sheets, and wassheets. The activity in the allowance for uncollectible accounts by portfolio segment as of September 30th is as follows:
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| Eversource | | CL&P | | NSTAR Electric | | PSNH |
(Millions of Dollars) | Hardship Accounts | | Retail (Non-Hardship), Wholesale, and Other Receivables | | Total Allowance | | Hardship Accounts | | Retail (Non-Hardship), Wholesale and Other Receivables | | Total Allowance | | Hardship Accounts | | Retail (Non-Hardship), Wholesale, and Other Receivables | | Total Allowance | | Total Allowance |
Three Months Ended 2021 | | | | | | | | | | | | | | | | | | | |
Beginning Balance | $ | 210.7 | | | $ | 215.1 | | | $ | 425.8 | | | $ | 145.6 | | | $ | 43.2 | | | $ | 188.8 | | | $ | 35.9 | | | $ | 62.1 | | | $ | 98.0 | | | $ | 17.2 | |
Uncollectible Expense | — | | | 12.0 | | | 12.0 | | | — | | | 3.6 | | | 3.6 | | | — | | | 5.1 | | | 5.1 | | | 1.2 | |
Uncollectible Costs Deferred (1) | 22.8 | | | 1.7 | | | 24.5 | | | 4.5 | | | 5.7 | | | 10.2 | | | 11.8 | | | (3.5) | | | 8.3 | | | 1.2 | |
Write-Offs | (3.9) | | | (20.5) | | | (24.4) | | | (3.5) | | | (5.4) | | | (8.9) | | | (0.1) | | | (7.4) | | | (7.5) | | | (2.8) | |
Recoveries Collected | 0.3 | | | 3.5 | | | 3.8 | | | 0.2 | | | 1.6 | | | 1.8 | | | — | | | 1.1 | | | 1.1 | | | 0.2 | |
Ending Balance | $ | 229.9 | | | $ | 211.8 | | | $ | 441.7 | | | $ | 146.8 | | | $ | 48.7 | | | $ | 195.5 | | | $ | 47.6 | | | $ | 57.4 | | | $ | 105.0 | | | $ | 17.0 | |
| | | | | | | | | | | | | | | | | | | |
Nine Months Ended 2021 | | | | | | | | | | | | | | | | | | | |
Beginning Balance | $ | 194.8 | | | $ | 164.1 | | | $ | 358.9 | | | $ | 129.1 | | | $ | 28.3 | | | $ | 157.4 | | | $ | 39.7 | | | $ | 51.9 | | | $ | 91.6 | | | $ | 17.2 | |
Uncollectible Expense | — | | | 39.7 | | | 39.7 | | | — | | | 10.2 | | | 10.2 | | | — | | | 12.5 | | | 12.5 | | | 4.4 | |
Uncollectible Costs Deferred (1) | 44.8 | | | 53.3 | | | 98.1 | | | 25.7 | | | 21.4 | | | 47.1 | | | 8.3 | | | 11.8 | | | 20.1 | | | 2.0 | |
Write-Offs | (10.6) | | | (55.2) | | | (65.8) | | | (8.7) | | | (14.8) | | | (23.5) | | | (0.4) | | | (22.6) | | | (23.0) | | | (7.3) | |
Recoveries Collected | 0.9 | | | 9.9 | | | 10.8 | | | 0.7 | | | 3.6 | | | 4.3 | | | — | | | 3.8 | | | 3.8 | | | 0.7 | |
Ending Balance | $ | 229.9 | | | $ | 211.8 | | | $ | 441.7 | | | $ | 146.8 | | | $ | 48.7 | | | $ | 195.5 | | | $ | 47.6 | | | $ | 57.4 | | | $ | 105.0 | | | $ | 17.0 | |
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| Eversource | | CL&P | | NSTAR Electric | | PSNH |
(Millions of Dollars) | Hardship Accounts | | Retail (Non-Hardship), Wholesale, and Other Receivables | | Total Allowance | | Hardship Accounts | | Retail (Non-Hardship), Wholesale and Other Receivables | | Total Allowance | | Hardship Accounts | | Retail (Non-Hardship), Wholesale, and Other Receivables | | Total Allowance | | Total Allowance |
Three Months Ended 2020 | | | | | | | | | | | | | | | | | | | |
Beginning Balance | $ | 175.5 | | | $ | 94.5 | | | $ | 270.0 | | | $ | 116.3 | | | $ | 20.4 | | | $ | 136.7 | | | $ | 34.6 | | | $ | 34.1 | | | $ | 68.7 | | | $ | 11.8 | |
Uncollectible Expense | — | | | 10.5 | | | 10.5 | | | — | | | 3.8 | | | 3.8 | | | — | | | 4.5 | | | 4.5 | | | 0.8 | |
Uncollectible Costs Deferred (1) | 10.1 | | | 20.4 | | | 30.5 | | | 11.2 | | | 4.9 | | | 16.1 | | | (1.3) | | | 10.4 | | | 9.1 | | | 3.2 | |
Write-Offs | (7.3) | | | (11.8) | | | (19.1) | | | (2.6) | | | (4.6) | | | (7.2) | | | (0.2) | | | (6.3) | | | (6.5) | | | (2.0) | |
Recoveries Collected | 0.4 | | | 2.7 | | | 3.1 | | | 0.3 | | | 1.1 | | | 1.4 | | | — | | | 1.0 | | | 1.0 | | | 0.2 | |
Ending Balance | $ | 178.7 | | | $ | 116.3 | | | $ | 295.0 | | | $ | 125.2 | | | $ | 25.6 | | | $ | 150.8 | | | $ | 33.1 | | | $ | 43.7 | | | $ | 76.8 | | | $ | 14.0 | |
| | | | | | | | | | | | | | | | | | | |
Nine Months Ended 2020 | | | | | | | | | | | | | | | | | | | |
Beginning Balance | $ | 143.3 | | | $ | 81.5 | | | $ | 224.8 | | | $ | 80.1 | | | $ | 17.2 | | | $ | 97.3 | | | $ | 43.9 | | | $ | 31.5 | | | $ | 75.4 | | | $ | 10.5 | |
ASU 2016-13 Implementation Impact on January 1, 2020 | 21.6 | | | 2.2 | | | 23.8 | | | 21.3 | | | 0.9 | | | 22.2 | | | (1.6) | | | 0.3 | | | (1.3) | | | 0.3 | |
Uncollectible Expense | — | | | 31.1 | | | 31.1 | | | — | | | 10.0 | | | 10.0 | | | — | | | 11.3 | | | 11.3 | | | 2.1 | |
Uncollectible Costs Deferred (1) | 24.9 | | | 41.5 | | | 66.4 | | | 32.7 | | | 8.3 | | | 41.0 | | | (8.4) | | | 17.3 | | | 8.9 | | | 5.6 | |
Write-Offs | (12.3) | | | (49.3) | | | (61.6) | | | (10.0) | | | (14.0) | | | (24.0) | | | (0.8) | | | (20.5) | | | (21.3) | | | (5.0) | |
Recoveries Collected | 1.2 | | | 9.3 | | | 10.5 | | | 1.1 | | | 3.2 | | | 4.3 | | | — | | | 3.8 | | | 3.8 | | | 0.5 | |
Ending Balance | $ | 178.7 | | | $ | 116.3 | | | $ | 295.0 | | | $ | 125.2 | | | $ | 25.6 | | | $ | 150.8 | | | $ | 33.1 | | | $ | 43.7 | | | $ | 76.8 | | | $ | 14.0 | |
(1) These expected credit losses are deferred as regulatory costs on the balance sheets, as these amounts are ultimately recovered in rates. Amounts include uncollectible costs for hardship accounts and other customer receivables, including uncollectible amounts related to COVID-19 and uncollectible energy supply costs.
|
| | | | | | | | | | | | | | | |
| Total Provision for Uncollectible Accounts | | Uncollectible Hardship |
(Millions of Dollars) | As of September 30, 2017 | | As of December 31, 2016 | | As of September 30, 2017 | | As of December 31, 2016 |
Eversource | $ | 196.8 |
| | $ | 200.6 |
| | $ | 126.3 |
| | $ | 119.9 |
|
CL&P | 77.6 |
| | 86.4 |
| | 64.6 |
| | 67.7 |
|
NSTAR Electric | 55.7 |
| | 54.8 |
| | 32.3 |
| | 26.2 |
|
PSNH | 10.6 |
| | 9.9 |
| | — |
| | — |
|
WMECO | 17.0 |
| | 15.5 |
| | 11.3 |
| | 9.9 |
|
D. Fair Value Measurements
Fair value measurement guidance is applied to derivative contracts that are not elected or designated as "normal purchases" or "normal sales" ("normal")(normal) and to the marketable securities held in trusts. Fair value measurement guidance is also applied to valuations of the investments used to calculate the funded status of pension and PBOP plans, the nonrecurring fair value measurements of nonfinancial assets such as goodwill, long-lived assets, equity method investments, and AROs, and in the estimatedvaluation of the acquisition of CMA's assets in 2020. The fair value measurement guidance was also applied in estimating the fair value of preferred stock, long-term debt and long-term debt.RRBs.
Fair Value Hierarchy: In measuring fair value, Eversource uses observable market data when available in order to minimize the use of unobservable inputs. Inputs used in fair value measurements are categorized into three fair value hierarchy levels for disclosure purposes. The entire fair value measurement is categorized based on the lowest level of input that is significant to the fair value measurement. Eversource evaluates the classification of assets and liabilities measured at fair value on a quarterly basis, and Eversource's policy is to recognize transfers between levels of the fair value hierarchy as of the end of the reporting period.basis. The three levels of the fair value hierarchy are described below:
Level 1 - Inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities as of the reporting date. Active markets are those in which transactions for the asset or liability occur in sufficient frequency and volume to provide pricing information on an ongoing basis.
Level 2 - Inputs are quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active, and model-derived valuations in which all significant inputs are observable.
Level 3 - Quoted market prices are not available. Fair value is derived from valuation techniques in which one or more significant inputs or assumptions are unobservable. Where possible, valuation techniques incorporate observable market inputs that can be validated to external sources such as industry exchanges, including prices of energy and energy-related products.
Uncategorized - Investments that are measured at net asset value are not categorized within the fair value hierarchy.
Determination of Fair Value: The valuation techniques and inputs used in Eversource's fair value measurements are described in Note 4, "Derivative Instruments," Note 5, "Marketable Securities," and Note 10, "Fair Value of Financial Instruments," to the financial statements.
E. Other Income, Net
Items included withinThe components of Other Income, Net on the statements of income primarily consistwere as follows:
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| For the Three Months Ended |
| September 30, 2021 | | September 30, 2020 |
(Millions of Dollars) | Eversource | | CL&P | | NSTAR Electric | | PSNH | | Eversource | | CL&P | | NSTAR Electric | | PSNH |
Pension, SERP and PBOP Non-Service Income Components | $ | 21.7 | | | $ | 4.2 | | | $ | 10.1 | | | $ | 2.5 | | | $ | 11.0 | | | $ | 0.9 | | | $ | 7.2 | | | $ | 1.8 | |
AFUDC Equity | 10.3 | | | 1.7 | | | 6.2 | | | 0.3 | | | 10.3 | | | 3.5 | | | 5.5 | | | 0.9 | |
Equity in Earnings of Unconsolidated Affiliates (1) | 4.9 | | | — | | | 0.1 | | | — | | | 3.9 | | | — | | | 0.1 | | | — | |
Investment (Loss)/Income | (0.6) | | | (0.3) | | | (0.2) | | | (0.1) | | | 1.0 | | | 1.3 | | | (0.2) | | | 0.2 | |
Interest Income | 7.3 | | | 1.3 | | | 3.9 | | | 0.4 | | | 1.5 | | | 0.2 | | | 0.1 | | | 1.2 | |
Gain on Sale of Property | — | | | — | | | — | | | — | | | 1.5 | | | — | | | — | | | — | |
Other | 0.2 | | | — | | | 0.1 | | | 0.1 | | | — | | | — | | | 0.1 | | | — | |
Total Other Income, Net | $ | 43.8 | | | $ | 6.9 | | | $ | 20.2 | | | $ | 3.2 | | | $ | 29.2 | | | $ | 5.9 | | | $ | 12.8 | | | $ | 4.1 | |
| | | | | | | | | | | | | | | |
| For the Nine Months Ended |
| September 30, 2021 | | September 30, 2020 |
(Millions of Dollars) | Eversource | | CL&P | | NSTAR Electric | | PSNH | | Eversource | | CL&P | | NSTAR Electric | | PSNH |
Pension, SERP and PBOP Non-Service Income Components | $ | 63.9 | | | $ | 11.2 | | | $ | 30.3 | | | $ | 7.9 | | | $ | 34.3 | | | $ | 3.0 | | | $ | 22.2 | | | $ | 5.2 | |
AFUDC Equity | 28.7 | | | 5.1 | | | 18.6 | | | 1.2 | | | 31.8 | | | 11.4 | | | 15.8 | | | 3.5 | |
Equity in Earnings of Unconsolidated Affiliates (1) | 13.3 | | | — | | | 0.3 | | | — | | | 13.8 | | | — | | | 0.4 | | | — | |
Investment Income/(Loss) | 0.7 | | | 1.2 | | | 0.6 | | | 0.3 | | | (1.5) | | | — | | | (1.5) | | | 0.1 | |
Interest Income | 17.2 | | | 4.1 | | | 8.8 | | | 2.0 | | | 3.3 | | | 1.8 | | | 0.7 | | | 2.0 | |
Gain on Sale of Property | 0.1 | | | — | | | — | | | 0.1 | | | 1.8 | | | — | | | 0.3 | | | — | |
Other | 0.7 | | | 0.1 | | | 0.3 | | | 0.1 | | | 0.1 | | | 0.1 | | | 0.3 | | | 0.1 | |
Total Other Income, Net | $ | 124.6 | | | $ | 21.7 | | | $ | 58.9 | | | $ | 11.6 | | | $ | 83.6 | | | $ | 16.3 | | | $ | 38.2 | | | $ | 10.9 | |
(1) Equity in earnings of income/(loss) related to equity method investments,unconsolidated affiliates includes $2.1 million of pre-tax unrealized gains associated with an investment income/(loss), interest income and AFUDC related to equity funds. Forin a renewable energy fund for the three and nine months ended September 30, 2017, Eversource had equity in earnings of $5.1 million and $23.0 million, respectively, related to its equity method investments.2021. For the three and nine months ended September 30, 2016 Eversource had2020, equity in earnings of $0.9unconsolidated affiliates included $2.4 million and losses of $2.0 million, respectively, related to its equity method investments. Investment income/(loss) primarily relates to debt and equity securities held in trust. For further information, see Note 5, "Marketable Securities," to the financial statements.realized gains associated with this investment.
F. Other Taxes
GrossEversource's companies that serve customers in Connecticut collect gross receipts taxes levied by the state of Connecticut are collected by CL&P and Yankee Gas from their respective customers. These gross receipts taxes are shownrecorded separately with collections in Operating Revenues and with payments in Taxes Other Than Income Taxes on the statements of income as follows:
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| For the Three Months Ended | | For the Nine Months Ended |
(Millions of Dollars) | September 30, 2021 | | September 30, 2020 | | September 30, 2021 | | September 30, 2020 |
Eversource | $ | 49.4 | | | $ | 48.4 | | | $ | 137.9 | | | $ | 129.1 | |
CL&P | 46.1 | | | 45.6 | | | 120.7 | | | 114.2 |
|
| | | | | | | | | | | | | | | |
| For the Three Months Ended | | For the Nine Months Ended |
(Millions of Dollars) | September 30, 2017 | | September 30, 2016 | | September 30, 2017 | | September 30, 2016 |
Eversource | $ | 40.3 |
| | $ | 45.1 |
| | $ | 118.2 |
| | $ | 124.8 |
|
CL&P | 37.8 |
| | 42.6 |
| | 103.5 |
| | 112.2 |
|
As agents for state and local governments, Eversource's companies that serve customers in Connecticut and Massachusetts collect certain sales taxes that are recorded on a net basis with no impact on the statements of income.
G. Supplemental Cash Flow Information
Non-cash investing activities include plant additions included in Accounts Payable as follows:
| | | | | | | | | | | |
(Millions of Dollars) | As of September 30, 2021 | | As of September 30, 2020 |
Eversource | $ | 359.6 | | | $ | 357.4 | |
CL&P | 75.3 | | | 97.8 | |
NSTAR Electric | 94.2 | | | 92.6 | |
PSNH | 32.8 | | | 50.0 | |
|
| | | | | | | |
(Millions of Dollars) | As of September 30, 2017 | | As of September 30, 2016 |
Eversource | $ | 307.7 |
| | $ | 203.6 |
|
CL&P | 113.4 |
| | 64.5 |
|
NSTAR Electric | 55.4 |
| | 39.4 |
|
PSNH | 39.6 |
| | 31.0 |
|
WMECO | 37.1 |
| | 17.6 |
|
The following table reconciles cash as reported on the balance sheets to the cash and restricted cash balance as reported on the statements of cash flows: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| As of September 30, 2021 | | As of December 31, 2020 |
(Millions of Dollars) | Eversource | | CL&P | | NSTAR Electric | | PSNH | | Eversource | | CL&P | | NSTAR Electric | | PSNH |
Cash as reported on the Balance Sheets | $ | 88.2 | | | $ | 62.8 | | | $ | 3.5 | | | $ | 3.9 | | | $ | 106.6 | | | $ | 90.8 | | | $ | 0.1 | | | $ | 0.1 | |
Restricted cash included in: | | | | | | | | | | | | | | | |
Special Deposits | 55.5 | | | 8.7 | | | 17.2 | | | 18.6 | | | 73.6 | | | 8.7 | | | 17.2 | | | 36.8 | |
Marketable Securities | 29.7 | | | 0.3 | | | 0.1 | | | 0.5 | | | 41.2 | | | 0.3 | | | 0.1 | | | 0.6 | |
Other Long-Term Assets | 44.7 | | | — | | | — | | | 3.2 | | | 43.6 | | | — | | | — | | | 2.1 | |
Cash and Restricted Cash as reported on the Statements of Cash Flows | $ | 218.1 | | | $ | 71.8 | | | $ | 20.8 | | | $ | 26.2 | | | $ | 265.0 | | | $ | 99.8 | | | $ | 17.4 | | | $ | 39.6 | |
Special Deposits represent cash collections related to the PSNH RRB customer charges that are held in trust, required ISO-NE cash deposits, and CYAPC and YAEC cash balances. Special Deposits are included in Current Assets on the balance sheets. Restricted cash included in Marketable Securities represents money market funds held in trusts to fund certain non-qualified executive benefits and restricted trusts to fund CYAPC and YAEC's spent nuclear fuel storage obligations. Restricted cash included in Other Long-Term Assets includes $41.5 million related to an Energy Relief Fund for energy efficiency and clean energy measures in the Merrimack Valley, and an additional energy efficiency program established under the terms of the EGMA settlement agreement.
2. REGULATORY ACCOUNTING
Eversource's Regulatedutility companies are subject to rate regulation that is based on cost recovery and meets the criteria for application of accounting guidance for rate-regulated operations, which considers the effect of regulation on the timing of the recognition of certain revenues and expenses. The Regulatedregulated companies' financial statements reflect the effects of the rate-making process. The rates charged to the customers of Eversource's Regulatedregulated companies are designed to collect each company's costs to provide service, includingplus a return on investment.
The application of accounting guidance for rate-regulated enterprises results in recording regulatory assets and liabilities. Regulatory assets represent the deferral of incurred costs that are probable of future recovery in customer rates. Regulatory assets are amortized as the incurred costs are recovered through customer rates. Regulatory liabilities represent either revenues received from customers to fund expected costs that have not yet been incurred or probable future refunds to customers.
Management believes it is probable that each of the Regulatedregulated companies will recover its respective investments in long-lived assets includingand the regulatory assets.assets that have been recorded. If management were to determine that it could no longer apply the accounting guidance applicable to rate-regulated enterprises, to any of the Regulated companies' operations, or if management could not conclude it is probable that costs would be recovered from customers in future rates, the applicable costs would be charged to net income in the period in which the determination is made.
Regulatory Assets: The components of regulatory assets were as follows:
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| As of September 30, 2021 | | As of December 31, 2020 |
(Millions of Dollars) | Eversource | | CL&P | | NSTAR Electric | | PSNH | | Eversource | | CL&P | | NSTAR Electric | | PSNH |
Benefit Costs | $ | 2,566.1 | | | $ | 540.2 | | | $ | 638.4 | | | $ | 249.7 | | | $ | 2,794.2 | | | $ | 632.3 | | | $ | 690.0 | | | $ | 267.6 | |
Income Taxes, Net | 756.4 | | | 458.1 | | | 113.8 | | | 18.7 | | | 747.1 | | | 458.9 | | | 110.4 | | | 15.2 | |
Securitized Stranded Costs | 489.7 | | | — | | | — | | | 489.7 | | | 522.1 | | | — | | | — | | | 522.1 | |
Storm Restoration Costs, Net | 944.2 | | | 674.2 | | | 198.1 | | | 71.9 | | | 765.6 | | | 515.1 | | | 186.4 | | | 64.1 | |
Regulatory Tracker Mechanisms | 883.0 | | | 304.6 | | | 320.0 | | | 76.8 | | | 850.5 | | | 246.6 | | | 332.2 | | | 95.3 | |
Derivative Liabilities | 265.3 | | | 265.3 | | | — | | | — | | | 296.3 | | | 293.1 | | | — | | | — | |
Goodwill-related | 302.0 | | | — | | | 259.3 | | | — | | | 314.7 | | | — | | | 270.2 | | | — | |
Asset Retirement Obligations | 121.6 | | | 33.7 | | | 57.8 | | | 4.0 | | | 118.4 | | | 32.1 | | | 58.6 | | | 3.9 | |
Other Regulatory Assets | 146.9 | | | 31.0 | | | 48.7 | | | 16.9 | | | 161.0 | | | 33.7 | | | 56.1 | | | 20.9 | |
Total Regulatory Assets | 6,475.2 | | | 2,307.1 | | | 1,636.1 | | | 927.7 | | | 6,569.9 | | | 2,211.8 | | | 1,703.9 | | | 989.1 | |
Less: Current Portion | 1,016.3 | | | 325.3 | | | 388.4 | | | 97.9 | | | 1,076.6 | | | 345.6 | | | 399.9 | | | 115.9 | |
Total Long-Term Regulatory Assets | $ | 5,458.9 | | | $ | 1,981.8 | | | $ | 1,247.7 | | | $ | 829.8 | | | $ | 5,493.3 | | | $ | 1,866.2 | | | $ | 1,304.0 | | | $ | 873.2 | |
|
| | | | | | | |
Eversource | As of September 30, 2017 | | As of December 31, 2016 |
(Millions of Dollars) | |
Benefit Costs | $ | 1,793.8 |
| | $ | 1,817.8 |
|
Derivative Liabilities | 385.1 |
| | 423.3 |
|
Income Taxes, Net | 652.7 |
| | 644.5 |
|
Storm Restoration Costs | 330.1 |
| | 385.3 |
|
Goodwill-related | 449.0 |
| | 464.4 |
|
Regulatory Tracker Mechanisms | 470.7 |
| | 576.6 |
|
Asset Retirement Obligations | 104.8 |
| | 99.3 |
|
Other Regulatory Assets | 65.8 |
| | 115.1 |
|
Total Regulatory Assets | 4,252.0 |
| | 4,526.3 |
|
Less: Current Portion | 746.1 |
| | 887.6 |
|
Total Long-Term Regulatory Assets | $ | 3,505.9 |
| | $ | 3,638.7 |
|
CL&P Deferred Storm Costs: In 2021 and 2020, multiple tropical and severe storms caused extensive damage to CL&P’s electric distribution systems and customer outages, along with significant pre-staging costs. These storms resulted in deferred pre-staging and storm restoration costs of $195 million for 2021 storms and $344 million for 2020 storms, including the catastrophic impact of Tropical Storm Isaias in August 2020, among others. Management believes all these storm costs were prudently incurred and meet the criteria for specific cost recovery. |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| As of September 30, 2017 | | As of December 31, 2016 |
(Millions of Dollars) | CL&P | | NSTAR Electric | | PSNH | | WMECO | | CL&P | | NSTAR Electric | | PSNH | | WMECO |
Benefit Costs | $ | 415.8 |
| | $ | 436.7 |
| | $ | 183.2 |
| | $ | 84.8 |
| | $ | 429.3 |
| | $ | 438.6 |
| | $ | 184.2 |
| | $ | 86.7 |
|
Derivative Liabilities | 381.6 |
| | 2.4 |
| | — |
| | — |
| | 420.5 |
| | 2.8 |
| | — |
| | — |
|
Income Taxes, Net | 441.1 |
| | 92.4 |
| | 22.3 |
| | 30.5 |
| | 437.0 |
| | 89.7 |
| | 24.2 |
| | 30.8 |
|
Storm Restoration Costs | 195.7 |
| | 112.4 |
| | 9.2 |
| | 12.8 |
| | 239.8 |
| | 112.5 |
| | 17.1 |
| | 15.9 |
|
Goodwill-related | — |
| | 385.5 |
| | — |
| | — |
| | — |
| | 398.7 |
| | — |
| | — |
|
Regulatory Tracker Mechanisms | 87.9 |
| | 201.1 |
| | 108.0 |
| | 44.4 |
| | 123.9 |
| | 257.3 |
| | 104.5 |
| | 46.7 |
|
Asset Retirement Obligations | 35.1 |
| | 33.9 |
| | 16.8 |
| | 4.5 |
| | 33.2 |
| | 31.9 |
| | 16.2 |
| | 4.2 |
|
Other Regulatory Assets | 30.0 |
| | 15.5 |
| | 17.6 |
| | 5.4 |
| | 43.4 |
| | 15.6 |
| | 16.5 |
| | 7.1 |
|
Total Regulatory Assets | 1,587.2 |
|
| 1,279.9 |
|
| 357.1 |
|
| 182.4 |
|
| 1,727.1 |
|
| 1,347.1 |
|
| 362.7 |
|
| 191.4 |
|
Less: Current Portion | 275.0 |
| | 230.6 |
| | 112.5 |
| | 60.6 |
| | 335.5 |
| | 289.4 |
| | 117.2 |
| | 64.1 |
|
Total Long-Term Regulatory Assets | $ | 1,312.2 |
|
| $ | 1,049.3 |
|
| $ | 244.6 |
|
| $ | 121.8 |
|
| $ | 1,391.6 |
|
| $ | 1,057.7 |
|
| $ | 245.5 |
|
| $ | 127.3 |
|
Regulatory Costs in Other Long-Term Assets: Eversource's Regulatedregulated companies had $108.7$260.6 million (including $3.9$111.2 million for CL&P, $42.3$85.1 million for NSTAR Electric $18.5and $3.2 million for PSNH,PSNH) and $25.7 million for WMECO) and $86.3$196.9 million (including $5.9$84.1 million for CL&P, $35.0$69.8 million for NSTAR Electric $8.2and $4.3 million for PSNH, and $20.1 million for WMECO)PSNH) of additional regulatory costs as of September 30, 20172021 and December 31, 2016,2020, respectively, that were included in Other Long-Term Assetslong-term assets on the balance sheets. These amounts represent incurred costs for which recovery has not yet been specifically approved by the applicable regulatory agency. However, based on regulatory policies or past precedent on similar costs, management believes it is probable that these costs will ultimately be approved and recovered from customers in rates.
As of September 30, 2021 and December 31, 2020, these regulatory costs included net incremental COVID-19 related costs deferred of $41.3 million and $24.0 million at Eversource, respectively, of which, $34.5 million and $15.8 million, respectively, related to non-tracked uncollectible expense and the remainder related to facilities and fleet cleaning, sanitizing costs and supplies for personal protective equipment. Net incremental COVID-19 related costs deferred at CL&P and NSTAR Electric totaled $15.9 million and $10.9 million, respectively, as of September 30, 2021, and $4.7 million and $11.9 million, respectively, as of December 31, 2020, and primarily related to deferred non-tracked uncollectible expense.
Regulatory Liabilities: The components of regulatory liabilities were as follows:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| As of September 30, 2021 | | As of December 31, 2020 |
(Millions of Dollars) | Eversource | | CL&P | | NSTAR Electric | | PSNH | | Eversource | | CL&P | | NSTAR Electric | | PSNH |
EDIT due to Tax Cuts and Jobs Act of 2017 | $ | 2,737.1 | | | $ | 1,001.5 | | | $ | 1,025.6 | | | $ | 363.9 | | | $ | 2,778.6 | | | $ | 1,010.7 | | | $ | 1,044.0 | | | $ | 371.5 | |
Cost of Removal | 676.7 | | | 117.0 | | | 384.1 | | | 19.0 | | | 624.8 | | | 98.4 | | | 363.6 | | | 12.9 | |
Benefit Costs | 65.9 | | | — | | | 56.5 | | | — | | | 83.6 | | | — | | | 72.5 | | | — | |
Regulatory Tracker Mechanisms | 484.5 | | | 208.9 | | | 180.6 | | | 87.5 | | | 366.5 | | | 148.9 | | | 139.7 | | | 47.8 | |
AFUDC - Transmission | 79.6 | | | 43.6 | | | 36.0 | | | — | | | 76.8 | | | 44.6 | | | 32.2 | | | — | |
CL&P Settlement Agreement and Storm Performance Penalty | 103.4 | | | 103.4 | | | — | | | — | | | — | | | — | | | — | | | — | |
Other Regulatory Liabilities | 373.3 | | | 50.4 | | | 84.6 | | | 15.8 | | | 309.9 | | | 39.5 | | | 63.2 | | | 9.8 | |
Total Regulatory Liabilities | 4,520.5 | | | 1,524.8 | | | 1,767.4 | | | 486.2 | | | 4,240.2 | | | 1,342.1 | | | 1,715.2 | | | 442.0 | |
Less: Current Portion | 612.9 | | | 311.3 | | | 205.8 | | | 96.8 | | | 389.4 | | | 137.2 | | | 164.8 | | | 58.8 | |
Total Long-Term Regulatory Liabilities | $ | 3,907.6 | | | $ | 1,213.5 | | | $ | 1,561.6 | | | $ | 389.4 | | | $ | 3,850.8 | | | $ | 1,204.9 | | | $ | 1,550.4 | | | $ | 383.2 | |
|
| | | | | | | |
Eversource | As of September 30, 2017 | | As of December 31, 2016 |
(Millions of Dollars) | |
Cost of Removal | $ | 470.3 |
| | $ | 459.7 |
|
Benefit Costs | 125.5 |
| | 136.2 |
|
Regulatory Tracker Mechanisms | 175.8 |
| | 145.3 |
|
AFUDC - Transmission | 65.4 |
| | 65.8 |
|
Other Regulatory Liabilities | 33.4 |
| | 42.1 |
|
Total Regulatory Liabilities | 870.4 |
| | 849.1 |
|
Less: Current Portion | 170.2 |
| | 146.8 |
|
Total Long-Term Regulatory Liabilities | $ | 700.2 |
| | $ | 702.3 |
|
Recent Regulatory Developments: |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| As of September 30, 2017 | | As of December 31, 2016 |
(Millions of Dollars) | CL&P | | NSTAR Electric | | PSNH | | WMECO | | CL&P | | NSTAR Electric | | PSNH | | WMECO |
Cost of Removal | $ | 40.5 |
| | $ | 278.8 |
| | $ | 40.5 |
| | $ | 11.7 |
| | $ | 38.8 |
| | $ | 271.6 |
| | $ | 44.1 |
| | $ | 8.6 |
|
Benefit Costs | — |
| | 106.0 |
| | — |
| | — |
| | — |
| | 113.1 |
| | — |
| | — |
|
Regulatory Tracker Mechanisms | 57.1 |
| | 65.5 |
| | 5.6 |
| | 12.7 |
| | 37.2 |
| | 63.7 |
| | 10.7 |
| | 14.7 |
|
AFUDC - Transmission | 49.2 |
| | 7.7 |
| | — |
| | 8.5 |
| | 50.2 |
| | 6.9 |
| | — |
| | 8.7 |
|
Other Regulatory Liabilities | 21.3 |
| | 0.4 |
| | 2.6 |
| | — |
| | 21.0 |
| | 0.2 |
| | 2.7 |
| | 0.1 |
|
Total Regulatory Liabilities | 168.1 |
|
| 458.4 |
|
| 48.7 |
|
| 32.9 |
|
| 147.2 |
|
| 455.5 |
|
| 57.5 |
|
| 32.1 |
|
Less: Current Portion | 69.3 |
| | 65.5 |
| | 7.9 |
| | 10.2 |
| | 47.1 |
| | 63.7 |
| | 12.7 |
| | 14.9 |
|
Total Long-Term Regulatory Liabilities | $ | 98.8 |
|
| $ | 392.9 |
|
| $ | 40.8 |
|
| $ | 22.7 |
|
| $ | 100.1 |
|
| $ | 391.8 |
|
| $ | 44.8 |
|
| $ | 17.2 |
|
CL&P Tropical Storm Isaias Costs: On August 4, 2020, Tropical Storm Isaias caused catastrophic damage to our electric distribution system, which resulted in significant numbers and durations of customer outages, primarily in Connecticut. In terms of customer outages, this storm was one of the worst in CL&P’s history. PURA will investigate the prudence of costs incurred by CL&P to restore service in response to Tropical Storm Isaias. That investigation is expected to occur either in a separate proceeding not yet initiated or as part of CL&P’s next rate review proceeding. Tropical Storm Isaias resulted in deferred storm restoration costs of approximately $234 million at CL&P and $251 million at Eversource as of September 30, 2021. The estimated cost of restoration may continue to change as additional cost information becomes available and final post-storm costs are deferred or capitalized. Although PURA found that CL&P’s performance in its preparation for and response to Tropical Storm Isaias fell below applicable performance standards in certain instances, CL&P believes it will be able to present credible evidence in a future proceeding demonstrating there is no reasonably close causal connection between the alleged sub-standard performance and the storm costs incurred. While it is possible that some amount of storm costs may be disallowed by PURA in a future proceeding, any such amount cannot be estimated at this time. Eversource and CL&P continue to believe that these storm restoration costs associated with Tropical Storm Isaias were prudently incurred and meet the criteria for cost recovery; and as a result, management does not expect the storm cost review by PURA to have a material impact on the financial position or results of operations of Eversource or CL&P.
CL&P Tropical Storm Isaias Response Investigation: On April 28, 2021, PURA issued a final decision on CL&P’s compliance with its emergency response plan that concluded CL&P failed to comply with certain storm performance standards and was imprudent in certain instances. The $28.4 million performance penalty assessed by PURA was recorded within current regulatory liabilities on CL&P’s balance sheet. See Note 9G, “Commitments and Contingencies - CL&P Regulatory Matters,” for further information.
CL&P Settlement Agreement: On October 1, 2021, CL&P entered into a settlement agreement with the DEEP, Office of Consumer Counsel (OCC), Office of the Attorney General (AG) and the Connecticut Industrial Energy Consumers, resolving certain issues that arose in pending regulatory proceedings initiated by the PURA. In the third quarter of 2021, CL&P recorded a current regulatory liability of $75 million on the balance sheet associated with the provisions of the settlement agreement. See Note 9G, “Commitments and Contingencies - CL&P Regulatory Matters,” for further information.
3. PROPERTY, PLANT AND EQUIPMENT AND ACCUMULATED DEPRECIATION
The following tables summarize property, plant and equipment by asset category:
| | | | | | | | | | | |
Eversource | As of September 30, 2021 | | As of December 31, 2020 |
(Millions of Dollars) | |
Distribution - Electric | $ | 17,257.3 | | | $ | 16,703.2 | |
Distribution - Natural Gas | 6,334.9 | | | 6,111.2 | |
Transmission - Electric | 12,396.2 | | | 11,954.0 | |
Distribution - Water | 1,771.1 | | | 1,743.1 | |
Solar | 200.4 | | | 201.5 | |
Utility | 37,959.9 | | | 36,713.0 | |
Other (1) | 1,430.5 | | | 1,269.0 | |
Property, Plant and Equipment, Gross | 39,390.4 | | | 37,982.0 | |
Less: Accumulated Depreciation | | | |
Utility | (8,830.2) | | | (8,476.3) | |
Other | (550.0) | | | (477.6) | |
Total Accumulated Depreciation | (9,380.2) | | | (8,953.9) | |
Property, Plant and Equipment, Net | 30,010.2 | | | 29,028.1 | |
Construction Work in Progress | 2,456.9 | | | 1,854.4 | |
Total Property, Plant and Equipment, Net | $ | 32,467.1 | | | $ | 30,882.5 | |
|
| | | | | | | |
Eversource | As of September 30, 2017 | | As of December 31, 2016 |
(Millions of Dollars) | |
Distribution - Electric | $ | 14,217.3 |
| | $ | 13,716.9 |
|
Distribution - Natural Gas | 3,158.1 |
| | 3,010.4 |
|
Transmission - Electric | 8,918.2 |
| | 8,517.4 |
|
Generation | 1,215.8 |
| | 1,224.2 |
|
Electric and Natural Gas Utility | 27,509.4 |
| | 26,468.9 |
|
Other (1) | 679.9 |
| | 591.6 |
|
Property, Plant and Equipment, Gross | 28,189.3 |
| | 27,060.5 |
|
Less: Accumulated Depreciation | | | |
Electric and Natural Gas Utility | (6,838.5 | ) | | (6,480.4 | ) |
Other | (274.4 | ) | | (242.0 | ) |
Total Accumulated Depreciation | (7,112.9 | ) | | (6,722.4 | ) |
Property, Plant and Equipment, Net | 21,076.4 |
| | 20,338.1 |
|
Construction Work in Progress (2) | 1,460.9 |
| | 1,012.4 |
|
Total Property, Plant and Equipment, Net | $ | 22,537.3 |
| | $ | 21,350.5 |
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| As of September 30, 2021 | | As of December 31, 2020 |
(Millions of Dollars) | CL&P | | NSTAR Electric | | PSNH | | CL&P | | NSTAR Electric | | PSNH |
Distribution - Electric | $ | 7,028.9 | | | $ | 7,798.8 | | | $ | 2,469.9 | | | $ | 6,820.7 | | | $ | 7,544.4 | | | $ | 2,378.4 | |
Transmission - Electric | 5,707.9 | | | 4,884.0 | | | 1,805.9 | | | 5,512.0 | | | 4,701.3 | | | 1,742.4 | |
Solar | — | | | 200.4 | | | — | | | — | | | 201.5 | | | — | |
Property, Plant and Equipment, Gross | 12,736.8 | | | 12,883.2 | | | 4,275.8 | | | 12,332.7 | | | 12,447.2 | | | 4,120.8 | |
Less: Accumulated Depreciation | (2,574.6) | | | (3,220.7) | | | (895.4) | | | (2,475.4) | | | (3,074.1) | | | (848.9) | |
Property, Plant and Equipment, Net | 10,162.2 | | | 9,662.5 | | | 3,380.4 | | | 9,857.3 | | | 9,373.1 | | | 3,271.9 | |
Construction Work in Progress | 436.6 | | | 949.2 | | | 148.7 | | | 377.3 | | | 750.0 | | | 102.4 | |
Total Property, Plant and Equipment, Net | $ | 10,598.8 | | | $ | 10,611.7 | | | $ | 3,529.1 | | | $ | 10,234.6 | | | $ | 10,123.1 | | | $ | 3,374.3 | |
(1) These assets are primarily comprised of building improvements, computer software, hardware and equipment at Eversource Service.Service and buildings at The Rocky River Realty Company.
(2) As of September 30, 2017, the total CWIP related to NPT was approximately $201 million.
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| As of September 30, 2017 | | As of December 31, 2016 |
(Millions of Dollars) | CL&P | | NSTAR Electric | | PSNH | | WMECO | | CL&P | | NSTAR Electric | | PSNH | | WMECO |
Distribution | $ | 5,797.6 |
| | $ | 5,543.1 |
| | $ | 2,048.8 |
| | $ | 868.1 |
| | $ | 5,562.9 |
| | $ | 5,402.3 |
| | $ | 1,949.8 |
| | $ | 841.9 |
|
Transmission | 4,061.2 |
| | 2,545.0 |
| | 1,115.7 |
| | 1,147.9 |
| | 3,912.9 |
| | 2,435.8 |
| | 1,059.3 |
| | 1,061.1 |
|
Generation | — |
| | — |
| | 1,179.8 |
| | 36.0 |
| | — |
| | — |
| | 1,188.2 |
| | 36.0 |
|
Property, Plant and Equipment, Gross | 9,858.8 |
| | 8,088.1 |
| | 4,344.3 |
| | 2,052.0 |
| | 9,475.8 |
| | 7,838.1 |
| | 4,197.3 |
| | 1,939.0 |
|
Less: Accumulated Depreciation | (2,207.0 | ) | | (2,143.8 | ) | | (1,315.7 | ) | | (356.5 | ) | | (2,082.4 | ) | | (2,025.4 | ) | | (1,254.7 | ) | | (338.8 | ) |
Property, Plant and Equipment, Net | 7,651.8 |
| | 5,944.3 |
| | 3,028.6 |
| | 1,695.5 |
| | 7,393.4 |
| | 5,812.7 |
| | 2,942.6 |
| | 1,600.2 |
|
Construction Work in Progress | 456.2 |
| | 324.4 |
| | 139.3 |
| | 74.1 |
| | 239.0 |
| | 239.1 |
| | 96.7 |
| | 78.1 |
|
Total Property, Plant and Equipment, Net | $ | 8,108.0 |
| | $ | 6,268.7 |
| | $ | 3,167.9 |
| | $ | 1,769.6 |
| | $ | 7,632.4 |
| | $ | 6,051.8 |
| | $ | 3,039.3 |
| | $ | 1,678.3 |
|
4. DERIVATIVE INSTRUMENTS
The Regulatedelectric and natural gas companies purchase and procure energy and energy-related products, which are subject to price volatility, for their customers. The costs associated with supplying energy to customers are recoverable from customers in future rates. The RegulatedThese regulated companies manage the risks associated with the price volatility of energy and energy-related products through the use of derivative and non-derivative contracts.
Many of the derivative contracts meet the definition of, and are designated as, normal and qualify for accrual accounting under the applicable accounting guidance. The costs and benefits of derivative contracts that meet the definition of normal are recognized in Operating Expenses or Operating Revenues on the statements of income, as applicable, as electricity or natural gas is delivered.
Derivative contracts that are not designated as normal are recorded at fair value as current or long-term Derivative Assets or Derivative Liabilities on the balance sheets. For the Regulatedelectric and natural gas companies, regulatory assets or regulatory liabilities are recorded to offset the fair values of derivatives, as contract settlement amounts are recovered from, or refunded to, customers in their respective energy supply rates.
The gross fair values of derivative assets and liabilities with the same counterparty are offset and reported as net Derivative Assets or Derivative Liabilities, with current and long-term portions, on the balance sheets. The following table presents the gross fair values of contracts, categorized by risk type, and the net amounts recorded as current or long-term derivative assets or liabilities:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | As of September 30, 2021 | | As of December 31, 2020 |
(Millions of Dollars) | Fair Value Hierarchy | | Commodity Supply and Price Risk Management | | Netting (1) | | Net Amount Recorded as a Derivative | | Commodity Supply and Price Risk Management | | Netting (1) | | Net Amount Recorded as a Derivative |
Current Derivative Assets: | | | | | | | | | | | | | |
CL&P | Level 3 | | $ | 14.4 | | | $ | (0.4) | | | $ | 14.0 | | | $ | 13.7 | | | $ | (0.4) | | | $ | 13.3 | |
Long-Term Derivative Assets: | | | | | | | | | | | | | |
CL&P | Level 3 | | 51.1 | | | (1.6) | | | 49.5 | | | 58.7 | | | (1.8) | | | 56.9 | |
Current Derivative Liabilities: | | | | | | | | | | | | | |
CL&P | Level 3 | | (72.2) | | | — | | | (72.2) | | | (68.8) | | | — | | | (68.8) | |
Other | Level 2 | | — | | | — | | | — | | | (3.3) | | | 0.1 | | | (3.2) | |
Long-Term Derivative Liabilities: | | | | | | | | | | | | | |
CL&P | Level 3 | | (256.6) | | | — | | | (256.6) | | | (294.5) | | | — | | | (294.5) | |
|
| | | | | | | | | | | | | | | | | | | | | | | |
| As of September 30, 2017 | | As of December 31, 2016 |
(Millions of Dollars) | Commodity Supply and Price Risk Management | | Netting (1) | | Net Amount Recorded as a Derivative | | Commodity Supply and Price Risk Management | | Netting (1) | | Net Amount Recorded as a Derivative |
Current Derivative Assets: | | | | | | | | | | | |
Level 2: | | | | | | | | | | | |
Eversource | $ | — |
| | $ | — |
| | $ | — |
| | $ | 6.0 |
| | $ | — |
| | $ | 6.0 |
|
Level 3: | | | | | | | | | | | |
CL&P | 10.4 |
| | (7.7 | ) | | 2.7 |
| | 13.9 |
| | (9.4 | ) | | 4.5 |
|
Long-Term Derivative Assets: | | | | | | | | | | | |
Level 2: | | | | | | | | | | | |
Eversource | $ | — |
| | $ | — |
| | $ | — |
| | $ | 0.3 |
| | $ | (0.1 | ) | | $ | 0.2 |
|
Level 3: | | | | | | | | | | | |
CL&P | 74.3 |
| | (6.9 | ) | | 67.4 |
| | 77.3 |
| | (11.7 | ) | | 65.6 |
|
Current Derivative Liabilities: | | | | | | | | | | | |
Level 2: | | | | | | | | | | | |
Eversource | $ | (1.5 | ) | | $ | 0.4 |
| | $ | (1.1 | ) | | $ | — |
| | $ | — |
| | $ | — |
|
Level 3: | | | | | | | | | | | |
Eversource | (62.2 | ) | | — |
| | (62.2 | ) | | (79.7 | ) | | — |
| | (79.7 | ) |
CL&P | (59.9 | ) | | — |
| | (59.9 | ) | | (77.8 | ) | | — |
| | (77.8 | ) |
NSTAR Electric | (2.3 | ) | | — |
| | (2.3 | ) | | (1.9 | ) | | — |
| | (1.9 | ) |
Long-Term Derivative Liabilities: | | | | | | | | | | | |
Level 3: | | | | | | | | | | | |
Eversource | $ | (391.9 | ) | | $ | — |
| | $ | (391.9 | ) | | $ | (413.7 | ) | | $ | — |
| | $ | (413.7 | ) |
CL&P | (391.8 | ) | | — |
| | (391.8 | ) | | (412.8 | ) | | — |
| | (412.8 | ) |
NSTAR Electric | (0.1 | ) | | — |
| | (0.1 | ) | | (0.9 | ) | | — |
| | (0.9 | ) |
| |
(1)
| (1)Amounts represent derivative assets and liabilities that Eversource elected to record net on the balance sheets. These amounts are subject to master netting agreements or similar agreements for which the right of offset exists. |
For further information on the fair valuebalance sheets. These amounts are subject to master netting agreements or similar agreements for which the right of derivative contracts, see Note 1D, "Summary of Significant Accounting Policies - Fair Value Measurements," to the financial statements.offset exists.
Derivative Contracts at Fair Value with Offsetting Regulatory Amounts
Commodity Supply and Price Risk Management: As required by regulation, CL&P, along with UI, has capacity-related contracts with generation facilities. CL&P has a sharing agreement with UI, with 80 percent of the costs or benefits of each contract borne by or allocated to CL&P and 20 percent borne by or allocated to UI. The combined capacitycapacities of these contracts is 787as of both September 30, 2021 and December 31, 2020 were675 MW. The capacity contracts extend through 2026 and obligate both CL&P and UI to make or receive payments on a monthly basis to or from the generation facilities based on the difference between a set capacity price and the capacity market price received in the ISO-NE capacity markets. In addition, CL&P has a contract to purchase 0.1 million MWh of energy per year through 2020.
NSTAR Electric has a renewable energy contract to purchase 0.1 million MWh of energy per year through 2018 and a capacity-related contract to purchase up to 35 MW per year through 2019.
As of September 30, 2017 and December 31, 2016,2020, Eversource had New York Mercantile Exchange ("NYMEX")(NYMEX) financial contracts for natural gas futures in order to reduce variability associated with the purchase price of approximately 10.4 million and 9.28.9 million MMBtu of natural gas, respectively.gas. These contracts were classified as Level 2 in the fair value hierarchy. NSTAR Gas terminated its financial contracts swap program in April 2021.
For the three months ended September 30, 20172021 and 2016,2020, there were gains of $0.6$0.7 million and losses of $53.4$2.6 million, respectively, deferred as regulatory costs, which reflect the change in fair value associated with Eversource's derivative contracts. For the nine months ended September 30, 20172021 and 2016, these2020, there were losses were $30.3of $9.5 million and $127.8$20.6 million, respectively.
Fair Value Measurements of Derivative Instruments
Derivative contracts classified as Level 2 in the fair value hierarchy relate to the financial contracts for natural gas futures. Prices are obtained from broker quotes and are based on actual market activity. The contracts are valued using NYMEX natural gas prices. Valuations of these contracts also incorporate discount rates using the yield curve approach.
The fair value of derivative contracts classified as Level 3 utilizes significant unobservable inputs. The fair value is modeled using income techniques, such as discounted cash flow valuations adjusted for assumptions relatingrelated to exit price. Significant observable inputs for valuations of these contracts include energy and energy-related product prices in future years for which quoted prices in an active market exist. Fair value measurements categorized in Level 3 of the fair value hierarchy are prepared by individuals with expertise in valuation techniques, pricing of energy and energy-related products, and accounting requirements. The future power and capacity prices for periods that are not quoted in an active market or established at auction are based on available market data and are escalated based on estimates of inflation in order to address the full term of the contract.
Valuations of derivative contracts using a discounted cash flow methodology include assumptions regarding the timing and likelihood of scheduled payments and also reflect non-performance risk, including credit, using the default probability approach based on the counterparty's credit rating for assets and the Company's credit rating for liabilities. Valuations incorporate estimates of premiums or discounts that would be required by a market participant to arrive at an exit price, using historical market transactions adjusted for the terms of the contract.
The following is a summary of Eversource's, including CL&P's and NSTAR Electric's, Level 3 derivative contracts and the range of the significant unobservable inputs utilized in the valuations over the duration of the contracts:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| As of September 30, 2021 | | As of December 31, 2020 | | |
CL&P | Range | | Weighted Average (1) | | | | Period Covered | | Range | | Weighted Average (1) | | | | Period Covered |
Capacity Prices | $2.61 | | $ | 2.61 | | | per kW-Month | | 2025 - 2026 | | $ | 4.30 | | | — | | $5.30 | | $ | 4.63 | | | per kW-Month | | 2024 - 2026 |
Forward Reserve Prices | $ | 0.50 | | | — | | $1.15 | | $ | 0.82 | | | per kW-Month | | 2022 - 2024 | | $ | 0.54 | | | — | | $0.90 | | $ | 0.72 | | | per kW-Month | | 2021 - 2024 |
|
| | | | | | | | | | | | | | | | | | | | | | | | | |
| As of September 30, 2017 | | As of December 31, 2016 |
| Range | | Period Covered | | Range | | Period Covered |
Capacity Prices: | | | | | | | | | | | | | | | | | | | |
CL&P | $ | 5.00 |
| | — | | 8.70 |
| | per kW-Month | | 2021 - 2026 | | $ | 5.50 |
| | — | | 8.70 |
| | per kW-Month | | 2020 - 2026 |
Forward Reserve: | | | | | | | | | | | | | | | | | | | |
CL&P | $ | 1.00 |
| | — | | 2.00 |
| | per kW-Month | | 2017 - 2024 | | $ | 1.40 |
| | — | | 2.00 |
| | per kW-Month | | 2017 - 2024 |
REC Prices: | | | | | | | | | | | | | | | | | | | |
NSTAR Electric | $ | 15.75 |
| | — | | 22.00 | | per REC | | 2017 - 2018 | | $ | 24.00 |
| | — | | 29.00 | | per REC | | 2017 - 2018 |
(1) Unobservable inputs were weighted by the relative future capacity and forward reserve prices and contractual MWs over the periods covered.
Exit price premiums of 15.5 percent through 189.8 percent, or a weighted average of 8.7 percent, are also applied onto these contracts and reflect the uncertainty and illiquidity premiums that would be required based on the most recent market activity available for similar type contracts. The risk premium was weighted by the relative fair value of the net derivative instruments.
Significant increases or decreases in future energycapacity or capacityforward reserve prices in isolation would decrease or increase, respectively, the fair value of the derivative liability. Any increases in risk premiums would increase the fair value of the derivative liability. Changes in these fair values are recorded as a regulatory asset or liability and do not impact net income.
Valuations using significant unobservable inputs:The following table presents changes in the Level 3 category of derivative assets and derivative liabilities measured at fair value on a recurring basis. The derivative assets and liabilities are presented on a net basis.
| | | | | | | | | | | | | | | | | | | | | | | |
CL&P | For the Three Months Ended September 30, | | For the Nine Months Ended September 30, |
(Millions of Dollars) | 2021 | | 2020 | | 2021 | | 2020 |
Derivatives, Net: | | | | | | | |
Fair Value as of Beginning of Period | $ | (279.7) | | | $ | (322.0) | | | $ | (293.1) | | | $ | (329.2) | |
Net Realized/Unrealized Gains/(Losses) Included in Regulatory Assets | 0.7 | | | (4.7) | | | (10.9) | | | (22.3) | |
Settlements | 13.7 | | | 14.9 | | | 38.7 | | | 39.7 | |
Fair Value as of End of Period | $ | (265.3) | | | $ | (311.8) | | | $ | (265.3) | | | $ | (311.8) | |
|
| | | | | | | | | | | | | | | | | | | | | | | |
| For the Three Months Ended September 30, |
| 2017 | | 2016 |
(Millions of Dollars) | Eversource | | CL&P | | NSTAR Electric | | Eversource | | CL&P | | NSTAR Electric |
Derivatives, Net: | | | | | | | | | | | |
Fair Value as of Beginning of Period | $ | (397.1 | ) | | $ | (394.8 | ) | | $ | (2.3 | ) | | $ | (412.6 | ) | | $ | (411.3 | ) | | $ | (1.3 | ) |
Net Realized/Unrealized Gains/Losses Included in Regulatory Assets and Liabilities | 0.5 |
| | (0.7 | ) | | 1.2 |
| | (52.3 | ) | | (49.8 | ) | | (2.5 | ) |
Settlements | 12.6 |
| | 13.9 |
| | (1.3 | ) | | 21.2 |
| | 20.1 |
| | 1.1 |
|
Fair Value as of End of Period | $ | (384.0 | ) | | $ | (381.6 | ) | | $ | (2.4 | ) | | $ | (443.7 | ) | | $ | (441.0 | ) | | $ | (2.7 | ) |
| | | | | | | | | | | |
| For the Nine Months Ended September 30, |
| 2017 | | 2016 |
(Millions of Dollars) | Eversource | | CL&P | | NSTAR Electric | | Eversource | | CL&P | | NSTAR Electric |
Derivatives, Net: | | | | | | | | | | | |
Fair Value as of Beginning of Period | $ | (423.3 | ) | | $ | (420.5 | ) | | $ | (2.8 | ) | | $ | (380.9 | ) | | $ | (380.8 | ) | | $ | (0.1 | ) |
Net Realized/Unrealized Losses Included in Regulatory Assets and Liabilities | (17.9 | ) | | (15.9 | ) | | (2.0 | ) | | (128.9 | ) | | (122.0 | ) | | (6.9 | ) |
Settlements | 57.2 |
| | 54.8 |
| | 2.4 |
| | 66.1 |
| | 61.8 |
| | 4.3 |
|
Fair Value as of End of Period | $ | (384.0 | ) | | $ | (381.6 | ) | | $ | (2.4 | ) | | $ | (443.7 | ) | | $ | (441.0 | ) | | $ | (2.7 | ) |
5. MARKETABLE SECURITIES
Eversource maintains trusts that holdholds marketable securities that are primarily used to fund certain non-qualified executive benefits. TheseThe trusts that hold marketable securities are not subject to regulatory oversight by state or federal agencies. CYAPC and YAEC maintain legally restricted trusts, each of which holds marketable securities, to fund the spent nuclear fuel removal obligations of their nuclear fuel storage facilities.
TradingEquity Securities: Eversource has elected to record certain Unrealized gains and losses on equity securities as trading securities, with the changesheld in fair valuesEversource's non-qualified executive benefit trust are recorded in Other Income, Net on the statements of income. As of December 31, 2016, these securities were classified as Level 1 in theThe fair value hierarchy and totaled $9.6 million. Theseof these equity securities were sold during the first quarter of 2017 and were no longer held as of September 30, 2017.2021 and December 31, 2020 was $39.2 million and $40.9 million, respectively. For the three months ended September 30, 2021 and 2020, there were unrealized losses of $0.5 million and unrealized gains of $1.6 million, respectively, recorded in Other Income, Net related to these equity securities. For the nine months ended September 30, 2016, net2021 and 2020, there were unrealized gains on these securities of $0.1$2.5 million and $0.6unrealized losses of $1.0 million, respectively, were recorded in Other Income, Net on the statements of income. Dividend income is recorded in Other Income, Net when dividends are declared. respectively.
Available-for-Sale Securities: The following is a summary of available-for-sale securities, which are recorded at fair value and are included in current and long-term Marketable Securities on the balance sheets.
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| As of September 30, 2017 | | As of December 31, 2016 |
Eversource (Millions of Dollars) | Amortized Cost | | Pre-Tax Unrealized Gains | | Pre-Tax Unrealized Losses | | Fair Value | | Amortized Cost | | Pre-Tax Unrealized Gains | | Pre-Tax Unrealized Losses | | Fair Value |
Debt Securities | $ | 286.5 |
| | $ | 5.5 |
| | $ | (0.5 | ) | | $ | 291.5 |
| | $ | 296.2 |
| | $ | 1.1 |
| | $ | (2.1 | ) | | $ | 295.2 |
|
Equity Securities | 210.7 |
| | 81.5 |
| | — |
| | 292.2 |
| | 203.3 |
| | 62.3 |
| | (1.2 | ) | | 264.4 |
|
Eversource's debt and equity securities also include CYAPC's and YAEC's marketable securities held in spent nuclear decommissioningfuel trusts, in the amountswhich had fair values of $489.1$214.9 million and $466.7$205.1 million as of September 30, 20172021 and December 31, 2016,2020, respectively. Unrealized gains and losses for these spent nuclear decommissioningfuel trusts are subject to regulatory accounting treatment and are recorded in Marketable Securities with the corresponding offset to Other Long-Term Liabilities on the balance sheets, with no impact on the statements of income.
Available-for-Sale Debt Securities: The following is a summary of the available-for-sale debt securities, which are recorded at fair value and are included in current and long-term Marketable Securities on the balance sheets.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| As of September 30, 2021 | | As of December 31, 2020 |
Eversource (Millions of Dollars) | Amortized Cost | | Pre-Tax Unrealized Gains | | Pre-Tax Unrealized Losses | | Fair Value | | Amortized Cost | | Pre-Tax Unrealized Gains | | Pre-Tax Unrealized Losses | | Fair Value |
Debt Securities | $ | 217.5 | | | $ | 8.0 | | | $ | (0.2) | | | $ | 225.3 | | | $ | 213.1 | | | $ | 11.2 | | | $ | (0.1) | | | $ | 224.2 | |
| | | | | | | | | | | | | | | |
Eversource's debt securities include CYAPC's and YAEC's marketable securities held in spent nuclear fuel trusts in the amounts of $195.2 million and $192.5 million as of September 30, 2021 and December 31, 2020, respectively.
Unrealized Lossesgains and Other-than-Temporary Impairment:losses on available-for-sale debt securities held in Eversource's non-qualified benefit trust are recorded in Accumulated Other Comprehensive Income, excluding amounts related to credit losses or losses on securities intended to be sold, which are recorded in Other Income, Net. There have been no significant unrealized losses other-than-temporary impairments orand no credit losses for the three and nine months ended September 30, 20172021 and 2016. 2020, and no allowance for credit losses as of September 30, 2021. Factors considered in determining whether a credit loss exists include the duration and severity of the impairment, adverse conditions specifically affecting the issuer, and the payment history, ratings and rating changes of the security.security, and the severity of the impairment. For asset-backed debt securities, underlying collateral and expected future cash flows are also evaluated. Debt securities included in Eversource's non-qualified benefit trust portfolio are investment-grade bonds with a lower default risk based on their credit quality.
As of September 30, 2021, the contractual maturities of available-for-sale debt securities were as follows:
| | | | | | | | | | | |
Eversource (Millions of Dollars) | Amortized Cost | | Fair Value |
Less than one year (1) | $ | 30.9 | | | $ | 30.9 | |
One to five years | 65.5 | | | 67.1 | |
Six to ten years | 41.8 | | | 43.9 | |
Greater than ten years | 79.3 | | | 83.4 | |
Total Debt Securities | $ | 217.5 | | | $ | 225.3 | |
(1) Amounts in the Less than one year category include securities in the CYAPC and YAEC spent nuclear fuel trusts, which are restricted and are classified in long-term Marketable Securities on the balance sheets.
Realized Gains and Losses: Realized gains and losses on available-for-sale securities are recorded in Other Income, Net for Eversource's non-qualified benefit trust and are offset in Other Long-Term Liabilities for CYAPC and YAEC. Eversource utilizes the specific identification basis method for the Eversource non-qualified benefit trust, and the average cost basis method for the CYAPC and YAEC spent nuclear decommissioningfuel trusts to compute the realized gains and losses on the sale of available-for-salemarketable securities.
Contractual Maturities: As of September 30, 2017, the contractual maturities of available-for-sale debt securities were as follows:
|
| | | | | | | |
Eversource (Millions of Dollars) | Amortized Cost | | Fair Value |
Less than one year (1) | $ | 40.2 |
| | $ | 40.2 |
|
One to five years | 56.7 |
| | 57.6 |
|
Six to ten years | 52.6 |
| | 54.1 |
|
Greater than ten years | 137.0 |
| | 139.6 |
|
Total Debt Securities | $ | 286.5 |
| | $ | 291.5 |
|
| |
(1)
| Amounts in the Less than one year category include securities in the CYAPC and YAEC nuclear decommissioning trusts, which are restricted and are classified in long-term Marketable Securities on the balance sheets. |
Fair Value Measurements: The following table presents the marketable securities recorded at fair value on a recurring basis by the level in which they are classified within the fair value hierarchy:
| | | | | | | | | | | |
Eversource (Millions of Dollars) | As of September 30, 2021 | | As of December 31, 2020 |
Level 1: | | | |
Mutual Funds and Equities | $ | 254.1 | | | $ | 246.0 | |
Money Market Funds | 29.7 | | | 41.2 | |
Total Level 1 | $ | 283.8 | | | $ | 287.2 | |
Level 2: | | | |
U.S. Government Issued Debt Securities (Agency and Treasury) | $ | 98.9 | | | $ | 72.9 | |
Corporate Debt Securities | 63.4 | | | 63.8 | |
Asset-Backed Debt Securities | 13.4 | | | 11.9 | |
Municipal Bonds | 6.1 | | | 24.0 | |
Other Fixed Income Securities | 13.8 | | | 10.4 | |
Total Level 2 | $ | 195.6 | | | $ | 183.0 | |
Total Marketable Securities | $ | 479.4 | | | $ | 470.2 | |
|
| | | | | | | |
Eversource (Millions of Dollars) | As of September 30, 2017 | | As of December 31, 2016 |
Level 1: | | | |
Mutual Funds and Equities | $ | 292.2 |
| | $ | 274.0 |
|
Money Market Funds | 21.8 |
| | 54.8 |
|
Total Level 1 | $ | 314.0 |
| | $ | 328.8 |
|
Level 2: | | | |
U.S. Government Issued Debt Securities (Agency and Treasury) | $ | 69.0 |
| | $ | 63.0 |
|
Corporate Debt Securities | 56.1 |
| | 41.1 |
|
Asset-Backed Debt Securities | 20.4 |
| | 18.5 |
|
Municipal Bonds | 113.6 |
| | 107.5 |
|
Other Fixed Income Securities | 10.6 |
| | 10.3 |
|
Total Level 2 | $ | 269.7 |
| | $ | 240.4 |
|
Total Marketable Securities | $ | 583.7 |
| | $ | 569.2 |
|
U.S. government issued debt securities are valued using market approaches that incorporate transactions for the same or similar bonds and adjustments for yields and maturity dates. Corporate debt securities are valued using a market approach, utilizing recent trades of the same or similar instrumentinstruments and also incorporating yield curves, credit spreads and specific bond terms and conditions. Asset-backed debt securities include collateralized mortgage obligations, commercial mortgage backed securities, and securities collateralized by auto loans, credit card loans or receivables. Asset-backed debt securities are valued using recent trades of similar instruments, prepayment assumptions, yield curves, issuance and maturity dates, and tranche information. Municipal bonds are valued using a market approach that incorporates reported trades and benchmark yields. Other fixed income securities are valued using pricing models, quoted prices of securities with similar characteristics, and discounted cash flows.
6. SHORT-TERM AND LONG-TERM DEBT
Short-Term Debt - Commercial Paper Programs and Credit Agreements: Eversource parent has a $1.45$2.00 billion commercial paper program allowing Eversource parent to issue commercial paper as a form of short-term debt. As of September 30, 2017 and December 31, 2016, Eversource parent had $917.0 million and approximately $1.0 billion, respectively, in short-term borrowings outstanding under the Eversource parent commercial paper program, leaving $533.0 million and $428.0 million of available borrowing capacity as of September 30, 2017 and December 31, 2016, respectively. The weighted-average interest rate on these borrowings as of September 30, 2017 and December 31, 2016 was 1.34 percent and 0.88 percent, respectively. As of September 30, 2017, there were intercompany loans from Eversource parent of $202.3 million to PSNH and $96.9 million to WMECO. As of December 31, 2016, there were intercompany loans from Eversource parent of $80.1 million to CL&P, $160.9 million to PSNH and $51.0 million to WMECO. Eversource parent, CL&P, PSNH, WMECO, NSTAR Gas, and Yankee Gas, EGMA and Aquarion Water Company of Connecticut are parties to a five-year $1.45$2.00 billion revolving credit facility. The revolving credit facility, which terminates on September 4, 2021. TheOctober 15, 2026. This revolving credit facility serves to backstop Eversource parent's $1.45$2.00 billion commercial paper program. There were no borrowings outstanding on the revolving credit facility as of September 30, 2017 and December 31, 2016.
Except as described below, amounts outstanding under the commercial paper programs are included in Notes Payable for Eversource and NSTAR Electric and are classified in current liabilities on the balance sheets as all borrowings are outstanding for no more than 364 days at one time. Intercompany loans from Eversource parent to CL&P, PSNH and WMECO are included in Notes Payable to Eversource Parent and are classified in current liabilities on their respective balance sheets. Intercompany loans from Eversource parent to CL&P, PSNH and WMECO are eliminated in consolidation on Eversource's balance sheets.
As a result of the October 2017 Eversource parent long-term debt issuances, the net proceeds of which were used to repay short-term borrowings outstanding under the Eversource parent commercial paper program, $898.8 million of short-term debt was reclassified to Long-Term Debt as of September 30, 2017.
NSTAR Electric has a $450$650 million commercial paper program allowing NSTAR Electric to issue commercial paper as a form of short-term debt. As of September 30, 2017, NSTAR Electric had no short-term borrowings outstanding and as of December 31, 2016, NSTAR Electric had $126.5 million in short-term borrowings outstanding under its commercial paper program, leaving $450.0 million and $323.5 million of available borrowing capacity as of September 30, 2017 and December 31, 2016, respectively. The weighted-average interest rate on these borrowings as of December 31, 2016 was 0.71 percent. NSTAR Electric is also a party to a five-year $450$650 million revolving credit facility. The revolving credit facility, which terminates on September 4, 2021.October 15, 2026. The revolving credit facility serves to backstop NSTAR Electric's $450$650 million commercial paper program.
The amount of borrowings outstanding and available under the commercial paper programs were as follows:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Borrowings Outstanding as of | | Available Borrowing Capacity as of | | Weighted-Average Interest Rate as of |
| September 30, 2021 | | December 31, 2020 | | September 30, 2021 | | December 31, 2020 | | September 30, 2021 | | December 31, 2020 |
(Millions of Dollars) | | | | | |
Eversource Parent Commercial Paper Program | $ | 653.0 | | | $ | 1,054.3 | | | $ | 1,347.0 | | | $ | 945.7 | | | 0.18 | % | | 0.25 | % |
NSTAR Electric Commercial Paper Program | 138.0 | | | 195.0 | | | 512.0 | | | 455.0 | | | 0.10 | % | | 0.16 | % |
There were no borrowings outstanding on the revolving credit facilityfacilities as of September 30, 2017 and2021 or December 31, 2016.2020.
Long-Term Debt Issuances: In March 2017, Eversource parent issued
CL&P and PSNH have uncommitted line of credit agreements totaling $450 million and $300 million, respectively, which will expire on May 12, 2022. There are no borrowings outstanding on either the CL&P or PSNH uncommitted line of 2.75 percent Series K Seniorcredit agreements as of September 30, 2021.
Amounts outstanding under the commercial paper programs are included in Notes due to maturePayable and classified in 2022. The proceeds, netcurrent liabilities on the Eversource and NSTAR Electric balance sheets, as all borrowings are outstanding for no more than 364 days at one time. As a result of issuance costs, were used to repay short-termthe NSTAR Gas long-term debt issuances in October 2021, $80.0 million of commercial paper borrowings under the Eversource parent commercial paper program.program were classified as Long-Term Debt as of September 30, 2021.
In March 2017,The Company expects the future operating cash flows of Eversource, CL&P, issued $300 million of 3.20 percent 2017 Series A First and Refunding Mortgage Bonds due to mature in 2027. The proceeds, net of issuance costs, were used to repay short-term borrowings.
In May 2017, NSTAR Electric issued $350 million of 3.20 percent Debentures dueand PSNH, along with existing borrowing availability and access to mature in 2027. The proceeds, net of issuance costs, were used to repay short-term borrowings and fund capital expenditures and working capital.
In August 2017, CL&P issued $225 million of 4.30 percent 2014 Series A First and Refunding Mortgage Bonds due to mature in 2044. These bonds are part of the same series of CL&P’s existing 4.30 percent bonds that were initially issued in 2014. The aggregate outstanding principal amount for these bonds is now $475 million. The proceeds, net of issuance costs, were used to refinance short-termboth debt and fundequity markets, will be sufficient to meet any working capital expenditures and working capital.future operating requirements, and capital investment forecasted opportunities.
In September 2017, Yankee Gas issued $75 million of 3.02 percent Series N First Mortgage Bonds due to mature in 2027. The proceeds, net of issuance costs, were used to repay short-term borrowings.
In October 2017,Intercompany Borrowings: Eversource parent issued $450 million 2.75 percent Series K Senior Notes dueuses its available capital resources to matureprovide loans to its subsidiaries to assist in 2022. These senior notes are part of the same series of Eversource parent’s existing 2.75 percent Series K Senior Notes that were initially issued in March 2017. The aggregate outstanding principal amount for the Series K Senior Notes is now $750 million. In addition,meeting their short-term borrowing needs. Eversource parent issued $450records intercompany interest income from its loans to subsidiaries, which is eliminated in consolidation. Intercompany loans from Eversource parent to its subsidiaries are eliminated in consolidation on Eversource's balance sheets. As of September 30, 2021, there were intercompany loans from Eversource parent to PSNH of $66.5 million, of 2.90 percent 2017 Series L Senior Notes dueand to mature in 2024. The proceeds, neta subsidiary of issuance costs, were used to repay short-term borrowings.
In October 2017, NSTAR Electric issued $350of $24.6 million. As of December 31, 2020, there were intercompany loans from Eversource parent to PSNH of $46.3 million, of 3.20 percent Debentures dueand to mature in 2027. The debentures are part of the same seriesa subsidiary of NSTAR Electric’s existing 3.20 percent Debentures that were initially issuedElectric of $21.3 million. Intercompany loans from Eversource parent are included in May 2017. The aggregate outstanding principal amount forNotes Payable to Eversource Parent and classified in current liabilities on the 3.20 percent Debentures is now $700 million. The proceeds, net of issuance costs, will be used to redeem long-term debt due to mature on November 15, 2017. As the debt issuance refinanced short-term debt, the amount was reclassified to Long-Term Debt on Eversource's and NSTAR Electric'srespective subsidiary's balance sheets.
Long-Term Debt Repayments: In March 2017, CL&P repaid at maturity the $150 million 5.375 percent 2007 Series A First and Refunding Mortgage Bonds.
In September 2017, CL&P repaid at maturity $100 million of 5.75 percent 2007 Series C First Mortgage Bonds and PSNH repaid at maturity $70 million of 6.15 percent 2007 Series N First Mortgage Bonds.
In October 2017, NSTAR Gas repaid at maturity $25 million of 7.04 percent Series M First Mortgage Bonds.
Availability under Long-Term Debt Issuance Authorizations:On January 4, 2017, PURA approved CL&P's request for authorization to issue up to $1.325 billion in long-term debt through December 31, 2020. On March 30, 2017,31, 2021, the DPU approved NSTAR Electric's request for authorization to issue up to $700$1.60 billion in long-term debt through December 31, 2023. On September 10, 2021, the DPU approved EGMA’s request for authorization to issue up to $725 million in long-term debt through December 31, 2018.2023. The remaining Eversource operating companies, including CL&P and PSNH, have utilized the long-term debt authorizations in place with the respective regulatory commissions.
Long-Term Debt Issuances and Repayments:The following table summarizes long-term debt issuances and repayments: | | | | | | | | | | | | | | | | | | | | | | | |
(Millions of Dollars) | Issuance/(Repayment) | | Issue Date or Repayment Date | | Maturity Date | | Use of Proceeds for Issuance/ Repayment Information |
CL&P: | | | | | | | |
2.05% Series A First Mortgage Bonds | $ | 425.0 | | | June 2021 | | July 2031 | | Repaid short-term debt, paid capital expenditures and working capital |
4.38% Series A PCRB | (120.5) | | | September 2021 | | September 2028 | | Paid on par call date in advance of maturity |
NSTAR Electric: | | | | | | | |
3.10% 2021 Debentures | 300.0 | | | May 2021 | | June 2051 | | Refinanced investments in eligible green expenditures, which were previously financed in 2019 and 2020 |
3.50% Series F Senior Notes | (250.0) | | | June 2021 | | September 2021 | | Paid on par call date in advance of maturity date |
1.95% 2021 Debentures | 300.0 | | | August 2021 | | August 2031 | | Repaid short-term debt, paid capital expenditures and working capital |
PSNH: | | | | | | | |
4.05% Series Q First Mortgage Bonds | (122.0) | | | March 2021 | | June 2021 | | Paid on par call date in advance of maturity date |
3.20% Series R First Mortgage Bonds | (160.0) | | | June 2021 | | September 2021 | | Paid on par call date in advance of maturity date |
2.20% Series V First Mortgage Bonds | 350.0 | | | June 2021 | | June 2031 | | Repaid short-term debt, including short-term debt used to redeem Series R First Mortgage Bonds, paid capital expenditures and working capital |
Other: | | | | | | | |
Eversource Parent 2.50% Series I Senior Notes | (450.0) | | | February 2021 | | March 2021 | | Paid on par call date in advance of maturity date |
Eversource Parent 2.55% Series S Senior Notes | 350.0 | | | March 2021 | | March 2031 | | Repaid short-term debt, including short-term debt used to redeem Series I Senior Notes |
Eversource Parent 1.40% Series U Senior Notes | 300.0 | | | August 2021 | | August 2026 | | Repaid short-term debt |
Eversource Parent Variable Rate Series T Senior Notes (1) | 350.0 | | | August 2021 | | August 2023 | | Repaid short-term debt |
Aquarion Water Company of Connecticut 3.31% Senior Notes | 100.0 | | | April 2021 | | April 2051 | | Repaid 5.50% Notes, repaid short-term debt, paid capital expenditures and working capital |
Aquarion Water Company of Connecticut 5.50% Notes | (40.0) | | | April 2021 | | April 2021 | | Paid at maturity |
Yankee Gas 1.38% Series S First Mortgage Bonds | 90.0 | | | August 2021 | | August 2026 | | (2) |
Yankee Gas 2.88% Series T First Mortgage Bonds | 35.0 | | | August 2021 | | August 2051 | | (2) |
EGMA 2.11% Series A First Mortgage Bonds | 310.0 | | | September 2021 | | October 2031 | | (2) |
EGMA 2.92% Series B First Mortgage Bonds | 240.0 | | | September 2021 | | October 2051 | | (2) |
NSTAR Gas 2.25% Series T First Mortgage Bonds | 40.0 | | | October 2021 | | November 2031 | | (2) |
NSTAR Gas 3.03% Series U First Mortgage Bonds | 40.0 | | | October 2021 | | November 2051 | | (2) |
(1) On August 10, 2021, Eversource Parent issued $350 million of floating rate Series T Senior Notes with a maturity date of August 15, 2023. The notes have a coupon rate based on the Compounded SOFR plus 0.25%.
(2) The use of proceeds from these various issuances refinanced existing indebtedness, funded capital expenditures and were for general corporate purposes. The EGMA indebtedness that was refinanced included $309.4 million of long-term debt.
7. RATE REDUCTION BONDS AND VARIABLE INTEREST ENTITIES
Rate Reduction Bonds: In May 2018, PSNH Funding, a wholly-owned subsidiary of PSNH, issued $635.7 million of securitized RRBs in multiple tranches with a weighted average interest rate of 3.66 percent, and final maturity dates ranging from 2026 to 2035. The RRBs are expected to be repaid by February 1, 2033. RRB payments consist of principal and interest and are paid semi-annually, beginning on February 1, 2019. The RRBs were issued pursuant to a finance orderissued by the NHPUC in January 2018 to recover remaining costs resulting from the divestiture of PSNH’s generation assets.
PSNH Funding was formed solely to issue RRBs to finance PSNH's unrecovered remaining costs associated with the divestiture of its generation assets. PSNH Funding is considered a VIE primarily because the equity capitalization is insufficient to support its operations. PSNH has the power to direct the significant activities of the VIE and is most closely associated with the VIE as compared to other interest holders. Therefore, PSNH is considered the primary beneficiary and consolidates PSNH Funding in its consolidated financial statements.
The following tables summarize the impact of PSNH Funding on PSNH's balance sheets and income statements:
| | | | | | | | | | | |
(Millions of Dollars) | | | |
PSNH Balance Sheets: | As of September 30, 2021 | | As of December 31, 2020 |
Restricted Cash - Current Portion (included in Current Assets) | $ | 18.3 | | | $ | 36.8 | |
Restricted Cash - Long-Term Portion (included in Other Long-Term Assets) | 3.2 | | | 2.1 | |
Securitized Stranded Cost (included in Regulatory Assets) | 489.7 | | | 522.1 | |
Other Regulatory Liabilities (included in Regulatory Liabilities) | 8.0 | | | 9.1 | |
Accrued Interest (included in Other Current Liabilities) | 3.0 | | | 8.0 | |
Rate Reduction Bonds - Current Portion | 43.2 | | | 43.2 | |
Rate Reduction Bonds - Long-Term Portion | 453.7 | | | 496.9 | |
| | | | | | | | | | | | | | | | | | | | | | | |
(Millions of Dollars) PSNH Income Statements: | For the Three Months Ended | | For the Nine Months Ended |
September 30, 2021 | | September 30, 2020 | | September 30, 2021 | | September 30, 2020 |
Amortization of RRB Principal (included in Amortization of Regulatory Assets, Net) | $ | 10.8 | | | $ | 10.8 | | | $ | 32.4 | | | $ | 32.4 | |
Interest Expense on RRB Principal (included in Interest Expense) | 4.5 | | | 4.9 | | | 13.9 | | | 14.9 | |
8. PENSION BENEFITS AND POSTRETIREMENT BENEFITS OTHER THAN PENSIONSPENSION
Eversource Service sponsors aprovides defined benefit retirement plan ("Pension Plan")plans (Pension Plans) that coverscover eligible participants.employees. In addition to the Pension Plan,Plans, Eversource maintains non-qualified defined benefit retirement plans sponsored by Eversource Service ("SERP Plans")(SERP Plans), which provide benefits in excess of Internal Revenue Code limitations to eligible participants.participants consisting of current and retired employees. Eversource Service also sponsors aprovides defined benefit postretirement planplans (PBOP Plans) that providesprovide life insurance and a health reimbursement arrangement created for the purpose of reimbursing retirees and dependents for health insurance premiums and certain medical expenses to eligible participantsemployees that meet certain age and service eligibility requirements ("PBOP Plan").requirements.
In August 2016, the Company amended its PBOP Plan, which standardized separate benefit structures that existed within the plan and made other benefit changes. The remeasurement resulted in a prior service credit of $5.3 million and $16.1 million for the three and nine months ended September 30, 2017, respectively, which was reflected as a reduction to net periodic benefit expense for PBOP benefits. The majority of this amount will be deferred for future refund to customers.
The components of net periodic benefit expenseplan expense/(income) for the Pension, SERP and PBOP Plans, prior to amounts capitalized as Property, Plant and Equipment or deferred as regulatory assets for future recovery, are shown below. The service cost component of net periodic benefit expense and the intercompany allocations,plan expense/(income), less the capitalized portions of pension, SERP and PBOP amounts, areportion, is included in Operations and Maintenance expense on the statements of income. Capitalized amounts relate to employees working on capital projects andThe remaining components of net periodic benefit plan expense/(income), less the deferred portion, are included in Property, Plant and Equipment,Other Income, Net on the balance sheets.statements of income. Pension, SERP and PBOP expense reflected in the statements of cash flows for CL&P, NSTAR Electric PSNH and WMECOPSNH does not include the intercompany allocations or the corresponding capitalized portion,of net periodic benefit plan expense/(income), as these amounts are cash settled on a short-term basis.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Pension and SERP | | PBOP |
| For the Three Months Ended September 30, 2021 | | For the Three Months Ended September 30, 2021 |
(Millions of Dollars) | Eversource | | CL&P | | NSTAR Electric | | PSNH | | Eversource | | CL&P | | NSTAR Electric | | PSNH |
Service Cost | $ | 21.5 | | | $ | 5.6 | | | $ | 4.0 | | | $ | 2.2 | | | $ | 3.3 | | | $ | 0.5 | | | $ | 0.6 | | | $ | 0.3 | |
Interest Cost | 32.5 | | | 6.7 | | | 6.7 | | | 3.7 | | | 4.3 | | | 0.8 | | | 1.1 | | | 0.4 | |
Expected Return on Plan Assets | (109.5) | | | (21.7) | | | (27.1) | | | (11.9) | | | (19.8) | | | (2.5) | | | (9.2) | | | (1.6) | |
Actuarial Loss | 60.7 | | | 10.8 | | | 15.3 | | | 5.3 | | | 2.0 | | | 0.4 | | | 0.5 | | | 0.1 | |
Prior Service Cost/(Credit) | 0.3 | | | — | | | 0.1 | | | — | | | (5.3) | | | 0.3 | | | (4.3) | | | 0.1 | |
Total Net Periodic Benefit Plan Expense/(Income) | $ | 5.5 | | | $ | 1.4 | | | $ | (1.0) | | | $ | (0.7) | | | $ | (15.5) | | | $ | (0.5) | | | $ | (11.3) | | | $ | (0.7) | |
Intercompany Expense/(Income) Allocations | N/A | | $ | 2.2 | | | $ | 2.4 | | | $ | 0.7 | | | N/A | | $ | (0.4) | | | $ | (0.5) | | | $ | (0.2) | |
| | | | | | | | | | | | | | | |
| Pension and SERP | | PBOP |
| For the Nine Months Ended September 30, 2021 | | For the Nine Months Ended September 30, 2021 |
(Millions of Dollars) | Eversource | | CL&P | | NSTAR Electric | | PSNH | | Eversource | | CL&P | | NSTAR Electric | | PSNH |
Service Cost | $ | 64.3 | | | $ | 17.4 | | | $ | 11.9 | | | $ | 6.6 | | | $ | 10.1 | | | $ | 1.7 | | | $ | 1.8 | | | $ | 0.9 | |
Interest Cost | 97.5 | | | 20.7 | | | 20.1 | | | 10.9 | | | 12.9 | | | 2.4 | | | 3.3 | | | 1.3 | |
Expected Return on Plan Assets | (328.0) | | | (65.0) | | | (81.1) | | | (35.6) | | | (59.3) | | | (7.7) | | | (27.7) | | | (4.6) | |
Actuarial Loss | 183.1 | | | 34.6 | | | 46.1 | | | 15.4 | | | 5.9 | | | 1.2 | | | 1.6 | | | 0.4 | |
Prior Service Cost/(Credit) | 1.1 | | | — | | | 0.3 | | | — | | | (15.9) | | | 0.8 | | | (12.7) | | | 0.3 | |
Total Net Periodic Benefit Plan Expense/(Income) | $ | 18.0 | | | $ | 7.7 | | | $ | (2.7) | | | $ | (2.7) | | | $ | (46.3) | | | $ | (1.6) | | | $ | (33.7) | | | $ | (1.7) | |
Intercompany Expense/(Income) Allocations | N/A | | $ | 5.8 | | | $ | 6.4 | | | $ | 1.9 | | | N/A | | $ | (1.3) | | | $ | (1.5) | | | $ | (0.5) | |
| | | | | | | | | | | | | | | |
| | | | | | | | | | | | Pension and SERP | | PBOP |
| Pension and SERP | | For the Three Months Ended September 30, 2020 | | For the Three Months Ended September 30, 2020 |
Eversource | For the Three Months Ended | | For the Nine Months Ended | |
(Millions of Dollars) | September 30, 2017 | | September 30, 2016 | | September 30, 2017 | | September 30, 2016 | |
Service Cost | $ | 17.4 |
| | $ | 18.6 |
| | $ | 53.8 |
| | $ | 56.6 |
| |
Interest Cost | 47.2 |
| | 46.4 |
| | 140.7 |
| | 139.2 |
| |
Expected Return on Pension Plan Assets | (83.5 | ) | | (79.4 | ) | | (250.5 | ) | | (238.5 | ) | |
Actuarial Loss | 33.9 |
| | 31.4 |
| | 101.3 |
| | 94.2 |
| |
Prior Service Cost | 1.2 |
| | 0.9 |
| | 3.4 |
| | 2.6 |
| |
Total Net Periodic Benefit Expense | $ | 16.2 |
| | $ | 17.9 |
| | $ | 48.7 |
| | $ | 54.1 |
| |
Capitalized Pension Expense | $ | 5.5 |
| | $ | 5.4 |
| | $ | 16.5 |
| | $ | 16.8 |
| |
| | | | | | | | |
| PBOP | |
Eversource | For the Three Months Ended | | For the Nine Months Ended | |
(Millions of Dollars) | September 30, 2017 | | September 30, 2016 | | September 30, 2017 | | September 30, 2016 | (Millions of Dollars) | Eversource | | CL&P | | NSTAR Electric | | PSNH | | Eversource | | CL&P | | NSTAR Electric | | PSNH |
Service Cost | $ | 2.4 |
| | $ | 3.0 |
| | $ | 7.1 |
| | $ | 9.2 |
| Service Cost | $ | 18.7 | | | $ | 5.4 | | | $ | 3.8 | | | $ | 2.0 | | | $ | 2.4 | | | $ | 0.4 | | | $ | 0.5 | | | $ | 0.2 | |
Interest Cost | 6.8 |
| | 7.5 |
| | 20.3 |
| | 26.5 |
| Interest Cost | 44.4 | | | 9.3 | | | 9.7 | | | 4.8 | | | 6.1 | | | 1.1 | | | 1.7 | | | 0.7 | |
Expected Return on Plan Assets | (16.0 | ) | | (15.9 | ) | | (47.8 | ) | | (47.3 | ) | Expected Return on Plan Assets | (99.2) | | | (19.8) | | | (25.7) | | | (11.1) | | | (18.3) | | | (2.5) | | | (8.5) | | | (1.4) | |
Actuarial Loss | 2.2 |
| | 3.0 |
| | 6.9 |
| | 5.0 |
| Actuarial Loss | 50.7 | | | 9.7 | | | 14.0 | | | 3.8 | | | 2.2 | | | 0.3 | | | 0.6 | | | 0.2 | |
Prior Service Credit | (5.3 | ) | | (3.6 | ) | | (16.1 | ) | | (3.7 | ) | |
Total Net Periodic Benefit Income | $ | (9.9 | ) | | $ | (6.0 | ) | | $ | (29.6 | ) | | $ | (10.3 | ) | |
Capitalized PBOP Income | $ | (4.8 | ) | | $ | (2.6 | ) | | $ | (14.3 | ) | | $ | (4.6 | ) | |
Prior Service Cost/(Credit) | | Prior Service Cost/(Credit) | 0.2 | | | — | | | — | | | — | | | (5.3) | | | 0.3 | | | (4.2) | | | 0.1 | |
Total Net Periodic Benefit Plan Expense/(Income) | | Total Net Periodic Benefit Plan Expense/(Income) | $ | 14.8 | | | $ | 4.6 | | | $ | 1.8 | | | $ | (0.5) | | | $ | (12.9) | | | $ | (0.4) | | | $ | (9.9) | | | $ | (0.2) | |
Intercompany Expense/(Income) Allocations | | Intercompany Expense/(Income) Allocations | N/A | | $ | 2.4 | | | $ | 2.3 | | | $ | 0.8 | | | N/A | | $ | (0.3) | | | $ | (0.4) | | | $ | (0.1) | |
| | | | Pension and SERP | | PBOP |
| | | For the Nine Months Ended September 30, 2020 | | For the Nine Months Ended September 30, 2020 |
(Millions of Dollars) | | (Millions of Dollars) | Eversource | | CL&P | | NSTAR Electric | | PSNH | | Eversource | | CL&P | | NSTAR Electric | | PSNH |
Service Cost | | Service Cost | $ | 57.0 | | | $ | 16.5 | | | $ | 11.4 | | | $ | 6.2 | | | $ | 7.3 | | | $ | 1.3 | | | $ | 1.6 | | | $ | 0.6 | |
Interest Cost | | Interest Cost | 133.0 | | | 28.1 | | | 29.0 | | | 14.5 | | | 18.3 | | | 3.3 | | | 5.0 | | | 2.1 | |
Expected Return on Plan Assets | | Expected Return on Plan Assets | (298.8) | | | (59.6) | | | (77.2) | | | (33.5) | | | (55.1) | | | (7.4) | | | (25.5) | | | (4.2) | |
Actuarial Loss | | Actuarial Loss | 150.7 | | | 29.4 | | | 41.3 | | | 11.8 | | | 6.3 | | | 0.9 | | | 1.8 | | | 0.6 | |
Prior Service Cost/(Credit) | | Prior Service Cost/(Credit) | 0.8 | | | — | | | 0.2 | | | — | | | (15.9) | | | 0.8 | | | (12.7) | | | 0.3 | |
Total Net Periodic Benefit Plan Expense/(Income) | | Total Net Periodic Benefit Plan Expense/(Income) | $ | 42.7 | | | $ | 14.4 | | | $ | 4.7 | | | $ | (1.0) | | | $ | (39.1) | | | $ | (1.1) | | | $ | (29.8) | | | $ | (0.6) | |
Intercompany Expense/(Income) Allocations | | Intercompany Expense/(Income) Allocations | N/A | | $ | 6.7 | | | $ | 6.5 | | | $ | 2.2 | | | N/A | | $ | (0.9) | | | $ | (1.0) | | | $ | (0.4) | |
Eversource Contributions: Eversource currently expects to make contributions of $180 million to the Pension Plans in 2021, of which $99 million and $30 million will be contributed by CL&P and NSTAR Electric, respectively.
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Pension and SERP |
| For the Three Months Ended September 30, 2017 | | For the Three Months Ended September 30, 2016 |
(Millions of Dollars) | CL&P | | NSTAR Electric | | PSNH | | WMECO | | CL&P | | NSTAR Electric | | PSNH | | WMECO |
Service Cost | $ | 4.6 |
| | $ | 3.1 |
| | $ | 2.4 |
| | $ | 0.7 |
| | $ | 4.6 |
| | $ | 3.3 |
| | $ | 2.5 |
| | $ | 0.8 |
|
Interest Cost | 10.5 |
| | 8.6 |
| | 5.3 |
| | 2.1 |
| | 10.2 |
| | 8.5 |
| | 5.1 |
| | 2.1 |
|
Expected Return on Pension Plan Assets | (17.8 | ) | | (17.5 | ) | | (10.0 | ) | | (4.4 | ) | | (18.0 | ) | | (16.9 | ) | | (9.6 | ) | | (4.4 | ) |
Actuarial Loss | 6.8 |
| | 8.9 |
| | 3.0 |
| | 1.5 |
| | 6.3 |
| | 8.7 |
| | 2.5 |
| | 1.3 |
|
Prior Service Cost | 0.4 |
| | 0.1 |
| | 0.1 |
| | 0.1 |
| | 0.4 |
| | — |
| | 0.1 |
| | 0.1 |
|
Total Net Periodic Benefit Expense/(Income) | $ | 4.5 |
| | $ | 3.2 |
| | $ | 0.8 |
| | $ | — |
| | $ | 3.5 |
| | $ | 3.6 |
| | $ | 0.6 |
| | $ | (0.1 | ) |
Intercompany Allocations | $ | 2.4 |
| | $ | 1.8 |
| | $ | 0.8 |
| | $ | 0.5 |
| | $ | 3.5 |
| | $ | 2.2 |
| | $ | 1.0 |
| | $ | 0.6 |
|
Capitalized Pension Expense | $ | 2.4 |
| | $ | 1.9 |
| | $ | 0.4 |
| | $ | 0.1 |
| | $ | 2.2 |
| | $ | 2.0 |
| | $ | 0.4 |
| | $ | 0.1 |
|
| | | | | | | | | | | | | | | |
| Pension and SERP |
| For the Nine Months Ended September 30, 2017 | | For the Nine Months Ended September 30, 2016 |
(Millions of Dollars) | CL&P | | NSTAR Electric | | PSNH | | WMECO | | CL&P | | NSTAR Electric | | PSNH | | WMECO |
Service Cost | $ | 13.9 |
| | $ | 9.4 |
| | $ | 7.3 |
| | $ | 2.3 |
| | $ | 14.3 |
| | $ | 9.9 |
| | $ | 7.5 |
| | $ | 2.4 |
|
Interest Cost | 31.3 |
| | 25.6 |
| | 15.9 |
| | 6.3 |
| | 31.2 |
| | 25.3 |
| | 15.4 |
| | 6.3 |
|
Expected Return on Pension Plan Assets | (53.9 | ) | | (52.5 | ) | | (29.9 | ) | | (13.3 | ) | | (54.2 | ) | | (50.7 | ) | | (28.9 | ) | | (13.1 | ) |
Actuarial Loss | 20.7 |
| | 26.4 |
| | 8.7 |
| | 4.5 |
| | 19.2 |
| | 25.8 |
| | 7.5 |
| | 4.1 |
|
Prior Service Cost | 1.1 |
| | 0.2 |
| | 0.4 |
| | 0.2 |
| | 1.1 |
| | — |
| | 0.3 |
| | 0.2 |
|
Total Net Periodic Benefit Expense/(Income) | $ | 13.1 |
| | $ | 9.1 |
| | $ | 2.4 |
| | $ | — |
| | $ | 11.6 |
| | $ | 10.3 |
| | $ | 1.8 |
| | $ | (0.1 | ) |
Intercompany Allocations | $ | 7.4 |
| | $ | 5.5 |
| | $ | 2.5 |
| | $ | 1.4 |
| | $ | 10.3 |
| | $ | 6.7 |
| | $ | 3.0 |
| | $ | 1.9 |
|
Capitalized Pension Expense | $ | 7.3 |
| | $ | 5.4 |
| | $ | 1.1 |
| | $ | 0.3 |
| | $ | 7.1 |
| | $ | 5.7 |
| | $ | 1.0 |
| | $ | 0.3 |
|
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| PBOP |
| For the Three Months Ended September 30, 2017 | | For the Three Months Ended September 30, 2016 |
(Millions of Dollars) | CL&P | | NSTAR Electric | | PSNH | | WMECO | | CL&P | | NSTAR Electric | | PSNH | | WMECO |
Service Cost | $ | 0.5 |
| | $ | 0.3 |
| | $ | 0.3 |
| | $ | 0.1 |
| | $ | 0.6 |
| | $ | 0.6 |
| | $ | 0.4 |
| | $ | 0.1 |
|
Interest Cost | 1.3 |
| | 1.9 |
| | 0.8 |
| | 0.3 |
| | 1.3 |
| | 2.5 |
| | 0.7 |
| | 0.3 |
|
Expected Return on Plan Assets | (2.4 | ) | | (6.6 | ) | | (1.4 | ) | | (0.6 | ) | | (2.5 | ) | | (6.4 | ) | | (1.4 | ) | | (0.6 | ) |
Actuarial Loss | 0.2 |
| | 0.9 |
| | 0.1 |
| | — |
| | 0.5 |
| | 1.2 |
| | 0.2 |
| | — |
|
Prior Service Cost/(Credit) | 0.3 |
| | (4.3 | ) | | 0.2 |
| | — |
| | 0.2 |
| | (2.9 | ) | | 0.1 |
| | — |
|
Total Net Periodic Benefit (Income)/Expense | $ | (0.1 | ) | | $ | (7.8 | ) | | $ | — |
| | $ | (0.2 | ) | | $ | 0.1 |
| | $ | (5.0 | ) | | $ | — |
| | $ | (0.2 | ) |
Intercompany Allocations | $ | (0.2 | ) | | $ | (0.2 | ) | | $ | (0.1 | ) | | $ | — |
| | $ | — |
| | $ | (0.1 | ) | | $ | — |
| | $ | — |
|
Capitalized PBOP Income | $ | (0.1 | ) | | $ | (4.0 | ) | | $ | — |
| | $ | (0.1 | ) | | $ | — |
| | $ | (2.2 | ) | | $ | — |
| | $ | (0.1 | ) |
| | | | | | | | | | | | | | | |
| PBOP |
| For the Nine Months Ended September 30, 2017 | | For the Nine Months Ended September 30, 2016 |
(Millions of Dollars) | CL&P | | NSTAR Electric | | PSNH | | WMECO | | CL&P | | NSTAR Electric | | PSNH | | WMECO |
Service Cost | $ | 1.5 |
| | $ | 1.1 |
| | $ | 1.0 |
| | $ | 0.3 |
| | $ | 1.4 |
| | $ | 2.5 |
| | $ | 0.9 |
| | $ | 0.3 |
|
Interest Cost | 4.0 |
| | 5.7 |
| | 2.3 |
| | 0.8 |
| | 4.0 |
| | 10.3 |
| | 2.2 |
| | 0.8 |
|
Expected Return on Plan Assets | (7.3 | ) | | (19.9 | ) | | (4.1 | ) | | (1.7 | ) | | (7.6 | ) | | (19.2 | ) | | (4.2 | ) | | (1.7 | ) |
Actuarial Loss | 0.7 |
| | 2.6 |
| | 0.4 |
| | — |
| | 0.9 |
| | 1.7 |
| | 0.5 |
| | — |
|
Prior Service Cost/(Credit) | 0.8 |
| | (12.9 | ) | | 0.4 |
| | 0.1 |
| | 0.2 |
| | (2.9 | ) | | 0.1 |
| | — |
|
Total Net Periodic Benefit Income | $ | (0.3 | ) | | $ | (23.4 | ) | | $ | — |
| | $ | (0.5 | ) | | $ | (1.1 | ) | | $ | (7.6 | ) | | $ | (0.5 | ) | | $ | (0.6 | ) |
Intercompany Allocations | $ | (0.5 | ) | | $ | (0.7 | ) | | $ | (0.3 | ) | | $ | (0.1 | ) | | $ | 0.3 |
| | $ | — |
| | $ | — |
| | $ | — |
|
Capitalized PBOP Income | $ | (0.4 | ) | | $ | (11.9 | ) | | $ | — |
| | $ | (0.2 | ) | | $ | (0.5 | ) | | $ | (3.3 | ) | | $ | — |
| | $ | (0.3 | ) |
8.9. COMMITMENTS AND CONTINGENCIES
A. Environmental Matters
Eversource, CL&P, NSTAR Electric PSNH and WMECOPSNH are subject to environmental laws and regulations intended to mitigate or remove the effect of past operations and improve or maintain the quality of the environment. These laws and regulations require the removal or the remedy of the effect on the environment of the disposal or release of certain specified hazardous substances at current and former operating sites. Eversource, CL&P, NSTAR Electric PSNH and WMECOPSNH have an active environmental auditing and training program and each believes it is substantially in compliance with all enacted laws and regulations.
The number of environmental sites and related reserves for which remediation or long-term monitoring, preliminary site work or site assessment is being performed are as follows:
| | | | | | | | | | | | | | | | | | | | | | | |
| As of September 30, 2021 | | As of December 31, 2020 |
| Number of Sites | | Reserve (in millions) | | Number of Sites | | Reserve (in millions) |
Eversource | 62 | | | $ | 111.9 | | | 63 | | | $ | 102.4 | |
CL&P | 14 | | | 12.5 | | | 15 | | | 12.3 | |
NSTAR Electric | 12 | | | 3.7 | | | 12 | | | 4.7 | |
PSNH | 9 | | | 6.4 | | | 9 | | | 7.1 | |
|
| | | | | | | | | | | | | |
| As of September 30, 2017 | | As of December 31, 2016 |
| Number of Sites | | Reserve (in millions) | | Number of Sites | | Reserve (in millions) |
Eversource | 58 |
| | $ | 57.7 |
| | 61 |
| | $ | 65.8 |
|
CL&P | 14 |
| | 4.9 |
| | 14 |
| | 4.9 |
|
NSTAR Electric | 10 |
| | 2.0 |
| | 13 |
| | 3.2 |
|
PSNH | 11 |
| | 5.7 |
| | 11 |
| | 5.3 |
|
WMECO | 4 |
| | 0.8 |
| | 4 |
| | 0.6 |
|
The increase in the reserve balance was due primarily to a change in cost estimates at an NSTAR Gas MGP site under investigation for which we now know of additional remediation that is required.
Included in the Eversource number of sites and reserve amounts above are former MGP sites that were operated several decades ago and manufactured natural gas from coal and other processes, which resulted in certain by-products remaining in the environment that may pose a potential risk to human health and the environment, for which Eversource may have potential liability. The reserve balances related to these former MGP sites were $51.9$102.4 million and $59.0$92.2 million as of September 30, 20172021 and December 31, 2016,2020, respectively, and related primarily to the natural gas business segment. The reduction in the reserve balance at the MGP sites in the first quarter of 2017 was primarily due to a change in cost estimates at one site where actual contamination was less than originally estimated.
These reserve estimates are subjective in nature as they take into consideration several different remediation options at each specific site. The reliability and precision of these estimates can be affected by several factors, including new information concerning either the level of contamination at the site, the extent of Eversource's, CL&P's, NSTAR Electric's PSNH's, and WMECO'sPSNH's responsibility for remediation or the extent of remediation required, recently enacted laws and regulations or changes in cost estimates due to certain economic factors. It is possible that new information or future developments could require a reassessment of the potential exposure to relatedrequired environmental matters.remediation. As this information becomes available, management will continue to assess the potential exposure and adjust the reserves accordingly.
B. Long-Term Contractual Arrangements
The following is an update to the current status of long-term contractual arrangements set forth in Note 13B of the Eversource 2020 Form 10-K.
Renewable Energy: Renewable energy contracts include non-cancelable commitments under contracts of NSTAR Electric for the purchase of energy and RECs from renewable energy facilities. | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
NSTAR Electric | | | | | | | | | | | | | |
(Millions of Dollars) | 2021 | | 2022 | | 2023 | | 2024 | | 2025 | | Thereafter | | Total |
Renewable Energy | $ | 27.1 | | | $ | 103.9 | | | $ | 230.5 | | | $ | 341.2 | | | $ | 348.1 | | | $ | 6,564.2 | | | $ | 7,615.0 | |
The table has been updated to include long-term commitments of NSTAR Electric pertaining to the Massachusetts Clean Energy 83D contract, for which construction commenced in 2021. Estimated costs under this contract are expected to begin in 2023 and range between $150 million and $415 million per year under a 20-year contract, totaling approximately $6.7 billion.
C. Guarantees and Indemnifications
In the normal course of business, Eversource parent provides credit assurances on behalf of its subsidiaries, including CL&P, NSTAR Electric PSNH and WMECO,PSNH, in the form of guarantees.
Eversource parent issued a guaranty on behalf of its subsidiary, NPT, under which, beginning at the time the Northern Pass Transmission line goes into commercial operation, Eversource parent will guarantee the financial obligations of NPT under the TSA with HQ in an amount not to exceed $25 million. Eversource parent's obligations under the guaranty expire upon the full, final and indefeasible payment of the guaranteed obligations. Eversource parent has also entered into a guaranty on behalf of NPT under which Eversource parent will guarantee NPT's obligations under a facility with a financial institution pursuant to which NPT may request letters of credit in an aggregate amount of up to approximately $14 million.
Eversource parent has also guaranteed certain indemnification and other obligations as a result of the sales of former unregulated subsidiaries and the termination of an unregulated business, with maximum exposures either not specified or not material.
Management does not anticipate a material impact to net income or cash flows as a result of these various guarantees and indemnifications.
Guarantees issued on behalf of unconsolidated entities, including equity method offshore wind investments, for which Eversource parent is the guarantor, are recorded at fair value as a liability on the balance sheet at the inception of the guarantee. Eversource regularly reviews performance risk under these guarantee arrangements, and in the event it becomes probable that Eversource parent will be required to perform under the guarantee, the amount of probable payment will be recorded. The fair value of guarantees issued on behalf of unconsolidated entities are recorded within Other Long-Term Liabilities on the balance sheet, and was $5.7 million as of September 30, 2021.
The following table summarizes Eversource parent's exposure to guarantees and indemnifications of its subsidiaries and affiliates to external parties, asparties:
| | | | | | | | | | | | | | | | | | | | |
As of September 30, 2021 |
Company (Obligor) | | Description | | Maximum Exposure (in millions) | | Expiration Dates |
North East Offshore LLC | | Construction-related purchase agreements with third-party contractors (1) | | $ | 1,093.5 | | | (1) |
Eversource Investment LLC | | Funding and indemnification obligations of North East Offshore LLC (2) | | — | | | (2) |
Sunrise Wind LLC | | OREC capacity production (3) | | 2.2 | | | (3) |
Sunrise Wind LLC | | Construction-related purchase agreements with third-party contractors (4) | | 386.4 | | | — |
South Fork Wind, LLC | | Transmission interconnection | | 1.2 | | | — |
South Fork Wind, LLC | | Construction-related purchase agreements with third-party contractors (5) | | 40.6 | | | 2023 |
Bay State Wind LLC | | Real estate purchase | | 2.5 | | | 2022 |
Various | | Surety bonds (6) | | 67.5 | | | 2021 - 2023 |
Rocky River Realty Company and Eversource Service | | Lease payments for real estate | | 4.0 | | | 2024 |
(1) Eversource parent issued guarantees on behalf of September 30, 2017: its 50 percent-owned affiliate, North East Offshore LLC (NEO), under which Eversource parent agreed to guarantee 50 percent of NEO’s performance of obligations under certain purchase agreements with third-party contactors, in an aggregate amount not to exceed $1.3 billion with an expiration date in 2025. Eversource parent also issued a separate guarantee to Ørsted on behalf of NEO, under which Eversource parent agreed to guarantee 50 percent of NEO’s payment obligations under certain offshore wind project construction-related agreements with Ørsted in an aggregate amount not to exceed $62.5 million. Any amounts paid under this guarantee to Ørsted will count toward, but not increase, the maximum amount of the Funding Guarantee described in Note 2, below. The guarantee expires upon the full performance of the guaranteed obligations.
(2) Eversource parent issued a guarantee (Funding Guarantee) on behalf of Eversource Investment LLC (EI), its wholly-owned subsidiary that holds a 50 percent ownership interest in NEO, under which Eversource parent agreed to guarantee certain funding obligations and certain indemnification payments of EI under the Amended and Restated Limited Liability Company Operating Agreement of NEO, in an aggregate amount not to exceed $910 million. The guaranteed obligations include payment of EI's funding obligations during the construction phase of NEO’s underlying offshore wind projects and indemnification obligations associated with third party credit support for its investment in NEO. Eversource parent’s obligations under the Funding Guarantee expire upon the full performance of the guaranteed obligations.
(3) Eversource parent issued a guarantee on behalf of its 50 percent-owned affiliate, Sunrise Wind LLC, whereby Eversource parent will guarantee Sunrise Wind LLC's performance of certain obligations, in an aggregate amount not to exceed $15.4 million, under the Offshore Wind Renewable Energy Certificate Purchase and Sale Agreement (the Agreement). The Agreement was executed on October 23, 2019, by and between the New York State Energy Research and Development Authority (NYSERDA) and Sunrise Wind LLC. The guarantee expires upon the full performance of the guaranteed obligations.
|
| | | | | | | | |
Company | | Description | | Maximum Exposure (in millions) | | Expiration Dates |
On behalf of subsidiaries: | | | | | | |
Eversource Gas Transmission LLC | | Access Northeast Project Capital Contributions Guaranty (1) | | $ | 185.1 |
| | 2021 |
Various | | Surety Bonds (2) | | 40.1 |
| | 2017 - 2018 |
Eversource Service and Rocky River Realty Company | | Lease Payments for Vehicles and Real Estate | | 8.2 |
| | 2019 - 2024 |
(4) Eversource parent issued a guaranty on behalf of its 50 percent-owned affiliate, Sunrise Wind LLC, whereby Eversource parent will guarantee Sunrise Wind LLC's performance of certain obligations, in an aggregate amount not to exceed $420.6 million, in connection with a construction-related purchase agreement. Eversource parent’s obligations under the guarantee expire upon the earlier of (i) April 14, 2026 and (ii) full performance of the guaranteed obligations.
| |
(1)
| Eversource parent issued a declining balance guaranty on behalf of its subsidiary, Eversource Gas Transmission LLC, to guarantee the payment of the subsidiary's capital contributions for its investment in the Access Northeast project. The guaranty decreases as capital contributions are made. The guaranty will expire upon the earlier of the full performance of the guaranteed obligations or December 31, 2021. |
| |
(2)
| Surety bond expiration dates reflect termination dates, the majority of which will be renewed or extended. Certain surety bonds contain credit ratings triggers that would require Eversource parent to post collateral in the event that the unsecured debt credit ratings of Eversource parent are downgraded. |
C. (5) Eversource parent issued two guarantees on behalf of its 50 percent-owned affiliate, South Fork Wind, LLC, whereby Eversource parent will guarantee South Fork Wind, LLC's performance of certain obligations in connection with two construction-related purchase agreements. Under one guarantee, Eversource parent will guarantee South Fork Wind, LLC's performance of certain obligations, in an aggregate amount not to exceed $25.8 million. Eversource parent’s obligations under the guarantee expire upon the earlier of (i) October 4, 2023 and (ii) full performance of the guaranteed obligations. Under the second guaranty, Eversource parent will guarantee South Fork Wind, LLC's performance of certain obligations, in an aggregate amount not to exceed $14.8 million. Eversource parent’s obligations under the guarantee expire upon the earlier of (i) October 18, 2023 and (ii) full performance of the guaranteed obligations.
(6) Surety bond expiration dates reflect termination dates, the majority of which will be renewed or extended. Certain surety bonds contain credit ratings triggers that would require Eversource parent to post collateral in the event that the unsecured debt credit ratings of Eversource parent are downgraded.
Letter of Credit: On September 16, 2020, Eversource parent entered into a guarantee on behalf of EI, which holds Eversource's investments in offshore wind-related equity method investments, under which Eversource parent would guarantee EI's obligations under a letter of credit facility with a financial institution that EI may request in an aggregate amount of up to approximately $25 million.
D. Spent Nuclear Fuel Obligations - Yankee Companies
CL&P, NSTAR Electric PSNH and WMECOPSNH have plant closure and fuel storage cost obligations to the Yankee Companies, which have each completed the physical decommissioning of their respective nuclear power facilities and are now engaged in the long-term storage of their spent fuel. The Yankee Companies collectfund these costs through litigation proceeds received from the DOE and, to the extent necessary, through wholesale, FERC-approved rates charged under power purchase agreements with several New England utilities, including CL&P, NSTAR Electric PSNH and WMECO. These companiesPSNH. CL&P, NSTAR Electric and PSNH, in turn recover these costs from their customers through state regulatory commission-approved retail rates. The Yankee Companies have collected or are currently collectingcollect amounts that management believes are adequate to recover the remaining plant closure and fuel storage cost estimates for the respective plants. Management believes CL&P and NSTAR Electric and WMECO will recover their shares of these obligations from their customers. PSNH has recovered its total share of these costs from its customers.
Spent Nuclear Fuel Litigation:
The Yankee Companies have filed complaints against the DOE in the Court of Federal Claims seeking monetary damages resulting from the DOE's failure to accept delivery of, and provide for a permanent facility to store, spent nuclear fuel pursuant to the terms of the 1983 spent fuel and high levelhigh-level waste disposal contracts between the Yankee Companies and the DOE. The court had previously awarded the Yankee Companies damages for PhasePhases I, II, III and IIIIV of litigation resulting from the DOE's failure to meet its contractual obligations. These Phases covered damages incurred in the years 1998 through 2012,2016, and the awarded damages have been received by the Yankee Companies with certain amounts of the damages refunded to their customers.
DOE Phase IVV Damages - On May 22, 2017,March 25, 2021, each of the Yankee Companies filed subsequenta fifth set of lawsuits against the DOE in the Court of Federal ClaimsClaims. The Yankee Companies are calculating and will be seeking monetary damages totaling approximately $100 million for CYAPC, YAEC and MYAPC, resulting from the DOE's failure to begin accepting spent nuclear fuel for disposal covering the years from 20132017 to 2016 (“DOE2020 (DOE Phase IV”)V). The DOE Phase IV trial is expected to begin in 2018.
For further discussion, see Part I, Item 3, “Legal Proceedings - Yankee Companies v. U.S. Department of Energy” of our 2016 Form 10-K.
D.E. FERC ROE Complaints
Four separate complaints have beenwere filed at the FERC by combinations of New England state attorneys general, state regulatory commissions, consumer advocates, consumer groups, municipal parties and other parties (collectively, the "Complainants")Complainants). In each of the first three complaints, filed on October 1, 2011, December 27, 2012, and July 31, 2014, respectively, the Complainants challenged the NETOs' base ROE of 11.14 percent that had been utilized since 2005 and sought an order to reduce it prospectively from the date of the final FERC order and for the separate 15-month complaint periods. In the fourth complaint, filed April 29, 2016, the Complainants challenged the NETOs' base ROE billed of 10.57 percent and the maximum ROE for transmission incentive ("incentive cap")(incentive cap) of 11.74 percent, asserting that these ROEs were unjust and unreasonable.
In response to appealsThe ROE originally billed during the period October 1, 2011 (beginning of the FERC decision in the first complaint filed by the NETOs and the Complainants, the U.S. Court of Appeals for the D.C. Circuit (the "Court") issued a decision on April 14, 2017 vacating and remanding the FERC's decision. The Court found that the FERC failed to make an explicit finding that the 11.14 percent base ROE was unjust and unreasonable, as required under Section 206 of the Federal Power Act, before it set a new base ROE. The Court also found that the FERC did not provide a rational connection between the record evidence and its decision to select the midpoint of the upper half of the zone of reasonableness for the new base ROE.
On May 26, 2017, the Chief Administrative Law Judge ("ALJ") issued an order that the fourth complaint will continue to trial in December 2017 with an ALJ initial decision expected in March of 2018.
A summary of the four separate complaints and the base ROEs pertinent to those complaints are as follows:
|
| | | | | | |
Complaint | 15-Month Time Period of Complaint (Beginning as of Complaint Filing Date) | Original Base ROE Authorized by FERC at Time of Complaint Filing Date (1) | Base ROE Subsequently Authorized by FERC for First Complaint Period and also Effective from October 16, 2014 through April 14, 2017 (1) | Reserve (Pre-Tax and Excluding Interest) as of September 30, 2017 (in millions) | | FERC ALJ Recommendation of Base ROE on Second and Third Complaints (Issued March 22, 2016) |
First | 10/1/2011 - 12/31/2012 | 11.14% | 10.57% | $— | (2) | N/A |
Second | 12/27/2012 - 3/26/2014 | 11.14% | N/A | 39.1 | (3) | 9.59% |
Third | 7/31/2014 - 10/30/2015 | 11.14% | 10.57% | — | | 10.90% |
Fourth | 4/29/2016 - 7/28/2017 | 10.57% | 10.57% | — | | N/A |
(1) The billed ROE (base plus incentives) between October 1, 2011 andperiod) through October 15, 2014 was withinconsisted of a rangebase ROE of 11.14 percent and incentives up to 13.1 percent. On October 16, 2014, the FERC set the base ROE at 10.57 percent and the incentive cap at 11.74 percent for the first complaint period andperiod. This was also effective fromfor all prospective billings to customers beginning October 16, 2014 through2014. This FERC order was vacated on April 14, 2017 by the date on whichU.S. Court of Appeals for the Court vacated this FERC order.D.C. Circuit (the Court).
(2) CL&P, NSTAR Electric, PSNH and WMECO have refunded allAll amounts associated with the first complaint period totalinghave been refunded, which totaled $38.9 million (pre-tax and excluding interest) at Eversource (consisting of $22.4 million at CL&P, $8.4 million at NSTAR Electric, $2.8 million at PSNH, and $5.3 million at WMECO), reflectingreflected both the base ROE and incentive cap prescribed by the FERC order. The refund consisted of $22.4 million for CL&P, $13.7 million for NSTAR Electric and $2.8 million for PSNH.
(3) TheEversource has recorded a reserve of $39.1 million (pre-tax and excluding interest) for the second complaint period as of September 30, 2021 and December 31, 2020. This reserve represents the difference between the ROEs billed rates during the second complaint period and a 10.57 percent base ROE and 11.74 percent incentive cap. The reserve consisted of $21.4 million for CL&P, $8.5$14.6 million for NSTAR Electric and $3.1 million for PSNH and $6.1 million for WMECO as of September 30, 2017.2021 and December 31, 2020.
On June 5, 2017, the NETOs, including Eversource, submitted a filing to the FERC to reinstate the base ROE of 11.14 percent with an associated ROE incentive cap of 13.5 percent effective June 8, 2017, as these were the last ROEs lawfully in effect for transmission billing purposes prior to the FERC order vacated by the Court on April 14, 2017. On October 6, 2017, the FERC did not accept the NETOs filing, temporarily leaving in place the ROEs (10.57 percent base ROE with an 11.74 percent incentive cap ROE) set in the first complaint proceeding until the FERC addresses the Court’s decision.
On October 5, 201716, 2018, FERC issued an order on all four complaints describing how it intends to address the issues that were remanded by the Court. FERC proposed a new framework to determine (1) whether an existing ROE is unjust and unreasonable and, if so, (2) how to calculate a replacement ROE. Initial briefs were filed by the NETOs, Complainants and FERC Trial Staff on January 11, 2019 and reply briefs were filed a serieson March 8, 2019. The NETOs' brief was supportive of motions, requesting that the FERC dismissoverall ROE methodology determined in the four complaint proceedings. Alternatively, ifOctober 16, 2018 order provided the FERC does not dismisschange the proceedings,proposed methodology or alter its implementation in a manner that has a material impact on the results.
The FERC order included illustrative calculations for the first complaint using FERC's proposed frameworks with financial data from that complaint. Those illustrative calculations indicated that for the first complaint period, for the NETOs, requested thatwhich FERC concludes are of average financial risk, the preliminary just and reasonable base ROE is 10.41 percent and the preliminary incentive cap on total ROE is 13.08 percent.
If the results of the illustrative calculations were included in a final FERC order for each of the complaint periods, then a 10.41 percent base ROE and a 13.08 percent incentive cap would not have a significant impact on our financial statements for all of the complaint periods. These preliminary calculations are not binding and do not represent what we believe to be the most likely outcome of a final FERC order.
On November 21, 2019, FERC issued Opinion No. 569 affecting the two pending transmission ROE complaints against the Midcontinent ISO (MISO) transmission owners, in which FERC adopted a new methodology for determining base ROEs. Various parties sought rehearing. On December 23, 2019, the NETOs filed supplementary materials in the NETOs' four pending cases to respond to this new methodology because of the uncertainty of the applicability to the NETOs’ cases.
On May 21, 2020, the FERC consolidate allissued its order in Opinion No. 569-A on the rehearing of the MISO transmission owners' cases, in which FERC again changed its methodology for determining the MISO transmission owners' base ROEs. Various parties appealed the MISO transmission owners' opinion. On November 19, 2020, the FERC issued Opinion No. 569-B denying rehearing of Opinion No. 569-A and reaffirmed the methodology previously adopted in Opinion No. 569-A. The new methodology differs significantly from the methodology proposed by FERC in its October 16, 2018 order to determine the NETOs' base ROEs in its four pending cases.
Given the significant uncertainty regarding the applicability of the FERC opinions in the MISO transmission owners' two complaint cases to the NETOs' pending four complaint proceedings for expeditious resolution and/or stay the trial in the fourth complaint proceeding and resolve it based on the standards set in the April 14, 2017 Court decision.
At this time, the Company cannot reasonably estimate a range of gain or loss for the complaint proceedings. The April 14, 2017 Court decision did not provide acases, Eversource concluded that there is no reasonable basis for a change to the reserve balance of $39.1 million (pre-tax, excluding interest) for the second complaint period, and the Company has not changed its reserve or recognized ROEs for any of the complaint periods.
Management cannotperiods at this time predict the ultimate effecttime. As well, Eversource cannot reasonably estimate a range of the Court decisionany gain or future FERC action onloss for any of the four complaint periods or the estimated impacts on the financial position, results of operations or cash flows of proceedings at this time.
Eversource, CL&P, NSTAR Electric and PSNH or WMECO.currently record revenues at the 10.57 percent base ROE and incentive cap at 11.74 percent established in the October 16, 2014 FERC order.
The average impactA change of a 10 basis point changepoints to the base ROE used to establish the reserves would impact Eversource's after-tax earnings by an average of approximately $3 million for each of the four 15-month complaint periods would affect Eversource's after-tax earnings by approximately $3 million.periods.
E.F. Eversource and NSTAR Electric Boston Harbor Civil Action
On July 15,In 2016, the United States Attorney on behalf of the United States Army Corps of Engineers filed a civil action in the United States District Court for the District of Massachusetts under provisions of the Rivers and Harbors Act of 1899 and the Clean Water Act against NSTAR Electric, Harbor Electric Energy Company, a wholly-owned subsidiary of NSTAR Electric ("HEEC"),HEEC, and the Massachusetts Water Resources Authority (together with NSTAR Electric and HEEC, the "Defendants"). The action alleged that the Defendants failed to comply with certain permitting requirements related to the placement of the HEEC-owned electric distribution cable beneath Boston Harbor. The action sought an order to compel HEEC to comply with cable depth requirements in the United States Army Corps of Engineers' permit or alternatively to remove the electric distribution cable and cease unauthorized work in U.S. waterways. The action also sought civil penalties and other costs.
After substantial negotiations, theThe parties reached a settlement wherebypursuant to which HEEC willagreed to install a new 115kV distribution cable across Boston Harbor to Deer Island, utilizing a different route, and will remove portions of the existing cable. Upon the installation and completionConstruction of the new distribution cable was completed in August 2019, and the removal of the portions of the existing cable allwas completed in January 2020. All issues surrounding the current permit from the United States Army Corps of Engineers are expected to be resolved, and subsequently, such litigation is expected to bethen dismissed with prejudice.
G. CL&P Regulatory Matters
CL&P Tropical Storm Isaias Response Investigation: In August 2020, PURA opened a docket to investigate the preparation for and response to Tropical Storm Isaias by Connecticut utilities, including CL&P. On April 28, 2021, PURA issued a final decision on CL&P’s compliance with its emergency response plan that concluded CL&P failed to comply with certain storm performance standards and was imprudent in certain instances. Specifically, PURA concluded that CL&P did not satisfy the performance standards for managing its municipal liaison program, timely removing electrical hazards from blocked roads, communicating critical information to its customers, or meeting its obligation to secure adequate external contractor and mutual aid resources in a timely manner. Based on its findings, PURA ordered CL&P to adjust its future rates in a pending or future rate proceeding to reflect a monetary penalty in the form of a downward adjustment of 90 basis points in its allowed rate of return on equity (ROE), which is currently 9.25 percent. In its decision, PURA explained that additional monetary penalties and further enforcement orders pursuant to Connecticut statute would be considered in a separate proceeding that was initiated on May 6, 2021.
On May 6, 2021, as part of the penalty proceeding, PURA issued a notice of violation that included an assessment of $30 million, consisting of a $28.4 million civil penalty for non-compliance with storm performance standards to be provided as credits on customer bills and a $1.6 million fine for violations of accident reporting requirements to be paid to the State of Connecticut’s general fund. On July 14, 2021, PURA issued a final decision in this penalty proceeding that included an assessment of $28.6 million, maintaining the $28.4 million performance penalty and reducing the $1.6 million fine for accident reporting to $0.2 million. The $28.4 million performance penalty is currently being credited to customers on electric bills beginning on September 1, 2021 over a one-year period. The $28.4 million is the maximum statutory penalty amount under applicable Connecticut law in effect at the time of Tropical Storm Isaias, which is 2.5 percent of CL&P’s annual distribution revenues. The
liability for the performance penalty was recorded as a current regulatory liability on CL&P’s balance sheet and as a reduction to Operating Revenues on the nine months ended September 30, 2021 income statement. The after-tax earnings impact of this charge was $0.07 per share.
CL&P Settlement Agreement: On October 1, 2021, CL&P entered into a settlement agreement with the DEEP, Office of Consumer Counsel (OCC), Office of the Attorney General (AG) and the Connecticut Industrial Energy Consumers, resolving certain issues that arose in pending regulatory proceedings initiated by the PURA. PURA approved the settlement agreement on October 27, 2021. In the settlement agreement, CL&P agreed to provide a total of $65 million of customer credits to be distributed based on customer sales over a two-month period from December 1, 2021 to January 31, 2022. CL&P also agreed to irrevocably set aside $10 million to fund various customer assistance initiatives as directed by PURA for disbursement to state-designated purposes, with the objective of disbursing the funds prior to April 30, 2022, including providing credits to existing hardship and non-hardship customers carrying arrearages and other purposes. In the third quarter of 2021, CL&P recorded a current regulatory liability of $75 million on the balance sheet associated with the provisions of the settlement agreement, with a $65 million pre-tax charge as a reduction to Operating Revenues associated with the customer credits and a $10 million charge to Operations and Maintenance expense associated with the customer assistance initiatives on the three months ended September 30, 2021 income statement.
In 2017, asexchange for the $75 million of customer credits and assistance, PURA’s interim rate reduction docket was resolved without findings. As a result of the settlement NSTAR Electric expensed $4.9 million (pre-tax) of previously incurred capitalized costs associated with engineering work performedagreement, neither the 90 basis point reduction to CL&P’s return on equity introduced in PURA’s storm-related decision issued April 28, 2021, nor the existing cable45 basis point reduction to CL&P’s return on equity included in PURA’s draft decision issued September 14, 2021 in the interim rate reduction docket, will be implemented.
CL&P has also agreed that will no longerits current base distribution rates shall be used. In addition, NSTAR Electric agreed to provide a rate base credit of $17.5 millionfrozen, subject to the Massachusetts Water Resources Authority forcustomer credits described above, until no earlier than January 1, 2024. The rate freeze applies only to base distribution rates (including storm costs) and not to other rate mechanisms such as the new cable. This negotiated credit will result in the initial $17.5 million of construction costs on the new cableretail rate components, rate reconciling mechanisms, formula rates and any other adjustment mechanisms. The rate freeze also does not apply to be expensed as incurred. Constructionany cost recovery mechanism outside of the new cable is expectedbase distribution rates with regard to grid-modernization initiatives or any other proceedings, either currently pending or that may be completed in 2019.
9. PSNH GENERATION ASSET SALE
On June 10, 2015, Eversource and PSNH entered intoinitiated during the 2015 Public Service Company of New Hampshire Restructuring and Rate Stabilization Agreement (the "Agreement") with the New Hampshire Office of Energy and Planning, certain membersrate freeze period, that may place additional obligations on CL&P. The approval of the NHPUC staff,settlement agreement satisfies the OfficeConnecticut statute of Consumer Advocate, two State Senators, and several other parties. Under the termsrate review requirements that requires electric utilities to file a distribution rate case within four years of the Agreement, PSNH agreed to divest its generation assets, subject to NHPUC approval. The Agreement provided for a resolution of issues pertaining to PSNH's generation assets in pending regulatory proceedings before the NHPUC. The Agreement provided for the Clean Air Project prudence proceeding to be resolved and all remaining Clean Air Project costs to be included in rates effective January 1, 2016. last rate case.
As part of the Agreement, PSNHsettlement agreement, CL&P agreed to forego recoverywithdraw with prejudice its pending appeals of $25 millionPURA’s April 28, 2021 and July 14, 2021 decisions related to Storm Isaias and agreed to waive its right to file an appeal and seek a judicial stay of the equity return relatedfinal decision in the interim rate reduction docket. The settlement agreement assures that CL&P will have the opportunity to petition for and demonstrate the Clean Air Project. prudence of the storm costs incurred to respond to customer outages associated with Storm Isaias in a future ratemaking proceeding.
On July 1, 2016,The cumulative pre-tax impact of the NHPUC approved the Agreement in an order that, among other things, instructed PSNH to begin the process of divesting its generation assets. The NHPUC selected an auction adviser to assist with the divestiture,settlement agreement and the final planStorm Isaias assessment imposed in PURA’s April 28, 2021 and auction process were approved byJuly 14, 2021 decisions totaled $103.6 million, and the NHPUC in November 2016.
As ofafter-tax earnings impact was $85.8 million, or $0.25 per share, for the nine months ended September 30, 2017, PSNH's generation assets were as follows:2021.
|
| | | |
(Millions of Dollars) | |
Gross Plant | $ | 1,184.1 |
|
Accumulated Depreciation | (573.3 | ) |
Net Plant | 610.8 |
|
Fuel | 92.9 |
|
Materials and Supplies | 44.0 |
|
Emission Allowances | 19.4 |
|
Total Generation Assets | $ | 767.1 |
|
On October 11, 2017, PSNH entered into two Purchase and Sale Agreements ("Agreements") to sell its thermal and hydroelectric generation assets to private investors at purchase prices of $175 million and $83 million, respectively, subject to adjustments as set forth in each Agreement.
On October 12, 2017, PSNH filed an application with the NHPUC requesting approval of the Agreements. We expect to receive approvals from the NHPUC and other necessary regulatory agencies by late December 2017 or early 2018, with the transactions to be completed shortly thereafter. The Company will classify these assets as held for sale upon NHPUC approval of the sale.
Upon completion, full recovery of PSNH's generation assets will occur through a combination of cash flows during the remaining operating period, sales proceeds, and recovery of stranded costs via bonds that will be secured by a non-bypassable charge or through recoveries in future rates billed to PSNH's customers.
10. FAIR VALUE OF FINANCIAL INSTRUMENTS
The following methods and assumptions were used to estimate the fair value of each of the following financial instruments:
Preferred Stock, Long-Term Debt and Long-Term Debt:Rate Reduction Bonds: The fair value of CL&P's and NSTAR Electric's preferred stock is based upon pricing models that incorporate interest rates and other market factors, valuations or trades of similar securities and cash flow projections. The fair value of long-term debt and RRB debt securities is based upon pricing models that incorporate quoted market prices for those issues or similar issues adjusted for market conditions, credit ratings of the respective companies and treasury benchmark yields. The fair values provided in the tablestable below are classified as Level 2 within the fair value hierarchy. Carrying amounts and estimated fair values are as follows:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Eversource | | CL&P | | NSTAR Electric | | PSNH |
(Millions of Dollars) | Carrying Amount | | Fair Value | | Carrying Amount | | Fair Value | | Carrying Amount | | Fair Value | | Carrying Amount | | Fair Value |
As of September 30, 2021: | | | | | | | | | | | | | | | |
Preferred Stock Not Subject to Mandatory Redemption | $ | 155.6 | | | $ | 165.5 | | | $ | 116.2 | | | $ | 121.4 | | | $ | 43.0 | | | $ | 44.1 | | | $ | — | | | $ | — | |
Long-Term Debt | 18,219.2 | | | 19,810.9 | | | 4,215.1 | | | 4,865.2 | | | 3,984.7 | | | 4,494.3 | | | 1,163.6 | | | 1,228.9 | |
Rate Reduction Bonds | 496.9 | | | 555.8 | | | — | | | — | | | — | | | — | | | 496.9 | | | 555.8 | |
| | | | | | | | | | | | | | | |
As of December 31, 2020: | | | | | | | | | | | | | | | |
Preferred Stock Not Subject to Mandatory Redemption | $ | 155.6 | | | $ | 169.1 | | | $ | 116.2 | | | $ | 123.4 | | | $ | 43.0 | | | $ | 45.7 | | | $ | — | | | $ | — | |
Long-Term Debt | 16,179.1 | | | 18,420.1 | | | 3,914.8 | | | 4,800.9 | | | 3,643.2 | | | 4,294.0 | | | 1,099.1 | | | 1,207.0 | |
Rate Reduction Bonds | 540.1 | | | 603.4 | | | — | | | — | | | — | | | — | | | 540.1 | | | 603.4 | |
|
| | | | | | | | | | | | | | | |
| As of September 30, 2017 | | As of December 31, 2016 |
Eversource (Millions of Dollars) | Carrying Amount | | Fair Value | | Carrying Amount | | Fair Value |
Preferred Stock Not Subject to Mandatory Redemption | $ | 155.6 |
| | $ | 160.3 |
| | $ | 155.6 |
| | $ | 158.3 |
|
Long-Term Debt | 11,425.9 |
| | 11,968.1 |
| | 9,603.2 |
| | 9,980.5 |
|
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| CL&P | | NSTAR Electric | | PSNH | | WMECO |
(Millions of Dollars) | Carrying Amount | | Fair Value | | Carrying Amount | | Fair Value | | Carrying Amount | | Fair Value | | Carrying Amount | | Fair Value |
As of September 30, 2017: | | | | | | | | | | | | | | | |
Preferred Stock Not Subject to Mandatory Redemption | $ | 116.2 |
| | $ | 115.9 |
| | $ | 43.0 |
| | $ | 44.4 |
| | $ | — |
| | $ | — |
| | $ | — |
| | $ | — |
|
Long-Term Debt | 3,058.9 |
| | 3,388.8 |
| | 2,426.2 |
| | 2,598.1 |
| | 1,002.6 |
| | 1,047.0 |
| | 566.2 |
| | 603.7 |
|
| | | | | | | | | | | | | | | |
As of December 31, 2016: | | | | | | | | | | | | | | | |
Preferred Stock Not Subject to Mandatory Redemption | $ | 116.2 |
| | $ | 114.7 |
| | $ | 43.0 |
| | $ | 43.6 |
| | $ | — |
| | $ | — |
| | $ | — |
| | $ | — |
|
Long-Term Debt | 2,766.0 |
| | 3,049.6 |
| | 2,078.1 |
| | 2,201.6 |
| | 1,072.0 |
| | 1,109.7 |
| | 566.5 |
| | 589.0 |
|
Derivative Instruments and Marketable Securities: Derivative instruments and investments in marketable securities are carried at fair value. For further information, see Note 4, "Derivative Instruments," and Note 5, "Marketable Securities," to the financial statements.
See Note 1D, "Summary of Significant Accounting Policies -– Fair Value Measurements," for the fair value measurement policy and the fair value hierarchy.
11. ACCUMULATED OTHER COMPREHENSIVE INCOME/(LOSS)
The changes in accumulated other comprehensive income/(loss) by component, net of tax, isare as follows:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| For the Nine Months Ended September 30, 2021 | | For the Nine Months Ended September 30, 2020 |
Eversource (Millions of Dollars) | Qualified Cash Flow Hedging Instruments | | Unrealized Gains/(Losses) on Marketable Securities | | Defined Benefit Plans | | Total | | Qualified Cash Flow Hedging Instruments | | Unrealized Gains on Marketable Securities | | Defined Benefit Plans | | Total |
Balance as of Beginning of Period | $ | (1.4) | | | $ | 1.1 | | | $ | (76.1) | | | $ | (76.4) | | | $ | (3.0) | | | $ | 0.7 | | | $ | (62.8) | | | $ | (65.1) | |
| | | | | | | | | | | | | | | |
OCI Before Reclassifications | — | | | (0.6) | | | (2.4) | | | (3.0) | | | — | | | 0.3 | | | (1.6) | | | (1.3) | |
Amounts Reclassified from AOCI | 1.0 | | | — | | | 6.5 | | | 7.5 | | | 1.2 | | | — | | | 4.8 | | | 6.0 | |
Net OCI | 1.0 | | | (0.6) | | | 4.1 | | | 4.5 | | | 1.2 | | | 0.3 | | | 3.2 | | | 4.7 | |
Balance as of End of Period | $ | (0.4) | | | $ | 0.5 | | | $ | (72.0) | | | $ | (71.9) | | | $ | (1.8) | | | $ | 1.0 | | | $ | (59.6) | | | $ | (60.4) | |
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| For the Nine Months Ended September 30, 2017 | | For the Nine Months Ended September 30, 2016 |
| Qualified | | Unrealized | | | | | | Qualified | | Unrealized | | | | |
| Cash Flow | | Gains | | | | | | Cash Flow | | Gains/(Losses) | | | | |
Eversource (Millions of Dollars) | Hedging | | on Marketable | | Defined | | | | Hedging | | on Marketable | | Defined | | |
Instruments | | Securities | | Benefit Plans | | Total | | Instruments | | Securities | | Benefit Plans | | Total |
Balance as of Beginning of Period | $ | (8.2 | ) | | $ | 0.4 |
| | $ | (57.5 | ) | | $ | (65.3 | ) | | $ | (10.3 | ) | | $ | (1.9 | ) | | $ | (54.6 | ) | | $ | (66.8 | ) |
| | | | | | | | | | | | | | | |
OCI Before Reclassifications | — |
| | 0.7 |
| | (3.5 | ) | | (2.8 | ) | | — |
| | 2.3 |
| | (5.3 | ) | | (3.0 | ) |
Amounts Reclassified from AOCL | 1.6 |
| | — |
| | 2.9 |
| | 4.5 |
| | 1.6 |
| | — |
| | 2.6 |
| | 4.2 |
|
Net OCI | 1.6 |
| | 0.7 |
| | (0.6 | ) | | 1.7 |
| | 1.6 |
| | 2.3 |
| | (2.7 | ) | | 1.2 |
|
Balance as of End of Period | $ | (6.6 | ) | | $ | 1.1 |
| | $ | (58.1 | ) | | $ | (63.6 | ) | | $ | (8.7 | ) | | $ | 0.4 |
| | $ | (57.3 | ) | | $ | (65.6 | ) |
Eversource's qualified cash flow hedging instruments represent interest rate swap agreements on debt issuances that were settled in prior years. The settlement amount was recorded in AOCL and is being amortized into Net Income over the term of the underlying debt instrument. CL&P, PSNH and WMECO continue to amortize interest rate swaps settled in prior years from AOCL into Interest Expense over the remaining life of the associated long-term debt. Such interest rate swaps are not material to their respective financial statements.
Defined benefit plan OCI amounts before reclassifications relate to actuarial gains and losses and prior service costs that arose during the year and were recognized in AOCL.AOCI. The unamortized actuarial gains and losses and prior service costs on the defined benefit plans are amortized from AOCLAOCI into Operations and Maintenance expenseOther Income, Net over the average future employee service period, and are reflected in amounts reclassified from AOCL. For further information, see Note 7, "Pension Benefits and Postretirement Benefits Other Than Pensions."AOCI.
12. COMMON SHARES
The following table sets forth the Eversource parent common shares and the shares of common stock of CL&P, NSTAR Electric PSNH and WMECOPSNH that were authorized and issued, as well as the respective per share par values:
| | | | | | | | | | | | | | | | | | | | | | | |
| Shares |
| | | Authorized as of September 30, 2021 and December 31, 2020 | | Issued as of |
| Par Value | | | September 30, 2021 | | December 31, 2020 |
Eversource | $ | 5 | | | 380,000,000 | | | 357,818,402 | | | 357,818,402 | |
CL&P | $ | 10 | | | 24,500,000 | | | 6,035,205 | | | 6,035,205 | |
NSTAR Electric | $ | 1 | | | 100,000,000 | | | 200 | | | 200 | |
PSNH | $ | 1 | | | 100,000,000 | | | 301 | | | 301 | |
|
| | | | | | | | | | | | |
| Shares |
| | | Authorized as of September 30, 2017 and | | Issued as of |
| Par Value | | December 31, 2016 | | September 30, 2017 | | December 31, 2016 |
Eversource | $ | 5 |
| | 380,000,000 |
| | 333,878,402 |
| | 333,878,402 |
|
CL&P | $ | 10 |
| | 24,500,000 |
| | 6,035,205 |
| | 6,035,205 |
|
NSTAR Electric | $ | 1 |
| | 100,000,000 |
| | 100 |
| | 100 |
|
PSNH | $ | 1 |
| | 100,000,000 |
| | 301 |
| | 301 |
|
WMECO | $ | 25 |
| | 1,072,471 |
| | 434,653 |
| | 434,653 |
|
Treasury Shares:As of both September 30, 20172021 and December 31, 2016,2020, there were 16,992,594 14,044,078 and 14,864,379 Eversource common shares held as treasury shares.shares, respectively. As of both September 30, 20172021 and December 31, 2016,2020, Eversource common shares outstanding were 343,774,324 and 342,954,023, respectively.
Eversource issues treasury shares to satisfy awards under the Company's incentive plans, shares issued under the dividend reinvestment and share purchase plan, and matching contributions under the Eversource 401k Plan. The issuance of treasury shares represents a non-cash transaction, as the treasury shares were 316,885,808.used to fulfill Eversource's obligations that require the issuance of common shares.
13. COMMON SHAREHOLDERS' EQUITY AND NONCONTROLLING INTERESTS
Dividends on the preferred stock of CL&P and NSTAR Electric totaled $1.9 million for botheach of the three months ended September 30, 20172021 and 2016,2020 and $5.6 million for botheach of the nine months ended September 30, 20172021 and 2016.2020. These dividends were presented as Net Income Attributable to Noncontrolling Interests on the Eversource statements of income. Noncontrolling Interest – Preferred Stock of Subsidiaries on the Eversource balance sheets totaled $155.6 million as of September 30, 20172021 and December 31, 2016.2020. On the Eversource balance sheets, Common Shareholders' Equity was fully attributable to theEversource parent and Noncontrolling Interest – Preferred Stock of Subsidiaries was fully attributable to the noncontrolling interest.
14. EARNINGS PER SHARE
Basic EPS is computed based upon the weighted average number of common shares outstanding during each period. Diluted EPS is computed on the basis of the weighted average number of common shares outstanding plus the potential dilutive effect of certain share-based compensation awards as if they were converted into outstanding common shares. The dilutive effect of unvested RSU and performance share awards is calculated using the treasury stock method. RSU and performance share awards are included in basic weighted average common shares outstanding as of the date that all necessary vesting conditions have been satisfied. For the three and nine months ended September 30, 2017 and 2016, thereThere were no antidilutive share awards excluded from the computation of diluted EPS.EPS for the three and nine months ended September 30, 2021 and the three months ended September 30, 2020. For the nine months ended September 30, 2020, there were 52,747 antidilutive share awards excluded from the EPS computation, as their impact would have been antidilutive. Antidilutive shares pertained to a purchase option extended to underwriters in connection with Eversource’s common share issuance on June 15, 2020.
The following table sets forth the components of basic and diluted EPS:
| | | | | | | | | | | | | | | | | | | | | | | |
Eversource (Millions of Dollars, except share information) | For the Three Months Ended | | For the Nine Months Ended |
September 30, 2021 | | September 30, 2020 | | September 30, 2021 | | September 30, 2020 |
Net Income Attributable to Common Shareholders | $ | 283.2 | | | $ | 346.3 | | | $ | 913.8 | | | $ | 933.2 | |
Weighted Average Common Shares Outstanding: | | | | | | | |
Basic | 344,023,846 | | | 343,076,614 | | | 343,848,905 | | | 337,375,172 | |
Dilutive Effect of: | | | | | | | |
Share-Based Compensation Awards and Other | 645,936 | | | 696,988 | | | 631,151 | | | 686,403 | |
Equity Forward Sale Agreement | — | | | — | | | — | | | 362,525 | |
Total Dilutive Effect | 645,936 | | | 696,988 | | | 631,151 | | | 1,048,928 | |
Diluted | 344,669,782 | | | 343,773,602 | | | 344,480,056 | | | 338,424,100 | |
Basic EPS | $ | 0.82 | | | $ | 1.01 | | | $ | 2.66 | | | $ | 2.77 | |
Diluted EPS | $ | 0.82 | | | $ | 1.01 | | | $ | 2.65 | | | $ | 2.76 | |
15. REVENUES
The following tables present operating revenues disaggregated by revenue source: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| For the Three Months Ended September 30, 2021 |
Eversource (Millions of Dollars) | Electric Distribution | | Natural Gas Distribution | | Electric Transmission | | Water Distribution | | Other | | Eliminations | | Total |
Revenues from Contracts with Customers | | | | | | | | | | | | | |
Retail Tariff Sales | | | | | | | | | | | | | |
Residential | $ | 1,146.8 | | | $ | 81.7 | | | $ | — | | | $ | 39.1 | | | $ | — | | | $ | — | | | $ | 1,267.6 | |
Commercial | 748.8 | | | 59.0 | | | — | | | 17.2 | | | — | | | (1.4) | | | 823.6 | |
Industrial | 96.2 | | | 28.6 | | | — | | | 1.1 | | | — | | | (4.8) | | | 121.1 | |
Total Retail Tariff Sales Revenues | 1,991.8 | | | 169.3 | | | — | | | 57.4 | | | — | | | (6.2) | | | 2,212.3 | |
Wholesale Transmission Revenues | — | | | — | | | 527.2 | | | — | | | 23.0 | | | (408.5) | | | 141.7 | |
Wholesale Market Sales Revenues | 133.8 | | | 12.2 | | | — | | | 1.1 | | | — | | | — | | | 147.1 | |
Other Revenues from Contracts with Customers | 29.6 | | | 1.2 | | | 3.5 | | | 1.8 | | | 303.1 | | | (301.4) | | | 37.8 | |
Reserve for Revenues Subject to Refund (1) | (93.4) | | | — | | | — | | | (0.9) | | | — | | | — | | | (94.3) | |
Total Revenues from Contracts with Customers | 2,061.8 | | | 182.7 | | | 530.7 | | | 59.4 | | | 326.1 | | | (716.1) | | | 2,444.6 | |
Alternative Revenue Programs | (7.9) | | | 2.7 | | | (112.6) | | | 2.3 | | | — | | | 102.0 | | | (13.5) | |
Other Revenues (2) | 1.3 | | | 0.1 | | | 0.2 | | | 0.1 | | | — | | | — | | | 1.7 | |
Total Operating Revenues | $ | 2,055.2 | | | $ | 185.5 | | | $ | 418.3 | | | $ | 61.8 | | | $ | 326.1 | | | $ | (614.1) | | | $ | 2,432.8 | |
| | | | | | | | | | | | | |
| For the Nine Months Ended September 30, 2021 |
Eversource (Millions of Dollars) | Electric Distribution | | Natural Gas Distribution | | Electric Transmission | | Water Distribution | | Other | | Eliminations | | Total |
Revenues from Contracts with Customers | | | | | | | | | | | | | |
Retail Tariff Sales | | | | | | | | | | | | | |
Residential | $ | 3,094.9 | | | $ | 722.8 | | | $ | — | | | $ | 102.8 | | | $ | — | | | $ | — | | | $ | 3,920.5 | |
Commercial | 1,902.9 | | | 356.4 | | | — | | | 47.0 | | | — | | | (4.1) | | | 2,302.2 | |
Industrial | 261.1 | | | 119.5 | | | — | | | 3.3 | | | — | | | (12.8) | | | 371.1 | |
Total Retail Tariff Sales Revenues | 5,258.9 | | | 1,198.7 | | | — | | | 153.1 | | | — | | | (16.9) | | | 6,593.8 | |
Wholesale Transmission Revenues | — | | | — | | | 1,338.4 | | | — | | | 62.5 | | | (1,075.4) | | | 325.5 | |
Wholesale Market Sales Revenues | 380.1 | | | 54.1 | | | — | | | 3.0 | | | — | | | — | | | 437.2 | |
Other Revenues from Contracts with Customers | 68.4 | | | 3.6 | | | 10.2 | | | 5.5 | | | 936.6 | | | (929.6) | | | 94.7 | |
Reserve for Revenues Subject to Refund (1) | (93.4) | | | — | | | — | | | (2.2) | | | — | | | — | | | (95.6) | |
Total Revenues from Contracts with Customers | 5,614.0 | | | 1,256.4 | | | 1,348.6 | | | 159.4 | | | 999.1 | | | (2,021.9) | | | 7,355.6 | |
Alternative Revenue Programs | 14.9 | | | 21.3 | | | (119.2) | | | 1.3 | | | — | | | 103.0 | | | 21.3 | |
Other Revenues (2) | 3.2 | | | 0.1 | | | 0.7 | | | 0.3 | | | — | | | — | | | 4.3 | |
Total Operating Revenues | $ | 5,632.1 | | | $ | 1,277.8 | | | $ | 1,230.1 | | | $ | 161.0 | | | $ | 999.1 | | | $ | (1,918.9) | | | $ | 7,381.2 | |
|
| | | | | | | | | | | | | | | |
Eversource (Millions of Dollars, except share information) | For the Three Months Ended | | For the Nine Months Ended |
September 30, 2017 | | September 30, 2016 | | September 30, 2017 | | September 30, 2016 |
Net Income Attributable to Common Shareholders | $ | 260.4 |
| | $ | 265.3 |
| | $ | 750.6 |
| | $ | 713.1 |
|
Weighted Average Common Shares Outstanding: | | | | | | | |
Basic | 317,393,029 |
| | 317,787,836 |
| | 317,415,848 |
| | 317,696,823 |
|
Dilutive Effect | 556,367 |
| | 789,243 |
| | 591,194 |
| | 814,786 |
|
Diluted | 317,949,396 |
| | 318,577,079 |
| | 318,007,042 |
| | 318,511,609 |
|
Basic and Diluted EPS | $ | 0.82 |
| | $ | 0.83 |
| | $ | 2.36 |
| | $ | 2.24 |
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| For the Three Months Ended September 30, 2020 |
Eversource (Millions of Dollars) | Electric Distribution | | Natural Gas Distribution | | Electric Transmission | | Water Distribution | | Other | | Eliminations | | Total |
Revenues from Contracts with Customers | | | | | | | | | | | | | |
Retail Tariff Sales | | | | | | | | | | | | | |
Residential | $ | 1,183.9 | | | $ | 45.5 | | | $ | — | | | $ | 45.8 | | | $ | — | | | $ | — | | | $ | 1,275.2 | |
Commercial | 682.7 | | | 41.1 | | | — | | | 17.1 | | | — | | | (1.4) | | | 739.5 | |
Industrial | 91.0 | | | 17.5 | | | — | | | 1.3 | | | — | | | (3.6) | | | 106.2 | |
Total Retail Tariff Sales Revenues | 1,957.6 | | | 104.1 | | | — | | | 64.2 | | | — | | | (5.0) | | | 2,120.9 | |
Wholesale Transmission Revenues | — | | | — | | | 458.2 | | | — | | | 19.0 | | | (365.6) | | | 111.6 | |
Wholesale Market Sales Revenues | 79.6 | | | 8.7 | | | — | | | 1.1 | | | — | | | — | | | 89.4 | |
Other Revenues from Contracts with Customers | 20.7 | | | 1.3 | | | 3.2 | | | 0.7 | | | 303.3 | | | (299.0) | | | 30.2 | |
| | | | | | | | | | | | | |
Total Revenues from Contracts with Customers | 2,057.9 | | | 114.1 | | | 461.4 | | | 66.0 | | | 322.3 | | | (669.6) | | | 2,352.1 | |
Alternative Revenue Programs | 1.7 | | | (4.0) | | | (72.3) | | | (2.0) | | | — | | | 67.0 | | | (9.6) | |
Other Revenues (2) | 0.7 | | | 0.1 | | | 0.2 | | | 0.1 | | | — | | | — | | | 1.1 | |
Total Operating Revenues | $ | 2,060.3 | | | $ | 110.2 | | | $ | 389.3 | | | $ | 64.1 | | | $ | 322.3 | | | $ | (602.6) | | | $ | 2,343.6 | |
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| For the Nine Months Ended September 30, 2020 |
Eversource (Millions of Dollars) | Electric Distribution | | Natural Gas Distribution | | Electric Transmission | | Water Distribution | | Other | | Eliminations | | Total |
Revenues from Contracts with Customers | | | | | | | | | | | | | |
Retail Tariff Sales | | | | | | | | | | | | | |
Residential | $ | 3,063.7 | | | $ | 399.6 | | | $ | — | | | $ | 113.2 | | | $ | — | | | $ | — | | | $ | 3,576.5 | |
Commercial | 1,815.7 | | | 243.5 | | | — | | | 47.7 | | | — | | | (3.7) | | | 2,103.2 | |
Industrial | 248.4 | | | 67.0 | | | — | | | 3.6 | | | — | | | (10.1) | | | 308.9 | |
Total Retail Tariff Sales Revenues | 5,127.8 | | | 710.1 | | | — | | | 164.5 | | | — | | | (13.8) | | | 5,988.6 | |
Wholesale Transmission Revenues | — | | | — | | | 1,177.9 | | | — | | | 55.6 | | | (981.4) | | | 252.1 | |
Wholesale Market Sales Revenues | 231.1 | | | 31.9 | | | — | | | 2.9 | | | — | | | — | | | 265.9 | |
Other Revenues from Contracts with Customers | 63.3 | | | 4.1 | | | 9.9 | | | 2.8 | | | 845.1 | | | (838.0) | | | 87.2 | |
| | | | | | | | | | | | | |
Total Revenues from Contracts with Customers | 5,422.2 | | | 746.1 | | | 1,187.8 | | | 170.2 | | | 900.7 | | | (1,833.2) | | | 6,593.8 | |
Alternative Revenue Programs | 54.8 | | | 22.9 | | | (52.7) | | | (4.1) | | | — | | | 48.9 | | | 69.8 | |
Other Revenues (2) | 4.9 | | | 1.0 | | | 0.5 | | | 0.5 | | | — | | | — | | | 6.9 | |
Total Operating Revenues | $ | 5,481.9 | | | $ | 770.0 | | | $ | 1,135.6 | | | $ | 166.6 | | | $ | 900.7 | | | $ | (1,784.3) | | | $ | 6,670.5 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | |
| For the Three Months Ended September 30, 2021 | | For the Three Months Ended September 30, 2020 |
(Millions of Dollars) | CL&P | | NSTAR Electric | | PSNH | | CL&P | | NSTAR Electric | | PSNH |
Revenues from Contracts with Customers | | | | | | | | | | | |
Retail Tariff Sales | | | | | | | | | | | |
Residential | $ | 572.0 | | | $ | 401.9 | | | $ | 172.9 | | | $ | 608.7 | | | $ | 415.4 | | | $ | 159.8 | |
Commercial | 249.4 | | | 411.3 | | | 88.5 | | | 244.7 | | | 358.3 | | | 80.1 | |
Industrial | 35.0 | | | 35.9 | | | 25.3 | | | 38.0 | | | 30.6 | | | 22.4 | |
Total Retail Tariff Sales Revenues | 856.4 | | | 849.1 | | | 286.7 | | | 891.4 | | | 804.3 | | | 262.3 | |
Wholesale Transmission Revenues | 268.2 | | | 171.0 | | | 88.0 | | | 233.3 | | | 153.1 | | | 71.8 | |
Wholesale Market Sales Revenues | 100.3 | | | 21.3 | | | 12.2 | | | 60.0 | | | 12.1 | | | 7.5 | |
Other Revenues from Contracts with Customers | 12.1 | | | 14.3 | | | 7.3 | | | 8.1 | | | 10.5 | | | 3.7 | |
(Reserve for)/Amortization of Revenues Subject to Refund (1) | (93.4) | | | — | | | — | | | — | | | — | | | 2.3 | |
Total Revenues from Contracts with Customers | 1,143.6 | | | 1,055.7 | | | 394.2 | | | 1,192.8 | | | 980.0 | | | 347.6 | |
Alternative Revenue Programs | (82.0) | | | (14.4) | | | (24.1) | | | (65.0) | | | 8.2 | | | (13.8) | |
Other Revenues (2) | 0.2 | | | 0.7 | | | 0.6 | | | 0.2 | | | 0.7 | | | — | |
Eliminations | (142.2) | | | (123.3) | | | (55.8) | | | (133.7) | | | (113.5) | | | (50.1) | |
Total Operating Revenues | $ | 919.6 | | | $ | 918.7 | | | $ | 314.9 | | | $ | 994.3 | | | $ | 875.4 | | | $ | 283.7 | |
15. | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | |
| For the Nine Months Ended September 30, 2021 | | For the Nine Months Ended September 30, 2020 |
(Millions of Dollars) | CL&P | | NSTAR Electric | | PSNH | | CL&P | | NSTAR Electric | | PSNH |
Revenues from Contracts with Customers | | | | | | | | | | | |
Retail Tariff Sales | | | | | | | | | | | |
Residential | $ | 1,558.6 | | | $ | 1,069.0 | | | $ | 467.3 | | | $ | 1,567.9 | | | $ | 1,057.9 | | | $ | 437.9 | |
Commercial | 679.3 | | | 975.7 | | | 249.2 | | | 670.4 | | | 921.3 | | | 225.3 | |
Industrial | 100.2 | | | 89.5 | | | 71.4 | | | 105.3 | | | 82.1 | | | 61.0 | |
Total Retail Tariff Sales Revenues | 2,338.1 | | | 2,134.2 | | | 787.9 | | | 2,343.6 | | | 2,061.3 | | | 724.2 | |
Wholesale Transmission Revenues | 652.8 | | | 478.2 | | | 207.4 | | | 576.5 | | | 430.3 | | | 171.1 | |
Wholesale Market Sales Revenues | 278.1 | | | 64.7 | | | 37.3 | | | 163.9 | | | 39.8 | | | 27.4 | |
Other Revenues from Contracts with Customers | 28.8 | | | 36.8 | | | 14.9 | | | 25.1 | | | 32.4 | | | 10.9 | |
(Reserve for)/Amortization of Revenues Subject to Refund (1) | (93.4) | | | — | | | — | | | — | | | — | | | 6.9 | |
Total Revenues from Contracts with Customers | 3,204.4 | | | 2,713.9 | | | 1,047.5 | | | 3,109.1 | | | 2,563.8 | | | 940.5 | |
Alternative Revenue Programs | (74.2) | | | (11.3) | | | (18.8) | | | (27.8) | | | 31.1 | | | (1.2) | |
Other Revenues (2) | 0.3 | | | 2.5 | | | 1.1 | | | 2.0 | | | 2.8 | | | 0.6 | |
Eliminations | (394.0) | | | (362.0) | | | (142.6) | | | (371.9) | | | (327.5) | | | (124.6) | |
Total Operating Revenues | $ | 2,736.5 | | | $ | 2,343.1 | | | $ | 887.2 | | | $ | 2,711.4 | | | $ | 2,270.2 | | | $ | 815.3 | |
(1) The Electric Distribution segment 2021 revenue subject to refund amount relates to an October 1, 2021 CL&P settlement agreement with the DEEP, OCC, AG and the Connecticut Industrial Energy Consumers, which resolved certain issues that arose in pending regulatory proceedings initiated by the PURA. In the third quarter of 2021, CL&P recorded a reduction to Operating Revenues of $65 million on the income statement for a reserve for customer credits associated with the provisions of the settlement agreement. Additionally, CL&P recorded a $28.4 million reserve in the first quarter of 2021 for a civil penalty for non-compliance with storm performance standards to be credited to customers. The penalty was reclassified from Operations and Maintenance expense to a reduction of Operating Revenues in the third quarter of 2021 in connection with the finalization of the settlement agreement. In total, the reserve for revenues subject to refund totaled $93.4 million and was recorded as a current regulatory liability on CL&P’s balance sheet and as a reduction to Operating Revenues on the nine months ended September 30, 2021 income statement. See Note 9G, “Commitments and Contingencies - CL&P Regulatory Matters,” for further information.
(2) Other Revenues include certain fees charged to customers that are not considered revenue from contracts with customers. Other Revenues also include lease revenues under lessor accounting guidance of $1.1 million (including $0.2 million at CL&P and $0.7 million at NSTAR Electric) and $1.1 million (including $0.2 million at CL&P and $0.7 million at NSTAR Electric) for the three months ended September 30, 2021 and 2020, respectively, and $3.8 million (including $0.6 million at CL&P and $2.5 million at NSTAR Electric) and $3.2 million (including $0.6 million at CL&P and $2.1 million at NSTAR Electric) for the nine months ended September 30, 2021 and 2020, respectively.
16. SEGMENT INFORMATION
Presentation:Eversource is organized amonginto the Electric Distribution, Electric Transmission, and Natural Gas Distribution and Water Distribution reportable segments and Other based on a combination of factors, including the characteristics of each segments' services, the sources of operating revenues and expenses and the regulatory environment in which each segment operates. These reportable segments represent substantially all of Eversource's total consolidated revenues. Revenues from the sale of electricity, and natural gas and water primarily are derived from residential, commercial and industrial customers and are not dependent on any single customer. The Electric Distribution reportable segment includes the generation activitiesresults of NSTAR Electric, PSNHElectric's solar power facilities. Eversource's reportable segments are determined based upon the level at which Eversource's chief operating decision maker assesses performance and WMECO. makes decisions about the allocation of company resources.
The remainder of Eversource's operations is presented as Other in the tables below and primarily consists of 1) the equity in earnings of Eversource parent from its subsidiaries and intercompany interest income, both of which are eliminated in consolidation, and interest expense related to the debt of Eversource parent, 2) the revenues and expenses of Eversource Service, most of which are eliminated in consolidation, 3) the operations of CYAPC and YAEC, and 4) the results of other unregulated subsidiaries, which are not part of its core business. In addition, Other in the tables below includesbusiness, and 5) Eversource parent's equity ownership interests in certainthat are not consolidated, which primarily include the offshore wind business, anatural gas pipeline projects owned by Enbridge, Inc., the Bay State Wind project,and a renewable energy investment fund, and two companies that transmit hydroelectricity imported from the Hydro-Quebec system in Canada. fund.
In the ordinary course of business, Yankee Gas, and NSTAR Gas and EGMA purchase natural gas transmission services from the Enbridge, Inc. natural gas pipeline projectsproject described above. These affiliate transaction costs total approximately $62.5$77.7 million annually and are classified as Purchased Power, Fuel and Transmission on the Eversource statements of income.
Each of Eversource's subsidiaries, including CL&P, NSTAR Electric and PSNH, has 1 reportable segment.
Cash flows used for investments in plant included in the segment information below are cash capital expenditures that do not include amounts incurred but not paid, cost of removal, AFUDC related to equity funds, and the capitalized portions of pension and PBOP expense.
Eversource's reportable segments are determined based upon the level at which Eversource's chief operating decision maker assesses performance and makes decisions about the allocation of company resources. Each of Eversource's subsidiaries, including CL&P, NSTAR Electric, PSNH and WMECO, has one reportable segment. Eversource's operating segments and reporting units are consistent with its reportable business segments.
Eversource's segment information is as follows:
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| For the Three Months Ended September 30, 2021 |
Eversource (Millions of Dollars) | Electric Distribution | | Natural Gas Distribution | | Electric Transmission | | Water Distribution | | Other | | Eliminations | | Total |
Operating Revenues | $ | 2,055.2 | | | $ | 185.5 | | | $ | 418.3 | | | $ | 61.8 | | | $ | 326.1 | | | $ | (614.1) | | | $ | 2,432.8 | |
Depreciation and Amortization | (179.8) | | | (28.5) | | | (75.4) | | | (11.5) | | | (28.0) | | | 1.1 | | | (322.1) | |
Other Operating Expenses | (1,640.5) | | | (176.9) | | | (122.4) | | | (26.1) | | | (275.2) | | | 613.7 | | | (1,627.4) | |
Operating Income/(Loss) | $ | 234.9 | | | $ | (19.9) | | | $ | 220.5 | | | $ | 24.2 | | | $ | 22.9 | | | $ | 0.7 | | | $ | 483.3 | |
Interest Expense | $ | (61.0) | | | $ | (15.7) | | | $ | (33.5) | | | $ | (8.0) | | | $ | (42.5) | | | $ | 12.7 | | | $ | (148.0) | |
Other Income, Net | 25.4 | | | 6.7 | | | 5.0 | | | 1.2 | | | 325.9 | | | (320.4) | | | 43.8 | |
Net Income/(Loss) Attributable to Common Shareholders | 150.4 | | | (22.0) | | | 139.4 | | | 17.5 | | | 304.9 | | | (307.0) | | | 283.2 | |
| | | | | | | | | | | | | |
| For the Nine Months Ended September 30, 2021 |
Eversource (Millions of Dollars) | Electric Distribution | | Natural Gas Distribution | | Electric Transmission | | Water Distribution | | Other | | Eliminations | | Total |
Operating Revenues | $ | 5,632.1 | | | $ | 1,277.8 | | | $ | 1,230.1 | | | $ | 161.0 | | | $ | 999.1 | | | $ | (1,918.9) | | | $ | 7,381.2 | |
Depreciation and Amortization | (534.1) | | | (108.7) | | | (223.4) | | | (34.3) | | | (83.7) | | | 3.1 | | | (981.1) | |
Other Operating Expenses | (4,531.3) | | | (970.6) | | | (359.6) | | | (76.7) | | | (860.3) | | | 1,918.9 | | | (4,879.6) | |
Operating Income | $ | 566.7 | | | $ | 198.5 | | | $ | 647.1 | | | $ | 50.0 | | | $ | 55.1 | | | $ | 3.1 | | | $ | 1,520.5 | |
Interest Expense | $ | (175.4) | | | $ | (44.2) | | | $ | (98.7) | | | $ | (24.0) | | | $ | (125.9) | | | $ | 37.0 | | | $ | (431.2) | |
Other Income, Net | 76.0 | | | 15.2 | | | 17.3 | | | 3.1 | | | 1,059.2 | | | (1,046.2) | | | 124.6 | |
Net Income Attributable to Common Shareholders | 365.4 | | | 129.6 | | | 412.4 | | | 30.0 | | | 982.5 | | | (1,006.1) | | | 913.8 | |
Cash Flows Used for Investments in Plant | 764.9 | | | 506.4 | | | 691.0 | | | 91.2 | | | 157.6 | | | — | | | 2,211.1 | |
| | | For the Three Months Ended September 30, 2017 | | For the Three Months Ended September 30, 2020 |
Eversource (Millions of Dollars) | Electric Distribution | | Natural Gas Distribution | | Electric Transmission | | Other | | Eliminations | | Total | Eversource (Millions of Dollars) | Electric Distribution | | Natural Gas Distribution (1) | | Electric Transmission | | Water Distribution | | Other (1) | | Eliminations (1) | | Total |
Operating Revenues | $ | 1,547.1 |
| | $ | 109.2 |
| | $ | 328.5 |
| | $ | 224.2 |
| | $ | (220.5 | ) | | $ | 1,988.5 |
| Operating Revenues | $ | 2,060.3 | | | $ | 110.2 | | | $ | 389.3 | | | $ | 64.1 | | | $ | 322.3 | | | $ | (602.6) | | | $ | 2,343.6 | |
Depreciation and Amortization | (159.6 | ) | | (15.2 | ) | | (52.6 | ) | | (9.5 | ) | | 0.6 |
| | (236.3 | ) | Depreciation and Amortization | (182.0) | | | (14.8) | | | (70.6) | | | (10.8) | | | (24.1) | | | 0.3 | | | (302.0) | |
Other Operating Expenses | (1,088.7 | ) | | (95.5 | ) | | (95.5 | ) | | (190.0 | ) | | 220.1 |
| | (1,249.6 | ) | Other Operating Expenses | (1,577.0) | | | (104.2) | | | (120.6) | | | (10.2) | | | (271.5) | | | 603.1 | | | (1,480.4) | |
Operating Income/(Loss) | $ | 298.8 |
| | $ | (1.5 | ) | | $ | 180.4 |
| | $ | 24.7 |
| | $ | 0.2 |
| | $ | 502.6 |
| Operating Income/(Loss) | $ | 301.3 | | | $ | (8.8) | | | $ | 198.1 | | | $ | 43.1 | | | $ | 26.7 | | | $ | 0.8 | | | $ | 561.2 | |
Interest Expense | $ | (51.3 | ) | | $ | (10.8 | ) | | $ | (29.2 | ) | | $ | (21.8 | ) | | $ | 4.4 |
| | $ | (108.7 | ) | Interest Expense | $ | (53.3) | | | $ | (10.1) | | | $ | (31.1) | | | $ | (8.0) | | | $ | (38.7) | | | $ | 7.1 | | | $ | (134.1) | |
Other Income, Net | 7.7 |
| | 0.3 |
| | 8.5 |
| | 267.5 |
| | (262.8 | ) | | 21.2 |
| Other Income, Net | 16.0 | | | 0.7 | | | 6.9 | | | 1.6 | | | 401.0 | | | (397.0) | | | 29.2 | |
Net Income/(Loss) Attributable to Common Shareholders | 157.4 |
| | (6.2 | ) | | 99.0 |
| | 268.4 |
| | (258.2 | ) | | 260.4 |
| Net Income/(Loss) Attributable to Common Shareholders | 205.5 | | | (15.4) | | | 125.6 | | | 23.1 | | | 396.6 | | | (389.1) | | | 346.3 | |
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| For the Nine Months Ended September 30, 2017 | | For the Nine Months Ended September 30, 2020 |
Eversource (Millions of Dollars) | Electric Distribution | | Natural Gas Distribution | | Electric Transmission | | Other | | Eliminations | | Total | Eversource (Millions of Dollars) | Electric Distribution | | Natural Gas Distribution (1) | | Electric Transmission | | Water Distribution | | Other (1) | | Eliminations (1) | | Total |
Operating Revenues | $ | 4,224.2 |
| | $ | 698.8 |
| | $ | 970.0 |
| | $ | 677.5 |
| | $ | (714.0 | ) | | $ | 5,856.5 |
| Operating Revenues | $ | 5,481.9 | | | $ | 770.0 | | | $ | 1,135.6 | | | $ | 166.6 | | | $ | 900.7 | | | $ | (1,784.3) | | | $ | 6,670.5 | |
Depreciation and Amortization | (394.9 | ) | | (54.8 | ) | | (154.5 | ) | | (26.7 | ) | | 1.7 |
| | (629.2 | ) | Depreciation and Amortization | (490.0) | | | (55.1) | | | (206.8) | | | (33.1) | | | (68.1) | | | 1.2 | | | (851.9) | |
Other Operating Expenses | (3,056.0 | ) | | (535.2 | ) | | (280.4 | ) | | (602.4 | ) | | 714.0 |
| | (3,760.0 | ) | Other Operating Expenses | (4,309.9) | | | (592.0) | | | (338.5) | | | (60.7) | | | (771.4) | | | 1,787.9 | | | (4,284.6) | |
Operating Income | $ | 773.3 |
| | $ | 108.8 |
| | $ | 535.1 |
| | $ | 48.4 |
| | $ | 1.7 |
| | $ | 1,467.3 |
| Operating Income | $ | 682.0 | | | $ | 122.9 | | | $ | 590.3 | | | $ | 72.8 | | | $ | 61.2 | | | $ | 4.8 | | | $ | 1,534.0 | |
Interest Expense | $ | (149.0 | ) | | $ | (32.3 | ) | | $ | (86.1 | ) | | $ | (63.1 | ) | | $ | 11.0 |
| | $ | (319.5 | ) | Interest Expense | $ | (160.7) | | | $ | (32.1) | | | $ | (93.8) | | | $ | (25.1) | | | $ | (119.0) | | | $ | 27.6 | | | $ | (403.1) | |
Other Income, Net | 15.2 |
| | 0.8 |
| | 20.1 |
| | 853.9 |
| | (833.7 | ) | | 56.3 |
| Other Income, Net | 44.9 | | | 2.5 | | | 22.7 | | | 1.7 | | | 1,087.9 | | | (1,076.1) | | | 83.6 | |
Net Income Attributable to Common Shareholders | 393.4 |
| | 49.1 |
| | 289.6 |
| | 839.5 |
| | (821.0 | ) | | 750.6 |
| Net Income Attributable to Common Shareholders | 450.6 | | | 73.3 | | | 381.8 | | | 35.6 | | | 1,035.6 | | | (1,043.7) | | | 933.2 | |
Cash Flows Used for Investments in Plant | 752.4 |
| | 209.8 |
| | 575.6 |
| | 104.5 |
| | — |
| | 1,642.3 |
| Cash Flows Used for Investments in Plant | 781.2 | | | 322.8 | | | 732.4 | | | 84.0 | | | 181.2 | | | — | | | 2,101.6 | |
Management's Discussion and Analysis of Financial Condition and Results of Operations
The following discussion and analysis should be read in conjunction with our unaudited condensed consolidated financial statements and related combined notes included in this combined Quarterly Report on Form 10-Q, the combined quarterly reportsQuarterly Report on Form 10-Q for the quarters ended March 31, 20172021 and June 30, 2017,2021, as well as the Eversource 20162020 combined Annual Report on Form 10-K. References in this combined Quarterly Report on Form 10-Q to "Eversource," the "Company," "we," "us," and "our" refer to Eversource Energy and its consolidated subsidiaries. All per-share amounts are reported on a diluted basis. The unaudited condensed consolidated financial statements of Eversource, NSTAR Electric and PSNH and the unaudited condensed financial statements of CL&P and WMECO are herein collectively referred to as the "financial statements."
The only common equity securities that are publicly traded are common shares of Eversource. The earnings and EPS of each business discussed below do not represent a direct legal interest in the assets and liabilities of such business, but rather represent a direct interest in our assets and liabilities as a whole. EPS by business is a financial measure not recognized under GAAP (non-GAAP) that is calculated by dividing the Net Income Attributable to Common Shareholders of each business by the weighted average diluted Eversource common shares outstanding for the period. Our earnings discussion also includes non-GAAP financial measures referencing our 2021 earnings and EPS excluding charges at CL&P related to a settlement agreement that included credits to customers and funding of various customer assistance initiatives and a storm performance penalty imposed on CL&P by PURA and our 2021 and 2020 earnings and EPS excluding certain acquisition and transition costs.
Other risk factors are detailed in our reports filed with the SEC and updated as necessary, and we encourage you to consult such disclosures.
The following items in this executive summary are explained in more detail in this combined Quarterly Report on Form 10-Q:
•On September 6, 2017,1, 2021, our Board of Trustees approved a common share dividend payment of $0.475$0.6025 per share, which was paid on September 29, 201730, 2021 to shareholders of record as of September 19, 2017.16, 2021.
Strategic, Legislative, Regulatory Policy and OtherStrategic Items:
•On October 6, 2017, the FERC issued an order that did not accept the NETOs June 5, 2017 filing to reinstate the base ROE of 11.14 percent with an associated ROE incentive cap of 13.5 percent. Therefore, the Company will continue to recognize transmission revenues as billed utilizing1, 2021, CL&P entered into a base ROE of 10.57 percent with an incentive cap of 11.74 percent.
On October 12, 2017, PSNH filed an applicationsettlement agreement with the NHPUC requesting approvalDEEP, Office of Consumer Counsel (OCC), Office of the saleAttorney General (AG) and the Connecticut Industrial Energy Consumers, resolving certain issues that arose in pending regulatory proceedings initiated by the PURA. PURA approved the settlement agreement on October 27, 2021. In the settlement agreement, CL&P agreed to provide a total of PSNH's thermal$65 million of customer credits to be distributed based on customer sales over a two-month period from December 1, 2021 to January 31, 2022. CL&P also agreed to irrevocably set aside $10 million to fund various customer assistance initiatives as directed by PURA. In the third quarter of 2021, CL&P recorded a liability of $75 million associated with the provisions of the settlement agreement, with a $65 million pre-tax charge as a reduction to Operating Revenues associated with the customer credits and hydroelectric power generation assets in New Hampshirea $10 million charge to private investorsOperations and Maintenance expense associated with the customer assistance initiatives onthe three months ended September 30, 2021 income statement. In exchange for a combined purchase price totaling $258 million.
On October 29, 2017, a storm delivered high windsthe $75 million of customer credits and rain, causing extensive damage to our electric distribution systems across all three states. We estimate that more than 800,000 of our electric distribution customers wereassistance, PURA’s interim rate reduction docket was resolved without power during or following the storm. Restoration costs cannot be estimated at this time.findings. As a result of the extentsettlement agreement, neither the 90 basis point reduction to CL&P’s return on equity introduced in PURA’s storm-related decision issued April 28, 2021, nor the 45 basis point reduction to CL&P’s return on equity included in PURA’s draft decision issued September 14, 2021 in the interim rate reduction docket, will be implemented. Additionally, CL&P agreed to withdraw its pending appeals related to the storm performance penalty imposed in PURA’s April 28, 2021 and July 14, 2021 decisions. CL&P has also agreed to freeze its current base distribution rates until no earlier than January 1, 2024. The cumulative pre-tax impact of the damages, we expectOctober 1, 2021 settlement agreement and the storm restoration costs will be materialStorm Isaias assessment imposed in PURA’s April 28, 2021 and will exceedJuly 14, 2021 decisions totaled $103.6 million, and the criteriaafter-tax earnings impact was $85.8 million, or $0.25 per share, for the nine months ended September 30, 2021.
•In August of 2021, BOEM released its Final Environmental Impact Statement (EIS) for the South Fork Wind project, which assessed the environmental, social, and economic impacts of constructing the project. In August of 2021, Sunrise Wind received BOEM’s Notice of Intent (NOI) to be declared a major storm in Connecticut, New Hampshire, and Massachusetts and, as a result, we do not expectprepare an EIS for the storm to have a material impact on our resultsreview of operations.the Construction Operations Plan (COP) application submitted by Sunrise Wind.
Earnings Overview
Consolidated: Below is a summary of our earnings by business, which also reconciles the non-GAAP financial measuremeasures of consolidated non-GAAP earnings and EPS, as well as EPS by business, to the most directly comparable GAAP measuremeasures of consolidated Net Income Attributable to Common Shareholders and diluted EPS.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| For the Three Months Ended September 30, | | For the Nine Months Ended September 30, |
| 2021 | | 2020 | | 2021 | | 2020 |
(Millions of Dollars, Except Per Share Amounts) | Amount | | Per Share | | Amount | | Per Share | | Amount | | Per Share | | Amount | | Per Share |
Net Income Attributable to Common Shareholders (GAAP) | $ | 283.2 | | | $ | 0.82 | | | $ | 346.3 | | | $ | 1.01 | | | $ | 913.8 | | | $ | 2.65 | | | $ | 933.2 | | | $ | 2.76 | |
| | | | | | | | | | | | | | | |
Regulated Companies (non-GAAP) (1) | $ | 348.5 | | | $ | 1.01 | | | $ | 338.8 | | | $ | 0.99 | | | $ | 1,023.2 | | | $ | 2.97 | | | $ | 941.3 | | | $ | 2.79 | |
Eversource Parent and Other Companies (non-GAAP) (1) | 2.2 | | | 0.01 | | | 12.8 | | | 0.03 | | | (6.3) | | | (0.02) | | | 4.7 | | | 0.01 | |
Non-GAAP Earnings | $ | 350.7 | | | $ | 1.02 | | | $ | 351.6 | | | $ | 1.02 | | | $ | 1,016.9 | | | $ | 2.95 | | | $ | 946.0 | | | $ | 2.80 | |
CL&P Settlement Impacts (after-tax) (2) | (63.2) | | | (0.19) | | | — | | | — | | | (85.8) | | | (0.25) | | | — | | | — | |
Transition and Acquisition Costs (after-tax) (3) | (4.3) | | | (0.01) | | | (5.3) | | | (0.01) | | | (17.3) | | | (0.05) | | | (12.8) | | | (0.04) | |
Net Income Attributable to Common Shareholders (GAAP) | $ | 283.2 | | | $ | 0.82 | | | $ | 346.3 | | | $ | 1.01 | | | $ | 913.8 | | | $ | 2.65 | | | $ | 933.2 | | | $ | 2.76 | |
(1) The 2020 amounts were revised to conform to the current period segment presentation.
(2) The 2021 after-tax costs are associated with the CL&P settlement agreement on October 1, 2021, which included a pre-tax $65 million charge to earnings for customer credits and a $10 million charge to earnings to fund various customer assistance initiatives recorded in the third quarter of 2021. The nine months ended 2021 after-tax costs also include charges recorded at CL&P as a result of the April 28, 2021 and July 14, 2021 PURA decisions, which included a $28.4 million civil penalty for non-compliance with storm performance standards currently being provided as credits to customer bills and a $0.2 million fine to the State of Connecticut’s general fund. As a result of the October 1, 2021 settlement agreement, CL&P agreed to withdraw its pending appeals related to the storm performance penalty imposed in PURA’s April 28, 2021 and July 14, 2021 decisions. Management views these collective charges as not directly related to the ongoing operations of the business and therefore not an indicator of baseline operating performance.
(3) The 2020 acquisition costs are associated with our purchase of the assets of CMA on October 9, 2020. The 2021 costs are for the transition of systems as a result of the CMA acquisition and costs associated with our pending water business acquisition.
Regulated Companies: Our regulated companies comprise the electric distribution, electric transmission, natural gas distribution and water distribution segments. A summary of our segment earnings and EPS is as follows:
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| For the Three Months Ended September 30, | | For the Nine Months Ended September 30, |
| 2021 | | 2020 | | 2021 | | 2020 |
(Millions of Dollars, Except Per Share Amounts) | Amount | | Per Share | | Amount | | Per Share | | Amount | | Per Share | | Amount | | Per Share |
Net Income - Regulated Companies (GAAP) | $ | 285.3 | | | $ | 0.82 | | | $ | 338.8 | | | $ | 0.99 | | | $ | 937.4 | | | $ | 2.72 | | | $ | 941.3 | | | $ | 2.79 | |
| | | | | | | | | | | | | | | |
Electric Distribution (non-GAAP) | $ | 213.6 | | | $ | 0.62 | | | $ | 205.5 | | | $ | 0.60 | | | $ | 451.2 | | | $ | 1.31 | | | $ | 450.6 | | | $ | 1.33 | |
Electric Transmission | 139.4 | | | 0.40 | | | 125.6 | | | 0.36 | | | 412.4 | | | 1.20 | | | 381.8 | | | 1.13 | |
Natural Gas Distribution (1) | (22.0) | | | (0.06) | | | (15.4) | | | (0.04) | | | 129.6 | | | 0.37 | | | 73.3 | | | 0.22 | |
Water Distribution | 17.5 | | | 0.05 | | | 23.1 | | | 0.07 | | | 30.0 | | | 0.09 | | | 35.6 | | | 0.11 | |
Net Income - Regulated Companies (Non-GAAP) | $ | 348.5 | | | $ | 1.01 | | | $ | 338.8 | | | $ | 0.99 | | | $ | 1,023.2 | | | $ | 2.97 | | | $ | 941.3 | | | $ | 2.79 | |
CL&P Settlement Impacts (after-tax) | (63.2) | | | (0.19) | | | — | | | — | | | (85.8) | | | (0.25) | | | — | | | — | |
Net Income - Regulated Companies (GAAP) | $ | 285.3 | | | $ | 0.82 | | | $ | 338.8 | | | $ | 0.99 | | | $ | 937.4 | | | $ | 2.72 | | | $ | 941.3 | | | $ | 2.79 | |
(1) The 2020 amounts were revised to conform to the current period segment presentation.
Our electric distribution segment earnings decreased $55.1 million in the third quarter of 2021, as compared to the third quarter of 2020, due primarily to CL&P’s settlement agreement on October 1, 2021, which included a pre-tax $65 million charge to earnings for customer credits and a $10 million charge to earnings to fund various customer assistance initiatives recorded in the third quarter of 2021. The after-tax impact of the CL&P settlement agreement was $63.2 million, or $0.19 per share. Excluding those charges, electric distribution segment earnings increased $8.1 million due primarily to base distribution rate increases at NSTAR Electric effective January 1, 2021 and at PSNH effective January 1, 2021 and August 1, 2021, and higher earnings from CL&P's capital tracker mechanism due to increased electric system improvements. The earnings increase was partially offset by higher operations and maintenance expense, higher depreciation expense, higher interest expense, and higher property tax expense.
Our electric distribution segment earnings decreased $85.2 million in the first nine months of 2021, as compared to the first nine months of 2020, due primarily to CL&P’s settlement agreement on October 1, 2021 resulting in a total $75 million pre-tax charge to earnings and a $28.6 million pre-tax charge at CL&P for an assessment by PURA as a result of CL&P’s preparation for and response to Tropical Storm Isaias in August 2020 recorded in the first quarter of 2021. The after-tax impact of the CL&P settlement agreement and CL&P storm performance assessment imposed by PURA was $85.8 million, or $0.25 per share. For further information, see "Regulatory Developments and Rate Matters - Connecticut" included in this Management’s Discussion and Analysis. Excluding those charges, electric distribution segment earnings increased $0.6 million due primarily to base distribution rate increases at NSTAR Electric effective January 1, 2021, at PSNH effective January 1, 2021 and August 1, 2021, and at CL&P effective May 1, 2020, and higher earnings from CL&P's capital tracker mechanism due to increased electric system improvements. Those earnings increases were partially offset by higher operations and maintenance expense driven by higher employee-related expenses and higher storm restoration costs, higher depreciation expense, higher property tax expense, and higher interest expense.
Our electric transmission segment earnings increased $13.8 million and $30.6 million in the third quarter and the first nine months of 2017 and 2016.
|
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| For the Three Months Ended September 30, | | For the Nine Months Ended September 30, |
| 2017 | | 2016 | | 2017 | | 2016 |
(Millions of Dollars, Except Per-Share Amounts) | Amount | | Per Share | | Amount | | Per Share | | Amount | | Per Share | | Amount | | Per Share |
Net Income Attributable to Common Shareholders (GAAP) | $ | 260.4 |
| | $ | 0.82 |
| | $ | 265.3 |
| | $ | 0.83 |
| | $ | 750.6 |
| | $ | 2.36 |
| | $ | 713.1 |
| | $ | 2.24 |
|
Regulated Companies | $ | 250.2 |
| | $ | 0.79 |
| | $ | 251.5 |
| | $ | 0.79 |
| | $ | 732.1 |
| | $ | 2.30 |
| | $ | 699.8 |
| | $ | 2.20 |
|
Eversource Parent and Other Companies | 10.2 |
| | 0.03 |
| | 13.8 |
| | 0.04 |
| | 18.5 |
| | 0.06 |
| | 13.3 |
| | 0.04 |
|
Net Income Attributable to Common Shareholders (GAAP) | $ | 260.4 |
| | $ | 0.82 |
| | $ | 265.3 |
|
| $ | 0.83 |
| | $ | 750.6 |
| | $ | 2.36 |
| | $ | 713.1 |
| | $ | 2.24 |
|
Regulated Companies: Our Regulated companies consist of the electric distribution, electric transmission, and natural gas distribution segments. Generation activities of PSNH and WMECO are included in our electric distribution segment. A summary of our segment earnings and EPS for2021, respectively, as compared to the third quarter and the first nine months of 2017 and 2016 is as follows:
|
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| For the Three Months Ended September 30, | | For the Nine Months Ended September 30, |
| 2017 | | 2016 | | 2017 | | 2016 |
(Millions of Dollars, Except Per-Share Amounts) | Amount | | Per Share | | Amount | | Per Share | | Amount | | Per Share | | Amount | | Per Share |
Electric Distribution | $ | 157.4 |
| | $ | 0.50 |
| | $ | 170.1 |
| | $ | 0.53 |
| | $ | 393.4 |
| | $ | 1.24 |
| | $ | 381.3 |
| | $ | 1.20 |
|
Electric Transmission | 99.0 |
| | 0.31 |
| | 88.4 |
| | 0.28 |
| | 289.6 |
| | 0.91 |
| | 266.6 |
| | 0.84 |
|
Natural Gas Distribution | (6.2 | ) | | (0.02 | ) | | (7.0 | ) | | (0.02 | ) | | 49.1 |
| | 0.15 |
| | 51.9 |
| | 0.16 |
|
Net Income - Regulated Companies | $ | 250.2 |
| | $ | 0.79 |
| | $ | 251.5 |
| | $ | 0.79 |
| | $ | 732.1 |
| | $ | 2.30 |
| | $ | 699.8 |
| | $ | 2.20 |
|
Our electric distribution segment earnings decreased $12.7 million in the third quarter of 2017, as compared to the third quarter of 2016, due primarily to lower sales volumes and demand revenues driven by the mild summer weather during the third quarter of 2017, primarily at NSTAR Electric, as well as higher property tax, depreciation and interest expense.
Our electric distribution segment earnings increased $12.1 million in the first nine months of 2017, as compared to the first nine months of 2016, due primarily to lower operations and maintenance expense, partially offset by lower sales volumes driven by the mild summer weather during the third quarter of 2017, primarily at NSTAR Electric, higher depreciation and interest expense, and lower generation earnings.
Our electric transmission segment earnings increased $10.6 million and $23.0 million in the third quarter and first nine months of 2017, respectively, as compared to the third quarter and first nine months of 2016,2020, due primarily to a higher transmission rate base as a result of our continued investment in our transmission infrastructure,infrastructure. The earnings increase for the nine-month period was partially offset by a lower benefit in the second quarter of 2017 related tofrom the annual billing and cost reconciliation filing with the FERC.
Our natural gas distribution segment results improved $0.8had an increased loss of $6.6 million in the third quarter of 2017,2021, as compared to the third quarter of 2016, and2020, due primarily to a loss from the addition of Eversource Gas Company of Massachusetts (EGMA) operations of $8.4 million due to the seasonality of the natural gas business. The increased loss was partially offset by the base distribution rate increase at Yankee Gas effective January 1, 2021 (with changes to customer rates beginning March 1, 2021).
Our natural gas distribution segment earnings decreased $2.8increased $56.3 million in the first nine months of 2017,2021, as compared to the first nine months of 2016. The decrease in2020, due primarily to the first nine monthsaddition of 2017EGMA earnings of $33.2 million. Additionally, the earnings increase was due primarily to base distribution rate increases at NSTAR Gas effective November 1, 2020 and at Yankee Gas effective January 1, 2021 (with changes to customer rates beginning March 1, 2021), and higher earnings from capital tracker mechanisms due to continued investments in natural gas infrastructure. The earnings increase was partially offset by higher depreciation expense, higher operations and maintenance expense, and lower demand revenues in Connecticut driven by lower peak usage in 2017, as compared to 2016, as a result of milder winter weather.higher property tax expense.
Eversource Parent and Other Companies: Eversource parent and other companies earned $10.2Our water distribution segment earnings decreased $5.6 million in the third quarter of 2017 and $18.5 million in the first nine months of 2017, compared with $13.8 million in the third quarter of 2016 and $13.3 million in the first nine months of 2016. The improved year-to-date results were largely due to increased gains on investments recorded in 2017, partially offset by higher interest expense.
Electric and Natural Gas Sales Volumes: Weather, fluctuations in energy supply costs, conservation measures (including utility-sponsored energy efficiency programs), and economic conditions affect customer energy usage. Industrial sales volumes are less sensitive to temperature variations than residential and commercial sales volumes. In our service territories, weather impacts electric sales volumes during the summer and both electric and natural gas sales volumes during the winter; however, natural gas sales volumes are more sensitive to temperature variations than are electric sales volumes. Customer heating or cooling usage may not directly correlate with historical levels or with the level of degree-days that occur.
Fluctuations in retail electric sales volumes at NSTAR Electric and PSNH impact earnings ("Traditional" in the table below). For CL&P and WMECO, fluctuations in retail electric sales volumes do not impact earnings due to their respective regulatory commission approved distribution revenue decoupling mechanisms ("Decoupled" in the table below). These distribution revenues are decoupled from their customer sales volumes, which breaks the relationship between sales volumes and revenues recognized. CL&P and WMECO reconcile their annual base distribution rate recovery amounts to their respective pre-established levels of baseline distribution delivery service revenues of $1.059 billion and $132.4 million, respectively. Any difference between the allowed level of distribution revenue and the actual amount incurred during a 12-month period is adjusted through rates in the following period.
Fluctuations in natural gas sales volumes in Connecticut impact earnings ("Traditional" in the table below). In Massachusetts, fluctuations in natural gas sales volumes do not impact earnings due to the DPU-approved natural gas distribution revenue decoupling mechanism approved in the last rate case decision ("Decoupled" in the table below). These distribution revenues are decoupled from their customer sales volumes, which breaks the relationship between sales volumes and revenues recognized.
A summary of our retail electric GWh sales volumes and our firm natural gas MMcf sales volumes, as well as percentage changes, is as follows:
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| For the Three Months Ended September 30, 2017 Compared to 2016 | | For the Nine Months Ended September 30, 2017 Compared to 2016 |
| Sales Volumes (GWh) | | Percentage | | Sales Volumes (GWh) | | Percentage |
Electric | 2017 | | 2016 | | Decrease | | 2017 | | 2016 | | Decrease |
Traditional: | | | | | | | | | | | |
Residential | 2,583 |
| | 2,910 |
| | (11.2 | )% | | 7,126 |
| | 7,407 |
| | (3.8 | )% |
Commercial | 4,291 |
| | 4,525 |
| | (5.2 | )% | | 12,058 |
| | 12,376 |
| | (2.6 | )% |
Industrial | 671 |
| | 696 |
| | (3.6 | )% | | 1,856 |
| | 1,948 |
| | (4.7 | )% |
Total – Traditional | 7,545 |
| | 8,131 |
| | (7.2 | )% | | 21,040 |
| | 21,731 |
| | (3.2 | )% |
| | | | | | | | | | | |
Decoupled: | | | | | | | | | | | |
Residential | 2,972 |
| | 3,398 |
| | (12.5 | )% | | 8,334 |
| | 8,750 |
| | (4.8 | )% |
Commercial | 2,849 |
| | 3,039 |
| | (6.3 | )% | | 8,003 |
| | 8,315 |
| | (3.8 | )% |
Industrial | 730 |
| | 776 |
| | (5.9 | )% | | 2,054 |
| | 2,170 |
| | (5.3 | )% |
Total – Decoupled | 6,551 |
| | 7,213 |
| | (9.2 | )% | | 18,391 |
| | 19,235 |
| | (4.4 | )% |
Total Sales Volumes | 14,096 |
| | 15,344 |
| | (8.1 | )% | | 39,431 |
| | 40,966 |
| | (3.7 | )% |
|
| | | | | | | | | | | | | | | | | |
| For the Three Months Ended September 30, 2017 Compared to 2016 | | For the Nine Months Ended September 30, 2017 Compared to 2016 |
| Sales Volumes (MMcf) | | Percentage | | Sales Volumes (MMcf) | | Percentage |
Firm Natural Gas | 2017 | | 2016 | | Increase/(Decrease) | | 2017 | | 2016 | | Increase/(Decrease) |
Traditional: | | | | | | | | | | | |
Residential | 1,036 |
| | 956 |
| | 8.4 | % | | 10,138 |
| | 10,109 |
| | 0.3 | % |
Commercial | 2,482 |
| | 2,350 |
| | 5.6 | % | | 14,432 |
| | 13,864 |
| | 4.1 | % |
Industrial | 2,032 |
| | 1,964 |
| | 3.5 | % | | 7,663 |
| | 7,597 |
| | 0.9 | % |
Total – Traditional | 5,550 |
| | 5,270 |
| | 5.3 | % | | 32,233 |
| | 31,570 |
| | 2.1 | % |
| | | | | | | | | | | |
Decoupled: | | | | | | | | | | | |
Residential | 1,244 |
| | 1,308 |
| | (4.9 | )% | | 14,593 |
| | 13,848 |
| | 5.4 | % |
Commercial | 2,314 |
| | 2,147 |
| | 7.8 | % | | 15,072 |
| | 15,019 |
| | 0.4 | % |
Industrial | 1,270 |
| | 990 |
| | 28.3 | % | | 4,293 |
| | 4,163 |
| | 3.1 | % |
Total – Decoupled | 4,828 |
| | 4,445 |
| | 8.6 | % | | 33,958 |
| | 33,030 |
| | 2.8 | % |
Special Contracts (1) | 1,147 |
| | 1,208 |
| | (5.0 | )% | | 3,495 |
| | 3,507 |
| | (0.3 | )% |
Total – Decoupled and Special Contracts | 5,975 |
| | 5,653 |
| | 5.7 | % | | 37,453 |
| | 36,537 |
| | 2.5 | % |
Total Sales Volumes | 11,525 |
| | 10,923 |
| | 5.5 | % | | 69,686 |
| | 68,107 |
| | 2.3 | % |
| |
(1)
| Special contracts are unique to the natural gas distribution customers who take service under such an arrangement and generally specify the amount of distribution revenue to be paid to Yankee Gas regardless of the customers' usage. |
For the third quarter and the first nine months of 2017, retail electric sales volumes at our electric utilities with a traditional rate structure (NSTAR Electric and PSNH) were lower,2021, as compared to the third quarter and first nine months of 2016. Sales volumes were negatively impacted by the mild summer weather in the third quarter of 2017, as compared to the same period in 2016, and lower customer usage driven by the impact of increased customer energy conservation efforts. Cooling degree days for the first nine months of 2017 were 17.8 percent lower2020. The earnings decrease in the Boston metropolitan area and 24.8 percent lower in New Hampshire, as comparedboth periods was due primarily to the same periodabsence in 2016.
On January 28, 2016, Eversource received approval2021 of a three-year energy efficiency plan in Massachusetts, which includes recoverythird quarter 2020 after-tax gain of LBR at NSTAR Electric until it is operating under a decoupled rate structure. NSTAR Electric earns LBR related to reductions in sales volume$3.5 million and lower revenues as a result of successful energy efficiency programs. LBR is recovered from retail customers through current rates. NSTAR Electric recognized LBRthe sale of $18.8the water system and treatment plant in Hingham, Massachusetts.
Eversource Parent and Other Companies: Eversource parent and other companies had increased losses of $9.6 million and $54.7$15.5 million in the third quarter and the first nine months of 2017,2021, respectively, as compared to $17.4 million and $44.1 million in the third quarter and the first nine months of 2016, respectively.2020, due primarily to a higher effective tax rate. The increased loss for the nine-month period was also due to an increase in the transition and integration costs of EGMA of $4.5 million.
Our firm natural gas sales volumes are subject
Impact of COVID-19
COVID-19 has adversely affected customers, workers and the U.S. economy. We provide a critical service to manyour customers and have taken extensive measures to maintain its safety and reliability. We continue to address the impacts of the same influences as our retail electric sales volumes. In addition, they have benefited from customer growthCOVID-19 pandemic and how the related developments affect Eversource. We are in boththe re-entry phase of our natural gas distribution companies. Consolidated firm natural gas sales volumes were higherpandemic response plan, in which the majority of our employees under remote work arrangements have transitioned back to the workplace. We have not experienced significant impacts directly related to the pandemic that have materially affected our current operations, our workforce, or results of operations. The extent of the impact to us in the future will vary, and depend on the duration, scope and severity of the pandemic and the resulting impact on economic, health care and capital market conditions. The future impact will also depend on the outcome of future proceedings before our state regulatory commissions to recover our incremental costs associated with COVID-19, which include uncollectible customer receivable expenses.
The current and expected future financial impacts of COVID-19 as it relates to our businesses primarily relate to collectability of customer receivables and customer payment plans and increased expenses for cleaning and supplies for personal protective equipment.
As of September 30, 2021, our allowance for uncollectible customer receivable balance of $441.7 million, of which $229.9 million relates to hardship accounts that are specifically recovered in rates charged to customers, adequately reflected the collection risk and net realizable value for our receivables. We continue to evaluate the adequacy of the uncollectible allowance based on an ongoing assessment of accounts receivable collections and customer payment trends, economic conditions, delinquency statistics, aging-based quantitative assessments, the impact on residential customer bills because of energy usage and change in rates, flexible payment plans and financial hardship arrearage management programs being offered to customers, and COVID-19 developments, including any potential federal governmental pandemic relief programs and the expansion of unemployment benefit initiatives, which help to mitigate the potential for increasing customer account delinquencies. Additionally, management considered past economic declines and corresponding uncollectible reserves as part of the current assessment.
This evaluation has shown that our operating companies have experienced an increase in aged receivables and lower cash collections from customers because of the length of the moratorium on disconnections in Connecticut and Massachusetts, and the economic slowdown resulting from the COVID-19 pandemic. In Connecticut, the moratorium on disconnections of commercial and non-hardship residential customers ended in June 2021 and September 2021, respectively, but is still in place for hardship residential customers. In Massachusetts, the moratorium on disconnections of commercial customers and residential customers ended in September 2020 and July 2021, respectively. Disconnection activities have resumed after these moratoria have expired, which has resulted in recent improved collection experience and more customers applying for, and receiving, hardship status. On July 7, 2021, the NHPUC issued an order to New Hampshire utilities that concluded that recovery of incremental bad debt or waived late fees related to the COVID-19 pandemic would be addressed in a future rate case to the extent those costs are relevant at that time. As a result of the order, in the first nine months of 2017, as compared to2021, PSNH removed its $0.6 million deferral of net incremental COVID-19 costs. In New Hampshire, the moratorium on disconnections of non-hardship residential and commercial customers ended in late 2020 and for hardship residential customers ended in May 2021 and PSNH has resumed disconnection activities, which has resulted in improved collection of outstanding customer receivable balances.
Based upon the evaluation performed, in the first nine months of 2016, due primarily to improved economic conditions across2021, management increased the allowance for uncollectible accounts for amounts incurred as a result of COVID-19 by $25.8 million for Eversource (increase of $16.3 million for CL&P and $12.5 million at our service territories, partially offset by increased customer energy conservation efforts. The firstnatural gas businesses, and decrease of $1.8 million at NSTAR Electric). In the third quarter of 2017 mild winter weather was more than offset2021, the COVID-19 related allowance for uncollectible accounts decreased by colder than normal weather$6.5 million at Eversource (increased $4.0 million at CL&P, and decreased $8.3 million at NSTAR Electric and $2.2 million at our natural gas businesses). The COVID-19 related uncollectible amounts were deferred either as incremental regulatory costs at our Connecticut and Massachusetts utilities or deferred through existing regulatory tracking mechanisms that recover uncollectible energy supply costs, as management believes it is probable that these costs will ultimately be recovered from customers in future rates. As of September 30, 2021, the total amount incurred as a result of COVID-19 included in the second quarterallowance for uncollectible accounts was $57.0 million at Eversource ($20.1 million at CL&P, $8.5 million at NSTAR Electric, and $27.4 million at our natural gas businesses). Based on the status of 2017. Heating degree daysour COVID-19 regulatory dockets, communications with our state regulatory commissions, and policies and practices in the jurisdictions in which we operate, we believe our state regulatory commissions in Connecticut and Massachusetts will allow us to recover our incremental costs associated with COVID-19, which include uncollectible customer receivable expenses, while balancing the impact on our customers’ bills and our operating cash flows.
We continue to work closely with our state regulatory commissions and consumer advocates on customer assistance measures, including payment plan options in order to mitigate the impact on customer rates in the future, as well as financial hardship and arrearage management programs for those customers who are unable to pay their utility bills. We developed these long-term solutions for customers in order to help minimize the extent of the impact of COVID-19 on customer receivable balances and customers’ affordability in light of the current financial impact they may experience.
In the first nine months of 2017 were 2.2 percent higher in Connecticut,2021, net incremental costs incurred as compared to the same period in 2016.
Major Storm: On October 29, 2017, a storm delivered high winds and rain, causing extensive damage to our electric distribution systems across all three states. We estimate that more than 800,000 of our electric distribution customers were without power during or following the storm. Restoration costs cannot be estimated at this time. As a result of COVID-19 totaled $21.2 million, and related to uncollectible expense that impacts earnings, facilities and fleet cleaning, sanitizing costs and supplies for personal protective equipment, net of cost savings and benefits under the extentCARES Act. In the first nine months of the damages,2021, we expect the storm restoration costs will be material and will exceed the criteria to be declared a major storm in Connecticut, New Hampshire, and Massachusetts and that each operating company will seek recoverydeferred $17.3 million of these net incremental COVID-19 costs through its applicable regulatory recovery process. on the balance sheet. Net incremental COVID-19 expenses that reduced pre-tax earnings totaled $3.9 million on the statement of income in the first nine months of 2021.
As of September 30, 2021, a result, all qualifying expenses prudently incurred duringtotal of $41.3 million of net deferred incremental COVID-19 costs were recorded on the storm will be deferredbalance sheet, of which $34.5 million of that deferral related to uncollectible expense that impacts earnings and recovered from customers. We do not expect the storm$6.8 million related to have a material impact to the results of operations of CL&P, NSTAR Electric, PSNH or WMECO.cleaning and supplies for personal protective equipment.
Liquidity
Consolidated: Cash and cash equivalents totaled $125.8$88.2 million as of September 30, 2017,2021, compared with $30.3$106.6 million as of December 31, 2016.2020.
Long-TermShort-Term Debt Issuances: In August 2017, CL&P issued $225 million of 4.30 percent 2014 Series A First and Refunding Mortgage Bonds due to mature in 2044. These bonds are part of the same series of CL&P’s existing 4.30 percent bonds that were initially issued in 2014. The aggregate outstanding principal amount for these bonds is now $475 million. The proceeds, net of issuance costs, were used to refinance short-term debt and fund capital expenditures and working capital.
In September 2017, Yankee Gas issued $75 million of 3.02 percent Series N First Mortgage Bonds due to mature in 2027. The proceeds, net of issuance costs, were used to repay short-term borrowings.
In October 2017, Eversource parent issued $450 million 2.75 percent Series K Senior Notes due to mature in 2022. These senior notes are part of the same series of Eversource parent’s existing 2.75 percent Series K Senior Notes that were initially issued in March 2017. The aggregate outstanding principal amount for the Series K Senior Notes is now $750 million. In addition, Eversource parent issued $450 million of 2.90 percent 2017 Series L Senior Notes due to mature in 2024. The proceeds, net of issuance costs, were used to repay short-term borrowings.
In October 2017, NSTAR Electric issued $350 million of 3.20 percent Debentures due to mature in 2027. The debentures are part of the same series of NSTAR Electric’s existing 3.20 percent Debentures that were initially issued in May 2017. The aggregate outstanding principal amount for the 3.20 percent Debentures is now $700 million. The proceeds, net of issuance costs, will be used to redeem long-term debt due to mature on November 15, 2017.
Long-Term Debt Repayments: In September 2017, CL&P repaid at maturity $100 million of 5.75 percent 2007 Series C First Mortgage Bonds and PSNH repaid at maturity $70 million of 6.15 percent 2007 Series N First Mortgage Bonds.
In October 2017, NSTAR Gas repaid at maturity $25 million of 7.04 percent Series M First Mortgage Bonds.
- Commercial Paper Programs and Credit Agreements: Eversource parent has a $1.45$2.00 billion commercial paper program allowing Eversource parent to issue commercial paper as a form of short-term debt. As of September 30, 2017 and December 31, 2016, Eversource parent had $917.0 million and approximately $1.0 billion, respectively, in short-term borrowings outstanding under the Eversource parent commercial paper program, leaving $533.0 million and $428.0 million of available borrowing capacity as of September 30, 2017 and December 31, 2016, respectively. The weighted-average interest rate on these borrowings as of September 30, 2017 and December 31, 2016 was 1.34 percent and 0.88 percent, respectively. As of September 30, 2017, there were intercompany loans from Eversource parent of $202.3 million to PSNH, and $96.9 million to WMECO. As of December 31, 2016, there were intercompany loans from Eversource parent of $80.1 million to CL&P, $160.9 million to PSNH and $51.0 million to WMECO. Eversource parent, CL&P, PSNH, WMECO, NSTAR Gas, and Yankee Gas, EGMA and Aquarion Water Company of Connecticut are parties to a five-year $1.45$2.00 billion revolving credit facility. The revolving credit facility, which terminates on September 4, 2021. TheOctober 15, 2026. This revolving credit facility serves to backstop Eversource parent's $1.45$2.00 billion commercial paper program. There were no borrowings outstanding on the revolving credit facility as of September 30, 2017 and December 31, 2016.
Except as described below, amounts outstanding under the commercial paper programs are included in Notes Payable for Eversource and are classified in current liabilities on the balance sheets as all borrowings are outstanding for no more than 364 days at one time.
As a result of the October 2017 Eversource parent long-term debt issuances, the net proceeds of which were used to repay short-term borrowings outstanding under the Eversource parent commercial paper program, $898.8 million of short-term debt was reclassified to Long-Term Debt as of September 30, 2017.
NSTAR Electric has a $450$650 million commercial paper program allowing NSTAR Electric to issue commercial paper as a form of short-term debt. As of September 30, 2017, NSTAR Electric had no short-term borrowings outstanding and as of December 31, 2016, NSTAR Electric had $126.5 million in short-term borrowings outstanding under its commercial paper program, leaving $450.0 million and $323.5 million of available borrowing capacity as of September 30, 2017 and December 31, 2016, respectively. The weighted-average interest rate on these borrowings as of December 31, 2016 was 0.71 percent. NSTAR Electric is also a party to a five-year $450$650 million revolving credit facility. The revolving credit facility, which terminates on September 4, 2021.October 15, 2026. The revolving credit facility serves to backstop NSTAR Electric's $450$650 million commercial paper program.
The amount of borrowings outstanding and available under the commercial paper programs were as follows:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Borrowings Outstanding as of | | Available Borrowing Capacity as of | | Weighted-Average Interest Rate as of |
| September 30, 2021 | | December 31, 2020 | | September 30, 2021 | | December 31, 2020 | | September 30, 2021 | | December 31, 2020 |
(Millions of Dollars) | | | | | |
Eversource Parent Commercial Paper Program | $ | 653.0 | | | $ | 1,054.3 | | | $ | 1,347.0 | | | $ | 945.7 | | | 0.18 | % | | 0.25 | % |
NSTAR Electric Commercial Paper Program | 138.0 | | | 195.0 | | | 512.0 | | | 455.0 | | | 0.10 | % | | 0.16 | % |
There were no borrowings outstanding on the revolving credit facilityfacilities as of September 30, 2017 and2021 or December 31, 2016.2020.
CL&P and PSNH have uncommitted line of credit agreements totaling $450 million and $300 million, respectively, which will expire on May 12, 2022. There are no borrowings outstanding on either the CL&P or PSNH uncommitted line of credit agreements as of September 30, 2021.
Amounts outstanding under the commercial paper programs are included in Notes Payable and classified in current liabilities on the Eversource and NSTAR Electric balance sheets, as all borrowings are outstanding for no more than 364 days at one time. As a result of the NSTAR Gas long-term debt issuances in October 2021, $80.0 million of commercial paper borrowings under the Eversource parent commercial paper program were classified as Long-Term Debt as of September 30, 2021.
Intercompany Borrowings: Eversource parent uses its available capital resources to provide loans to its subsidiaries to assist in meeting their short-term borrowing needs. Eversource parent records intercompany interest income from its loans to subsidiaries, which is eliminated in consolidation. Intercompany loans from Eversource parent to its subsidiaries are eliminated in consolidation on Eversource's balance sheets. As of September 30, 2021, there were intercompany loans from Eversource parent to PSNH of $66.5 million, and to a subsidiary of NSTAR Electric of $24.6 million. As of December 31, 2020, there were intercompany loans from Eversource parent to PSNH of $46.3 million, and to a subsidiary of NSTAR Electric of $21.3 million. Intercompany loans from Eversource parent are included in Notes Payable to Eversource Parent and classified in current liabilities on the respective subsidiary's balance sheets.
Availability under Long-Term Debt Issuance Authorizations: On March 31, 2021, the DPU approved NSTAR Electric's request for authorization to issue up to $1.60 billion in long-term debt through December 31, 2023. On September 10, 2021, the DPU approved EGMA’s request for authorization to issue up to $725 million in long-term debt through December 31, 2023. The remaining Eversource operating companies, including CL&P and PSNH, have utilized the long-term debt authorizations in place with the respective regulatory commissions.
Long-Term Debt Issuances and Repayments:The following table summarizes long-term debt issuances and repayments:
| | | | | | | | | | | | | | | | | | | | | | | |
(Millions of Dollars) | Issuance/(Repayment) | | Issue Date or Repayment Date | | Maturity Date | | Use of Proceeds for Issuance/ Repayment Information |
CL&P: | | | | | | | |
2.05% Series A First Mortgage Bonds | $ | 425.0 | | | June 2021 | | July 2031 | | Repaid short-term debt, paid capital expenditures and working capital |
4.38% Series A PCRB | (120.5) | | | September 2021 | | September 2028 | | Paid on par call date in advance of maturity |
NSTAR Electric: | | | | | | | |
3.10% 2021 Debentures | 300.0 | | | May 2021 | | June 2051 | | Refinanced investments in eligible green expenditures, which were previously financed in 2019 and 2020 |
3.50% Series F Senior Notes | (250.0) | | | June 2021 | | September 2021 | | Paid on par call date in advance of maturity date |
1.95% 2021 Debentures | 300.0 | | | August 2021 | | August 2031 | | Repaid short-term debt, paid capital expenditures and working capital |
PSNH: | | | | | | | |
4.05% Series Q First Mortgage Bonds | (122.0) | | | March 2021 | | June 2021 | | Paid on par call date in advance of maturity date |
3.20% Series R First Mortgage Bonds | (160.0) | | | June 2021 | | September 2021 | | Paid on par call date in advance of maturity date |
2.20% Series V First Mortgage Bonds | 350.0 | | | June 2021 | | June 2031 | | Repaid short-term debt, including short-term debt used to redeem Series R First Mortgage Bonds, paid capital expenditures and working capital |
Other: | | | | | | | |
Eversource Parent 2.50% Series I Senior Notes | (450.0) | | | February 2021 | | March 2021 | | Paid on par call date in advance of maturity date |
Eversource Parent 2.55% Series S Senior Notes | 350.0 | | | March 2021 | | March 2031 | | Repaid short-term debt, including short-term debt used to redeem Series I Senior Notes |
Eversource Parent 1.40% Series U Senior Notes | 300.0 | | | August 2021 | | August 2026 | | Repaid short-term debt |
Eversource Parent Variable Rate Series T Senior Notes (1) | 350.0 | | | August 2021 | | August 2023 | | Repaid short-term debt |
Aquarion Water Company of Connecticut 3.31% Senior Notes | 100.0 | | | April 2021 | | April 2051 | | Repaid 5.50% Notes, repaid short-term debt, paid capital expenditures and working capital |
Aquarion Water Company of Connecticut 5.50% Notes | (40.0) | | | April 2021 | | April 2021 | | Paid at maturity |
Yankee Gas 1.38% Series S First Mortgage Bonds | 90.0 | | | August 2021 | | August 2026 | | (2) |
Yankee Gas 2.88% Series T First Mortgage Bonds | 35.0 | | | August 2021 | | August 2051 | | (2) |
EGMA 2.11% Series A First Mortgage Bonds | 310.0 | | | September 2021 | | October 2031 | | (2) |
EGMA 2.92% Series B First Mortgage Bonds | 240.0 | | | September 2021 | | October 2051 | | (2) |
NSTAR Gas 2.25% Series T First Mortgage Bonds | 40.0 | | | October 2021 | | November 2031 | | (2) |
NSTAR Gas 3.03% Series U First Mortgage Bonds | 40.0 | | | October 2021 | | November 2051 | | (2) |
(1) On August 10, 2021, Eversource Parent issued $350 million of floating rate Series T Senior Notes with a maturity date of August 15, 2023. The notes have a coupon rate based on the Compounded SOFR plus 0.25%.
(2) The use of proceeds from these various issuances refinanced existing indebtedness, funded capital expenditures and were for general corporate purposes. The EGMA indebtedness that was refinanced included $309.4 million of long-term debt.
Rate Reduction Bonds: PSNH's RRB payments consist of principal and interest and are paid semi-annually. PSNH paid $43.2 million of RRB principal payments and $18.9 million of interest payments in the first nine months of 2021, and paid $43.2 million of RRB principal payments and $20.2 million of interest payments in the first nine months of 2020.
Cash Flows: Cash flows provided by operating activities totaled $1.49$1.52 billion in the first nine months of 2017,2021, compared with $1.65$1.50 billion in the first nine months of 2016. The decrease in operating2020. Operating cash flows was due primarilywere favorably impacted by improvements in the timing of collections for regulatory tracking mechanisms, the addition of cash flows of EGMA, the timing of cash collections on our accounts receivable, and the timing of other working capital items. These favorable impacts were partially offset by the timing of cash payments made on our accounts payable, cash payments made in 2021 for storm restoration costs of approximately $52 million related to the $200.7Tropical Storm Isaias at CL&P, a $39.5 million net unfavorable impact as a result of the changeincrease in income tax payments made or refunds received, in 2017 when2021, as compared to 2016. This unfavorable impact was primarily the result of the December 2015 legislation, which extended the accelerated deduction of depreciation from 2015 to 2019. The legislation resulted in2020, a significant refund of approximately $275$32.0 million which we received in the first quarter of 2016. Additionally, there was an increase of $76.0 million in Pension and PBOP Plan cash contributions made in the first nine months of 2017,2021, as compared to the same period2020, and an increase in 2016. Partially offsetting these unfavorable impacts was the benefit related to the timingcost of regulatory recoveries and the timing of collections and payments of our working capital items, including accounts receivable and accounts payable.removal expenditures.
On September 6, 2017,1, 2021, our Board of Trustees approved a common share dividend payment of $0.475$0.6025 per share, which was paid on September 29, 201730, 2021 to shareholders of record as of September 19, 2017.16, 2021. In the first nine months of 2021, we paid cash dividends of $603.6 million and issued non-cash dividends of $17.3 million in the form of treasury shares, totaling dividends of $620.9 million. In the first nine months of 2020, we paid cash dividends of $555.7 million and issued non-cash dividends of $17.2 million in the form of treasury shares, totaling dividends of $572.9 million.
Eversource issues treasury shares to satisfy awards under the Company's incentive plans, shares issued under the dividend reinvestment and share purchase plan, and matching contributions under the Eversource 401k Plan.
In the first nine months of 2017,2021, CL&P, NSTAR Electric and PSNH and WMECO paid $205.2$210.3 million, $186.0 million, $23.9$283.2 million, and $28.5$235.6 million, respectively, in common stock dividends to Eversource parent.
Investments in Property, Plant and Equipment on the statements of cash flows do not include amounts incurred on capital projects but not yet paid, cost of removal, AFUDC related to equity funds, and the capitalized and deferred portions of pension and PBOP expense. In the first nine months of 2017,2021, investments for Eversource, CL&P, NSTAR Electric, and PSNH and WMECO were $1.64$2.21 billion, $621.9$563.2 million, $358.0 million, $215.5$675.2 million, and $109.2$217.4 million, respectively.
We expect the future operating cash flows of Eversource, CL&P, NSTAR Electric and PSNH, along with our existing borrowing availability and access to both debt and equity markets, will be sufficient to meet any working capital and future operating requirements, and capital investment forecasted opportunities.
Credit Ratings: On September 21, 2021, Fitch changed CL&P’s outlook from stable to negative. On October 29, 2021, S&P changed CL&P’s outlook from negative to stable.
Business Development and Capital Expenditures
Aquarion: On June 2, 2017, Eversource announced that it had entered into an agreement to acquire Aquarion from Macquarie Infrastructure Partners for $1.675 billion, consisting of approximately $880 million in cash and $795 million of assumed Aquarion debt. The transaction requires approval from PURA, the DPU, the NHPUC, the Maine PUC, and the Federal Communications Commission, and is also subject to a review under the Hart-Scott-Rodino Act. On June 29, 2017, Eversource and Aquarion filed joint applications with regulatory agencies in Connecticut, Massachusetts, New Hampshire and Maine requesting approval of the transaction. With the exception of Massachusetts, all state and federal regulatory agency approvals have been received and the related review period has expired. The transaction is expected to close by December 31, 2017.
Bay State Wind: Bay State Wind is a proposed offshore wind project being jointly developed by Eversource and Denmark-based Ørsted (formerly known as DONG Energy). Bay State Wind will be located in a 300-square-mile area approximately 15 to 25 miles south of Martha's Vineyard that has the ultimate potential to generate more than 2,000 MW of energy. Both Eversource and Ørsted hold a 50 percent ownership interest in Bay State Wind. In August 2016, Massachusetts passed clean energy legislation that requires EDCs to jointly solicit RFPs and enter into long-term contracts for offshore wind, creating RFP opportunities for projects like Bay State Wind. On June 29, 2017, the Bureau of Ocean Energy Management ("BOEM") approved the project’s Site Assessment Plan ("SAP"), the first BOEM approval of an offshore wind SAP in the U.S.
On June 29, 2017, the Massachusetts RFP was issued, seeking bids for a minimum of 400 MW of offshore wind capacity. The RFP states that bids of up to 800 MW would be considered, provided they demonstrate significant net economic benefits to customers. Bay State Wind submitted a Notice of Intent to Bid on July 26, 2017, and will submit a proposal by the December 20, 2017 due date.
Consolidated Capital Expenditures:Our consolidated capital expenditures, including amounts incurred but not paid, cost of removal, AFUDC, and the capitalized and deferred portions of pension and PBOP expense (all of which are non-cash factors), totaled $1.69$2.29 billion in the first nine months of 2017,2021, compared to $1.43$2.19 billion in the first nine months of 2016.2020. These amounts included $97.8$161.2 million and $87.1$178.3 million in the first nine months of 20172021 and 2016,2020, respectively, related to information technology and facilities upgrades and enhancements, primarily at Eversource Service and The Rocky River Realty Company.
Electric Transmission Business:
Our consolidated electric transmission business capital expenditures increaseddecreased by $40.9$22.6 million in the first nine months of 2017,2021, as compared to the first nine months of 2016.2020. A summary of electric transmission capital expenditures by company is as follows:
| | | | | | | | | | | |
| For the Nine Months Ended September 30, |
(Millions of Dollars) | 2021 | | 2020 |
CL&P | $ | 242.4 | | | $ | 296.4 | |
NSTAR Electric | 316.1 | | | 253.6 | |
PSNH | 123.7 | | | 154.8 | |
Total Electric Transmission Segment | $ | 682.2 | | | $ | 704.8 | |
|
| | | | | | | |
| For the Nine Months Ended September 30, |
(Millions of Dollars) | 2017 | | 2016 |
CL&P | $ | 300.7 |
| | $ | 211.8 |
|
NSTAR Electric | 108.5 |
| | 162.6 |
|
PSNH | 87.4 |
| | 80.2 |
|
WMECO | 70.9 |
| | 75.7 |
|
NPT | 32.1 |
| | 28.4 |
|
Total Electric Transmission Segment | $ | 599.6 |
| | $ | 558.7 |
|
Northern Pass: Northern Pass is a planned HVDC transmission line from the Québec-New Hampshire border to Franklin, New Hampshire and an associated alternating current radial transmission line between Franklin and Deerfield, New Hampshire. Northern Pass will interconnect at the Québec-New Hampshire border with a planned HQ HVDC transmission line.
On April 13, 2017, the New Hampshire Site Evaluation Committee ("NH SEC") commenced final adjudicative hearings that, on August 31, 2017, were extended and will result in the issuance of a final order by March 31, 2018.
On August 10, 2017, the DOE issued the final Environmental Impact Statement for Northern Pass concluding that the proposed Northern Pass route is the preferred alternative, providing substantial benefits with only minimal impacts. Siting and permitting at both the state and federal levels is well advanced and the DOE is expected to issue the Presidential Permit for Northern Pass during the fourth quarter of 2017. Northern Pass is expected to be placed in service in the second half of 2020.
In August 2016,Eastern Massachusetts enacted clean energy legislation that requires EDCs to solicit proposals jointly and enter into long-term contracts for energy, such as hydropower. The RFP was issued on March 31, 2017 and on July 27, 2017, Eversource Energy Transmission Ventures, Inc. and HQ jointly submitted proposals for Northern Pass into the Massachusetts clean energy RFP.
Greater Boston Reliability Solution: In February 2015, ISO-NE selected the Greater Boston and New Hampshire Solution (the "Solution"), proposed by Eversource and National Grid, to satisfy the requirements identified in the Greater Boston study. The Solution consistsTransmission Projects: These projects consist of a portfolio of electric transmission upgrades coveringin southern New Hampshire, and northern Massachusetts and continuing into the greater Boston metropolitan area, of which 28 upgrades are in Eversource's service territory.territory (two in New Hampshire and 26 in Massachusetts). The NH SEC issued its written order approving thetwo New Hampshire upgrades, on October 4, 2016. We are currently pursuingincluding the necessary regulatoryMerrimack Valley Reliability Project, have been placed in service, and siting application approvals23 Massachusetts upgrades have been placed in Massachusetts. To date, we have received approval for two of these projects fromservice. On December 17, 2019, the Massachusetts Energy Facilities Siting Board. Construction has also begunBoard issued a favorable decision on several smallerthe Sudbury-Hudson Reliability Project, the last project requiring such approval. On January 17, 2020, the Town of Sudbury and Protect Sudbury, a community group, appealed the decision to the Massachusetts Supreme Judicial Court. On June 25, 2021, the Massachusetts Supreme Judicial Court rejected the Town’s appeal, affirming all aspects of the Siting Board’s final decision. On March 11, 2021, Protect Sudbury filed a petition with the Surface Transportation Board, a federal agency, claiming the Massachusetts Bay Transportation Authority (MBTA) did not have the right to lease a portion of its inactive railroad corridor, a claim previously rejected by the Massachusetts Land Court. MBTA filed its response on April 30, 2021 and a decision is anticipated by the end of the year. Additionally, Eversource must reach agreement on a Memorandum of Agreement (MOA) with the Army Corps of Engineers and consulting parties, including the Massachusetts Historical Commission and the Narragansett tribe, to establish measures to be performed by the Company to mitigate project impacts. The Army Corps of Engineers initiated the MOA consultation process with the consulting parties in late September. Although there is no mandated timeframe for resolution, the Company anticipates achieving resolution by the end of 2021. The two remaining upgrades, the Mystic-Woburn and the Wakefield-Woburn reliability projects, not requiring siting approval. All upgradesare under construction and are expected to be completedplaced in service by the endsecond quarter of 2019.2023. We estimate our portion of the investment in the Solution will be approximately $560$750 million, of which, $186.3$564 million has been spent and capitalized through September 30, 2017.2021.
GHCC: The Greater Hartford Central Connecticut ("GHCC")Southeastern Massachusetts Transmission Projects: These projects which have been approved by ISO-NE, consist of 27 projectsa portfolio of electric transmission and substation upgrades in southeastern Massachusetts, including Cape Cod, required to reinforce the Southeastern Massachusetts transmission system and bring the system into compliance with an expected investmentapplicable national and regional reliability standards. Of the twelve upgrades in Eversource’s service territory, four require siting approvals from the Massachusetts regulatory agencies, of approximately $350 million thatwhich, one has received approval and is under construction, two have completed hearings and are expectedawaiting orders and one, a joint project with National Grid, has yet to be placed in service through 2019. Sixteenfiled. Of the remaining eight projects, two projects are under construction, and six projects have been placed in service, and eight projects are in active construction. As of September 30, 2017, CL&P had capitalized $192.3 million in costs associated with GHCC.
Seacoast Reliability Project: On April 12, 2016, PSNH filed a siting application with the NH SEC for the Seacoast Reliability Project, a 13-mile, 115kV transmission line within several New Hampshire communities, which proposes to use a combination of overhead, underground and underwater line design to help meet the growing demand for electricity in the Seacoast region. In June 2016, the NH SEC accepted our application as complete. Due to delays with the siting hearings, we now expect the NH SEC decision in mid-2018, and this project is now expected to be completed by the end of 2019.in-service. We estimate our portion of the investment in this project towill be approximately $84$190 million, of which, $42 million has been spent and capitalized through September 30, 2017, PSNH had capitalized $19.7 million in costs.2021.
All project costs are anticipated to be fully recoverable through transmission rates.
Distribution Business:
A summary of distribution capital expenditures is as follows:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| For the Nine Months Ended September 30, |
(Millions of Dollars) | CL&P | | NSTAR Electric | | PSNH | | Total Electric | | Natural Gas | | Water | | Total |
2021 | | | | | | | | | | | | | |
Basic Business | $ | 160.2 | | | $ | 111.7 | | | $ | 39.5 | | | $ | 311.4 | | | $ | 140.8 | | | $ | 11.0 | | | $ | 463.2 | |
Aging Infrastructure | 110.5 | | | 162.7 | | | 44.3 | | | 317.5 | | | 358.3 | | | 77.7 | | | 753.5 | |
Load Growth and Other | 51.2 | | | 108.5 | | | 15.2 | | | 174.9 | | | 59.0 | | | 0.5 | | | 234.4 | |
Total Distribution | 321.9 | | | 382.9 | | | 99.0 | | | 803.8 | | | 558.1 | | | 89.2 | | | 1,451.1 | |
Solar | — | | | (0.7) | | | — | | | (0.7) | | | — | | | — | | | (0.7) | |
Total | $ | 321.9 | | | $ | 382.2 | | | $ | 99.0 | | | $ | 803.1 | | | $ | 558.1 | | | $ | 89.2 | | | $ | 1,450.4 | |
2020 | | | | | | | | | | | | | |
Basic Business | $ | 149.4 | | | $ | 146.5 | | | $ | 38.9 | | | $ | 334.8 | | | $ | 59.7 | | | $ | 7.6 | | | $ | 402.1 | |
Aging Infrastructure | 133.2 | | | 178.8 | | | 58.7 | | | 370.7 | | | 268.0 | | | 82.5 | | | 721.2 | |
Load Growth and Other | 55.3 | | | 69.2 | | | 14.6 | | | 139.1 | | | 39.2 | | | 0.6 | | | 178.9 | |
Total Distribution | 337.9 | | | 394.5 | | | 112.2 | | | 844.6 | | | 366.9 | | | 90.7 | | | 1,302.2 | |
Solar | — | | | 1.1 | | | — | | | 1.1 | | | — | | | — | | | 1.1 | |
Total | $ | 337.9 | | | $ | 395.6 | | | $ | 112.2 | | | $ | 845.7 | | | $ | 366.9 | | | $ | 90.7 | | | $ | 1,303.3 | |
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | |
| For the Nine Months Ended September 30, |
(Millions of Dollars) | CL&P | | NSTAR Electric | | PSNH | | WMECO | | Total Electric | | Natural Gas | | Total Electric and Natural Gas Distribution Segment |
2017 | | | | | | | | | | | | | |
Basic Business | $ | 161.8 |
| | $ | 110.3 |
| | $ | 52.5 |
| | $ | 16.4 |
| | $ | 341.0 |
| | $ | 51.3 |
| | $ | 392.3 |
|
Aging Infrastructure | 127.4 |
| | 49.6 |
| | 63.9 |
| | 16.3 |
| | 257.2 |
| | 149.6 |
| | 406.8 |
|
Load Growth (1) | 41.0 |
| | 53.2 |
| | 14.1 |
| | (1.5 | ) | | 106.8 |
| | 30.6 |
| | 137.4 |
|
Total Distribution | 330.2 |
| | 213.1 |
| | 130.5 |
| | 31.2 |
| | 705.0 |
| | 231.5 |
| | 936.5 |
|
Generation (2) | — |
| | 24.6 |
| | 6.7 |
| | 20.9 |
| | 52.2 |
| | — |
| | 52.2 |
|
Total Electric and Natural Gas Distribution Segment | $ | 330.2 |
| | $ | 237.7 |
| | $ | 137.2 |
| | $ | 52.1 |
| | $ | 757.2 |
| | $ | 231.5 |
| | $ | 988.7 |
|
| | | | | | | | | | | | | |
2016 | | | | | | | | | | | | | |
Basic Business | $ | 127.0 |
| | $ | 87.7 |
| | $ | 46.8 |
| | $ | 10.7 |
| | $ | 272.2 |
| | $ | 48.9 |
| | $ | 321.1 |
|
Aging Infrastructure | 97.4 |
| | 57.8 |
| | 61.9 |
| | 17.6 |
| | 234.7 |
| | 103.0 |
| | 337.7 |
|
Load Growth (1) | 31.9 |
| | 48.1 |
| | 11.8 |
| | (2.5 | ) | | 89.3 |
| | 28.3 |
| | 117.6 |
|
Total Distribution | 256.3 |
| | 193.6 |
| | 120.5 |
| | 25.8 |
| | 596.2 |
| | 180.2 |
| | 776.4 |
|
Generation | — |
| | — |
| | 8.5 |
| | — |
| | 8.5 |
| | — |
| | 8.5 |
|
Total Electric and Natural Gas Distribution Segment | $ | 256.3 |
| | $ | 193.6 |
| | $ | 129.0 |
| | $ | 25.8 |
| | $ | 604.7 |
| | $ | 180.2 |
| | $ | 784.9 |
|
(1) For the nine months ended September 30, 2017 and September 30, 2016, WMECO had $11.0 million and $6.4 million, respectively, of total contributions in aid of construction, which were credits to capital expenditures for those periods.
(2) In 2017, NSTAR Electric and WMECO incurred capital expenditures related to the construction of solar generation facilities.
For the electric distribution business, basic business includes the purchase of meters, tools, vehicles, information technology, transformer replacements, equipment facilities, and the relocation of plant. Aging infrastructure relates to reliability and the replacement of overhead lines, plant substations, underground cable replacement, and equipment failures. Load growth and other includes requests for new business and capacity additions on distribution lines and substation additions and expansions.
For the natural gas distribution segment,business, basic business addresses daily operational needs including meters, pipe relocations due to public works projects, vehicles, and tools. Aging infrastructure projects seek to improve the reliability of the system through enhancements related to cast iron and bare steel replacement of main and services, corrosion mediation, and station upgrades. Load growth and other reflects growth in existing service territories including new developments, installation of services, and expansion.
For the water distribution business, basic business addresses daily operational needs including periodic meter replacement, water main relocation, facility maintenance, and tools. Aging infrastructure relates to reliability and the replacement of water mains, regulators, storage tanks, pumping stations, wellfields, reservoirs, and treatment facilities. Load growth and other reflects growth in our service territory, including improvements of acquisitions, installation of new services, and interconnections of systems.
Pending Acquisition of New England Service Company: On April 8, 2021, Aquarion and New England Service Company (NESC) entered into a definitive agreement pursuant to which Aquarion would acquire all outstanding shares of NESC. NESC provides regulated water service to approximately 10,000 customers in Connecticut, Massachusetts, and New Hampshire. The acquisition will be structured as a stock-for-stock exchange and Eversource will issue approximately 463,000 common shares at closing. The transaction requires approval from the PURA, DPU, NHPUC and other regulators and is expected to close by the end of 2021. On August 3, 2021, NESC shareholders voted to approve the pending acquisition. On October 27, 2021, PURA approved the transaction.
Offshore Wind Business: Our offshore wind business includes 50 percent ownership interests in both North East Offshore and Bay State Wind, which together hold PPAs and contracts for the Revolution Wind, South Fork Wind and Sunrise Wind projects, as well as offshore leases issued by BOEM. Our offshore wind projects are being developed and constructed through a joint and equal partnership with Ørsted. This partnership also participates in new procurement opportunities for offshore wind energy in the Northeast U.S.
The natural gas distribution segment's capital spending programoffshore leases include a 257 square-mile ocean lease off the coasts of Massachusetts and Rhode Island and a separate, adjacent 300-square-mile ocean lease located approximately 25 miles south of the coast of Massachusetts. In aggregate, these ocean lease sites jointly-owned by Eversource and Ørsted could eventually develop at least 4,000 MW of clean, renewable offshore wind energy.
We are preparing our final project designs and advancing the appropriate federal, state and local siting and permitting processes along with our offshore wind partner, Ørsted, all of which is competitively sensitive. We currently expect to make investments in our offshore wind business of approximately $300 million to $500 million during 2021, subject to advancing our final project designs and federal, state and local permitting processes. As of September 30, 2021 and December 31, 2020, Eversource's total equity investment balance in its offshore wind business was $1.13 billion and $887.1 million, respectively.
The following table provides a summary of the Eversource and Ørsted major projects with announced contracts:
| | | | | | | | | | | | | | | | | | | | |
Wind Project | State Servicing | Size (MW) | Term (Years) | Price per MWh | Pricing Terms | Contract Status |
Revolution Wind | Rhode Island | 400 | 20 | $98.43 | Fixed price contract; no price escalation | Approved |
Revolution Wind | Connecticut | 304 | 20 | $98.43 - $99.50 | Fixed price contracts; no price escalation | Approved |
South Fork Wind | New York (LIPA) | 90 | 20 | $160.33 | 2 percent average price escalation | Approved |
South Fork Wind | New York (LIPA) | 40 | 20 | $86.25 | 2 percent average price escalation | Approved |
Sunrise Wind | New York (NYSERDA) | 924 (1) | 25 | $110.37 (2) | Fixed price contract; no price escalation | Approved |
(1) The contractual capacity increased from 880 MWs to 924 MWs, as allowed under the original agreement with NYSERDA.
(2) Index Offshore Wind Renewable Energy Certificate (OREC) strike price.
Our offshore wind projects are subject to receipt of federal, state and local approvals necessary to construct and operate the projects. The federal permitting process is governed by $51.3 millionBOEM, and state approvals are required from New York, Rhode Island and Massachusetts. Significant delays in the siting and permitting process resulting from the timeline for obtaining approval from BOEM and the state and local agencies could adversely impact the timing of these projects' in-service dates.
Federal Siting and Permitting Process: The South Fork Wind project has commenced the federal siting and permitting process with the filing of its Construction Operations Plan (COP) application with BOEM in 2018. The first major milestone in the BOEM review process is an issuance of a Notice of Intent (NOI) to complete an Environmental Impact Statement (EIS), which South Fork Wind received in 2018. In August 2020, we received the final review schedule from BOEM regarding South Fork Wind’s COP approval. In January 2021, BOEM released its Draft EIS for the South Fork Wind project and in August 2021, BOEM released its Final EIS, which assessed the environmental, social, and economic impacts of constructing the project and recommends measures to minimize impacts. The Final EIS will inform BOEM in deciding whether to approve the project or to approve with modifications. Identified impacts in the Final EIS included negligible to major adverse impacts to certain physical, biological or cultural resources from project construction and operations. The Final EIS also analyzed four alternatives to be evaluated as part of the process. Each of the identified alternative configurations had a similar level of environmental impacts, and if an alternative configuration was selected, the South Fork Wind project would still meet the contractual output under its PPA. The Record of Decision (ROD) is expected in November 2021 and will identify the recommended alternative. The final decision is expected in January 2022.
Based on BOEM’s final review schedule and final United States Army Corps of Engineers approval, we expect to start construction on South Fork in early 2022. South Fork Wind is designated as a “Covered Project” pursuant to Title 41 of the Fixing America’s Surface Transportation Act (FAST41) and a Major Infrastructure Project under Section 3(e) of Executive Order 13807, which provides greater federal attention on meeting the project’s permitting timelines.
Revolution Wind and Sunrise Wind filed their COP applications with BOEM in March 2020 and September 2020, respectively. Both projects received FAST41 designation in 2020. On April 30, 2021, Revolution Wind received BOEM’s NOI to prepare an EIS for the review of the COP submitted by Revolution Wind. For Revolution Wind, a final EIS is expected in the first nine monthsquarter of 2017, as compared2023, the Record of Decision in the second quarter of 2023, and a final decision is expected in the third quarter of 2023. On August 31, 2021, Sunrise Wind received BOEM’s NOI to prepare an EIS for the first nine monthsreview of 2016, primarily duethe COP submitted by Sunrise Wind. For Sunrise Wind, a final EIS and Record of Decision is expected in the third quarter of 2023, and a final decision is expected in the fourth quarter of 2023.
State and Local Siting and Permitting Process: South Fork Wind commenced the New York state siting process in 2018. On September 17, 2020, South Fork Wind filed a Joint Proposal in the New York State Article VII siting application. Among other things, the Joint Proposal included proposed mitigations to an increased investment in system replacementcertain environmental, community and reliability,construction impacts associated with constructing the project. South Fork Wind was joined by PSEG Long Island and several citizens advocacy organizations. On October 9, 2020, the Joint Proposal was signed by the New York Departments of Public Service, Environmental Conservation, Transportation and State as well as upgradesthe Office of Parks, Recreation and Historic Preservation. On March 18, 2021, the New York Public Service Commission approved an order adopting the Joint Proposal and granting a Certificate of Environmental Compatibility and Public Need. Two petitions for re-hearing of the New York Public Service Commission decision have been filed, and South Fork Wind responded on May 3, 2021 opposing the re-hearing requests. In April 2021, South Fork Wind filed its Environmental Management and Construction Plan (EM&CP) with the New York Public Service Commission, which details the plans on how the project will be constructed in accordance with the conditions of the approved Joint Proposal. Comments from reviewing agencies and parties have been received and South Fork Wind has responded to our LNG facilities. Weand addressed those comments in the plan which was re-submitted in September 2021.A final approval of the EM&CP is expected by the fourth quarter 2021.
On September 10, 2020, the Town of East Hampton and the East Hampton Town Trustees announced that they had reached an agreement with South Fork Wind to issue the necessary easements and other real estate rights necessary to construct the South Fork Wind project. The Town approved the easements on January 21, 2021, and Trustees approved the lease on January 25, 2021.
State permitting applications in Rhode Island for Revolution Wind and in New York for Sunrise Wind were filed in December 2020. The Revolution Wind state siting application was deemed complete on January 22, 2021, and the preliminary hearing was completed on March 22, 2021. On April 26, 2021, the Rhode Island Energy Facilities Siting Board issued a Preliminary Decision and Order on scheduling with Advisory Opinions for local and state agencies. All advisory opinions were received in August, in accordance with the expedited schedule, and evidentiary hearings began in October 2021. The Sunrise Wind state siting application was deemed complete on July 1, 2021, initiating the formal review process, and Sunrise Wind filed a formal notice of intent to commence settlement negotiations towards a Joint Proposal on August 31, 2021.
Projected In-Service Dates: Based on BOEM’s permit schedule outlining when BOEM will complete its review of the South Fork Wind COP, we expect the LNG facility upgrades to cost approximately $200 million andSouth Fork Wind project to be placedin-service by the end of 2023. For Revolution Wind and Sunrise Wind, based on the BOEM permit schedule included in serviceeach respective NOI, we currently expect in-service dates in late 2019.2025 for both projects, and are continuing to analyze the overall project schedules.
FERC Regulatory Matters
FERC ROE Complaints: Four separate complaints have beenwere filed at the FERC by combinations of New England state attorneys general, state regulatory commissions, consumer advocates, consumer groups, municipal parties and other parties (collectively, the "Complainants")Complainants). In each of the first three complaints, filed on October 1, 2011, December 27, 2012, and July 31, 2014, respectively, the Complainants challenged the NETOs' base ROE of 11.14 percent that had been utilized since 2005 and sought an order to reduce it prospectively from the date of the final FERC order and for the separate 15-month complaint periods. In the fourth complaint, filed April 29, 2016, the Complainants challenged the NETOs' base ROE billed of 10.57 percent and the maximum ROE for transmission incentive ("incentive cap")(incentive cap) of 11.74 percent, asserting that these ROEs were unjust and unreasonable.
In response to appealsThe ROE originally billed during the period October 1, 2011 (beginning of the FERC decision in the first complaint filed by the NETOs and the Complainants, the U.S. Court of Appeals for the D.C. Circuit (the "Court") issued a decision on April 14, 2017 vacating and remanding the FERC's decision. The Court found that the FERC failed to make an explicit finding that the 11.14 percent base ROE was unjust and unreasonable, as required under Section 206 of the Federal Power Act, before it set a new base ROE. The Court also found that the FERC did not provide a rational connection between the record evidence and its decision to select the midpoint of the upper half of the zone of reasonableness for the new base ROE.
On May 26, 2017, the Chief Administrative Law Judge ("ALJ") issued an order that the fourth complaint will continue to trial in December 2017 with an ALJ initial decision expected in March of 2018.
A summary of the four separate complaints and the base ROEs pertinent to those complaints are as follows:
|
| | | | | | |
Complaint | 15-Month Time Period of Complaint (Beginning as of Complaint Filing Date) | Original Base ROE Authorized by FERC at Time of Complaint Filing Date (1) | Base ROE Subsequently Authorized by FERC for First Complaint Period and also Effective from October 16, 2014 through April 14, 2017 (1) | Reserve (Pre-Tax and Excluding Interest) as of September 30, 2017 (in millions) | | FERC ALJ Recommendation of Base ROE on Second and Third Complaints (Issued March 22, 2016) |
First | 10/1/2011 - 12/31/2012 | 11.14% | 10.57% | $— | (2) | N/A |
Second | 12/27/2012 - 3/26/2014 | 11.14% | N/A | 39.1 | (3) | 9.59% |
Third | 7/31/2014 - 10/30/2015 | 11.14% | 10.57% | — | | 10.90% |
Fourth | 4/29/2016 - 7/28/2017 | 10.57% | 10.57% | — | | N/A |
(1) The billed ROE (base plus incentives) between October 1, 2011 andperiod) through October 15, 2014 was withinconsisted of a rangebase ROE of 11.14 percent and incentives up to 13.1 percent. On October 16, 2014, the FERC set the base ROE at 10.57 percent and the incentive cap at 11.74 percent for the first complaint period andperiod. This was also effective fromfor all prospective billings to customers beginning October 16, 2014 through2014. This FERC order was vacated on April 14, 2017 by the date on whichU.S. Court of Appeals for the Court vacated this FERC order.D.C. Circuit (the Court).
(2) CL&P, NSTAR Electric, PSNH and WMECO have refunded allAll amounts associated with the first complaint period totaling $38.9have been refunded. Eversource has recorded a reserve of $39.1 million (pre-tax and excluding interest) at Eversource (consistingfor the second complaint period as of $22.4 million at CL&P, $8.4 million at NSTAR Electric, $2.8 million at PSNH,September 30, 2021 and $5.3 million at WMECO), reflecting both the base ROE and incentive cap prescribed by the FERC order.
(3) TheDecember 31, 2020. This reserve represents the difference between the ROEs billed rates during the second complaint period and a 10.57 percent base ROE and 11.74 percent incentive cap. The reserve consisted of $21.4 million for CL&P, $8.5$14.6 million for NSTAR Electric and $3.1 million for PSNH and $6.1 million for WMECO as of September 30, 2017.2021 and December 31, 2020.
On June 5, 2017, the NETOs, including Eversource, submitted a filing to the FERC to reinstate the base ROE of 11.14 percent with an associated ROE incentive cap of 13.5 percent effective June 8, 2017, as these were the last ROEs lawfully in effect for transmission billing purposes prior to the FERC order vacated by the Court on April 14, 2017. On October 6, 2017, the FERC did not accept the NETOs filing, temporarily leaving in place the ROEs (10.57 percent base ROE with an 11.74 percent incentive cap ROE) set in the first complaint proceeding until the FERC addresses the Court’s decision.
On October 5, 201716, 2018, FERC issued an order on all four complaints describing how it intends to address the issues that were remanded by the Court. FERC proposed a new framework to determine (1) whether an existing ROE is unjust and unreasonable and, if so, (2) how to calculate a replacement ROE. Initial briefs were filed by the NETOs, Complainants and FERC Trial Staff on January 11, 2019 and reply briefs were filed a serieson March 8, 2019. The NETOs' brief was supportive of motions, requesting that the FERC dismissoverall ROE methodology determined in the four complaint proceedings. Alternatively, ifOctober 16, 2018 order provided the FERC does not dismisschange the proceedings,proposed methodology or alter its implementation in a manner that has a material impact on the results.
The FERC order included illustrative calculations for the first complaint using FERC's proposed frameworks with financial data from that complaint. Those illustrative calculations indicated that for the first complaint period, for the NETOs, requested thatwhich FERC concludes are of average financial risk, the preliminary just and reasonable base ROE is 10.41 percent and the preliminary incentive cap on total ROE is 13.08 percent.
If the results of the illustrative calculations were included in a final FERC order for each of the complaint periods, then a 10.41 percent base ROE and a 13.08 percent incentive cap would not have a significant impact on our financial statements for all of the complaint periods. These preliminary calculations are not binding and do not represent what we believe to be the most likely outcome of a final FERC order.
On November 21, 2019, FERC issued Opinion No. 569 affecting the two pending transmission ROE complaints against the Midcontinent ISO (MISO) transmission owners, in which FERC adopted a new methodology for determining base ROEs. Various parties sought rehearing. On December 23, 2019, the NETOs filed supplementary materials in the NETOs' four pending cases to respond to this new methodology because of the uncertainty of the applicability to the NETOs’ cases.
On May 21, 2020, the FERC consolidate allissued its order in Opinion No. 569-A on the rehearing of the MISO transmission owners' cases, in which FERC again changed its methodology for determining the MISO transmission owners' base ROEs. Various parties appealed the MISO transmission owners' opinion. On November 19, 2020, the FERC issued Opinion No. 569-B denying rehearing of Opinion No. 569-A and reaffirmed the methodology previously adopted in Opinion No. 569-A. The new methodology differs significantly from the methodology proposed by FERC in its October 16, 2018 order to determine the NETOs' base ROEs in its four pending cases.
Given the significant uncertainty regarding the applicability of the FERC opinions in the MISO transmission owners' two complaint cases to the NETOs' pending four complaint proceedings for expeditious resolution and/or stay the trial in the fourth complaint proceeding and resolve it based on the standards set in the April 14, 2017 Court decision.
At this time, the Company cannot reasonably estimate a range of gain or loss for the complaint proceedings. The April 14, 2017 Court decision did not provide acases, Eversource concluded that there is no reasonable basis for a change to the reserve balance of $39.1 million (pre-tax, excluding interest) for the second complaint period, and the Company has not changed its reserve or recognized ROEs for any of the complaint periods.
Management cannotperiods at this time predict the ultimate effecttime. As well, Eversource cannot reasonably estimate a range of the Court decisionany gain or future FERC action onloss for any of the four complaint periods or the estimated impacts on the financial position, results of operations or cash flows of proceedings at this time.
Eversource, CL&P, NSTAR Electric and PSNH or WMECO.currently record revenues at the 10.57 percent base ROE and incentive cap at 11.74 percent established in the October 16, 2014 FERC order.
The average impactA change of a 10 basis point changepoints to the base ROE used to establish the reserves would impact Eversource's after-tax earnings by an average of approximately $3 million for each of the four 15-month complaint periodsperiods. From the date of a final FERC order, based off of estimated 2021 rate base, a change of 10 basis points to the base ROE would affect Eversource'simpact Eversource’s future annual after-tax earnings by approximately $3$5 million, or $0.01 per share, per year, and will increase slightly over time as we continue to invest in our transmission infrastructure.
FERC Notice of Inquiry on ROE: On March 21, 2019, FERC issued a Notice of Inquiry (NOI) seeking comments from all stakeholders on FERC's policies for evaluating ROEs for electric public utilities, and interstate natural gas and oil pipelines. On June 26, 2019, the NETOs jointly filed comments supporting the methodology established in the FERC’s October 16, 2018 order with minor enhancements going forward. The NETOs jointly filed reply comments in the FERC ROE NOI on July 26, 2019. On May 12, 2020, the NETOs filed supplemental comments in the NOI ROE docket. At this time, Eversource cannot predict how this proceeding will affect its transmission ROEs.
FERC Notice of Inquiry and Proposed Rulemaking on Transmission Incentives: On March 21, 2019, FERC issued an NOI seeking comments on FERC's policies for implementing electric transmission incentives. On June 26, 2019, Eversource filed comments requesting that FERC retain policies that have been effective in encouraging new transmission investment and remain flexible enough to attract investment in new and emerging transmission technologies. Eversource filed reply comments on August 26, 2019. On March 20, 2020, FERC issued a Notice of Proposed Rulemaking (NOPR) on transmission incentives. The NOPR intends to revise FERC’s electric transmission incentive policies to reflect competing uses of transmission due to generation resource mix, technological innovation and shifts in load patterns. FERC proposes to grant transmission incentives based on measurable project economics and reliability benefits to consumers rather than its current project risks and challenges framework. On July 1, 2020, Eversource filed comments generally supporting the NOPR.
On April 15, 2021, FERC issued a Supplemental NOPR that proposes to eliminate the existing 50 basis point return on equity for utilities that have been participating in a regional transmission organization (RTO ROE incentive) for more than three years. On June 25, 2021, the NETOs jointly filed comments strongly opposing the Commission’s proposal. On July 26, 2021, the NETOs filed Supplemental NOPR reply comments responding to various parties advocating for the elimination of the RTO Adder. If the FERC issues a final order eliminating the RTO ROE incentive as proposed in the Supplemental NOPR, the estimated annual impact (using 2020 actual data) on Eversource’s after-tax earnings is approximately $15 million.
NSTAR Electric and WMECO Merger FERC Filings: On January 13, 2017, Eversource made two filings with FERC related to the proposed merger of WMECO into NSTAR Electric with The Supplemental NOPR contemplates an anticipated effective date 30 days from the final order.
At this time, Eversource cannot predict the ultimate outcome of December 31, 2017. One filing requests FERC approval of the merger,these proceedings, including possible appellate review, and the other filing requests FERC approval of NSTAR Electric's assumption of WMECO's short-term debt obligations. The FERC approved the mergerresulting impact on March 2, 2017 and will act on the assumption of debt filing by the end of 2017.its transmission incentives.
Regulatory Developments and Rate Matters
Electric, and Natural Gas and Water Utility Base Distribution Rates:
The Regulatedregulated companies’ distribution rates are set by their respective state regulatory commissions, and their tariffs include mechanisms for periodically adjusting their rates for the recovery of specific incurred costs. Other than as described below, for the first nine months of 2017,2021, changes made to the Regulatedregulated companies’ rates did not have a material impact on their earnings, financial position, or cash flows. For further information, see "Financial Condition and Business Analysis – Regulatory Developments and Rate Matters" included in Item 7, "Management’s Discussion and Analysis of Financial Condition and Results of Operations," of the Eversource 20162020 Form 10-K.
Connecticut:
On April 20, 2017, PURA approved the joint request of CL&P the Connecticut Office of Consumer CounselDeferred Storm Costs: In 2021 and the Connecticut Attorney General2020, multiple tropical and severe storms caused extensive damage to amend the deadline to establish newCL&P’s electric distribution ratessystems and customer outages, along with significant pre-staging costs. These storms resulted in deferred pre-staging and storm restoration costs of $195 million for 2021 storms and $344 million for 2020 storms, including the 2012 Connecticut merger settlement agreement from "no later than December 1, 2017" to "no later than July 1, 2018." On October 27, 2017, catastrophic impact of Tropical Storm Isaias in August 2020, among others. Management believes all these storm costs were prudently incurred and meet the criteria for specific cost recovery.
CL&P filed a letterTropical Storm Isaias Costs: On August 4, 2020, Tropical Storm Isaias caused catastrophic damage to our electric distribution system, which resulted in significant numbers and durations of intent with PURA to request a rate increasecustomer outages, primarily in Connecticut. In terms of $255.8 million, $45 million and $36 million effective May 1, 2018, 2019, and 2020, respectively.
Massachusetts:
Eversource and NSTAR Electric Boston Harbor Civil Action: On July 15, 2016, the United States Attorney on behalfcustomer outages, this storm was one of the United States Army Corpsworst in CL&P’s history. PURA will investigate the prudence of Engineers filed a civil actioncosts incurred by CL&P to restore service in the United States District Court for the District of Massachusetts under provisions of the Rivers and Harbors Act of 1899 and the Clean Water Act against NSTAR Electric, Harbor Electric Energy Company, a wholly-owned subsidiary of NSTAR Electric ("HEEC"), and the Massachusetts Water Resources Authority (together with NSTAR Electric and HEEC, the "Defendants"). The action alleged that the Defendants failedresponse to comply with certain permitting requirements related to the placement of the HEEC-owned electric distribution cable beneath Boston Harbor. The action sought an order to compel HEEC to comply with cable depth requirements in the United States Army Corps of Engineers' permit or alternatively to remove the electric distribution cable and cease unauthorized work in U.S. waterways. The action also sought civil penalties and other costs.
After substantial negotiations, the parties reached a settlement whereby HEEC will install a new 115kV distribution cable across Boston Harbor to Deer Island, utilizing a different route, and will remove portions of the existing cable. Upon the installation and completion of the new cable and the removal of the portions of the existing cable, all issues surrounding the current permit from the United States Army Corps of Engineers are expected to be resolved, and such litigationTropical Storm Isaias. That investigation is expected to occur either in a separate proceeding not yet initiated or as part of CL&P’s next rate review proceeding. Tropical Storm Isaias resulted in deferred storm restoration costs of approximately $234 million at CL&P and $251 million at Eversource as of September 30, 2021. The estimated cost of restoration may continue to change as additional cost information becomes available and final post-storm costs are deferred or capitalized. Although PURA found that CL&P’s performance in its preparation for and response to Tropical Storm Isaias fell below applicable performance standards in certain instances, CL&P believes it will be dismissedable to present credible evidence in a future proceeding demonstrating there is no reasonably close causal connection between the alleged sub-standard performance and the storm costs incurred. While it is possible that some amount of storm costs may be disallowed by PURA in a future proceeding, any such amount cannot be estimated at this time. Eversource and CL&P continue to believe that these storm restoration costs associated with prejudice.
In 2017,Tropical Storm Isaias were prudently incurred and meet the criteria for cost recovery; and as a result, ofmanagement does not expect the settlement, NSTAR Electric expensed $4.9 million (pre-tax) of previously incurred capitalized costs associated with engineering work performed on the existing cable that will no longer be used. In addition, NSTAR Electric agreed to provide a rate base credit of $17.5 million to the Massachusetts Water Resources Authority for the new cable. This negotiated credit will result in the initial $17.5 million of construction costs on the new cable to be expensed as incurred. Construction of the new cable is expected to be completed in 2019.
Massachusetts RFPs: On March 31, 2017, pursuant to a comprehensive energy law enacted in 2016, "An Act to Promote Energy Diversity," (the "Act") the Massachusetts EDCs, including NSTAR Electric and WMECO, and the DOER issued a joint RFP for 9.45 terawatt hours of clean energy per year, such as hydropower, land-based wind or solar. The RFP seeks proposals for long-term contracts of 15 to 20 years to provide the state's electric distribution companies with clean energy generation. The proposal submission due date was July 27, 2017. Contracts will be selected in January 2018, with an expectation to submit executed long-term contracts to the DPU for final approval in April 2018. On July 27, 2017, Eversource Energy Transmission Ventures, Inc. and HQ jointly submitted proposals for Northern Pass into the Massachusetts clean energy RFP. Northern Pass is expected to be placed in service in the second half of 2020.
On June 29, 2017, pursuant to the Act, the Massachusetts EDCs, including NSTAR Electric and WMECO, and the DOER issued a joint RFP for long-term contracts for offshore wind energy projects, seeking bids for a minimum of 400 MW of offshore wind capacity. The Offshore Wind Energy RFP states that bids of up to 800 MW would be considered, provided they demonstrate significant net economic benefits to customers. Bay State Wind submitted a Notice of Intent to Bid on July 26, 2017 and will submit a proposalstorm cost review by the December 20, 2017 due date.
NSTAR Electric and WMECO Rate Case: On January 17, 2017, NSTAR Electric and WMECO jointly filed an application (the "Joint Applicants") with the DPU for approval of a combined $96 million increase in base distribution rates, effective January 1, 2018. As part of this filing, the Joint Applicants are presenting a grid-wise performance plan, including the implementation of a performance-based rate-making mechanism in conjunction with a grid modernization base commitment of $400 million in incremental capital investment over a period of five years, commencing January 1, 2018. In addition, the Joint Applicants proposed to streamline and align rate classifications between NSTAR Electric and WMECO, and requested a revenue decoupling rate mechanism for NSTAR Electric. WMECO has a revenue decoupling mechanism in place. The DPU will also be reviewing the proposed December 31, 2017 merger of NSTAR Electric and WMECO as part of the rate case. A final decision from the DPU is expected in late 2017, with new rates anticipated to be effective January 1, 2018.
New Hampshire:
Generation Divestiture: On June 10, 2015, Eversource and PSNH entered into the 2015 Public Service Company of New Hampshire Restructuring and Rate Stabilization Agreement (the "Agreement") with the New Hampshire Office of Energy and Planning, certain members of the NHPUC staff, the Office of Consumer Advocate, two State Senators, and several other parties. Under the terms of the Agreement, PSNH agreed to divest its generation assets, subject to NHPUC approval. The Agreement provided for a resolution of issues pertaining to PSNH's generation assets in pending regulatory proceedings before the NHPUC. The Agreement provided for the Clean Air Project prudence proceeding to be resolved and all remaining Clean Air Project costs to be included in rates effective January 1, 2016. As part of the Agreement, PSNH agreed to forego recovery of $25 million of the equity return related to the Clean Air Project.
On July 1, 2016, the NHPUC approved the Agreement in an order that, among other things, instructed PSNH to begin the process of divesting its generation assets. The NHPUC selected an auction adviser to assist with the divestiture, and the final plan and auction process were approved by the NHPUC in November 2016.
On October 11, 2017, PSNH entered into two Purchase and Sale Agreements ("Agreements") to sell its thermal and hydroelectric generation assets to private investors at purchase prices of $175 million and $83 million, respectively, subject to adjustments as set forth in each Agreement.
On October 12, 2017, PSNH filed an application with the NHPUC requesting approval of the Agreements. We expect to receive approvals from the NHPUC and other necessary regulatory agencies by late December 2017 or early 2018, with the transactions to be completed shortly thereafter. Upon completion, full recovery of PSNH's generation assets will occur through a combination of cash flows during the remaining operating period, sales proceeds, and recovery of stranded costs via bonds that will be secured by a non-bypassable charge or through recoveries in future rates billed to PSNH's customers.
As of September 30, 2017, PSNH's energy service rate base balance was approximately $594 million, and the carrying value of PSNH's total generation assets subject to divestiture was approximately $767 million.
Legislative and Policy Matters
On August 11, 2017, Massachusetts issued final legislation, pursuant to Executive Order 569, which established volumetric limits on multiple greenhouse emission sources to ensure reductions are realized by deadlines established in the Massachusetts Global Warming Solutions Act enacted in 2008. Under this legislation, the initial target date for reduction in greenhouse gas emissions has been established in the year 2020. The legislation is not expectedPURA to have a material impact on the financial statementsposition or results of operations of Eversource or CL&P.
CL&P Tropical Storm Isaias Response Investigation: In August 2020, PURA opened a docket to investigate the preparation for and response to Tropical Storm Isaias by Connecticut utilities, including CL&P. On April 28, 2021, PURA issued a final decision on CL&P’s compliance with its emergency response plan that concluded CL&P failed to comply with certain storm performance standards and was imprudent in certain instances. Specifically, PURA concluded that CL&P did not satisfy the performance standards for managing its municipal liaison program, timely removing electrical hazards from blocked roads, communicating critical information to its customers, or meeting its obligation to secure adequate external contractor and mutual aid resources in a timely manner. Based on its findings, PURA ordered CL&P to adjust its future rates in a pending or future rate proceeding to reflect a monetary penalty in the form of a downward adjustment of 90 basis points in its allowed rate of return on equity (ROE), which is currently 9.25 percent. In its decision, PURA explained that additional monetary penalties and further enforcement orders pursuant to Connecticut statute would be considered in a separate proceeding that was initiated on May 6, 2021.
On May 6, 2021, as part of the penalty proceeding, PURA issued a notice of violation that included an assessment of $30 million, consisting of a $28.4 million civil penalty for non-compliance with storm performance standards to be provided as credits on customer bills and a $1.6 million fine for violations of accident reporting requirements to be paid to the State of Connecticut’s general fund. On July 14, 2021, PURA issued a final decision in this penalty proceeding that included an assessment of $28.6 million, maintaining the $28.4 million performance penalty and reducing the $1.6 million fine for accident reporting to $0.2 million. The $28.4 million performance penalty is currently being credited to customers on electric bills beginning on September 1, 2021 over a one-year period. The $28.4 million is the maximum statutory penalty amount under applicable Connecticut law in effect at the time of Tropical Storm Isaias, which is 2.5 percent of CL&P’s annual distribution revenues. The liability for the performance penalty was recorded as a current regulatory liability on CL&P’s balance sheet and as a reduction to Operating Revenues on the nine months ended September 30, 2021 income statement. The after-tax earnings impact of this charge was $0.07 per share.
CL&P Settlement Agreement: On October 1, 2021, CL&P entered into a settlement agreement with the DEEP, Office of Consumer Counsel (OCC), Office of the Attorney General (AG) and the Connecticut Industrial Energy Consumers, resolving certain issues that arose in pending regulatory proceedings initiated by the PURA. PURA approved the settlement agreement on October 27, 2021. In the settlement agreement, CL&P agreed to provide a total of $65 million of customer credits to be distributed based on customer sales over a two-month period from December 1, 2021 to January 31, 2022. CL&P also agreed to irrevocably set aside $10 million to fund various customer assistance initiatives as directed by PURA for disbursement to state-designated purposes, with the objective of disbursing the funds prior to April 30, 2022, including providing credits to existing hardship and non-hardship customers carrying arrearages and other purposes. In the third quarter of 2021, CL&P recorded a current regulatory liability of $75 million on the balance sheet associated with the provisions of the settlement agreement, with a $65 million pre-tax charge as a reduction to Operating Revenues associated with the customer credits and a $10 million charge to Operations and Maintenance expense associated with the customer assistance initiatives on the three months ended September 30, 2021 income statement.
In exchange for the $75 million of customer credits and assistance, PURA’s interim rate reduction docket was resolved without findings. As a result of the settlement agreement, neither the 90 basis point reduction to CL&P’s return on equity introduced in PURA’s storm-related decision issued April 28, 2021, nor the 45 basis point reduction to CL&P’s return on equity included in PURA’s draft decision issued September 14, 2021 in the interim rate reduction docket, will be implemented.
CL&P has also agreed that its current base distribution rates shall be frozen, subject to the customer credits described above, until no earlier than January 1, 2024. The rate freeze applies only to base distribution rates (including storm costs) and not to other rate mechanisms such as the retail rate components, rate reconciling mechanisms, formula rates and any other adjustment mechanisms. The rate freeze also does not apply to any cost recovery mechanism outside of the base distribution rates with regard to grid-modernization initiatives or any other proceedings, either currently pending or that may be initiated during the rate freeze period, that may place additional obligations on CL&P. The approval of the settlement agreement satisfies the Connecticut statute of rate review requirements that requires electric utilities to file a distribution rate case within four years of the last rate case.
As part of the settlement agreement, CL&P agreed to withdraw with prejudice its pending appeals of PURA’s April 28, 2021 and July 14, 2021 decisions related to Storm Isaias and agreed to waive its right to file an appeal and seek a judicial stay of the final decision in the interim rate reduction docket. The settlement agreement assures that CL&P will have the opportunity to petition for and demonstrate the prudence of the storm costs incurred to respond to customer outages associated with Storm Isaias in a future ratemaking proceeding.
The cumulative pre-tax impact of the settlement agreement and the Storm Isaias assessment imposed in PURA’s April 28, 2021 and July 14, 2021 decisions totaled $103.6 million, and the after-tax earnings impact was $85.8 million, or $0.25 per share, for the nine months ended September 30, 2021.
CL&P Rate Adjustment Mechanisms (RAM) Filing: On July 31, 2020, PURA temporarily suspended its June 26, 2020 approval of certain delivery rate components effective July 1, 2020, and ordered CL&P to restore rates to those in effect as of June 30, 2020 in order to allow PURA time to reexamine the rates. Rates were adjusted effective August 1, 2020. On December 2, 2020, PURA issued a final decision in which it adjusted the timing of the annual rate adjustments for the Transmission Adjustment Clause (TAC) charge, the Non-Bypassable Federally Mandated Congestion Charge (NBFMCC), the Electric System Improvements Tracker (ESI), Competitive Transition Assessment (CTA), System Benefits Charge (SBC) and Revenue Decoupling Mechanism (RDM) so that these rates take effect on May 1st of each year. On April 28, 2021, PURA issued its interim decision on CL&P’s proposal that accepted the May 1, 2021 rate proposals for the CTA, TAC, ESI and RDM, but ordered that these rate changes go into effect on June 1, 2021, as opposed to May 1, 2021. Further, PURA elected to keep in place the current rates for the NBFMCC and SBC until further review of the costs being recovered in those rates could be performed. Finally, PURA indicated it would further review CL&P’s proposal to begin recovery of 2020 under-recoveries associated with these rates on October 1, 2021, and over what the period of recovery would be at a later time.
On September 15, 2021, PURA issued its final decision in the 2020 RAM reconciliation filing, which required no adjustment to the GSC, BFMCC, NBFMCC and SBC rates, changed the TAC and RDM rates effective October 1, 2021, and maintained the CTA, ESI and base distribution rates in effect as of June 1, 2021. As part of this decision, PURA also approved two separate amortization periods, effective October 1, 2021, allowing for the collection of cumulative under-recoveries totaling $193 million as of December 31, 2020 associated with the NBFMCC and TAC rates over a 31-month period and the RDM rate over a 15-month period. PURA also required CL&P to apply the prime rate, retroactive to January 1, 2020, when calculating carrying charges for the under- or over-recoveries included in the rate components, which impacted the NBFMCC, SBC, CTA, and TAC rates.
CL&P Impact of Third Quarter 2021 Rate Changes: On September 1, 2021, CL&P adjusted its rates for the $28.4 million penalty imposed by PURA for non-compliance with performance standards that is being provided as credits on customer bills over a one-year period. On October 1, 2021, CL&P implemented new TAC and RDM delivery rates. In total, CL&P implemented an overall net rate increase of $0.00174 per kWh for residential Rate 1 customers for these rate component charges, net of the rate decrease for the storm penalty credit. For residential customers with 700 kWh monthly usage, the impact of the September 1 and October 1, 2021 rate changes equated to a net increase of $1.22 on monthly customer bills.
Massachusetts:
NSTAR Electric or WMECO.Gas and EGMA Mitigation Filings: On October 6, 2021, NSTAR Gas and EGMA made filings with the DPU regarding the deferral of certain costs for the purpose of mitigating November 1, 2021 bill impacts associated with new delivery rates as a result of increases in natural gas supply costs, thereby providing rate relief to customers. These adjustments to rates do not impact the recovery of costs, only the timing of when the costs are collected in rates. For NSTAR Gas and EGMA, these adjustments included delaying portions of the base distribution rate changes, the decoupling revenue requirement, and the recovery of certain prior period under-collections until November 1, 2022. These adjustments delay recovery of $16.7 million for NSTAR Gas and $19.7 million for EGMA for a one-year period. These adjustments will result in the under-recovery of costs beginning November 1, 2021, with no impact on the statement of income.
NSTAR Gas Distribution Rates: As part of an inflation-based mechanism, NSTAR Gas submitted its first annual Performance Based Rate Adjustment filing on September 15, 2021. Subsequently, NSTAR Gas filed a mitigation plan on October 6, 2021 to defer recovery of the base distribution rate change for NSTAR Gas until November 1, 2022 associated with depreciation and property tax expense for the 2019 and 2020 non-GSEP investments. The DPU approved a $13.6 million increase to base distribution rates on October 29, 2021 for effect on November 1, 2021.
EGMA Distribution Rates: As established in the October 7, 2020 EGMA Rate Settlement Agreement, EGMA filed for its first base distribution rate increase on September 17, 2021. The DPU approved a $13 million increase to base distribution rates on October 28, 2021 for effect on November 1, 2021.
Critical Accounting Policies
The preparation of financial statements in conformity with GAAP requires management to make estimates, assumptions and, at times, difficult, subjective or complex judgments. Changes in these estimates, assumptions and judgments, in and of themselves, could materially impact our financial position, results of operations or cash flows. Our management communicates to and discusses with the Audit Committee of our Board of Trustees significant matters relating to critical accounting policies. Our critical accounting policies that we believed were the most critical in nature were reported in the Eversource 20162020 Form 10-K. There have been no material changes with regard to these critical accounting policies.
Other Matters
Accounting Standards: For information regarding new accounting standards, see Note 1B, "Summary of Significant Accounting Policies –Accounting– Accounting Standards," to the financial statements.
Contractual Obligations and Commercial Commitments: There have been noSee Note 9B, "Commitments and Contingencies – Long-Term Contractual Arrangements," for discussion of material changes to contractual obligations identified and no material changes with regard to the contractual obligations and commercial commitments previously disclosed insince the Eversource 20162020 Form 10-K.
Web Site: Additional financial information is available through our website at www.eversource.com. We make available through our website a link to the SEC's EDGAR website (http://www.sec.gov/edgar/searchedgar/companysearch.html), at which site Eversource's, CL&P's, NSTAR Electric's PSNH's and WMECO'sPSNH's combined Annual Reports on Form 10-K, combined Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and any amendments to those reports may be reviewed. Information contained on the Company's website or that can be accessed through the website is not incorporated into and does not constitute a part of this combined Quarterly Report on Form 10-Q.
RESULTS OF OPERATIONS – EVERSOURCE ENERGY AND SUBSIDIARIES
The following provides the amounts and variances in operating revenues and expense line items in the statements of income for Eversource for the three and nine months ended September 30, 20172021 and 20162020 included in this combined Quarterly Report on Form 10-Q:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| For the Three Months Ended September 30, | | For the Nine Months Ended September 30, | |
(Millions of Dollars) | 2021 | | 2020 | | Increase/(Decrease) | | 2021 | | 2020 | | Increase/(Decrease) | | | | | | |
Operating Revenues | $ | 2,432.8 | | | $ | 2,343.6 | | | $ | 89.2 | | | $ | 7,381.2 | | | $ | 6,670.5 | | | $ | 710.7 | | | | | | | |
Operating Expenses: | | | | | | | | | | | | | | | | | |
Purchased Power, Fuel and Transmission | 880.6 | | | 806.3 | | | 74.3 | | | 2,529.2 | | | 2,313.0 | | | 216.2 | | | | | | | |
Operations and Maintenance | 389.1 | | | 332.0 | | | 57.1 | | | 1,265.8 | | | 1,006.1 | | | 259.7 | | | | | | | |
Depreciation | 276.8 | | | 244.5 | | | 32.3 | | | 822.2 | | | 721.2 | | | 101.0 | | | | | | | |
Amortization | 45.2 | | | 57.5 | | | (12.3) | | | 158.9 | | | 130.7 | | | 28.2 | | | | | | | |
Energy Efficiency Programs | 143.8 | | | 145.0 | | | (1.2) | | | 460.8 | | | 408.8 | | | 52.0 | | | | | | | |
Taxes Other Than Income Taxes | 213.9 | | | 197.1 | | | 16.8 | | | 623.8 | | | 556.7 | | | 67.1 | | | | | | | |
| | | | | | | | | | | | | | | | | |
Total Operating Expenses | 1,949.4 | | | 1,782.4 | | | 167.0 | | | 5,860.7 | | | 5,136.5 | | | 724.2 | | | | | | | |
Operating Income | 483.4 | | | 561.2 | | | (77.8) | | | 1,520.5 | | | 1,534.0 | | | (13.5) | | | | | | | |
Interest Expense | 148.0 | | | 134.0 | | | 14.0 | | | 431.2 | | | 403.2 | | | 28.0 | | | | | | | |
Other Income, Net | 43.8 | | | 29.2 | | | 14.6 | | | 124.6 | | | 83.6 | | | 41.0 | | | | | | | |
Income Before Income Tax Expense | 379.2 | | | 456.4 | | | (77.2) | | | 1,213.9 | | | 1,214.4 | | | (0.5) | | | | | | | |
Income Tax Expense | 94.1 | | | 108.2 | | | (14.1) | | | 294.5 | | | 275.6 | | | 18.9 | | | | | | | |
Net Income | 285.1 | | | 348.2 | | | (63.1) | | | 919.4 | | | 938.8 | | | (19.4) | | | | | | | |
Net Income Attributable to Noncontrolling Interests | 1.9 | | | 1.9 | | | — | | | 5.6 | | | 5.6 | | | — | | | | | | | |
Net Income Attributable to Common Shareholders | $ | 283.2 | | | $ | 346.3 | | | $ | (63.1) | | | $ | 913.8 | | | $ | 933.2 | | | $ | (19.4) | | | | | | | |
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| For the Three Months Ended September 30, | | For the Nine Months Ended September 30, |
(Millions of Dollars) | 2017 | | 2016 | | Increase/ (Decrease) | | Percent | | 2017 | | 2016 | | Increase/ (Decrease) | | Percent |
Operating Revenues | $ | 1,988.5 |
| | $ | 2,039.7 |
| | $ | (51.2 | ) | | (2.5 | )% | | $ | 5,856.5 |
| | $ | 5,862.5 |
| | $ | (6.0 | ) | | (0.1 | )% |
Operating Expenses: | |
| | |
| | |
| | |
| | | | |
| | |
| | |
|
Purchased Power, Fuel and Transmission | 651.8 |
| | 665.8 |
| | (14.0 | ) | | (2.1 | ) | | 1,955.1 |
| | 2,001.9 |
| | (46.8 | ) | | (2.3 | ) |
Operations and Maintenance | 300.4 |
| | 324.7 |
| | (24.3 | ) | | (7.5 | ) | | 933.4 |
| | 965.6 |
| | (32.2 | ) | | (3.3 | ) |
Depreciation | 194.5 |
| | 181.3 |
| | 13.2 |
| | 7.3 |
| | 571.2 |
| | 531.8 |
| | 39.4 |
| | 7.4 |
|
Amortization of Regulatory Assets, Net | 41.8 |
| | 43.9 |
| | (2.1 | ) | | (4.8 | ) | | 58.1 |
| | 56.2 |
| | 1.9 |
| | 3.4 |
|
Energy Efficiency Programs | 129.2 |
| | 149.1 |
| | (19.9 | ) | | (13.3 | ) | | 391.8 |
| | 406.0 |
| | (14.2 | ) | | (3.5 | ) |
Taxes Other Than Income Taxes | 168.2 |
| | 165.0 |
| | 3.2 |
| | 1.9 |
| | 479.6 |
| | 479.2 |
| | 0.4 |
| | 0.1 |
|
Total Operating Expenses | 1,485.9 |
| | 1,529.8 |
| | (43.9 | ) | | (2.9 | ) | | 4,389.2 |
| | 4,440.7 |
| | (51.5 | ) | | (1.2 | ) |
Operating Income | 502.6 |
| | 509.9 |
| | (7.3 | ) | | (1.4 | ) | | 1,467.3 |
| | 1,421.8 |
| | 45.5 |
| | 3.2 |
|
Interest Expense | 108.7 |
| | 99.9 |
| | 8.8 |
| | 8.8 |
| | 319.5 |
| | 298.6 |
| | 20.9 |
| | 7.0 |
|
Other Income, Net | 21.2 |
| | 13.6 |
| | 7.6 |
| | 55.9 |
| | 56.3 |
| | 23.7 |
| | 32.6 |
| | (a) |
|
Income Before Income Tax Expense | 415.1 |
| | 423.6 |
| | (8.5 | ) | | (2.0 | ) | | 1,204.1 |
| | 1,146.9 |
| | 57.2 |
| | 5.0 |
|
Income Tax Expense | 152.8 |
| | 156.4 |
| | (3.6 | ) | | (2.3 | ) | | 447.9 |
| | 428.2 |
| | 19.7 |
| | 4.6 |
|
Net Income | 262.3 |
| | 267.2 |
| | (4.9 | ) | | (1.8 | ) | | 756.2 |
| | 718.7 |
| | 37.5 |
| | 5.2 |
|
Net Income Attributable to Noncontrolling Interests | 1.9 |
| | 1.9 |
| | — |
| | — |
| | 5.6 |
| | 5.6 |
| | — |
| | — |
|
Net Income Attributable to Common Shareholders | $ | 260.4 |
| | $ | 265.3 |
| | $ | (4.9 | ) | | (1.8 | )% | | $ | 750.6 |
| | $ | 713.1 |
| | $ | 37.5 |
| | 5.3 | % |
Eversource's consolidated financial information includes the results of EGMA beginning on October 9, 2020. The natural gas distribution assets acquired from CMA on October 9, 2020 were assigned to EGMA.
(a) Percent greater than 100 not shown as it is not meaningful.
Operating Revenues
A summary of our Operating Revenues by segment is as follows:
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| For the Three Months Ended September 30, | | For the Nine Months Ended September 30, |
(Millions of Dollars) | 2017 | | 2016 | | Increase/ (Decrease) | | Percent | | 2017 | | 2016 | | Increase/ (Decrease) | | Percent |
Electric Distribution | $ | 1,547.1 |
| | $ | 1,623.4 |
| | $ | (76.3 | ) | | (4.7 | )% | | $ | 4,224.2 |
| | $ | 4,362.6 |
| | $ | (138.4 | ) | | (3.2 | )% |
Natural Gas Distribution | 109.2 |
| | 99.2 |
| | 10.0 |
| | 10.1 |
| | 698.8 |
| | 622.3 |
| | 76.5 |
| | 12.3 |
|
Electric Transmission | 328.5 |
| | 306.8 |
| | 21.7 |
| | 7.1 |
| | 970.0 |
| | 892.5 |
| | 77.5 |
| | 8.7 |
|
Other and Eliminations | 3.7 |
| | 10.3 |
| | (6.6 | ) | | (64.1 | ) | | (36.5 | ) | | (14.9 | ) | | (21.6 | ) | | (a) |
|
Total Operating Revenues | $ | 1,988.5 |
| | $ | 2,039.7 |
| | $ | (51.2 | ) | | (2.5 | )% | | $ | 5,856.5 |
| | $ | 5,862.5 |
| | $ | (6.0 | ) | | (0.1 | )% |
(a) Percent greater than 100 not shown as it is not meaningful.
Sales Volumes:A summary of our retail electric GWh sales volumes, and our firm natural gas MMcf sales volumes, in MMcf wereand our water MG sales volumes, and percentage changes, is as follows:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Electric | | Firm Natural Gas | | Water |
| Sales Volumes (GWh) | | Percentage (Decrease)/Increase | | Sales Volumes (MMcf) | | Percentage Increase | | Sales Volumes (MG) | | Percentage Decrease |
Three Months Ended September 30: | 2021 | | 2020 | | | 2021 | | 2020 | | | 2021 | | 2020 | |
Traditional | 2,097 | | | 2,110 | | | (0.6) | % | | — | | | — | | | — | % | | 397 | | | 770 | | | (48.4) | % |
Decoupled and Special Contracts (1)(2) | 12,197 | | | 12,281 | | | (0.7) | % | | 16,545 | | | 15,951 | | | 3.7 | % | | 6,856 | | | 8,102 | | | (15.4) | % |
Total Sales Volumes | 14,294 | | | 14,391 | | | (0.7) | % | | 16,545 | | | 15,951 | | | 3.7 | % | | 7,253 | | | 8,872 | | | (18.2) | % |
| | | | | | | | | | | | | | | | | |
Nine Months Ended September 30: | | | | | | | | | | | | | | | | | |
Traditional | 5,901 | | | 5,805 | | | 1.7 | % | | — | | | — | | | — | % | | 967 | | | 1,686 | | | (42.6) | % |
Decoupled and Special Contracts (1)(2) | 33,071 | | | 32,404 | | | 2.1 | % | | 107,337 | | | 103,286 | | | 3.9 | % | | 16,863 | | | 17,658 | | | (4.5) | % |
Total Sales Volumes | 38,972 | | | 38,209 | | | 2.0 | % | | 107,337 | | | 103,286 | | | 3.9 | % | | 17,830 | | | 19,344 | | | (7.8) | % |
|
| | | | | | | | | | | | | | | | | | | | | | | |
| For the Three Months Ended September 30, | | For the Nine Months Ended September 30, |
| 2017 | | 2016 | | Increase/ (Decrease) | | Percent | | 2017 | | 2016 | | Increase/ (Decrease) | | Percent |
Electric | | | | | | | | | | | | | | | |
Traditional | 7,545 |
| | 8,131 |
| | (586 | ) | | (7.2 | )% | | 21,040 |
| | 21,731 |
| | (691 | ) | | (3.2 | )% |
Decoupled | 6,551 |
| | 7,213 |
| | (662 | ) | | (9.2 | ) | | 18,391 |
| | 19,235 |
| | (844 | ) | | (4.4 | ) |
Total Electric | 14,096 |
| | 15,344 |
| | (1,248 | ) | | (8.1 | ) | | 39,431 |
| | 40,966 |
| | (1,535 | ) | | (3.7 | ) |
| | | | | | | | | | | | | | | |
Firm Natural Gas | | | | | |
| | | | | | | | |
| | |
Traditional | 5,550 |
| | 5,270 |
| | 280 |
| | 5.3 |
| | 32,233 |
| | 31,570 |
| | 663 |
| | 2.1 |
|
Decoupled and Special Contracts | 5,975 |
| | 5,653 |
| | 322 |
| | 5.7 |
| | 37,453 |
| | 36,537 |
| | 916 |
| | 2.5 |
|
Total Firm Natural Gas | 11,525 |
| | 10,923 |
| | 602 |
| | 5.5 | % | | 69,686 |
| | 68,107 |
| | 1,579 |
| | 2.3 | % |
(1) Special contracts are unique to Yankee Gas natural gas distribution customers who take service under such an arrangement and generally specify the amount of distribution revenue to be paid to Yankee Gas regardless of the customers' usage.
(2) Eversource acquired CMA's natural gas distribution assets on October 9, 2020. Prior year sales volumes have been presented for comparative purposes.
Three Months Ended:
Operating Revenues, which primarily consist of baseWeather, fluctuations in energy supply costs, conservation measures (including utility-sponsored energy efficiency programs), and economic conditions affect customer energy usage and water consumption. Industrial sales volumes are less sensitive to temperature variations than residential and commercial sales volumes. In our service territories, weather impacts both electric and water sales volumes during the summer and both electric and natural gas distribution revenues and tracked revenues further described below, decreased by $51.2 million forsales volumes during the three months ended September 30, 2017, as compared to the same period in 2016.
Base electric andwinter; however, natural gas distribution revenues: Base electric distribution segment revenues, excluding LBR, decreased $21.0 million for the three months ended September 30, 2017, as compared to the same period in 2016, due primarily to a decrease in sales volumes and lower demand revenues driven byare more sensitive to temperature variations than electric sales volumes. Customer heating or cooling usage may not directly correlate with historical levels or with the mild summer weather during the third quarterlevel of 2017 at NSTAR Electric and PSNH. LBR increased $1.5 million for the three months ended September 30, 2017, as compared to the same period in 2016. degree-days that occur.
Base natural gas distribution revenues remained relatively unchanged for the three months ended September 30, 2017, as compared to the same period in 2016.
Fluctuations in retail electric sales volumes at PSNH impact earnings ("Traditional" in the table above). For CL&P's, WMECO's&P, NSTAR Electric, NSTAR Gas, EGMA, Yankee Gas, and NSTAR Gas'our Connecticut water distribution business, fluctuations in retail sales volumes do not materially impact the level of base distribution revenue realized or earnings due to their respective regulatory commission approved revenue decoupling mechanisms. Thecommission-approved distribution revenue decoupling mechanisms permit recovery of a base amount of("Decoupled" in the table above). These distribution revenues and breakare decoupled from their customer sales volumes, which breaks the relationship between sales volumes and revenues recognized. Revenue decoupling mechanisms result
Operating Revenues: Operating Revenues by segment increased for the three and nine months ended September 30, 2021, as compared to the same periods in 2020, as follows:
| | | | | | | | | | | |
(Millions of Dollars) | Three Months Ended | | Nine Months Ended |
Electric Distribution | $ | (5.1) | | | $ | 150.2 | |
Natural Gas Distribution | 75.3 | | | 507.8 | |
Electric Transmission | 29.0 | | | 94.5 | |
Water Distribution | (2.3) | | | (5.6) | |
Other | 3.8 | | | 98.4 | |
Eliminations | (11.5) | | | (134.6) | |
Total Operating Revenues | $ | 89.2 | | | $ | 710.7 | |
Electric and Natural Gas (excluding EGMA) Distribution Revenues:
Base Distribution Revenues:
•Base electric distribution revenues increased $3.9 million and $36.3 million for the three and nine months ended September 30, 2021, as compared to the same periods in 2020, respectively, due primarily to the impact of base distribution rate increases at NSTAR Electric effective January 1, 2021, at PSNH effective January 1, 2021 and August 1, 2021, and at CL&P effective May 1, 2020, partially offset by a base distribution rate decrease at CL&P implemented June 1, 2021. The decrease in the CL&P base distribution rate on June 1, 2021 was due primarily to the completion of the recovery of our approvedcertain storm cost amortization and therefore the base rate decrease did not impact earnings.
•Base natural gas distribution revenues increased $7.9 million and $48.5 million for the three and nine months ended September 30, 2021, as compared to the same periods in 2020, respectively, due primarily to base distribution revenue requirements. rate increases at NSTAR Gas effective November 1, 2020, which includes a shift of recovery into base rates of certain GSEP investments, and at Yankee Gas effective January 1, 2021. Although new rates at Yankee Gas were implemented on March 1, 2021 to customers, the provisions of the base distribution rate increase were effective January 1, 2021.
Electric distribution revenues also decreased $65 million for the three and nine months ended September 30, 2021, as compared to the same periods in 2020, due to CL&P’s settlement agreement on October 1, 2021, in which CL&P agreed to provide a total of $65 million of customer credits to be distributed based on customer sales over a two-month period from December 1, 2021 to January 31, 2022. In the third quarter of 2021, CL&P recorded a current regulatory liability associated with the provisions of the settlement agreement, with a $65 million pre-tax charge as a reduction to Operating Revenues. Additionally, CL&P recorded a $28.4 million reserve in the first quarter of 2021 for a civil penalty for non-compliance with storm performance standards that is currently being provided as credits to customer bills beginning on September 1, 2021 over a one-year period. The penalty was reclassified from Operations and Maintenance expense to a reduction of Operating Revenues in the third quarter of 2021 in connection with the finalization of the settlement agreement. For further information, see "Regulatory Developments and Rate Matters - Connecticut" included in this Management’s Discussion and Analysis.
Tracked Distribution Revenues:Tracked distribution revenues: Tracked revenues consist of certain costs that are recovered from customers in retail rates through regulatory commission-approved cost tracking mechanisms and therefore, haverecovery of these costs has no impact on earnings. Costs recovered throughRevenues from certain of these cost tracking mechanisms also include energy supply procurement costs and other energy-related costs for our electric and natural gas customers, retail transmission charges, energy efficiency program costs, and restructuring and stranded cost recovery revenues. In addition, certain tracked revenues include incentives earned, return on capital tracking mechanisms, and carrying charges that are billed in rates to customers. Tracked natural gas distribution segment revenues increased as a result of an increase incustomers, which do impact earnings. Costs recovered through cost tracking mechanisms include, among others, energy supply and natural gas supply procurement and other energy-related costs, ($7.6 million) and an increase inelectric retail transmission charges, energy efficiency program revenues ($2.2 million). Trackedcosts, electric distribution revenues decreased as a result of a decrease in retail electric transmission charges ($39.8 million), a decrease inrestructuring and stranded cost recovery revenues ($16.9 million)(including securitized RRB charges), a decrease inand additionally for the Massachusetts utilities, pension and PBOP benefits and net metering for distributed generation. Tracked revenues also include wholesale market sales transactions, such as sales of energy efficiency program revenues ($13.9 million) and a decrease in pension rate adjustment mechanisms ($7.1 million). Partially offsetting these decreases were increases in tracked electricenergy-related products into the ISO-NE wholesale electricity market, sales of natural gas to third party marketers, and the sale of RECs to various counterparties.
Tracked distribution revenues relatedincreased/(decreased) for the three and nine months ended September 30, 2021, as compared to electric energy supply costs ($7.3 million), revenues related to renewable energy requirements ($10.8 million), net metering revenues ($7.0 million) and federally-mandated congestion charges ($2.8 million).
Electric transmission revenues: The electric transmission segment revenues increased by $21.7 millionthe same periods in 2020, due primarily to the recovery of higher revenue requirements associated with ongoing investmentsfollowing:
| | | | | | | | | | | | | | | | | | | | | | | |
| Electric Distribution | | Natural Gas Distribution |
(Millions of Dollars) | Three Months Ended | | Nine Months Ended | | Three Months Ended | | Nine Months Ended |
Retail Tariff Tracked Revenues: | | | | | | | |
Energy supply procurement | $ | (47.2) | | | $ | (148.0) | | | $ | 8.9 | | | $ | 40.0 | |
Retail transmission | 77.0 | | | 156.2 | | | — | | | — | |
Other distribution tracking mechanisms | (11.4) | | | 36.9 | | | 1.5 | | | 12.7 | |
Wholesale Market Sales Revenue | 54.2 | | | 149.0 | | | (3.2) | | | (1.1) | |
The decrease in our transmission infrastructure.
Other: Other revenues decreased due primarilyenergy supply procurement within electric distribution for the three months ended September 30, 2021, as compared to the sale of Eversource's unregulated telecommunication business on December 31, 2016 ($5.0 million).
Nine Months Ended:
Operating Revenues decreasedsame period in 2020, was driven primarily by $6.0 millionlower average supply-related sales volumes, partially offset by higher average prices. The decrease in energy supply procurement within electric distribution for the nine months ended September 30, 2017,2021, as compared to the same period in 2016.
Base electric2020, was driven primarily by lower average supply-related sales volumes and lower average prices. The increase in energy supply procurement within natural gas distribution for the three and nine months ended September 30, 2021, as compared to the same periods in 2020, was driven primarily by higher average prices. The increase for the nine-month period was also attributable to higher average supply-related sales volumes.
Fluctuations in retail transmission revenues: Base are driven by the recovery of the costs of our wholesale transmission business, such as those billed by ISO-NE and Local and Regional Network Service charges. For further information, see "Purchased Power and Transmission Expense" below.
The increase in electric distribution wholesale market sales revenue was due primarily to higher average electricity market prices received for wholesale sales at CL&P for both the three and nine months ended September 30, 2021, as compared to the same periods in 2020. ISO-NE average market prices received for CL&P’s wholesale sales increased approximately 100 percent and 96 percent for the three and nine months ended September 30, 2021, respectively, as compared to the same periods in 2020, driven primarily by higher natural gas prices in New England.Volumes sold into the market were primarily from the sale of output generated by the Millstone PPA that CL&P entered into in 2019, as required by regulation.
EGMA Natural Gas Distribution Revenues: The addition of EGMA increased total operating revenues at the natural gas distribution segment by $62.8 million and $412.1 million for the three and nine months ended September 30, 2021, respectively.
Electric Transmission Revenues: Electric transmission revenues excluding LBR, decreased $13.2increased $29.0 million and $94.5 million for the three and nine months ended September 30, 2021, respectively, as compared to the same periods in 2020, due primarily to a higher transmission rate base as a result of our continued investment in our transmission infrastructure. The increase in electric transmission revenues for the nine months ended September 30, 2017,2021, as compared to the same period in 2016, due2020, was partially offset by a lower benefit from the annual billing and cost reconciliation filing with FERC.
Other Revenues and Eliminations: Other revenues primarily include the revenues of Eversource's service company, most of which are eliminated in consolidation. Eliminations are also primarily related to a decrease in sales volumes driven by the mild summer weather duringEversource electric transmission revenues that are derived from ISO-NE regional transmission charges to the third quarterdistribution businesses of 2017 atCL&P, NSTAR Electric and PSNH. LBR increased $10.6 million forPSNH that recover the nine months ended September 30, 2017, as comparedcosts of the wholesale transmission business in rates charged to the same period in 2016. their customers.
Base natural gas distribution revenues remained relatively unchanged for the nine months ended September 30, 2017, as compared to the same period in 2016. The impact of higher firm natural gas sales volumes was offset by lower demand revenues in Connecticut driven by lower peak usage in 2017, as compared to 2016.
Tracked distribution revenues: Tracked natural gas distribution segment revenues increased as a result of an increase in natural gas supply costs ($57.8 million) and an increase in energy efficiency program revenues ($17.1 million). Tracked electric distribution revenues decreased as a result of a decrease in electric energy supply costs ($81.0 million), driven by decreased average retail prices and lower sales volumes, a decrease in retail electric transmission charges ($45.9 million), a decrease in transition and stranded cost recovery revenues ($33.1 million), a decrease in pension rate adjustment mechanisms ($16.2 million), and a decrease in energy efficiency program revenues ($8.8 million). Partially offsetting these decreases were increases in tracked electric distribution revenues related to federally-mandated congestion charges ($23.0 million), net metering revenues ($22.4 million) and revenues related to renewable energy requirements and the sale of PSNH's RECs ($14.7 million).
Electric transmission revenues: The electric transmission segment revenues increased by $77.5 million due primarily to the recovery of higher revenue requirements associated with ongoing investments in our transmission infrastructure.
Other: Other revenues decreased due primarily to the sale of Eversource's unregulated telecommunication business on December 31, 2016 ($15.0 million).
Purchased Power, Fuel and Transmissionexpense includes costs associated with purchasing electricity and natural gas on behalf of our customers.customers and the cost of energy purchase contracts, as required by regulation. These energyelectric and natural gas supply costs and other energy-related costs are recovered from customers in rates through commission-approved cost tracking mechanisms, which have no impact on earnings (tracked costs). Total Purchased Power, Fuel and Transmission expense decreasedincreased for the three and nine months ended September 30, 2017,2021, as compared to the same periods in 2016,2020, due primarily to the following:
| | | | | | | | | | | |
(Millions of Dollars) | Three Months Ended | | Nine Months Ended |
Purchased Power Costs | $ | (25.2) | | | $ | (81.5) | |
Natural Gas Costs | 47.0 | | | 222.1 | |
Transmission Costs | 79.8 | | | 155.5 | |
Eliminations | (27.3) | | | (79.9) | |
Total Purchased Power, Fuel and Transmission | $ | 74.3 | | | $ | 216.2 | |
|
| | | | | | | |
(Millions of Dollars) | Three Months Ended Increase/(Decrease) | | Nine Months Ended Increase/(Decrease) |
Electric Distribution | $ | (0.4 | ) | | $ | (109.1 | ) |
Natural Gas Distribution | 7.0 |
| | 50.1 |
|
Transmission | (20.6 | ) | | 12.2 |
|
Total Purchased Power, Fuel and Transmission | $ | (14.0 | ) | | $ | (46.8 | ) |
The decrease in purchased power expense at the electric distribution business for the three months ended September 30, 2021, as compared to the same period in 2020, was driven primarily by lower expense related to the procurement of energy supply resulting from lower average supply-related sales volumes, partially offset by higher average prices. The decrease in purchased power expense at the electric distribution business for the nine months ended September 30, 2017,2021, as compared to the same period in 2016,2020, was driven primarily by lower prices associated withexpense related to the procurement of energy supply resulting from lower average supply-related sales volumes and lower sales volumes. average prices. The lower energy supply expense in the three and nine-month periods was partially offset by higher long-term contractual energy-related costs that are recovered in the NBFMCC mechanism at CL&P.
The increase in purchased power expensecosts at the natural gas distribution business for each of the periods presented was due to higher average natural gas prices and higher sales volumes. The decrease in transmission costssegment for the three and nine months ended September 30, 2017,2021, as compared to the same periodperiods in 2016,2020, was due primarily to the addition of EGMA natural gas supply costs as a result of a decrease in the retail transmission cost deferral, which reflects2020 CMA asset acquisition of $18.4 million and $140.9 million, respectively, as well as higher average prices. The increase for the actual costs of transmission service comparednine-month period was also attributable to estimated amounts billed to customers. higher average supply-related sales volumes.
The increase in transmission costs for the three and nine months ended September 30, 2017,2021, as compared to the same periodperiods in 2016,2020, was primarily the result of an increase in costs billed by ISO-NE that support regional grid investment,investments and an increase in Local Network Service charges, which reflectreflects the cost of transmission service provided by Eversource over our local transmission network. This was partially offset by a decrease in the retail transmission cost deferral.
Operations and Maintenance expense includes tracked costs and costs that are part of base electric, and natural gas and water distribution rates with changes impacting earnings (non-tracked costs). Operations and Maintenance expense decreasedincreased for the three and nine months ended September 30, 2017,2021, as compared to the same periods in 2016,2020, due primarily to the following: | | | | | | | | | | | |
(Millions of Dollars) | Three Months Ended | | Nine Months Ended |
Base Electric Distribution (Non-Tracked Costs): | | | |
CL&P assessment by PURA for Tropical Storm Isaias response; reflected as reduction to Operating Revenues in the third quarter of 2021 in connection with the finalization of the settlement agreement | $ | (28.4) | | | $ | — | |
CL&P charge to fund various customer assistance initiatives associated with the settlement agreement on October 1, 2021 | 10.0 | | | 10.0 | |
Employee-related expenses, including labor and benefits | (3.8) | | | 22.9 | |
Funding of CL&P storm reserve as part of June 1, 2021 rate change | 6.0 | | | 10.0 | |
Storm restoration costs | 2.7 | | | 20.4 | |
Vegetation Management | 9.3 | | | 11.6 | |
Operations-related expenses, including vehicles and outside services | 1.4 | | | 5.6 | |
Shared corporate costs (including computer software depreciation at Eversource Service) | 4.9 | | | 15.8 | |
Other non-tracked operations and maintenance | 0.2 | | | 6.2 | |
Total Base Electric Distribution (Non-Tracked Costs) | 2.3 | | | 102.5 | |
Tracked Costs (Electric Distribution and Electric Transmission) | 5.8 | | | 22.7 | |
Natural Gas Distribution: | | | |
Base (Non-Tracked) Costs, excluding EGMA | 2.6 | | | 5.8 | |
Tracked Costs, excluding EGMA | 1.5 | | | 4.8 | |
EGMA Operations and Maintenance | 33.6 | | | 119.2 | |
Total Natural Gas Distribution | 37.7 | | | 129.8 | |
Water Distribution: | | | |
Absence in 2021 of gain on sale of Hingham water system in July 2020 | 16.0 | | | 16.0 | |
Other | 0.1 | | | 0.1 | |
Total Water Distribution | 16.1 | | | 16.1 | |
Parent and Other Companies and eliminations: | | | |
Eversource Parent and Other Companies - other operations and maintenance | 3.5 | | | 81.8 | |
Transition and Acquisition Costs | (1.4) | | | 6.2 | |
Eliminations | (6.9) | | | (99.4) | |
Total Operations and Maintenance | $ | 57.1 | | | $ | 259.7 | |
|
| | | | | | | |
(Millions of Dollars) | Three Months Ended Increase/(Decrease) | | Nine Months Ended Increase/(Decrease) |
Base Electric Distribution: | | | |
Employee-related expenses, including labor and benefits | $ | (15.0 | ) | | $ | (46.2 | ) |
Bad debt expense | (2.6 | ) | | (15.3 | ) |
Shared corporate costs (including computer software depreciation at Eversource Service) | 5.4 |
| | 15.0 |
|
Storm restoration costs | (4.0 | ) | | 3.1 |
|
Boston Harbor civil action settlement charge recorded in the second quarter of 2017 | — |
| | 4.9 |
|
Other operations and maintenance | 9.1 |
| | 15.7 |
|
Total Base Electric Distribution | (7.1 | ) | | (22.8 | ) |
Total Base Natural Gas Distribution: | | | |
Shared corporate costs (including computer software depreciation at Eversource Service) | 1.2 |
| | 3.6 |
|
Other operations and maintenance | (4.1 | ) | | (1.5 | ) |
Total Base Natural Gas Distribution | (2.9 | ) | | 2.1 |
|
Total Tracked costs (Electric Distribution, Electric Transmission and Natural Gas Distribution) | (5.5 | ) | | 7.2 |
|
Other and eliminations: | | | |
Eversource Parent and Other Companies | (1.1 | ) | | 0.8 |
|
Eliminations | (7.7 | ) | | (19.5 | ) |
Total Operations and Maintenance | $ | (24.3 | ) | | $ | (32.2 | ) |
Depreciation expense increased for the three and nine months ended September 30, 2017,2021, as compared to the same periods in 2016,2020, due primarily to higher utility plant in service balances.balances, and due to the addition of EGMA utility plant balances as a result of the 2020 CMA asset acquisition of $12.0 million and $35.5 million, respectively.
Amortization of Regulatory Assets, Net expense includes the deferral of energy supply, and energy-related costs and other costs that are included in certain regulatory-approvedregulatory commission-approved cost tracking mechanisms, and the amortization of certain costs. Themechanisms. This deferral adjusts expense to match the corresponding revenues.revenues compared to the actual costs incurred. Energy supply and energy-related costs are recovered from customers in rates and have no impact on earnings. Amortization expense also includes the amortization of Regulatory Assets, Net,certain costs as those costs are collected in rates.
Amortization decreased for the three months ended September 30, 20172021, as compared to the same period in 2020, due primarily to a decrease in storm amortization expense at CL&P related to the completion of the amortization period of certain storm cost deferred assets. The decrease was partially offset by an increase in the deferral adjustment of energy supply, energy-related and other costs. Amortization increased for the nine months ended September 30, 2017,2021, as compared to the same periodsperiod in 2016,2020, due primarily to the deferral adjustment of energy supply, energy-related and energy-relatedother costs, which can fluctuate from period to period based on the timing of costs incurred and the related rate changes to recover these costs. Energy supply and energy-related costsThe increase for the nine-month period was partially offset by a decrease in storm amortization expense at CL&P NSTAR Electric, PSNH and WMECO, which arerelated to the primary drivers incompletion of the amortization are recovered from customers in rates and have no impact on earnings.period of certain storm cost deferred assets.
Energy Efficiency Programsexpense decreased for the three and nine months ended September 30, 2017,2021, as compared to the same periodsperiod in 2016,2020, due primarily to the deferral adjustmentsadjustment at CL&P, NSTAR Electric and WMECO, partially offset by deferral adjustments at the natural gas businesses, which reflectreflects the actual costs of energy efficiency programs compared to the estimated amounts billed to customers. The deferral adjusts costs incurred to matchcustomers, and the timing of the recovery of energy efficiency revenuecosts. Energy Efficiency increased for the nine months ended September 30, 2021, as compared to the same period in 2020, due primarily to the addition of EGMA energy efficiency program costs as a result of the 2020 CMA asset acquisition of $45.7 million. The increase in the first nine months of 2021 was also due to the deferral adjustment at NSTAR Electric and PSNH, which reflects the actual costs of energy efficiency programs compared to the amounts billed to customers, and the timing of the recovery of energy efficiency costs. The costs for variousthe majority of the state energy policy initiatives and expanded energy efficiency programs are recovered from customers in rates and have no impact on earnings.
Interest ExpenseTaxes Other Than Income Taxes expense increased for the three and nine months ended September 30, 2017,2021, as compared to the same periods in 2016,2020, due primarily to an increase in property taxes as a result of higher utility plant balances, the addition of EGMA property taxes as a result of the 2020 CMA asset acquisition of $6.2 million and $24.1 million, respectively, and higher Connecticut gross earnings taxes.
Interest Expense increased for the three months ended September 30, 2021, as compared to the same period in 2020, due primarily to an increase in interest on long-term debt ($5.8 million and $15.9 million, respectively) as a result of new debt issuances ($7.8 million), an increase in interest expense on regulatory deferrals ($5.1 million), and higheran increase in interest on short-termnotes payable ($1.2 million), partially offset by an increase in AFUDC related to debt ($2.4 millionfunds and $4.8 million, respectively)other capitalized interest ($0.5 million).
Other Income, NetInterest Expense increased for the three and nine months ended September 30, 2017,2021, as compared to the same periodsperiod in 2016,2020, due primarily to increased gainsan increase in interest on investmentslong-term debt as a result of new debt issuances ($4.2 million23.5 million), an increase in interest expense on regulatory deferrals ($8.0 million), and $24.9 million, respectively)higher amortization of debt discounts and premiums, net ($0.8 million), primarilypartially offset by a decrease in interest on notes payable ($3.4 million), a decrease in RRB interest expense ($1.0 million) and an increase in AFUDC related to Eversource's investmentdebt funds and other capitalized interest ($0.6 million).
Other Income, Net increased for the three months ended September 30, 2021, as compared to the same period in a renewable energy fund, market value changes2020, due primarily to an increase related to pension, SERP and PBOP non-service income components ($10.7 million) and an increase in interest income primarily from regulatory deferrals ($5.8 million), partially offset by investment losses in 2021 compared to investment income in 2020 driven by market volatility ($1.7 million).
Other Income, Net increased for the deferred compensation plansnine months ended September 30, 2021, as compared to the same period in 2020, due primarily to an increase related to pension, SERP and PBOP non-service income components ($2.9 million29.6 million), an increase in interest income primarily from regulatory deferrals ($13.9 million) and $5.1 million, respectively) and higherinvestment income in 2021 compared to investment losses in 2020 driven by market volatility ($2.2 million), partially offset by lower AFUDC related to equity funds ($1.2 million and $5.0 million, respectively)3.1 million).
Income Tax Expense decreased for the three months ended September 30, 2017,2021, as compared to the same period in 2016,2020, due primarily to lower pre-tax earnings ($2.416.5 million), higher share-based payment excess tax benefits ($0.1 million), and the absence of the sale of Hingham water system ($12.5 million), partially offset by higher state taxes ($4.4 million), a decrease in amortization of EDIT ($0.9 million), an increase in items that impact our tax rate as a result of regulatory treatment (flow-through items) and permanent differences ($1.25.1 million), and a return to provision adjustment ($4.6 million).
Income Tax Expense increased for the nine months ended September 30, 2017,2021, as compared to the same period in 2016,2020, due primarily to higher pre-tax earningsstate taxes ($20.617.8 million), the absence oflower share-based payment excess tax benefits ($2.6 million), a tax credit in 2017return to provision adjustment ($2.44.6 million), and higher state taxesan increase in items that impact our tax rate as a result of regulatory treatment (flow-through items) and permanent differences ($1.37.8 million), partially offset by flow-through itemsthe absence of the sale of Hingham water system ($12.5 million) and permanent differencesan increase in amortization of EDIT ($4.61.4 million).
RESULTS OF OPERATIONS –
THE CONNECTICUT LIGHT AND POWER COMPANY
NSTAR ELECTRIC COMPANY AND SUBSIDIARY
PUBLIC SERVICE COMPANY OF NEW HAMPSHIRE AND SUBSIDIARIES
The following provides the amounts and variances in operating revenues and expense line items in the statements of income for CL&P, NSTAR Electric and PSNH for the three and nine months ended September 30, 20172021 and 20162020 included in this combined Quarterly Report on Form 10-Q:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| For the Nine Months Ended September 30, |
| CL&P | | NSTAR Electric | | PSNH |
(Millions of Dollars) | 2021 | | 2020 | | Increase/ (Decrease) | | 2021 | | 2020 | | Increase/ (Decrease) | | 2021 | | 2020 | | Increase/ (Decrease) |
Operating Revenues | $ | 2,736.5 | | | $ | 2,711.4 | | | $ | 25.1 | | | $ | 2,343.1 | | | $ | 2,270.2 | | | $ | 72.9 | | | $ | 887.2 | | | $ | 815.3 | | | $ | 71.9 | |
Operating Expenses: | | | | | | | | | | | | | | | | | |
Purchased Power and Transmission | 1,073.7 | | | 1,089.2 | | | (15.5) | | | 711.7 | | | 702.1 | | | 9.6 | | | 279.5 | | | 273.3 | | | 6.2 | |
Operations and Maintenance | 465.6 | | | 417.7 | | | 47.9 | | | 421.6 | | | 369.3 | | | 52.3 | | | 168.2 | | | 151.8 | | | 16.4 | |
Depreciation | 253.1 | | | 238.7 | | | 14.4 | | | 251.5 | | | 238.2 | | | 13.3 | | | 89.5 | | | 74.5 | | | 15.0 | |
Amortization of Regulatory Assets, Net | 76.6 | | | 37.2 | | | 39.4 | | | 24.0 | | | 69.1 | | | (45.1) | | | 62.7 | | | 39.0 | | | 23.7 | |
Energy Efficiency Programs | 100.8 | | | 109.7 | | | (8.9) | | | 226.1 | | | 210.7 | | | 15.4 | | | 30.5 | | | 29.2 | | | 1.3 | |
Taxes Other Than Income Taxes | 275.3 | | | 260.6 | | | 14.7 | | | 163.5 | | | 154.1 | | | 9.4 | | | 69.7 | | | 58.4 | | | 11.3 | |
Total Operating Expenses | 2,245.1 | | | 2,153.1 | | | 92.0 | | | 1,798.4 | | | 1,743.5 | | | 54.9 | | | 700.1 | | | 626.2 | | | 73.9 | |
Operating Income | 491.4 | | | 558.3 | | | (66.9) | | | 544.7 | | | 526.7 | | | 18.0 | | | 187.1 | | | 189.1 | | | (2.0) | |
Interest Expense | 124.4 | | | 115.0 | | | 9.4 | | | 106.7 | | | 95.0 | | | 11.7 | | | 42.7 | | | 44.1 | | | (1.4) | |
Other Income, Net | 21.7 | | | 16.3 | | | 5.4 | | | 58.9 | | | 38.2 | | | 20.7 | | | 11.6 | | | 10.9 | | | 0.7 | |
Income Before Income Tax Expense | 388.7 | | | 459.6 | | | (70.9) | | | 496.9 | | | 469.9 | | | 27.0 | | | 156.0 | | | 155.9 | | | 0.1 | |
Income Tax Expense | 104.6 | | | 103.5 | | | 1.1 | | | 114.6 | | | 106.3 | | | 8.3 | | | 32.5 | | | 37.5 | | | (5.0) | |
Net Income | $ | 284.1 | | | $ | 356.1 | | | $ | (72.0) | | | $ | 382.3 | | | $ | 363.6 | | | $ | 18.7 | | | $ | 123.5 | | | $ | 118.4 | | | $ | 5.1 | |
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| For the Three Months Ended September 30, | | For the Nine Months Ended September 30, |
(Millions of Dollars) | 2017 | | 2016 | | Increase/ (Decrease) | | Percent | | 2017 | | 2016 | | Increase/ (Decrease) | | Percent |
Operating Revenues | $ | 774.8 |
| | $ | 760.0 |
| | $ | 14.8 |
| | 1.9 | % | | $ | 2,173.6 |
| | $ | 2,175.1 |
| | $ | (1.5 | ) | | (0.1 | )% |
Operating Expenses: | |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
|
Purchased Power and Transmission | 259.0 |
| | 253.5 |
| | 5.5 |
| | 2.2 |
| | 711.2 |
| | 760.6 |
| | (49.4 | ) | | (6.5 | ) |
Operations and Maintenance | 123.1 |
| | 123.0 |
| | 0.1 |
| | 0.1 |
| | 359.8 |
| | 356.4 |
| | 3.4 |
| | 1.0 |
|
Depreciation | 63.7 |
| | 57.7 |
| | 6.0 |
| | 10.4 |
| | 184.3 |
| | 172.2 |
| | 12.1 |
| | 7.0 |
|
Amortization of Regulatory Assets, Net | 34.6 |
| | 23.4 |
| | 11.2 |
| | 47.9 |
| | 58.8 |
| | 30.3 |
| | 28.5 |
| | 94.1 |
|
Energy Efficiency Programs | 37.7 |
| | 44.4 |
| | (6.7 | ) | | (15.1 | ) | | 106.5 |
| | 118.0 |
| | (11.5 | ) | | (9.7 | ) |
Taxes Other Than Income Taxes | 79.2 |
| | 81.9 |
| | (2.7 | ) | | (3.3 | ) | | 223.4 |
| | 227.9 |
| | (4.5 | ) | | (2.0 | ) |
Total Operating Expenses | 597.3 |
| | 583.9 |
| | 13.4 |
| | 2.3 |
| | 1,644.0 |
| | 1,665.4 |
| | (21.4 | ) | | (1.3 | ) |
Operating Income | 177.5 |
| | 176.1 |
| | 1.4 |
| | 0.8 |
| | 529.6 |
| | 509.7 |
| | 19.9 |
| | 3.9 |
|
Interest Expense | 36.3 |
| | 36.1 |
| | 0.2 |
| | 0.6 |
| | 106.6 |
| | 108.6 |
| | (2.0 | ) | | (1.8 | ) |
Other Income, Net | 7.5 |
| | 3.7 |
| | 3.8 |
| | (a) |
| | 14.1 |
| | 10.9 |
| | 3.2 |
| | 29.4 |
|
Income Before Income Tax Expense | 148.7 |
| | 143.7 |
| | 5.0 |
| | 3.5 |
| | 437.1 |
| | 412.0 |
| | 25.1 |
| | 6.1 |
|
Income Tax Expense | 52.6 |
| | 57.1 |
| | (4.5 | ) | | (7.9 | ) | | 159.5 |
| | 155.4 |
| | 4.1 |
| | 2.6 |
|
Net Income | $ | 96.1 |
| | $ | 86.6 |
| | $ | 9.5 |
| | 11.0 | % | | $ | 277.6 |
| | $ | 256.6 |
| | $ | 21.0 |
| | 8.2 | % |
(a) Percent greater than 100 not shown as it is not meaningful.
Operating Revenues
CL&P'sSales Volumes: A summary of our retail electric GWh sales volumes wereis as follows:
| | | | | | | | | | | | | | | | | | | | | | | |
| For the Nine Months Ended September 30, |
| 2021 | | 2020 | | Increase | | Percentage Increase |
CL&P | 15,728 | | | 15,318 | | | 410 | | | 2.7 | % |
NSTAR Electric | 17,343 | | | 17,086 | | | 257 | | | 1.5 | % |
PSNH | 5,901 | | | 5,805 | | | 96 | | | 1.7 | % |
|
| | | | | | | | | | | | | | | | | | | | | | | |
| For the Three Months Ended September 30, | | For the Nine Months Ended September 30, |
| 2017 | | 2016 | | Decrease | | Percent | | 2017 | | 2016 | | Decrease | | Percent |
Retail Sales Volumes in GWh | 5,644 |
| | 6,225 |
| | (581 | ) | | (9.3 | )% | | 15,812 |
| | 16,541 |
| | (729 | ) | | (4.4 | )% |
Fluctuations in retail electric sales volumes at PSNH impact earnings. For CL&P and NSTAR Electric, fluctuations in retail electric sales volumes do not impact earnings due to their respective regulatory commission-approved distribution revenue decoupling mechanisms.
Three Months Ended:
CL&P'sOperating Revenues: Operating Revenues, which consist of base distribution revenues and tracked revenues further described below, increased by $14.8$25.1 million at CL&P, $72.9 million at NSTAR Electric, and $71.9 million at PSNH, for the threenine months ended September 30, 2017,2021, as compared to the same period in 2016.2020.
Fluctuations in Base Distribution Revenues:
•CL&P's sales volumes dodistribution revenues decreased $3.5 million due primarily to the base distribution rate decrease implemented June 1, 2021. The decrease in the base distribution rate on June 1, 2021 was due primarily to the completion of the recovery of certain storm cost amortization and therefore the base rate decrease did not impact earnings. Excluding the levelreduction to revenue resulting from the completion of certain storm cost amortization, base distribution revenue realized or earningsrevenues increased due to the PURA-approved revenue decoupling mechanism. CL&P's revenue decoupling mechanism permits recoveryimpact of a base amount ofdistribution rate increase effective May 1, 2020.
•NSTAR Electric's distribution revenues ($1.059 billion annually)increased $17.6 million due primarily to the impact of its base distribution rate increase effective January 1, 2021.
•PSNH's distribution revenues increased $22.2 million due primarily to the impact of its base distribution rate increases effective January 1, 2021 and breaksAugust 1, 2021.
Electric distribution revenues also decreased $65 million for the relationship betweennine months ended September 30, 2021, as compared to the same period in 2020, due to CL&P’s settlement agreement on October 1, 2021, in which CL&P agreed to provide a total of $65 million of customer credits to be distributed based on customer sales volumes and revenues recognized. The revenue decoupling mechanism resultsover a two-month period from December 1, 2021 to January 31, 2022. In the third quarter of 2021, CL&P recorded a current regulatory liability associated with the provisions of the settlement agreement, with a $65 million pre-tax charge as a reduction to Operating Revenues. Additionally, CL&P recorded a $28.4 million reserve in the recoveryfirst quarter of approved base distribution revenue requirements.
Fluctuations2021 for a civil penalty for non-compliance with storm performance standards that is currently being provided as credits to customer bills beginning on September 1, 2021 over a one-year period. The penalty was reclassified from Operations and Maintenance expense to a reduction of Operating Revenues in the overall levelthird quarter of operating revenues are primarily related to tracked revenues. 2021 in connection with the finalization of the settlement agreement. For further information, see "Regulatory Developments and Rate Matters - Connecticut" included in this Management’s Discussion and Analysis.
Tracked Revenues: Tracked distribution revenues consist of certain costs that are recovered from customers in retail rates through PURA-approvedregulatory commission-approved cost tracking mechanisms and therefore, haverecovery of these costs has no impact on earnings. Revenues from certain of these cost tracking mechanisms also include certain incentives earned, return on capital tracking mechanisms, and carrying charges that are billed in rates to customers, which do impact earnings. Costs recovered through cost tracking mechanisms include, among others, energy supply procurement and other energy-related costs, retail transmission charges, energy efficiency program costs, andelectric restructuring and stranded cost recovery revenues. In addition, certain tracked revenues (including securitized RRB charges), and additionally for NSTAR Electric, pension and PBOP benefits and net metering for distributed generation. Tracked revenues also include incentives earnedwholesale market sales transactions, such as sales of energy and carrying charges that are billed in ratesenergy-related products into the ISO-NE wholesale electricity market and the sale of RECs to customers. various counterparties.
Tracked distribution revenues increased primarily as a result of an increase in energy supply costs ($27.1 million) driven by increased average retail prices. Partially offsetting this increase was a decrease in stranded cost recovery revenues ($7.6 million) and a decrease in retail transmission charges ($7.6 million).
Transmission revenues increased by $6.3 million due primarily to the recovery of higher revenue requirements associated with ongoing investments in our transmission infrastructure.
Nine Months Ended:
CL&P's Operating Revenues decreased by $1.5 millionincreased/(decreased) for the nine months ended September 30, 2017,2021, as compared to the same period in 2016.2020, due primarily to the following:
| | | | | | | | | | | | | | | | | |
(Millions of Dollars) | CL&P | | NSTAR Electric | | PSNH |
Retail Tariff Tracked Revenues: | | | | | |
Energy supply procurement | $ | (30.5) | | | $ | (102.8) | | | $ | (14.7) | |
Retail transmission | 22.6 | | | 97.9 | | | 35.7 | |
Other distribution tracking mechanisms | (5.9) | | | 29.2 | | | 13.6 | |
Wholesale Market Sales Revenue | 114.2 | | | 24.9 | | | 9.9 | |
Tracked
The decrease in energy supply procurement at CL&P and PSNH was driven primarily by lower average prices, partially offset by higher average supply-related sales volumes. The decrease in energy supply procurement at NSTAR Electric was driven by both lower average prices and lower average supply-related sales volumes. Fluctuations in retail transmission revenues are driven by the recovery of the costs of our wholesale transmission business, such as those billed by ISO-NE and Local and Regional Network Service charges. For further information, see "Purchased Power and Transmission Expense" below.
The increase in electric distribution wholesale market sales revenue was due primarily to higher average electricity market prices received for wholesale sales at CL&P for the nine months ended September 30, 2021, as compared to the same period in 2020. ISO-NE average market prices received for CL&P’s wholesale sales increased approximately 96 percent for the nine months ended September 30, 2021, as compared to the same period in 2020, driven primarily by higher natural gas prices in New England.Volumes sold into the market were primarily from the sale of output generated by the Millstone PPA that CL&P entered into in 2019, as required by regulation.
Transmission Revenues: Transmission revenues decreasedincreased $40.6 million at CL&P, $35.2 million at NSTAR Electric, and $18.7 million at PSNH for the nine months ended September 30, 2021, as compared to the same period in 2020, due primarily to a higher transmission rate base as a result of a decrease in energy supply costs ($25.0 million) driven by decreased average retail prices and lower sales volumes. In addition, there was a $17.8 million decrease in stranded cost recovery revenues. Partially offsetting these decreases was an increase in federally-mandated congestion charges ($23.0 million).
Transmission revenues increased by $27.2 million due primarily to higher revenue requirements associated with ongoing investmentsour continued investment in our transmission infrastructure. The increase was partially offset by a lower benefit from the annual billing and cost reconciliation filing with FERC.
Eliminations: Eliminations are primarily related to the Eversource electric transmission revenues that are derived from ISO-NE regional transmission charges to the distribution businesses of CL&P, NSTAR Electric and PSNH that recover the costs of the wholesale transmission business in rates charged to their customers. The impact of eliminations decreased revenues by $22.1 million at CL&P, $34.5 million at NSTAR Electric and $18.0 million at PSNH for the nine months ended September 30, 2021, as compared to the same period in 2020.
Purchased Power and Transmission expense includes costs associated with purchasing electricity on behalf of CL&P's customers.&P, NSTAR Electric and PSNH's customers and the cost of energy purchase contracts, as required by regulation. These energy supply and other energy-related costs are recovered from customers in rates through PURA-approvedcommission-approved cost tracking mechanisms, which have no impact on earnings (tracked costs). Total Purchased Power and Transmission expense decreased/increased for the three months ended September 30, 2017, and decreased for the nine months ended September 30, 2017,2021, as compared to the same periodsperiod in 2016,2020, due primarily to the following:
| | | | | | | | | | | | | | | | | |
(Millions of Dollars) | CL&P | | NSTAR Electric | | PSNH |
Purchased Power Costs | $ | (16.0) | | | $ | (53.1) | | | $ | (12.4) | |
Transmission Costs | 21.6 | | | 97.2 | | | 36.7 | |
Eliminations | (21.1) | | | (34.5) | | | (18.1) | |
Total Purchased Power and Transmission | $ | (15.5) | | | $ | 9.6 | | | $ | 6.2 | |
|
| | | | | | | |
(Millions of Dollars) | Three Months Ended Increase/(Decrease) | | Nine Months Ended Increase/(Decrease) |
Purchased Power Costs | $ | 5.7 |
| | $ | (68.1 | ) |
Transmission Costs | (0.2 | ) | | 18.7 |
|
Total Purchased Power and Transmission | $ | 5.5 |
| | $ | (49.4 | ) |
Purchased Power Costs: Included in purchased power costs are the costs associated with CL&P's GSC, CTA and FMCC tracking mechanisms and deferred energy supply costs. The increase in purchased power costs for the three months ended September 30, 2017, as compared to the same period in 2016, was due primarily to GSC-related purchased power expenses. The GSC recovers energy-related costs incurred as a result of providing electric generation service supply to all customers who have not migrated to third party suppliers. suppliers and the cost of energy purchase contracts, as required by regulation.
•The decrease in purchased power costs for the nine months ended September 30, 2017, as compared to the same period in 2016,at CL&P was due primarily to a decreaselower expense related to the procurement of energy supply resulting from lower average prices, partially offset by higher average supply-related sales volumes. The lower energy supply expense was partially offset by higher long-term contractual energy-related costs that are recovered in the priceNBFMCC mechanism.
•The decrease at NSTAR Electric was due primarily to lower expense related to the procurement of standard offerenergy supply also associated with the GSC,resulting from lower average prices and lower average supply-related sales volumes.
•The decrease at PSNH was due primarily to lower expense related to the procurement of energy supply resulting from lower average prices, partially offset by higher average supply-related sales volumes.
Transmission Costs: Included in transmission costs are charges that recover the cost of transporting electricity over high-voltage lines from generation facilities to substations, including costs allocated by ISO-NE to maintain the wholesale electric market.
•The increase in transmission costs forat CL&P was due primarily to an increase in Local Network Service charges, which reflect the nine months ended September 30, 2017, as compared to the same period in 2016, was primarily the resultcost of transmission service provided by Eversource over our local transmission network, and an increase in costs billed by ISO-NE that support regional grid investment, and Local Network Service charges, which reflect the cost of transmission service.investments. This was partially offset by a decrease in the retail transmission cost deferral, which reflects the actual costs of transmission service compared to estimated amounts billed to customers.
Operations and Maintenance expense includes tracked costs and costs that are part of base distribution rates with changes impacting earnings (non-tracked costs). Operations and Maintenance expense increased for the three months ended September 30, 2017, as compared to the same period in 2016, driven by a $0.4 million increase in non-tracked costs, which was primarily attributable to higher shared corporate costs, partially offset by lower employee-related expenses, lower storm restoration costs and lower vegetation management costs. The increase in non-tracked costs was partially offset by a $0.3 million decrease in tracked costs, which was primarily attributable to lower tracked system resiliency, lower bad debt expense and lower employee-related costs, partially offset by higher transmission expenses.
Operations and Maintenance expense increased for the nine months ended September 30, 2017, as compared to the same period in 2016, driven by a $6.5 million increase in tracked costs, which was primarily attributable to higher transmission expenses, partially offset by lower tracked bad debt expense. Non-tracked costs decreased $3.0 million, which was primarily attributable to lower employee-related expenses, lower bad debt expense and lower vegetation management costs, partially offset by higher shared corporate costs, higher storm restoration costs, and higher system resiliency project costs.
Depreciation expense increased for the three and nine months ended September 30, 2017, as compared to the same periods in 2016, due primarily to higher utility plant in service balances.
Amortization of Regulatory Assets, Net expense includes the deferral of energy supply and energy-related costs and the amortization of certain costs, which are recovered from customers in rates and have no impact on earnings. The deferral adjusts expense to match the corresponding revenues. The increase for the three and nine months ended September 30, 2017, as compared to the same periods in 2016, was due primarily to the fluctuation of the deferral, which can fluctuate from period to period based on the timing of costs incurred and related rate changes to recover these costs.
Energy Efficiency Programs expense decreased for the three and nine months ended September 30, 2017, as compared to the same periods in 2016, due primarily to the deferral adjustment, which reflects the actual cost of energy efficiency programs compared to the estimated amounts billed to customers and the timing of the recovery of energy efficiency costs. The deferral adjusts costs incurred to match energy efficiency revenue billed to customers. The costs for various state policy initiatives are recovered from customers in rates and have no impact on earnings.
Taxes Other Than Income Taxes expensedecreased for the three and nine months ended September 30, 2017, as compared to the same periods in 2016, due primarily to a decrease in gross earnings taxes, partially offset by an increase in property taxes due to higher plant balances. Gross earnings taxes are tracked costs and have no impact on earnings.
Income Tax Expense decreased for the three months ended September 30, 2017, as compared to the same period in 2016, due primarily to the true-up of the return to provision impacts ($4.7 million) and items that impact our tax rate as a result of regulatory treatment (flow-through items) and permanent differences ($1.5 million), partially offset by higher pre-tax earnings ($1.7 million).
Income Tax Expense increased for the nine months ended September 30, 2017, as compared to the same period in 2016, due primarily to higher pre-tax earnings ($8.8 million) and higher state taxes ($2.6 million), partially offset by the true-up of the return to provision impacts ($4.7 million) and flow-through items and permanent differences ($2.6 million).
EARNINGS SUMMARY
CL&P's earnings increased $9.5 millionfor the three months ended September 30, 2017, as compared to the same period in 2016, due primarily to a lower effective tax rate, an increase in transmission earnings driven by a higher transmission rate base, and higher distribution revenues due in part to a higher rate base for the system resiliency program, partially offset by higher depreciation expense.
CL&P's earnings increased $21.0 million for the nine months ended September 30, 2017, as compared to the same period in 2016, due primarily to an increase in transmission earnings driven by a higher transmission rate base, higher distribution revenues due in part to a higher rate base for the system resiliency program, and lower non-tracked operations and maintenance expense. These favorable earnings impacts were partially offset by higher depreciation expense.
LIQUIDITY
Cash totaled $9.4 million as of September 30, 2017, compared with $6.6 million as of December 31, 2016.
CL&P had cash flows provided by operating activities of $623.3 million for the nine months ended September 30, 2017, as compared to $614.4 million in the same period of 2016. The increase in operating cash flows was due primarily to the favorable impact of the timing of regulatory recoveries and the timing of collections and payments of our working capital items, including accounts receivable and accounts payable. Partially offsetting these favorable impacts were the income tax payments of $19.8 million made in 2017, compared to the income tax refunds of $128.5 million received in 2016.
Eversource parent has a $1.45 billion commercial paper program allowing Eversource parent to issue commercial paper as a form of short-term debt, with intercompany loans to certain subsidiaries, including CL&P. The weighted-average interest rate on the commercial paper borrowings as of September 30, 2017 and December 31, 2016 was 1.34 percent and 0.88 percent, respectively. There were no intercompany loans from Eversource parent to CL&P as of September 30, 2017. As of December 31, 2016, there were intercompany loans from Eversource parent to CL&P of $80.1 million. Eversource parent, and certain of its subsidiaries, including CL&P, are parties to a five-year $1.45 billion revolving credit facility. The revolving credit facility terminates on September 4, 2021. The revolving credit facility serves to backstop Eversource parent's $1.45 billion commercial paper program. There were no borrowings outstanding on the revolving credit facility as of September 30, 2017 and December 31, 2016.
In August 2017, CL&P issued $225 million of 4.30 percent 2014 Series A First and Refunding Mortgage Bonds due to mature in 2044. These bonds are part of the same series of CL&P’s existing 4.30 percent bonds that were initially issued in 2014. The aggregate outstanding principal amount for these bonds is now $475 million. The proceeds, net of issuance costs, were used to refinance short-term debt and fund capital expenditures and working capital.
In September 2017, CL&P repaid at maturity $100 million of 5.75 percent 2007 Series C First Mortgage Bonds.
Investments in Property, Plant and Equipment on the statements of cash flows do not include amounts incurred on capital projects but not yet paid, cost of removal, AFUDC related to equity funds, and the capitalized portions of pension expense. CL&P's investments in property, plant and equipment totaled $621.9 million for the nine months ended September 30, 2017.
RESULTS OF OPERATIONS – NSTAR ELECTRIC COMPANY AND SUBSIDIARY
The following provides the amounts and variances in operating revenues and expense line items in the statements of income for NSTAR Electric for the nine months ended September 30, 2017 and 2016 included in this combined Quarterly Report on Form 10-Q:
|
| | | | | | | | | | | | | | |
| For the Nine Months Ended September 30, |
(Millions of Dollars) | 2017 | | 2016 | | Increase/ (Decrease) | | Percent |
Operating Revenues | $ | 1,913.5 |
| | $ | 1,986.0 |
| | $ | (72.5 | ) | | (3.7 | )% |
Operating Expenses: | | | | | |
| | |
|
Purchased Power and Transmission | 689.8 |
| | 764.9 |
| | (75.1 | ) | | (9.8 | ) |
Operations and Maintenance | 266.2 |
| | 279.9 |
| | (13.7 | ) | | (4.9 | ) |
Depreciation | 167.6 |
| | 159.2 |
| | 8.4 |
| | 5.3 |
|
Amortization of Regulatory Assets, Net | 17.8 |
| | 18.3 |
| | (0.5 | ) | | (2.7 | ) |
Energy Efficiency Programs | 198.8 |
| | 212.9 |
| | (14.1 | ) | | (6.6 | ) |
Taxes Other Than Income Taxes | 99.0 |
| | 101.8 |
| | (2.8 | ) | | (2.8 | ) |
Total Operating Expenses | 1,439.2 |
| | 1,537.0 |
| | (97.8 | ) | | (6.4 | ) |
Operating Income | 474.3 |
| | 449.0 |
| | 25.3 |
| | 5.6 |
|
Interest Expense | 70.0 |
| | 62.2 |
| | 7.8 |
| | 12.5 |
|
Other Income, Net | 8.7 |
| | 7.6 |
| | 1.1 |
| | 14.5 |
|
Income Before Income Tax Expense | 413.0 |
| | 394.4 |
| | 18.6 |
| | 4.7 |
|
Income Tax Expense | 161.3 |
| | 154.5 |
| | 6.8 |
| | 4.4 |
|
Net Income | $ | 251.7 |
| | $ | 239.9 |
| | $ | 11.8 |
| | 4.9 | % |
Operating Revenues
NSTAR Electric's retail sales volumes were as follows:
|
| | | | | | | | | | | |
| For the Nine Months Ended September 30, |
| 2017 | | 2016 | | Decrease | | Percent |
Retail Sales Volumes in GWh | 15,204 |
| | 15,746 |
| | (542 | ) | | (3.4 | )% |
NSTAR Electric's Operating Revenues, which consist of base distribution revenues and tracked revenues further described below, decreased by $72.5 million for the nine months ended September 30, 2017, as compared to the same period in 2016.
Base distribution revenues: Base distribution revenues, excluding LBR, decreased $11.2 million for the nine months ended September 30, 2017, as compared to the same period in 2016, as a result of lower sales volumes in 2017, as compared to 2016 driven by the mild summer weather during the third quarter of 2017. LBR increased $10.6 million for the nine months ended September 30, 2017, as compared to the same period in 2016.
Tracked revenues: Tracked revenues consist of certain costs that are recovered from customers in rates through DPU-approved cost tracking mechanisms and therefore, have no impact on earnings. Costs recovered through cost tracking mechanisms include energy supply procurement and other energy-related costs, retail transmission charges, energy efficiency program costs, net metering for distributed generation and transition cost recovery revenues. In addition, certain tracked revenues include incentives earned and carrying charges that are billed in rates to customers. Tracked distribution revenues decreased primarily as a result of a decrease in energy supply costs ($44.1 million) driven by decreased average retail prices and lower sales volumes, a decrease in retail transmission charges ($53.9 million), a decrease in the pension rate adjustment mechanism ($14.7 million), and a decrease in transition cost recovery revenues ($11.9 million). Partially offsetting these decreases were an increase in net metering revenues ($20.2 million) and an increase in revenues related to renewable energy requirements ($23.4 million).
Transmission revenues increased by $20.6 million due primarily to the recovery of higher revenue requirements associated with ongoing investments in our transmission infrastructure.
Purchased Power and Transmission expense includes costs associated with purchasing electricity on behalf of NSTAR Electric's customers. These energy supply costs are recovered from customers in rates through DPU-approved cost tracking mechanisms, which have no impact on earnings (tracked costs). Total Purchased Power and Transmission expense decreased for the nine months ended September 30, 2017, as compared to the same period in 2016, due primarily to the following:
|
| | | |
(Millions of Dollars) | Decrease |
Purchased Power Costs | $ | (42.3 | ) |
Transmission Costs | (32.8 | ) |
Total Purchased Power and Transmission | $ | (75.1 | ) |
Included in purchased power costs are the costs associated with NSTAR Electric's basic service charge and deferred energy supply costs. The basic service charge recovers energy-related costs incurred as a result of providing electric generation service supply to all customers who have not migrated to third party suppliers. The decrease in purchased power costs was due primarily to lower prices associated with the procurement of energy supply and lower sales volumes. The decrease in transmission costs was primarily the result of a decrease in the retail transmission cost deferral, which reflects the actual costs of transmission service compared to estimated amounts billed to customers.
Operations and Maintenance expense includes tracked costs and costs that are part of base distribution rates with changes impacting earnings (non-tracked costs). Operations and Maintenance expense decreased for the nine months ended September 30, 2017, as compared to the same period in 2016, driven by a $13.0 million decrease in non-tracked costs, which was primarily attributable to lower employee-related expenses, lower bad debt expense and lower storm restoration costs, partially offset by higher shared corporate costs, a $4.9 million charge recorded in the second quarter of 2017 related to the Boston Harbor civil action settlement, and higher vegetation management costs. Tracked costs decreased $0.7 million, which was primarily attributable to lower tracked employee-related expenses, partially offset by higher transmission expenses and higher tracked bad debt expense.
Depreciation expense increased for the nine months ended September 30, 2017, as compared to the same period in 2016, due primarily to higher utility plant in service balances.
Energy Efficiency Programs expense decreased for the nine months ended September 30, 2017, as compared to the same period in 2016, due primarily to the deferral adjustment, which reflects the actual cost of energy efficiency programs compared to the estimated amounts billed to customers and the timing of the recovery of energy efficiency costs. The deferral adjusts costs incurred to match energy efficiency revenue billed to customers. The costs for various state policy initiatives are recovered from customers in rates and have no impact on earnings.
Taxes Other Than Income Taxes expense decreased for the nine months ended September 30, 2017, as compared to the same period in 2016, due primarily to a decrease in property tax rates and lower employment-related taxes.
Interest Expense increased for the nine months ended September 30, 2017, as compared to the same period in 2016, due primarily to new debt issuances.
Income Tax Expense increased for the nine months ended September 30, 2017, as compared to the same period in 2016, due primarily to higher pre-tax earnings ($6.9 million), partially offset by items that impact our tax rate as a result of regulatory treatment (flow-through items) and permanent differences ($0.1 million).
EARNINGS SUMMARY
NSTAR Electric's earnings increased $11.8 million for the nine months ended September 30, 2017, as compared to the same period in 2016, due primarily to lower operations and maintenance expense and lower property tax expense, partially offset by lower sales volumes driven by the mild summer weather during the third quarter of 2017, and higher interest and depreciation expense.
LIQUIDITY
NSTAR Electric had cash flows provided by operating activities of $413.0 million for the nine months ended September 30, 2017, as compared to $564.3 million in the same period of 2016. The decrease in operating cash flows was due primarily to a decrease in regulatory recoveries, which were significantly impacted by the timing of collections of purchased power and transmission costs, an increase of $56.3 million in Pension and PBOP Plan cash contributions, and the income tax payments of $23.9 million made in 2017, compared to the income tax refunds of $28.1 million received in 2016. Partially offsetting these decreases was a favorable impact related to the timing of collections of accounts receivable.
NSTAR Electric has a $450 million commercial paper program allowing NSTAR Electric to issue commercial paper as a form of short-term debt. As of September 30, 2017, NSTAR Electric had no short-term borrowings outstanding and as of December 31, 2016, NSTAR Electric had $126.5 million in short-term borrowings outstanding under its commercial paper program, leaving $450.0 million and $323.5 million of available borrowing capacity as of September 30, 2017 and December 31, 2016, respectively. The weighted-average interest rate on these borrowings as of December 31, 2016 was 0.71 percent. NSTAR Electric is a party to a five-year $450 million revolving credit facility. The revolving credit facility terminates on September 4, 2021. The revolving credit facility serves to backstop NSTAR Electric's $450 million commercial paper program. There were no borrowings outstanding on the revolving credit facility as of September 30, 2017 and December 31, 2016.
RESULTS OF OPERATIONS – PUBLIC SERVICE COMPANY OF NEW HAMPSHIRE AND SUBSIDIARY
The following provides the amounts and variances in operating revenues and expense line items in the statements of income for PSNH for the nine months ended September 30, 2017 and 2016 included in this combined Quarterly Report on Form 10-Q:
|
| | | | | | | | | | | | | | |
| For the Nine Months Ended September 30, |
(Millions of Dollars) | 2017 | | 2016 | | Increase/ (Decrease) | | Percent |
Operating Revenues | $ | 733.6 |
| | $ | 727.8 |
| | $ | 5.8 |
| | 0.8 | % |
Operating Expenses: | |
| | |
| | |
| | |
|
Purchased Power, Fuel and Transmission | 179.3 |
| | 155.7 |
| | 23.6 |
| | 15.2 |
|
Operations and Maintenance | 191.2 |
| | 187.2 |
| | 4.0 |
| | 2.1 |
|
Depreciation | 95.3 |
| | 86.5 |
| | 8.8 |
| | 10.2 |
|
Amortization of Regulatory (Liabilities)/Assets, Net | (10.7 | ) | | 14.5 |
| | (25.2 | ) | | (a) |
|
Energy Efficiency Programs | 11.0 |
| | 10.9 |
| | 0.1 |
| | 0.9 |
|
Taxes Other Than Income Taxes | 67.0 |
| | 64.5 |
| | 2.5 |
| | 3.9 |
|
Total Operating Expenses | 533.1 |
| | 519.3 |
| | 13.8 |
| | 2.7 |
|
Operating Income | 200.5 |
| | 208.5 |
| | (8.0 | ) | | (3.8 | ) |
Interest Expense | 38.7 |
| | 37.4 |
| | 1.3 |
| | 3.5 |
|
Other Income, Net | 2.9 |
| | 1.0 |
| | 1.9 |
| | (a) |
|
Income Before Income Tax Expense | 164.7 |
| | 172.1 |
| | (7.4 | ) | | (4.3 | ) |
Income Tax Expense | 65.1 |
| | 66.3 |
| | (1.2 | ) | | (1.8 | ) |
Net Income | $ | 99.6 |
| | $ | 105.8 |
| | $ | (6.2 | ) | | (5.9 | )% |
(a) Percent greater than 100 not shown as it is not meaningful.
Operating Revenues
PSNH's retail sales volumes were as follows:
|
| | | | | | | | | | | |
| For the Nine Months Ended September 30, |
| 2017 | | 2016 | | Decrease | | Percent |
Retail Sales Volumes in GWh | 5,835 |
| | 5,985 |
| | (150 | ) | | (2.5 | )% |
PSNH's Operating Revenues, which consist of base distribution revenues and tracked revenues further described below, increased by $5.8 million for the nine months ended September 30, 2017, as compared to the same period in 2016.
Base distribution revenues: Base distribution revenues decreased $2.0 million for the nine months ended September 30, 2017, as compared to the same period in 2016, due primarily to a 2.5 percent decrease in sales volumes driven by the mild summer weather during the third quarter of 2017.
Tracked revenues: Tracked revenues consist of certain costs that are recovered from customers in rates through NHPUC-approved cost tracking mechanisms and therefore, have no impact on earnings. Costs recovered through cost tracking mechanisms include energy supply procurement and energy-related costs, costs associated with the generation of electricity for customers, retail transmission charges, energy efficiency program costs and stranded cost recovery revenues. In addition, certain tracked revenues include incentives earned and carrying charges that are billed in rates to customers. Tracked distribution revenues decreased primarily as a result of a decrease in revenues related to the timing of the sale of RECs ($15.3 million) and a decrease in the energy service rate ($5.1 million). Partially offsetting these decreases was an increase in retail transmission charges ($7.2 million) and an increase in wholesale generation revenues ($4.0 million).
Transmission revenues increased by $17.6 million due primarily to the recovery of higher revenue requirements associated with ongoing investments in our transmission infrastructure.
Purchased Power, Fuel and Transmission expense includes costs associated with PSNH's generation of electricity, as well as purchasing electricity on behalf of its customers. These generation and energy supply costs are recovered from customers in rates through NHPUC-approved cost tracking mechanisms, which have no impact on earnings (tracked costs). Total Purchased Power, Fuel and Transmission expense increased for the nine months ended September 30, 2017, as compared to the same period in 2016, due primarily to the following:
|
| | | |
(Millions of Dollars) | Increase |
Purchased Power and Generation Fuel Costs | $ | 5.1 |
|
Transmission Costs | 18.5 |
|
Total Purchased Power, Fuel and Transmission | $ | 23.6 |
|
In order to meet the demand of customers who have not migrated to third party suppliers, PSNH procures power through power supply contracts and spot purchases in the competitive New England wholesale power market and/or produces power through its own generation. The increase in purchased power and generation fuel costs was due primarily to higher purchased power energy expenses that are recovered as a component of the Energy Service rate, and Regional Greenhouse Gas Initiative related expenses recovered in the SCRC. •The increase in transmission costs at NSTAR Electric and PSNH was due primarily the result ofto an increase in costs billed by ISO-NE that support regional grid investment, and Local Network Service charges, which reflect the cost of transmission service, as well asan increase in the retail transmission cost deferral, which reflects actual costs of transmission service compared to estimated amounts billed to customers.partially offset by a decrease in Local Network Service charges.
Operations and Maintenance expense includes tracked costs and costs that are part of base distribution rates with changes impacting earnings (non-tracked costs). Operations and Maintenance expense increased for the nine months ended September 30, 2017,2021, as compared to the same period in 2016, driven by a $2.1 million increase in tracked costs, which was2020, due primarily attributable to higher transmission expenses, partially offset by lower employee-related expenses. Non-tracked costs increased by $1.9 million, which was primarily attributable to higher shared corporate costs and higher vegetation management costs, partially offset by lower employee-related expenses.the following:
| | | | | | | | | | | | | | | | | |
(Millions of Dollars) | CL&P | | NSTAR Electric | | PSNH |
Base Electric Distribution (Non-Tracked Costs): | | | | | |
CL&P charge to fund various customer assistance initiatives associated with the settlement agreement on October 1, 2021 | $ | 10.0 | | | $ | — | | | $ | — | |
Funding of CL&P storm reserve as part of June 1, 2021 rate change | 10.0 | | | — | | | — | |
Employee-related expenses, including labor and benefits | (3.5) | | | 12.1 | | | 5.7 | |
Storm restoration costs | 7.7 | | | 9.3 | | | 3.4 | |
Vegetation Management | 1.0 | | | 0.6 | | | 10.0 | |
Operations-related expenses, including vehicles and outside services | 7.8 | | | — | | | (2.2) | |
Shared corporate costs (including computer software depreciation at Eversource Service) | 4.5 | | | 10.0 | | | 1.3 | |
Other non-tracked operations and maintenance | 1.6 | | | 2.8 | | | 1.8 | |
Total Base Electric Distribution (Non-Tracked Costs) | 39.1 | | | 34.8 | | | 20.0 | |
Tracked Costs: | | | | | |
Transmission expenses | 3.0 | | | 3.5 | | | 3.9 | |
Other tracked operations and maintenance | 5.8 | | | 14.0 | | | (7.5) | |
Total Tracked Costs | 8.8 | | | 17.5 | | | (3.6) | |
Total Operations and Maintenance | $ | 47.9 | | | $ | 52.3 | | | $ | 16.4 | |
Depreciation expense increased for the nine months ended September 30, 2017,2021, as compared to the same period in 2016,2020, for CL&P, NSTAR Electric and PSNH due primarily to higher utilitynet plant in service balances.
Amortization of Regulatory (Liabilities)/Assets, Net expense includes the deferral of energy supply, and energy-related costs and other costs that are included in certain regulatory-approved cost tracking mechanisms. This deferral adjusts expense to match the amortization of certaincorresponding revenues compared to the actual costs whichincurred. Energy supply and energy-related costs are recovered from customers in rates and have no impact on earnings. The deferral adjustsAmortization expense to matchalso includes the corresponding revenues. The decreaseamortization of certain costs as those costs are collected in rates. Amortization of Regulatory Assets, Net increased/decreased for the nine months ended September 30, 2017,2021, as compared to the same period in 2016,2020, due primarily to the following:
•The increase at CL&P was due primarily to the fluctuationdeferral adjustment of the deferral,energy supply, energy-related and other tracked costs, which can fluctuate from period to period based on the timing of costs incurred and related rate changes to recover these costs. The increase was partially offset by a decrease in storm amortization expense related to the completion of the amortization period of certain storm cost deferred assets.
•The decrease at NSTAR Electric was due to the deferral adjustment of energy supply, energy-related costs and other tracked costs, which can fluctuate from period to period based on the timing of costs incurred and related rate changes to recover these costs.
•The increase at PSNH was due to the deferral adjustment of energy-related and other tracked costs, which can fluctuate from period to period based on the timing of costs incurred and related rate changes to recover these costs.
Energy Efficiency Programs expenseincludes costs of various state energy policy initiatives and expanded energy efficiency programs that are recovered from customers in rates, most of which have no impact on earnings. Energy Efficiency Programs expenseincreased/decreased for the nine months ended September 30, 2021, as compared to the same period in 2020, due primarily to the following:
•The decrease at CL&P was due to the deferral adjustment, which reflects actual costs of energy efficiency programs compared to the estimated amounts billed to customers, and the timing of the recovery of energy efficiency costs.
•The increases at NSTAR Electric and PSNH were due to the deferral adjustment, which reflects actual costs of energy efficiency programs compared to the estimated amounts billed to customers, and the timing of the recovery of energy efficiency costs.
Taxes Other Than Income Taxes expense increased for the nine months ended September 30, 2017,2021, as compared to the same period in 2016,2020, due primarily to the following:
•The increase at CL&P was related to higher property taxes as a result of a higher utility plant balance and higher gross earnings taxes.
•The increases at NSTAR Electric and PSNH were due to higher property taxes as a result of higher utility plant balances.
Interest Expense increased at CL&P and NSTAR Electric and decreased at PSNH for the nine months ended September 30, 2021, as compared to the same period in 2020, due primarily to the following:
•The increase at CL&P was due to higher interest on long-term debt ($4.0 million), a decrease in AFUDC related to debt funds ($3.4 million), and an increase in interest expense on regulatory deferrals ($2.4 million).
•Theincrease at NSTAR Electric was due to an increase in interest expense on regulatory deferrals ($6.1 million) and higher interest on long-term debt ($5.7 million).
•The decrease at PSNH was due to a decrease in interest expense on regulatory deferrals ($1.1 million) and a decrease in RRB interest expense ($1.0 million), partially offset by a decrease in AFUDC related to debt funds ($1.2 million).
Other Income, Net increased for the nine months ended September 30, 2021, as compared to the same period in 2020, due primarily to the following:
•The increase at CL&P was due primarily to an increase related to pension, SERP and PBOP non-service income components ($8.2 million), an increase in property taxesinterest income primarily on regulatory deferrals ($2.3 million), and an increase in investment income driven by market volatility ($1.2 million), partially offset by a decrease in AFUDC related to equity funds ($6.3 million).
•The increase at NSTAR Electric was due primarily to higher plant balances.an increase related to pension, SERP and PBOP non-service income components ($8.1 million), an increase in interest income primarily on regulatory deferrals ($8.1 million), an increase in AFUDC related to equity funds ($2.8 million), and investment income in 2021 compared to investment losses in 2020 driven by market volatility ($2.1 million).
•The increase at PSNH was due primarily to an increase related to pension, SERP and PBOP non-service income components ($2.7 million) and an increase in investment income driven by market volatility ($0.2 million), partially offset by a decrease in AFUDC related to equity funds ($2.3 million).
Income Tax Expense increased/decreased for the nine months ended September 30, 2017,2021, as compared to the same period in 2016,2020, due primarily to the following:
•The increase at CL&P was due primarily to higher state taxes ($11.0 million), lower pre-tax earningsshare-based payment excess tax benefits ($2.60.8 million), and an increase in items that impact our tax rate as a result of regulatory treatment (flow-through items) and permanent differences ($1.04.2 million), partially offset by the absencelower pre-tax earnings ($14.9 million).
•The increase at NSTAR Electric was due primarily to higher pre-tax earnings ($5.7 million), higher state taxes ($1.5 million), an increase in items that impact our tax rate as a result of regulatory treatment (flow-through items) and permanent differences ($0.2 million), and lower share-based payment excess tax benefits ($0.9 million).
•The decrease at PSNH was due primarily to an increase in amortization of EDIT ($4.2 million) and lower state taxes ($1.3 million), partially offset by lower share-based payment excess tax benefits ($0.3 million), higher pre-tax earnings ($0.1 million), and an increase in items that impact our tax rate as a tax credit in 2017result of regulatory treatment (flow-through items) and permanent differences ($2.40.1 million).
EARNINGS SUMMARY
PSNH'sCL&P's earnings decreased $6.2$72.0 millionfor the nine months ended September 30, 2017,2021, as compared to the same period in 2016,2020, due primarily to lower generationthe settlement agreement on October 1, 2021 resulting in a total $75 million pre-tax charge to earnings and a $28.6 million pre-tax charge for an assessment by PURA as a result of CL&P’s preparation for and response to Tropical Storm Isaias in August 2020 recorded in the first quarter of 2021. The after-tax impact of the settlement agreement and the storm performance assessment imposed by PURA was $85.8 million, or $0.25 per share. Earnings were also unfavorably impacted by higher operations and maintenance expense, a higher effective tax rate, higher depreciation expense, higher property tax and depreciationother tax expense, and lower sales volumes driven by the mild summer weather during the third quarter of 2017. These unfavorablehigher interest expense. The earnings impacts weredecrease was partially offset by higher earnings from its capital tracker mechanism due to increased electric system improvements, the base distribution rate increase effective May 1, 2020, and an increase in transmission earnings driven by a higher transmission rate base.
NSTAR Electric's earnings increased $18.7 million for the nine months ended September 30, 2021, as compared to the same period in 2020, due primarily to an increase in transmission earnings driven by a higher transmission rate base and the base distribution rate increase effective January 1, 2021. The earnings increase was partially offset by higher operations and maintenance expense driven by higher employee-related expenses and higher storm restoration costs, higher depreciation expense and higher interest expense.
PSNH's earnings increased $5.1 million for the nine months ended September 30, 2021, as compared to the same period in 2020, due primarily to the base distribution rate increases effective January 1, 2021 and August 1, 2021, an increase in transmission earnings driven by a higher transmission rate base, a lower effective tax rate, and the impact in 2021 of a new tracker mechanism at PSNH approved as part of the 2020 rate settlement agreement. The earnings increase was partially offset by higher operations and maintenance expense, higher depreciation expense and higher property tax expense.
LIQUIDITY
Cash Flows: CL&P had cash flows provided by operating activities of $450.6 million for the nine months ended September 30, 2021, as compared to $399.2 million in the same period of 2020. The increase in operating cash flows was due primarily to the timing of collections for regulatory tracking mechanisms, the timing of other working capital items, and a $10.6 million decrease in income tax payments made in 2021, as compared to 2020. These favorable impacts were partially offset by a $55.7 million increase in pension contributions made in 2021, as compared to 2020, the timing of cash payments made on our accounts payable, cash payments made in 2021 for storm restoration costs of approximately $52 million related to Tropical Storm Isaias, and the timing of cash collections on our accounts receivable.
NSTAR Electric had cash flows provided by operating activities of $617.3 million for the nine months ended September 30, 2021, as compared to $502.6 million in the same period of 2020. The increase in operating cash flows was due primarily to the timing of collections for regulatory tracking mechanisms, income tax refunds received of $7.5 million in 2021, as compared to $39.3 million of income tax payments made in 2020, and the timing of other working capital items. These favorable impacts were partially offset by the timing of cash payments made on our accounts payable, a $9.4 million increase in pension contributions made in 2021, as compared to 2020, and the timing of cash collections on our accounts receivable.
PSNH had cash flows provided by operating activities of $264.0$237.2 million for the nine months ended September 30, 2017,2021, as compared to $306.0$149.2 million in the same period of 2016.2020. The decreaseincrease in operating cash flows was due primarily to the income tax paymentstiming of $11.8collections for regulatory tracking mechanisms primarily related to transmission costs, the absence in 2021 of pension contributions of $19.5 million made in 2017, compared to the income tax refunds of $41.3 million received in 2016. Partially offsetting this decrease was $16.2 million of lower Pension Plan contributions made in 2017, as compared to 2016,2020, and the favorable impacts related to the timing of regulatory recoveries.other working capital items. These favorable impacts were partially offset by the timing of cash payments made on our accounts payable.
For further information on CL&P's, NSTAR Electric's and PSNH's liquidity and capital resources, see "Liquidity" and "Business Development and Capital Expenditures" included in this Management's Discussion and Analysis of Financial Condition and Results of Operations.
RESULTS OF OPERATIONS – WESTERN MASSACHUSETTS ELECTRICTHE CONNECTICUT LIGHT AND POWER COMPANY
The following provides the amounts and variances in operating revenues and expense line items in the statements of income for WMECOCL&P for the ninethree months ended September 30, 20172021 and 20162020 included in this combined Quarterly Report on Form 10-Q:
| | | | | | | | | | | | | | | | | |
| For the Three Months Ended September 30, |
(Millions of Dollars) | 2021 | | 2020 | | Increase/(Decrease) |
Operating Revenues | $ | 919.6 | | | $ | 994.3 | | | $ | (74.7) | |
Operating Expenses: | | | | | |
Purchased Power and Transmission | 392.3 | | | 399.1 | | | (6.8) | |
Operations and Maintenance | 137.8 | | | 147.5 | | | (9.7) | |
Depreciation | 85.3 | | | 80.6 | | | 4.7 | |
Amortization of Regulatory Assets, Net | 28.9 | | | 36.4 | | | (7.5) | |
Energy Efficiency Programs | 35.7 | | | 41.8 | | | (6.1) | |
Taxes Other Than Income Taxes | 99.9 | | | 97.7 | | | 2.2 | |
Total Operating Expenses | 779.9 | | | 803.1 | | | (23.2) | |
Operating Income | 139.7 | | | 191.2 | | | (51.5) | |
Interest Expense | 42.7 | | | 38.4 | | | 4.3 | |
Other Income, Net | 6.9 | | | 5.9 | | | 1.0 | |
Income Before Income Tax Expense | 103.9 | | | 158.7 | | | (54.8) | |
Income Tax Expense | 33.7 | | | 38.6 | | | (4.9) | |
Net Income | $ | 70.2 | | | $ | 120.1 | | | $ | (49.9) | |
|
| | | | | | | | | | | | | | |
| For the Nine Months Ended September 30, |
(Millions of Dollars) | 2017 | | 2016 | | Increase/ (Decrease) | | Percent |
Operating Revenues | $ | 377.2 |
| | $ | 368.5 |
| | $ | 8.7 |
| | 2.4 | % |
Operating Expenses: | |
| | |
| | |
| | |
|
Purchased Power and Transmission | 109.6 |
| | 104.4 |
| | 5.2 |
| | 5.0 |
|
Operations and Maintenance | 65.8 |
| | 68.0 |
| | (2.2 | ) | | (3.2 | ) |
Depreciation | 36.8 |
| | 34.4 |
| | 2.4 |
| | 7.0 |
|
Amortization of Regulatory Assets/(Liabilities), Net | (0.6 | ) | | 3.3 |
| | (3.9 | ) | | (a) |
|
Energy Efficiency Programs | 29.7 |
| | 33.6 |
| | (3.9 | ) | | (11.6 | ) |
Taxes Other Than Income Taxes | 31.4 |
| | 30.4 |
| | 1.0 |
| | 3.3 |
|
Total Operating Expenses | 272.7 |
| | 274.1 |
| | (1.4 | ) | | (0.5 | ) |
Operating Income | 104.5 |
| | 94.4 |
| | 10.1 |
| | 10.7 |
|
Interest Expense | 18.8 |
| | 18.3 |
| | 0.5 |
| | 2.7 |
|
Other Income, Net | 1.4 |
| | 0.1 |
| | 1.3 |
| | (a) |
|
Income Before Income Tax Expense | 87.1 |
| | 76.2 |
| | 10.9 |
| | 14.3 |
|
Income Tax Expense | 34.7 |
| | 30.1 |
| | 4.6 |
| | 15.3 |
|
Net Income | $ | 52.4 |
| | $ | 46.1 |
| | $ | 6.3 |
| | 13.7 | % |
(a) Percent greater than 100 not shown as it is not meaningful.
Operating Revenues
WMECO'sSales Volumes: CL&P's retail electric GWh sales volumes were as follows:5,776 and 5,798 for the three months ended September 30, 2021 and 2020, respectively, resulting in a decrease of 0.4 percent. Fluctuations in retail electric sales volumes do not impact earnings due to its PURA-approved distribution revenue decoupling mechanism.
|
| | | | | | | | | | | |
| For the Nine Months Ended September 30, |
| 2017 | | 2016 | | Decrease | | Percent |
Retail Sales Volumes in GWh | 2,579 |
| | 2,695 |
| | (116 | ) | | (4.3 | )% |
WMECO'sOperating Revenues: Operating Revenues, which consist of base distribution revenues and tracked revenues further described below, increased by $8.7decreased $74.7 million for the ninethree months ended September 30, 2017,2021, as compared to the same period in 2016.2020.
Fluctuations in WMECO's sales volumes do not impact the level of base distribution revenue realized or earnings due to the DPU-approved revenue decoupling mechanism. WMECO's revenue decoupling mechanism permits recovery of a base amount of distribution revenues ($132.4 million annually) and breaks the relationship between sales volumes and revenues recognized. The revenue decoupling mechanism results in the recovery of approved base distribution revenue requirements.
Fluctuations in the overall level of operating revenues are primarily related to tracked revenues. Tracked revenues consist of certain costs that are recovered from customers in rates through DPU-approved cost tracking mechanisms and therefore, have no impact on earnings. Costs recovered through cost tracking mechanisms include energy supply procurement and other energy-related costs, retail transmission charges, energy efficiency program costs, low income assistance programs, and restructuring and stranded cost recovery revenues. In addition, certain tracked revenues include incentives earned and carrying charges that are billed in rates to customers. TrackedBase Distribution Revenues: CL&P's distribution revenues decreased due primarily to a decrease in energy supply costs ($10.8 million) driven by decreased average retail prices and lower sales volumes, partially offset by increases in revenues related to renewable energy requirements ($6.6 million).
Transmission revenues increased by $12.0$9.1 million due primarily to the impact of a base distribution rate decrease implemented on June 1, 2021. The decrease in the base distribution rate was due primarily to the completion of the recovery of higher revenue requirementscertain storm cost amortization and therefore the base rate decrease did not impact earnings.
Electric distribution revenues also decreased $65 million for the three months ended September 30, 2021, as compared to the same period in 2020, due to CL&P’s settlement agreement on October 1, 2021, in which CL&P agreed to provide a total of $65 million of customer credits to be distributed based on customer sales over a two-month period from December 1, 2021 to January 31, 2022. In the third quarter of 2021, CL&P recorded a current regulatory liability associated with ongoing investmentsthe provisions of the settlement agreement, with a $65 million pre-tax charge as a reduction to Operating Revenues. Additionally, CL&P recorded a $28.4 million reserve in the first quarter of 2021 for a civil penalty for non-compliance with storm performance standards that is currently being provided as credits to customer bills beginning on September 1, 2021 over a one-year period. The penalty was reclassified from Operations and Maintenance expense to a reduction of Operating Revenues in the third quarter of 2021 in connection with the finalization of the settlement agreement. For further information, see "Regulatory Developments and Rate Matters - Connecticut" included in this Management’s Discussion and Analysis.
Tracked Revenues: Tracked revenues increased/(decreased) for the three months ended September 30, 2021, as compared to the same period in 2020, due primarily to the following:
| | | | | |
(Millions of Dollars) | |
Retail Tariff Tracked Revenues: | |
Energy supply procurement | $ | (14.5) | |
Retail transmission | 13.5 | |
Other distribution tracking mechanisms | (20.4) | |
Wholesale Market Sales Revenue | 40.3 | |
The decrease in energy supply procurement was driven by lower average prices, partially offset by higher average supply-related sales volumes. Fluctuations in retail transmission revenues are driven by the recovery of the costs of our wholesale transmission business, such as those billed by ISO-NE and Local and Regional Network Service charges. For further information, see "Purchased Power and Transmission Expense" below.
The increase in electric distribution wholesale market sales revenue was due primarily to higher average electricity market prices received for wholesale sales for the three months ended September 30, 2021, as compared to the same period in 2020. ISO-NE average market prices received for CL&P’s wholesale sales increased approximately 100 percent for the three months ended September 30, 2021, as compared to the same period in 2020, driven primarily by higher natural gas prices in New England.Volumes sold into the market were primarily from the sale of output generated by the Millstone PPA that CL&P entered into in 2019, as required by regulation.
Transmission Revenues: Transmission revenues increased $13.9 million due primarily to a higher transmission rate base as a result of continued investment in our transmission infrastructure.
Eliminations: Eliminations are primarily related to transmission revenues derived from ISO-NE regional transmission charges to the distribution business that recover the costs of the wholesale transmission business. The impact of eliminations decreased revenues by $8.5 million.
Purchased Power and Transmission expense includes costs associated with purchasing electricity on behalf of WMECO's customers.CL&P's customers and the cost of energy purchase contracts, as required by regulation. These energy supply and other energy-related costs are recovered from customers in rates through DPU-approvedPURA-approved cost tracking mechanisms, which have no impact on earnings (tracked costs). Total Purchased Power and Transmission expense increaseddecreased for the ninethree months ended September 30, 2017,2021, as compared to the same period in 2016,2020, due primarily to the following:
| | | | | |
(Millions of Dollars) | |
Purchased Power Costs | $ | (13.3) | |
Transmission Costs | 14.9 | |
Eliminations | (8.4) | |
Total Purchased Power and Transmission | $ | (6.8) | |
|
| | | |
(Millions of Dollars) | Increase/(Decrease) |
Purchased Power Costs | $ | (2.6 | ) |
Transmission Costs | 7.8 |
|
Total Purchased Power and Transmission | $ | 5.2 |
|
Included in purchased power costs are the costs associated with WMECO's basic service charge and deferred energy supply costs. The basic service charge recovers energy-related costs incurred as a result of providing electric generation service supply to all customers who have not migrated to third party suppliers. The decrease in purchased power costs for the nine months ended September 30, 2017, as compared to the same period in 2016, was due primarily to lower prices associated withexpense related to the procurement of energy supply andresulting from lower average prices, partially offset by higher average supply-related sales volumes. The lower energy supply expense was partially offset by higher long-term contractual energy-related costs that are recovered in the NBFMCC mechanism.
The increase in transmission costs for the nine months ended September 30, 2017, as comparedwas due primarily to the same period in 2016, was primarily the result of an increase in costs billed by ISO-NE that support regional grid investment, and Local Network Service charges, which reflect the cost of transmission service, as well asinvestments. This was partially offset by a decrease in the retail transmission cost deferral, which reflects the actual costs of transmission service compared to estimated amounts billed to customers.
Operations and Maintenance expense includes tracked costs and costs that are part of base distribution rates with changes impacting earnings (non-tracked costs). Operations and Maintenance expense decreased for the ninethree months ended September 30, 2017,2021, as compared to the same period in 2016, driven by a decrease in non-tracked costs of $1.9 million, which was2020, due primarily attributable to lower employee-related expenses, partially offset by higher shared corporate costs. Tracked costs also decreased by $0.3 million, which was primarily attributable to lower tracked employee-related expenses, and a lower deferral adjustment for RECs generated and sold by the WMECO solar program, partially offset by higher transmission expenses.following:
| | | | | |
(Millions of Dollars) | |
Base Electric Distribution (Non-Tracked Costs): | |
CL&P assessment by PURA for Tropical Storm Isaias response; reflected as reduction to Operating Revenues in the third quarter of 2021 in connection with the finalization of the settlement agreement | $ | (28.4) | |
Charge to fund various customer assistance initiatives associated with the settlement agreement on October 1, 2021 | 10.0 | |
Funding of CL&P storm reserve as part of June 1, 2021 rate change | 6.0 | |
Employee-related expenses, including labor and benefits | (7.2) | |
Storm Restoration Costs | (2.7) | |
Vegetation management | 3.5 | |
Operations-related expenses, including vehicles and outside services | 3.4 | |
Other non-tracked operations and maintenance | 0.3 | |
Total Base Electric Distribution (Non-Tracked Costs) | (15.1) | |
Total Tracked Costs | 5.4 | |
Total Operations and Maintenance | $ | (9.7) | |
Depreciationexpense increased for the ninethree months ended September 30, 2017,2021, as compared to the same period in 2016,2020, due primarily to a higher utilitynet plant in service balances. balance.
Amortization of Regulatory Assets/(Liabilities),Assets, Net expense includes the deferral of energy supply, energy-related costs and other costs that are included in certain regulatory-approved cost tracking mechanisms, and the amortization of certain costs as those costs are collected in rates. This deferral adjusts expense to match the corresponding revenues. Energy supply and energy-related costs are recovered from customers in rates and have no impact on earnings. Amortization of Regulatory Assets, Net decreased for the ninethree months ended September 30, 2017,2021, as compared to the same period in 2016,2020, due to a decrease in storm amortization expense related to the completion of the amortization period of certain storm cost deferred assets. The decrease was partially offset by an increase in the deferral adjustment of energy supply and energy-related costs, which can fluctuate from period to period based on the timing of refunds or recoverycosts incurred and related rate changes to recover these costs.
Energy Efficiency Programs expenseincludes costs of tracked costs to/various state energy policy initiatives and expanded energy efficiency programs that are recovered from customers in rates. These costsrates, most of which have no impact on earnings.
Energy Efficiency Programs expensedecreased for the ninethree months ended September 30, 2017,2021, as compared to the same period in 2016,2020, due primarily to the deferral adjustment, which reflects the actual costcosts of energy efficiency programs compared to the estimated amounts billed to customers, and the timing of the recovery of energy efficiency costs. The deferral adjusts costs incurred to match energy efficiency revenue billed to customers. The costs for various state policy initiatives are recovered from customers in rates and have no impact on earnings.
Taxes Other Than Income Tax ExpenseTaxes increased for the ninethree months ended September 30, 2017,2021, as compared to the same period in 2016,2020, due primarily to higher property taxes as a result of a higher utility plant balance and higher gross earnings taxes.
Interest Expense increased for the three months ended September 30, 2021, as compared to the same period in 2020, due primarily to higher interest on long-term debt ($2.5 million), a decrease in AFUDC related to debt funds ($1.0 million), and an increase in interest expense on regulatory deferrals ($0.7 million).
Other Income, Net increased for the three months ended September 30, 2021, as compared to the same period in 2020, due primarily to an increase related to pension, SERP and PBOP non-service income components ($3.3 million) and an increase in interest income primarily on regulatory deferrals ($1.0 million), partially offset by a decrease in AFUDC related to equity funds ($1.9 million) and investment losses in 2021 compared to investment income in 2020 driven by market volatility ($1.5 million).
Income Tax Expense decreased for the three months ended September 30, 2021, as compared to the same period in 2020, due primarily to lower pre-tax earnings ($3.811.6 million), partially offset by higher state taxes ($4.1 million) and an increase in items that impact our tax rate as a result of regulatory treatment (flow-through items) and permanent differences ($0.82.6 million).
EARNINGS SUMMARY
WMECO'sCL&P's earnings increased $6.3decreased $49.9 millionfor the ninethree months ended September 30, 2017,2021, as compared to the same period in 2016,2020, due primarily to the settlement agreement on October 1, 2021 resulting in a total $75 million pre-tax charge to earnings. The after-tax impact of the settlement agreement was $63.2 million, or $0.19 per share. Earnings were also unfavorably impacted by a higher effective tax rate, higher depreciation expense, and higher interest expense. The earnings decrease was partially offset by higher earnings from its capital tracker mechanism due to increased electric system improvements and an increase in transmission earnings driven by a higher transmission rate base, and lower operations and maintenance expense.base.
LIQUIDITY
WMECO had cash flows provided by operating activities of $92.0 million for the nine months ended September 30, 2017, as compared to $124.8 million in the same period of 2016. The decrease in operating cash flows was due primarily to the income tax payments of $2.0 million made in 2017, compared to the income tax refunds of $21.6 million received in 2016, and the unfavorable impacts related to the timing of collections and payments of our working capital items, including accounts receivable. Partially offsetting these unfavorable impacts was the benefit related to the timing of regulatory recoveries.ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
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ITEM 3. | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK |
Market Risk Information
Commodity Price Risk Management: Our Regulatedregulated companies enter into energy contracts to serve our customers, and the economic impacts of those contracts are passed on to our customers. Accordingly, the Regulatedregulated companies have no exposure to loss of future earnings or fair values due to these market risk-sensitive instruments. Eversource's Energy Supply Risk Committee, comprised of senior officers, reviews and approves all large scalelarge-scale energy related transactions entered into by its Regulatedregulated companies.
Other Risk Management Activities
Interest Rate Risk Management: We manage our interest rate risk exposure in accordance with our written policies and procedures by maintaining a mix of fixed and variable rate long-term debt. procedures.
Credit Risk Management: Credit risk relates to the risk of loss that we would incur as a result of non-performance by counterparties pursuant to the terms of our contractual obligations. We serve a wide variety of customers and transact with suppliers that include IPPs, industrial companies, natural gas and electric utilities, oil and natural gas producers, financial institutions, and other energy marketers. Margin accounts exist within this diverse group, and we realize interest receipts and payments related to balances outstanding in these margin accounts. This wide customer and supplier mix generates a need for a variety of contractual structures, products and terms that, in turn, require us to manage the portfolio of market risk inherent in those transactions in a manner consistent with the parameters established by our risk management process.
Our Regulatedregulated companies are subject to credit risk from certain long-term or high-volume supply contracts with energy marketing companies. Our Regulatedregulated companies manage the credit risk with these counterparties in accordance with established credit risk practices and monitor contractingcontracting risks, including credit risk. As of September 30, 2017,2021, our Regulatedregulated companies did not holdheld collateral (letters of credit)credit or cash) of $108.5 million from counterparties related to our standard service contracts. As of September 30, 2017,2021, Eversource had $24.5$34.6 million of cash postedposted with ISO-NE related to energy transactions.
We have provided additional disclosures regarding interest rate risk management and credit risk management in Part II, Item 7A, "Quantitative and Qualitative Disclosures about Market Risk," in Eversource's 20162020 Form 10-K, which is incorporated herein by reference. There have been no additional risks identified and no material changes with regard to the items previously disclosed in the Eversource 20162020 Form 10-K.
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ITEM 4. | CONTROLS AND PROCEDURES |
ITEM 4. CONTROLS AND PROCEDURES
Management, on behalf of Eversource, CL&P, NSTAR Electric PSNH and WMECO,PSNH, evaluated the design and operation of the disclosure controls and procedures as of September 30, 20172021 to determine whether they are effective in ensuring that the disclosure of required information is made timely and in accordance with the Securities Exchange Act of 1934 and the rules and regulations of the SEC. This evaluation was made under management's supervision and with management's participation, including the principal executive officer and principal financial officer as of the end of the period covered by this Quarterly Report on Form 10-Q. There are inherent limitations of disclosure controls and procedures, including the possibility of human error and the circumventing or overriding of the controls and procedures. Accordingly, even effective disclosure controls and procedures can only provide reasonable assurance of achieving their control objectives. The principal executive officer and principal financial officer have concluded, based on their review, that the disclosure controls and procedures of Eversource, CL&P, NSTAR Electric PSNH and WMECOPSNH are effective to ensure that information required to be disclosed by us in reports filed under the Securities Exchange Act of 1934 (i) is recorded, processed, summarized, and reported within the time periods specified in SEC rules and regulations and (ii) is accumulated and communicated to management, including the principal executive officer and principal financial officer, as appropriate to allow timely decisions regarding required disclosures.
During the third quarter of 2017, Eversource implemented a new supply chain management system resulting in a material change in internal controls over financial reporting. This new supply chain system consisted of both modern software tools and revised processes that consolidated and standardized all supply chain processes and practices across all of Eversource, including CL&P, NSTAR Electric, PSNH, and WMECO. Pre-implementation testing and post-implementation reviews were conducted by management to ensure that internal controls surrounding the system implementation process, the applications, and the closing process were properly designed to prevent material financial statement errors. Such procedures included the review of required documents, user acceptance testing, change management procedures, access controls, data migration strategies and reconciliations, application interface testing and other standard application controls.
Except as described above, thereThere have been no changes in internal controls over financial reporting for Eversource, CL&P, NSTAR Electric PSNH and WMECOPSNH during the quarter ended September 30, 20172021 that have materially affected, or are reasonably likely to materially affect, internal controls over financial reporting.
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
We are parties to various legal proceedings. We have disclosed thesecertain legal proceedings in Part I, Item 3, "Legal Proceedings," and elsewhere in our 20162020 Form 10-K. These disclosures are incorporated herein by reference.
On May 22, 2017, each of the Yankee Companies filed subsequent lawsuits against the DOE in the Court of Federal Claims seeking damages totaling approximately $100 million for CYAPC, YAEC and MYAPC, covering the years from 2013 to 2016 (“DOE Phase IV”). The DOE Phase IV trial is expected to begin in 2018. For a further discussion of the Yankee Companies v. U.S. Department of Energy, see Part I, Item 3, “Legal Proceedings” of our 2016 Form 10-K.
Other than as set forth above, thereThere have been no additional material legal proceedings identified and no further material changes with regard to the legal proceedings previously disclosed in our 20162020 Form 10-K.
ITEM 1A. RISK FACTORS
We are subject to a variety of significant risks in addition to the matters set forth under "Forward-Looking Statements,"our forward-looking statements section in Item 2, "Management's Discussion and Analysis of Financial Condition and Results of Operations," of this Quarterly Report on Form 10-Q. We have identified a number of these risk factors in Part I, Item 1A, "Risk Factors," in our 20162020 Form 10-K, which risk factors are incorporated herein by reference. These risk factors should be considered carefully in evaluating our risk profile. The following risk factor should be read in conjunction
with the risk factors described in the 2020 Form 10-K.
Regulatory, Legislative and Compliance Risks:
The actions of regulators and legislators could result in outcomes that may adversely affect our earnings and liquidity.
The rates that our electric, natural gas and water companies charge their customers are determined by their state regulatory commissions and by the FERC. These commissions also regulate the companies' accounting, operations, the issuance of certain securities and certain other matters. The FERC also regulates the transmission of electric energy, the sale of electric energy at wholesale, accounting, issuance of certain securities and certain other matters, including reliability standards through the North American Electric Reliability Corporation (NERC).
Under state and federal law, our electric, natural gas and water companies are entitled to charge rates that are sufficient to allow them an opportunity to recover their prudently incurred operating and capital costs and a reasonable rate of return on invested capital, to attract needed capital and maintain their financial integrity, while also protecting relevant public interests. Our electric, natural gas and water companies are required to engage in regulatory approval proceedings as a part of the process of establishing the terms and rates for their respective services. Each of these companies prepares and submits periodic rate filings with their respective regulatory commissions for review and approval, which allows for various entities to challenge our current or future rates, structures or mechanisms and could alter or limit the rates we are allowed to charge our customers. These proceedings typically involve multiple parties, including governmental bodies and officials, consumer advocacy groups, and various consumers of energy, who have differing concerns. Any change in rates, including changes in allowed rate of return, are subject to regulatory approval proceedings that can be contentious, lengthy, and subject to appeal. This may lead to uncertainty as to the ultimate result of those proceedings. Established rates are also subject to subsequent prudency reviews by state regulators, whereby various portions of rates could be adjusted, subject to refund or disallowed, including cost recovery mechanisms. The ultimate outcome and timing of regulatory rate proceedings could have a significant effect on our ability to recover costs or earn an adequate return. Adverse decisions in our proceedings could adversely affect our financial position, results of operations and cash flows.
There can be no assurance that regulators will approve the recovery of all costs incurred by our electric, natural gas and water companies, including costs for construction, operation and maintenance, and storm restoration. The inability to recover a significant amount of operating costs could have an adverse effect on a company’s financial position, results of operations and cash flows.
Changes to rates may occur at times different from when costs are incurred. Additionally, catastrophic events at other utilities could result in our regulators and legislators imposing additional requirements that may lead to additional costs for the companies.
In addition to the risk of disallowance of incurred costs, regulators may also impose downward adjustments in a company’s allowed ROE as well as assess penalties and fines. These actions would have an adverse effect on our financial position, results of operations and cash flows.
The FERC has jurisdiction over our transmission costs recovery and our allowed ROEs. Certain outside parties have filed four complaints against all electric companies under the jurisdiction of ISO-NE alleging that our allowed ROEs are unjust and unreasonable. An adverse decision in any of these four complaints could adversely affect our financial position, results of operations and cash flows.
FERC's policy has encouraged competition for transmission projects, even within existing service territories of electric companies. Implementation of FERC's goals, including within our service territories, may expose us to competition for construction of transmission projects, additional regulatory considerations, and potential delay with respect to future transmission projects, which may adversely affect our results of operations and lower rate base growth.
Changes in tax laws, as well as the potential tax effects of business decisions could negatively impact our business, results of operations (including our expected project returns from our planned offshore wind facilities), financial condition and cash flows.
Other than as set forth above, there have been no additional risk factors identified and no material changes with regard to the risk factors previously disclosed in our 20162020 Form 10-K.
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ITEM 2. | UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS |
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
The following table discloses purchases of our common shares made by us or on our behalf for the periods shown below. The common shares purchased consist of open market purchases made by the Company or an independent agent. These share transactions related to shares awarded under the Company's Incentive Plan and Dividend Reinvestment Plan and matching contributions under the Eversource 401k Plan.
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Period | Total Number of Shares Purchased | Average Price Paid per Share | Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs | Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans and Programs (at month end) |
July 1 - July 31, 2021 | — | | $ | — | | — | | — | |
August 1 - August 31, 2021 | 21 | | 89.05 | | — | | — | |
September 1 - September 30, 2021 | 2,377 | | 82.19 | | — | | — | |
Total | 2,398 | | $ | 82.25 | | — | | — | |
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Period | Total Number of Shares Purchased | Average Price Paid per Share | Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs | Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans and Programs (at month end) |
July 1 - July 31, 2017 | 99,090 |
| $ | 60.76 |
| — |
| — |
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August 1 - August 31, 2017 | 4,802 |
| 62.08 |
| — |
| — |
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September 1 - September 30, 2017 | 74,148 |
| 60.77 |
| — |
| — |
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Total | 178,040 |
| $ | 60.80 |
| — |
| — |
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ITEM 6. EXHIBITS
Each document described below is filed herewith, unless designated with an asterisk (*), which exhibits are incorporated by reference by the registrant under whose name the exhibit appears.
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| Exhibit No. | | Description |
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| Listing of Exhibits (Eversource) |
* | | | |
4 | | | ThirteenFifteenth Supplemental Indenture of Mortgage and Deed of Trust between Yankee Gas Services CompanyEversource Energy and The Bank of New York Mellon Trust Company, N.A., successor as Trustee, to The Bank of New York, as successor to Fleet National Bank (formerly known as The Connecticut National Bank), dated as of SeptemberAugust 1, 2017
2021, relating to $350 million aggregate principal amount of Floating Rate Senior Notes, Series T, Due 2023 and $300 million aggregate principal amount of Senior Notes, Series U, Due 2026 (Exhibit 4.1, Eversource Energy Current Report on Form 8-K filed on August 13, 2021, File No. 001-05324)
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| 31 | | | Ratio of Earnings to Fixed Charges |
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| | | Certification by the Chief Executive Officer of Eversource Energy pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 |
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| 31.1 | | | Certification by the Chief Financial Officer of Eversource Energy pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 |
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| 32 | | | Certification by the Chief Executive Officer and Chief Financial Officer of Eversource Energy pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 |
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| Listing of Exhibits (CL&P) |
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*31 | | | Supplemental Indenture (2017 Series A Bonds) between CL&P and Deutsche Bank Trust Company Americas, as Trustee dated as of August 1, 2017 (incorporated by reference to Exhibit 4.1, CL&P Current Report on Form 8-K filed August 23, 2017, File No. 000-00404)
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| | | Ratio of Earnings to Fixed Charges |
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| | | Certification by the Chairman of The Connecticut Light and Power Company pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 |
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| 31.1 | | | Certification by the Chief Financial Officer of The Connecticut Light and Power Company pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 |
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| 32 | | | Certification by the Chairman and the Chief Financial Officer of The Connecticut Light and Power Company pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 |
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| Listing of Exhibits (NSTAR Electric Company) |
* | 4 | | |
| | | Ratio of Earnings to Fixed Charges |
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31 | | | Certification by the Chairman of NSTAR Electric Company pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 |
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| 31.1 | | | Certification by the Chief Financial Officer of NSTAR Electric Company pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 |
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| 32 | | | Certification by the Chairman and the Chief Financial Officer of NSTAR Electric Company pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 |
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| Listing of Exhibits (PSNH) |
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31 | | | Ratio of Earnings to Fixed Charges |
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| | | Certification by the Chairman of Public Service Company of New Hampshire pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 |
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| 31.1 | | | Certification by the Chief Financial Officer of Public Service Company of New Hampshire pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 |
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32 | | | Certification by the Chairman and the Chief Financial Officer of Public Service Company of New Hampshire pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 |
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| Listing of Exhibits (WMECO) |
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| | | Ratio of Earnings to Fixed Charges |
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| | | Certification by the Chairman of Western Massachusetts Electric Company pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 |
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| | | Certification by the Chief Financial Officer of Western Massachusetts Electric Company pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 |
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| | | Certification by the Chairman and the Chief Financial Officer of Western Massachusetts Electric Company pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 |
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| Listing of Exhibits (Eversource, CL&P, NSTAR Electric, PSNH, WMECO)PSNH) |
| 101.INS | | |
| 101.INS | | Inline XBRL Instance Document - the instance document does not appear in the interactive data file because its XBRL tags are embedded within the inline XBRL document |
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| 101.SCH | | Inline XBRL Taxonomy Extension Schema |
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| 101.CAL | | Inline XBRL Taxonomy Extension Calculation |
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| 101.DEF | | Inline XBRL Taxonomy Extension Definition |
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| 101.LAB | | Inline XBRL Taxonomy Extension Labels |
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| 101.PRE | | Inline XBRL Taxonomy Extension Presentation |
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| 104 | The cover page from the Quarterly Report on Form 10-Q for the quarter ended September 30, 2021, formatted in Inline XBRL |
SIGNATURE
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
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| | EVERSOURCE ENERGY |
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November 3, 20175, 2021 | | By: | /s/ Jay S. Buth |
| | | Jay S. Buth |
| | | Vice President, Controller and Chief Accounting Officer |
SIGNATURE
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
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| | THE CONNECTICUT LIGHT AND POWER COMPANY |
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November 3, 20175, 2021 | | By: | /s/ Jay S. Buth |
| | | Jay S. Buth |
| | | Vice President, Controller and Chief Accounting Officer |
SIGNATURE
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
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| | NSTAR ELECTRIC COMPANY |
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November 3, 20175, 2021 | | By: | /s/ Jay S. Buth |
| | | Jay S. Buth |
| | | Vice President, Controller and Chief Accounting Officer |
SIGNATURE
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
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| | PUBLIC SERVICE COMPANY OF NEW HAMPSHIRE |
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November 3, 20175, 2021 | | By: | /s/ Jay S. Buth |
| | | Jay S. Buth |
| | | Vice President, Controller and Chief Accounting Officer |
SIGNATURE
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
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| | WESTERN MASSACHUSETTS ELECTRIC COMPANY |
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November 3, 2017 | | By: | /s/ Jay S. Buth |
| | | Jay S. Buth |
| | | Vice President, Controller and Chief Accounting Officer |