Exhibit 99.1
News Release
CONTACTS: Jeffrey R. Kotkin Barbara Nieman
Office: (860) 665-5154 (860) 665-3249
NU REPORTS THIRD QUARTER EARNINGS
BERLIN, Connecticut, October 27, 2003-Northeast Utilities
(NU-NYSE) today reported third quarter 2003 earnings of $44.0
million, or $0.35 per share fully diluted before the cumulative
effect of accounting change, compared with earnings of $48.6
million, or $0.38 per share fully diluted, in the third quarter
of 2002. After the cumulative effect of accounting change, NU
earned $39.2 million, or $0.31 a share, in the third quarter of
2003.
For the first nine months of 2003, NU earned $126.3
million, or $0.99 per share fully diluted after the cumulative
effect of accounting change, compared with earnings of $96.1
million, or $0.74 per share fully diluted, in the same period of
2002.
Michael G. Morris, NU chairman, president and chief
executive officer, said third-quarter earnings benefited from
improved results at NU's competitive energy businesses,
including better performance at NU's competitive hydroelectric
and pumped storage generating units, lower regulated company
controllable operation and maintenance expenses, and lower
interest costs. Those factors were offset by lower pension
income and the absence of earnings related to Seabrook.
Third quarter 2003 results included a $4.7 million
cumulative effect of accounting change related to the
consolidation of R. M. Services, Inc., a bill collection company
that was once a subsidiary of Yankee Energy System, Inc. NU
merged with Yankee Energy in March 2000 and sold R. M. Services
in June 2001, retaining a preferred equity interest. In
connection with the adoption of FASB Interpretation No. 46
"Consolidation of Variable Interest Entities," effective July 1,
2003, NU was required to consolidate R. M. Services Inc. into
NU's financial statements and to adjust its equity interest as a
cumulative effect of an accounting change.
Third quarter 2002 results included a net after-tax gain of
$14.5 million, or $0.11 per share, related to the elimination of
certain reserves associated with NU's former ownership share of
the Seabrook nuclear plant, which was sold in November 2002.
The following table reconciles third quarter and year-to-
date earnings on a reported and adjusted basis:
Third Year-to-Date
Quarter
2002 Reported EPS $0.38 $0.74
Significant
items Investment write-downs --- $0.08
Seabrook 2 items ($0.11) ($0.11)
2002 Adjusted EPS $0.27 $0.71
Lower regulated results ($0.09) ($0.26)
Reduced trading losses --- $0.14
Improved competitive
results $0.12 $0.34
Lower NU parent
interest
cost--net $0.02 $0.04
Lower share count $0.01 $0.02
Other $0.02 $0.04
2003 Adjusted EPS $0.35 $1.03
Significant R.M. Services
item accounting change ($0.04) ($0.04)
2003 Reported EPS $0.31 $0.99
NU's competitive energy businesses earned $6.9 million in
the third quarter of 2003, compared with a loss of $9.0 million
in the same period of 2002. Over the first nine months of 2003,
those businesses earned $24.0 million, compared with a loss of
$38.7 million in the first nine months of 2002. Morris said
better third-quarter operating performance at NU's competitive
businesses reflect better margins on wholesale and retail
contracts and better performance at Northeast Generation
Company, which owns nearly 1,300 megawatts of primarily
hydroelectric and pumped storage generating capacity in
Massachusetts and Connecticut.
"We continue to be pleased with the return to profitability
of our competitive energy businesses," Morris said. "We believe
that those businesses will earn between $0.20 a share and $0.25
a share in 2003."
Morris noted that earnings estimates for NU's competitive
energy businesses exclude any potential negative impact on
Select Energy from an ongoing dispute involving Select Energy's
contract to provide The Connecticut Light and Power Company
(CL&P) with 50 percent of its standard offer service through the
end of 2003. The dispute, now before an administrative law
judge at the Federal Energy Regulatory Commission (FERC),
relates to whether Select Energy or CL&P's retail customers are
responsible for an estimated $90 million of costs associated
with the implementation of locational marginal pricing in March
2003. A FERC decision is expected in 2004.
Morris said earnings at NU's regulated electric companies
fell due to lower pension income and the Seabrook sale.
Primarily as a result of an adjustment to unbilled electric
revenues, third quarter 2003 regulated retail electric sales
were up 4.9 percent in the third quarter of 2003 compared with
the same period of 2002. Absent that change, retail electric
sales would have been down 0.3 percent due to cooler summer
weather. The adjustment to unbilled revenues had a negative
impact on Yankee Gas Services Company, which serves
approximately 191,000 natural gas customers in Connecticut.
Together, the adjustments to unbilled revenues increased NU's
net income by approximately $6.7 million in the third quarter of
2003.
CL&P earned $29.0 million in the third quarter of 2003,
compared with $27.9 million in the same period of 2002. Through
September 30, 2003, CL&P earned $59.0 million, compared with
$58.2 million in the same period of 2002.
Public Service Company of New Hampshire (PSNH) earned $12.6
million in the third quarter of 2003, compared with $19.5
million in the same period of 2002. Through September 30, 2003,
PSNH earned $34.5 million, compared with $46.4 million in the
first three quarters of 2002. Morris said PSNH earnings
comparisons continue to be negatively affected by the sale of
Seabrook.
Western Massachusetts Electric Company (WMECO) earned $5.2
million in the third quarter of 2003, compared with $4.7 million
in the same period of 2002. Through September 30, 2003, WMECO
earned $13.9 million, compared with $26.9 million in the same
period of 2002. Morris said the significant decrease in WMECO
earnings is due primarily to the recognition of $13 million in
investment tax credits in the second quarter of 2002 as a result
of a regulatory decision.
Yankee Gas lost $9.6 million in the third quarter of 2003,
compared with a loss of $5.8 million in the third quarter of
2002. Through September 30, 2003, Yankee Gas earned $3.4
million, compared with earnings of $6.1 million in the same
period of 2002. Lower Yankee Gas earnings are primarily due to
lower revenues in the third quarter as a result of a downward
adjustment in estimated unbilled revenues.
Morris said NU has narrowed its forecasted earnings in 2003
from between $1.10 per share and $1.30 per share to between
$1.20 per share and $1.30 per share, including the $0.20-$0.25
per share from competitive businesses noted above. Those ranges
exclude any potential losses at Select Energy due to the ongoing
dispute over locational marginal pricing.
NU also has established an earnings range of between $1.20
per share and $1.40 per share for 2004. That range reflects
earnings of between $1.08 and $1.20 per share at NU's regulated
businesses and between $0.22 and $0.30 per share at NU's
competitive businesses. The 2004 earnings range also reflects
$0.10 per share of parent company after-tax expenses, primarily
related to interest expense. NU has approximately 127 million
common shares outstanding.
Morris said NU's 2004 earnings range is dependent on a
number of factors, including the outcome of state rate cases
involving CL&P and PSNH and a FERC rate case involving NU's
transmission tariffs. A final decision from the Connecticut
Department of Public Utility Control is due December 15, 2003
with new rates effective January 1, 2004. The filing of a PSNH
rate case is expected by the end of this year with new rates to
be effective February 1, 2004. NU's subsidiaries filed the
transmission rate case with the FERC on August 26, 2003, and a
final decision is expected in 2004. NU's regulated companies
provide electric service to more than 1.8 million retail
electric customers in Connecticut, New Hampshire, and
Massachusetts and natural gas service to 191,000 customers in
Connecticut.
Morris said that competitive business earnings in 2004 are
heavily dependent on Select Energy's ability to renew and secure
new profitable electricity and natural gas supply contracts in
the Northeast United States.
Northeast Utilities is a Fortune 500 diversified energy
company located in Connecticut with operations throughout the
Northeast. Through its competitive and regulated subsidiaries,
NU provides Energy for a Changing World, with a full range of
products and services to millions of residential and business
customers from Maine to Maryland. From delivering electricity
and natural gas, to marketing energy commodities, to operating
and maintaining power plant facilities, NU is committed to
safety, reliability and expanding consumers' energy options.
For more information on Northeast Utilities and its
subsidiaries, visit the NU family of Web sites at www.nu.com.
This press release includes forward-looking statements
within the meaning of the Private Securities Litigation Reform
Act of 1995, which are statements of future expectations and not
facts. Actual results or developments might differ materially
from those included in the forward-looking statements because of
factors such as competition and industry restructuring, changes
in economic conditions, changes in weather patterns, changes in
laws, regulations or regulatory policies, developments in legal
or public policy doctrines, technological developments,
volatility in electric and natural gas commodity markets, and
other presently unknown or unforeseen factors. Other risk
factors are detailed from time to time in NU's reports to the
Securities and Exchange Commission.
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NOTE: NU will webcast an investor meeting this morning at
7:30 a.m. Eastern Daylight Time. The call can be accessed
through NU's website at www.nu.com.