NU Logo Northeast
Utilities System 107 Selden Street, Berlin, CT 06037
Northeast Utilities Service Company
P.O. Box 270
Hartford, CT 06141-0270
Charles W. Shivery
Chairman of the Board, President,
and Chief Executive Officer
Exhibit 20
September 30, 2004
Dear fellow Northeast Utilities shareholders:
Enclosed with this letter is your September 30 dividend check or
a statement concerning the reinvestment of your September 30
dividend in additional Northeast Utilities shares. You will
notice that the quarterly dividend has been raised to $0.1625 per
share, an increase of 8.3 percent from the quarterly
dividends you received earlier this year. This increase was
announced at our May annual meeting and represents the fourth
consecutive year that the Northeast Utilities Board of Trustees
has raised the common dividend, effective in the third quarter of
the year. We are pleased to report that the rate of our dividend
increases over the past four years has been among the highest in
the utility industry and underscores our confidence in our
business plan and growth prospects.
Since it has been nearly six months since you received the 2003
annual report, we thought it would be helpful if we took this
opportunity to update you on 2004 developments at Northeast
Utilities.
Financial Performance
In the first half of 2004, NU earned $90.3 million, or $0.71 per
share, up from the $87.1 million, or $0.69 per share, we earned
in the same period of 2003. Earnings have improved in both our
regulated and our competitive businesses. Our four regulated
utilities earned $80.5 million in the first half of 2004,
compared with $73.6 million in the first half of 2003. This
improvement is due primarily to higher electric rate levels that
were implemented at the beginning of this year by The Connecticut
Light and Power Company (CL&P), our largest regulated business.
Our competitive energy businesses earned $21.7 million in the
first half of 2004, compared with $17.1 million in the first half
of 2003. We continue to benefit from increasing profitability at
our wholesale and retail merchant energy business. These
improvements have been partially offset by write-downs of about
$4 million of certain noncore investments.
Regulatory Update
This year also has been marked by the settlement of many
regulatory issues. This is important to many investors who cite
regulatory certainty as a key factor in their analysis of utility
stocks. Here is a list of some of the accomplishments to date:
- In May, we received final New Hampshire Public
Utilities Commission (NHPUC) and local approvals of a
$75 million conversion of an older coal-burning
generating unit in Portsmouth, New Hampshire to burn
wood chips. The project is expected to provide
additional earnings to NU shareholders, reduce the
unit's air emissions considerably, and provide an
economic stimulus to the town of Portsmouth and to the
New Hampshire wood industry.
- On August 4, The Connecticut Department of Public Utility
Control (DPUC) approved revisions to the CL&P distribution
rate decision it issued in December 2003. The revisions will
benefit CL&P's earnings in 2004 through 2007.
- On September 2, the NHPUC approved the settlement of a
distribution rate case involving Public Service Company of New
Hampshire (PSNH). The settlement provided for rate increases
of $3.5 million on October 1, 2004 and $10 million on June 1,
2005 and will help us offset rising pension and depreciation
costs.
- On September 3, the DPUC approved a proposal by Yankee Gas
Services Co. to build a $108 million, 1.2 billion cubic foot
liquefied natural gas storage facility on property Yankee owns
in Waterbury, Connecticut. This facility will provide Yankee
Gas and its customers with significant additional resources to
meet high demands during the coldest winter days.
- On September 15, the Federal Energy Regulatory Commission
approved the settlement of an electric transmission rate case
that we had reached with Connecticut, New Hampshire and
Massachusetts regulators. This settlement gives us greater
certainty over the timing of rate increases to support our
proposed $1 billion-plus expansion of our electric
transmission system.
Con Edison Litigation
We regularly receive inquiries concerning our litigation against
Con Edison over the failed merger of the two companies. The most
immediate issue being reviewed by the courts at this time is a
lower court decision that NU shareholders of March 5, 2001, when
Con Edison said it would not complete the merger on previously
agreed upon terms, should benefit from any recoveries from Con
Edison. We believe current shareholders should benefit. At this
time, we cannot estimate when a trial will begin in this case.
Opportunity to Buy or Sell NU Shares
In 2002, we authorized Bank of New York, our stock transfer
agent, and D. F. King, a shareholder services firm, to undertake
a program for those NU shareholders owning fewer than 100 shares.
That program allowed registered shareholders to either purchase
enough NU shares to round up their holdings to 100 shares or to
sell out their holdings completely. Nearly 8,000 NU shareholders
took advantage of that program to either buy or sell shares while
paying relatively modest commissions. Due to that program's
success, we will be offering a similar opportunity this fall
through the Bank of New York and D. F. King, and those NU
shareholders holding fewer than 100 shares will receive a mailing
about it shortly. This program is completely voluntary. For
those shareholders with more than 100 shares, you will be able to
continue to buy and sell NU shares through the Bank of New York.
You may obtain a brochure describing the terms and conditions of
this Direct Purchase and Sale Plan by calling (800) 999-7269.
I would like to conclude this letter on a personal note. It has
been six months since NU's Board of Trustees entrusted me with
the title of Chairman, President, and Chief Executive Officer. I
continue to be impressed with the energy, expertise and
commitment of NU's 6,800 employees and with our company's
business prospects. I thank you for your continued investment in
Northeast Utilities and look forward to continuing to provide you
with a very competitive return on your investment dollars.
Very truly yours,
/s/ Charles W. Shivery