SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549-1004 [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 1995 ------------- OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to ------- ------- Commission File Number 0-404 ----- THE CONNECTICUT LIGHT AND POWER COMPANY --------------------------------------- (Exact name of registrant as specified in its charter) CONNECTICUT 06-0303850 ----------- ---------- (State or other jurisdiction (I.R.S. Employer of incorporation or organization) Identification No.) SELDEN STREET, BERLIN, CONNECTICUT 06037-1616 ------------------------------------------------------------------ (Address of principal executive offices) (Zip Code) (203) 665-5000 -------------- (Registrant's telephone number, including area code) Not Applicable -------------- (Former name, former address and former fiscal year, if changed since last report) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No --- --- Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date. Class Outstanding at July 31, 1995 ----- ---------------------------- Common Shares, $10.00 par value 12,222,930 shares THE CONNECTICUT LIGHT AND POWER COMPANY AND SUBSIDIARIES TABLE OF CONTENTS Page No. -------- Part I.Financial Information Item 1. Financial Statements Consolidated Balance Sheets - June 30, 1995 and December 31, 1994 2 Consolidated Statements of Income - Three and Six Months Ended June 30, 1995 and 1994 4 Consolidated Statements of Cash Flows - Six Months Ended June 30, 1995 and 1994 5 Notes to Consolidated Financial Statements 6 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 9 Part II. Other Information Item 1. Legal Proceedings 15 Item 4. Submission of Matters to a Vote of Security Holders 15 Item 5. Other Information 16 Item 6. Exhibits and Reports on Form 8-K 17 Signatures 18 PART I. FINANCIAL INFORMATION THE CONNECTICUT LIGHT AND POWER COMPANY AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (Unaudited) June 30, December 31, 1995 1994 ------------- ------------- (Thousands of Dollars) ASSETS ------ Utility Plant, at original cost: Electric................................................ $ 6,099,589 $ 6,063,179 Less: Accumulated provision for depreciation......... 2,295,752 2,194,314 ------------- ------------- 3,803,837 3,868,865 Construction work in progress........................... 87,823 99,993 Nuclear fuel, net....................................... 160,898 164,795 ------------- ------------- Total net utility plant............................. 4,052,558 4,133,653 ------------- ------------- Other Property and Investments: Nuclear decommissioning trusts, at market............... 211,567 171,950 Investments in regional nuclear generating companies, at equity................................... 54,598 54,952 Other, at cost.......................................... 14,867 14,742 ------------- ------------- 281,032 241,644 ------------- ------------- Current Assets: Cash and special deposits............................... 1,245 2,017 Receivables, net........................................ 171,222 192,926 Accounts receivable from affiliated companies........... 3,700 9,367 Accrued utility revenues................................ 82,200 90,475 Fuel, materials, and supplies, at average cost.......... 68,252 64,003 Recoverable energy costs, net--current portion.......... 23,565 10,561 Prepayments and other................................... 37,654 43,654 ------------- ------------- 387,838 413,003 ------------- ------------- Deferred Charges: Regulatory assets: Income taxes,net...................................... 926,671 949,134 Deferred costs--nuclear plants........................ 50,210 101,632 Unrecovered contract obligation--Yankee Atomic Electric Company..................................... 94,747 100,003 Deferred demand-side-management costs................. 109,341 116,133 Recoverable energy costs, net......................... 101,679 61,040 Cogeneration costs.................................... 75,354 36,821 Other................................................. 60,869 45,571 Unamortized debt expense................................ 15,447 8,396 Other................................................... 9,243 10,427 ------------- ------------- 1,443,561 1,429,157 ------------- ------------- Total Assets........................................ $ 6,164,989 $ 6,217,457 ============= ============= See accompanying notes to consolidated financial statements. THE CONNECTICUT LIGHT AND POWER COMPANY AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (Unaudited) June 30, December 31, 1995 1994 ------------- ------------- (Thousands of Dollars) CAPITALIZATION AND LIABILITIES ------------------------------ Capitalization: Common stock--$10 par value. Authorized 24,500,000 shares; outstanding 12,222,930 shares................................................. $ 122,229 $ 122,229 Capital surplus, paid in................................ 637,014 632,117 Retained earnings....................................... 776,713 765,724 ------------- ------------- Total common stockholder's equity.............. 1,535,956 1,520,070 Preferred stock not subject to mandatory redemption............................................. 116,200 166,200 Preferred stock subject to mandatory redemption......... 158,750 226,250 Long-term debt.......................................... 1,812,919 1,815,579 ------------- ------------- Total capitalization........................... 3,623,825 3,728,099 ------------- ------------- Minority Interest in Consolidated Subsidiary.............. 100,000 - ------------- ------------- Obligations Under Capital Leases.......................... 129,997 120,268 ------------- ------------- Current Liabilities: Notes payable to banks.................................. 44,000 76,000 Notes payable to affiliated company..................... 104,250 92,750 Commercial paper........................................ 10,000 10,000 Long-term debt and preferred stock--current portion................................................ 12,469 11,861 Obligations under capital leases--current portion................................................ 48,098 55,701 Accounts payable........................................ 87,764 102,837 Accounts payable to affiliated companies................ 18,391 43,033 Accrued taxes........................................... 1,963 26,413 Accrued interest........................................ 30,786 30,682 Other................................................... 23,091 22,828 ------------- ------------- 380,812 472,105 ------------- ------------- Deferred Credits: Accumulated deferred income taxes....................... 1,553,358 1,544,021 Accumulated deferred investment tax credits............. 146,193 150,087 Deferred contract obligation--Yankee Atomic Electric Company....................................... 94,747 100,003 Other................................................... 136,057 102,874 ------------- ------------- 1,930,355 1,896,985 ------------- ------------- Commitments and Contingencies (Note 4)<F4> Total Capitalization and Liabilities........... $ 6,164,989 $ 6,217,457 ============= ============= See accompanying notes to consolidated financial statement THE CONNECTICUT LIGHT AND POWER COMPANY AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME (Unaudited) Three Months Ended Six Months Ended June 30, June 30, ------------------- ----------------------- 1995 1994 1995 1994 --------- --------- ----------- ----------- (Thousands of Dollars) Operating Revenues................................. $525,147 $551,135 $1,126,341 $1,170,950 --------- --------- ----------- ----------- Operating Expenses: Operation -- Fuel, purchased and net interchange power..... 123,008 137,249 282,923 288,378 Other......................................... 146,411 143,232 291,655 283,435 Maintenance...................................... 43,765 48,024 85,528 91,920 Depreciation..................................... 58,600 55,695 119,337 112,591 Amortization of regulatory assets, net........... 9,298 30,012 18,404 59,822 Federal and state income taxes................... 39,449 37,601 83,151 99,404 Taxes other than income taxes.................... 40,100 41,132 86,015 88,414 --------- --------- ----------- ----------- Total operating expenses................... 460,631 492,945 967,013 1,023,964 --------- --------- ----------- ----------- Operating Income................................... 64,516 58,190 159,328 146,986 --------- --------- ----------- ----------- Other Income: Deferred nuclear plants return--other funds...... 1,154 3,376 2,397 6,938 Equity in earnings of regional nuclear generating companies........................... 1,989 1,940 3,061 3,651 Other, net....................................... 862 3,562 (2,254) 5,451 Income taxes--credit............................. 2,161 1,531 5,623 3,315 --------- --------- ----------- ----------- Other income, net.......................... 6,166 10,409 8,827 19,355 --------- --------- ----------- ----------- Income before interest charges............. 70,682 68,599 168,155 166,341 --------- --------- ----------- ----------- Interest Charges: Interest on long-term debt....................... 31,489 29,395 62,444 60,416 Other interest................................... 1,556 2,020 2,639 2,256 Deferred nuclear plants return--borrowed funds... (452) (1,978) (894) (4,083) --------- --------- ----------- ----------- Interest charges, net...................... 32,593 29,437 64,189 58,589 --------- --------- ----------- ----------- Net Income......................................... $ 38,089 $ 39,162 $ 103,966 $ 107,752 ========= ========= =========== =========== See accompanying notes to consolidated financial statements. THE CONNECTICUT LIGHT AND POWER COMPANY AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) Six Months Ended June 30, ----------------------- 1995 1994 ----------- ----------- (Thousands of Dollars) Operating Activities: Net Income................................................ $ 103,966 $ 107,752 Adjustments to reconcile to net cash from operating activities: Depreciation............................................ 119,337 112,591 Deferred income taxes and investment tax credits, net... 33,554 12,124 Deferred nuclear plants return, net of amortization..... 51,056 40,346 Recoverable energy costs, net of amortization........... (53,643) 5,646 Deferred demand-side management, net of amortization.... 6,792 3,687 Other sources of cash................................... 61,052 8,927 Other uses of cash...................................... (66,164) (28,901) Changes in working capital: Receivables and accrued utility revenues................ 35,646 49,354 Fuel, materials, and supplies........................... (4,249) (3,767) Accounts payable........................................ (39,715) (66,591) Accrued taxes........................................... (24,450) (12,409) Other working capital (excludes cash)................... 6,367 (2,682) ----------- ----------- Net cash flows from operating activities.................... 229,549 226,077 ----------- ----------- Financing Activities: Issuance of long-term debt................................ - 395,000 Issuance of Monthly Income Preferred Securities..................................... 100,000 - Net (decrease) increase in short-term debt................ (20,500) 145,250 Reacquisitions and retirements of long-term debt.......... (6,669) (600,213) Reacquisitions and retirements of preferred stock......... (117,500) - Cash dividends on preferred stock......................... (13,405) (11,970) Cash dividends on common stock............................ (79,572) (79,450) ----------- ----------- Net cash flows used for financing activities................ (137,646) (151,383) ----------- ----------- Investment Activities: Investment in plant: Electric utility plant.................................. (59,635) (70,129) Nuclear fuel............................................ (7,006) 7,684 ----------- ----------- Net cash flows used for investments in plant.............. (66,641) (62,445) Other investment activities, net.......................... (26,034) (13,928) ----------- ----------- Net cash flows used for investments......................... (92,675) (76,373) ----------- ----------- Net Decrease In Cash For The Period......................... (772) (1,679) Cash and special deposits - beginning of period............. 2,017 2,283 ----------- ----------- Cash and special deposits - end of period................... $ 1,245 $ 604 =========== =========== See accompanying notes to consolidated financial statements. THE CONNECTICUT LIGHT AND POWER COMPANY AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) 1. General The accompanying unaudited consolidated financial statements should be read in conjunction with the Annual Report of The Connecticut Light and Power Company (the company or CL&P), a wholly owned subsidiary of Northeast Utilities (NU) on Form 10-K for the year ended December 31, 1994 (1994 Form 10-K). In the opinion of the company, the accompanying financial statements contain all adjustments necessary to present fairly the financial position as of June 30, 1995, the results of operations for the three and six months ended June 30, 1995 and 1994, and the statements of cash flows for the six months ended June 30, 1995 and 1994. The results of operations for the three and six months ended June 30, 1995 and 1994 are not necessarily indicative of the results expected for a full year. Certain reclassifications of prior period data have been made to conform with the current period presentation. 2. Accounting Change The company's accounting policies and the accompanying consolidated financial statements conform to generally accepted accounting principles applicable to rate-regulated enterprises and reflect the effects of the ratemaking process in accordance with Statement of Financial Accounting Standards No. 71, "Accounting for Certain Types of Regulation" (SFAS 71). In the event that any portion of the company's operations is no longer subject to the provisions of SFAS 71, as a result of a change in the cost-of-service based regulatory structure or the effects of competition, the company would be required to write off related regulatory assets and liabilities. In addition, the company would be required to determine any impairment to other assets and write down these assets to their fair value. Statement of Financial Accounting Standards No. 121, "Accounting for the Impairment of Long-Lived Assets and Long-Lived Assets to be Disposed Of" (SFAS 121), issued in March 1995 and effective January 1, 1996, establishes accounting standards for the impairment of long-lived assets. SFAS 121 requires that regulatory assets which are no longer probable of recovery through future revenues be charged to earnings. Based upon the current regulatory environment in the company's operating service area, it is not expected that SFAS 121 would have a material impact on the financial position or results of operations of the company upon adoption. This conclusion may change in the future as competitive factors influence wholesale and retail pricing in the electric utility industry, or if the cost-of-service based regulatory structure were to change. 3. Derivative Financial Instruments CL&P uses fuel-swap agreements with financial institutions to hedge against well-defined fuel-price risk created by negotiated energy contracts. CL&P does not use these agreements for trading purposes. Those fuel swap agreements minimize exposure associated with rising fuel prices and effectively fix CL&P's cost of fuel for these negotiated energy contracts. Under the swap agreements, CL&P exchanges monthly payments based on the differential between a fixed or variable price for the associated fuel. These swap agreements have been made with various financial institutions, each of which is rated "A" or better by Standards & Poor's rating group. CL&P is exposed to credit risk on its fuel swaps if the counterparties fail to perform their obligations. However, management anticipates that the counterparties will be able to fully satisfy their obligations under the contracts. As of August 10, 1995, CL&P had outstanding fuel-swap agreements with a total notional value of approximately $257 million. As of July 31, 1995, the fuel- swaps outstanding on that date had a negative mark-to-market position of approximately $3 million. For further information on Derivative Financial Instruments, see the Notes to Consolidated Financial Statements in CL&P's March 31, 1995 Form 10-Q and in its 1994 Form 10-K. 4. Commitments and Contingencies Construction Program: For information regarding CL&P's construction program, see the Notes to Consolidated Financial Statements in CL&P's 1994 Form 10-K. Nuclear Performance: For information regarding the performance of CL&P's nuclear units, see "Management's Discussion and Analysis of Financial Condition and Results of Operations" in this Form 10-Q and the Notes to Consolidated Financial Statements in CL&P's March 31, 1995 Form 10-Q, and the Notes to Consolidated Financial Statements in CL&P's 1994 Form 10-K. Environmental Matters: For information regarding environmental matters, see the Notes to Consolidated Financial Statements in CL&P's 1994 Form 10-K. Nuclear Insurance Contingencies: For information regarding nuclear insurance contingencies, see the Notes to Consolidated Financial Statements in CL&P's 1994 Form 10-K. Purchased Power Arrangements: For information regarding purchased power arrangements, see the Notes to Consolidated Financial Statements in CL&P's 1994 Form 10-K. Hydro-Quebec: For information regarding Hydro-Quebec, see the Notes to Consolidated Financial Statements in CL&P's 1994 Form 10-K. 5. Workforce Reduction For information regarding the NU system's workforce reduction program, see "Management's Discussion and Analysis of Financial Condition and Results of Operations," in this Form 10-Q. CONNECTICUT LIGHT AND POWER COMPANY AND SUBSIDIARIES Management's Discussion and Analysis of Financial Condition and Results of Operations This section contains management's assessment of CL&P's (the company) financial condition and the principal factors having an impact on the results of operations. The company is a wholly owned subsidiary of Northeast Utilities (NU). This discussion should be read in conjunction with the company's consolidated financial statements and footnotes and Management's Discussion and Analysis in the 1994 Form 10-K and the First Quarter 1995 Form 10-Q. FINANCIAL CONDITION Overview The company's net income decreased to $104 million for the six months ended June 30, 1995, from $108 million for the same period in 1994. Net income decreased slightly to $38 million for the three months ended June 30, 1995, from $39 million for the same period in 1994. The decrease in net income from 1994 for the six-month period is primarily attributable to lower retail kilowatt-hour sales as a result of mild weather in the first quarter of 1995, higher fuel and purchased-power costs, net of fuel recoveries, lower wholesale revenues and lower deferred nuclear plants return, partially offset by the continued deferral of cogeneration expenses and increased revenues from regulatory decisions. CL&P's retail kilowatt-hour sales through June 1995 were down by 3.3 percent from 1994, which had colder than normal weather in the first quarter. Workforce Reductions In July 1995, NU announced a program aimed at reducing the nuclear organization's total workforce by approximately 250 employees by the end of January 1996. An early retirement program is available to approximately 155 eligible employees of NU's subsidiaries, who will be at least age 55 with ten years of service as of January 1, 1996. The employees have until September 15, 1995, to make their decisions. The balance of the workforce reduction will be achieved through attrition and layoffs. The NU system-wide estimated cost of the early retirements and layoffs could be in the range of $10 to $12 million. Retail Wheeling and Utility Restructuring See "Part II. Item 5. Other Information" for updated information concerning retail wheeling and utility restructuring. Regulatory Matters On June 30, 1995, the Department of Public Utility Control (DPUC) approved a transaction between the company and the O'Brien EPA cogeneration facility (O'Brien) which allows CL&P to terminate its existing agreement to purchase power from O'Brien and, in turn, enter into an agreement to purchase an equivalent amount of power at lower rates from Citizens Lehman Power LP. CL&P will apply 100 percent of the savings from the new agreements to reduce the balance of deferred cogeneration expenses ($73 million as of June 30, 1995). The savings are estimated to be $59 million over 15 years with $39 million of the savings anticipated in the first 5 years. The transaction is expected to close in August 1995. Nuclear Performance The composite capacity factor of the five nuclear generating units that the NU system operates -- including the Connecticut Yankee nuclear unit (CY) -- was 61.7 percent for the six months ended June 30, 1995, as compared with 61.0 percent for the same period in 1994. The low capacity factor in 1995 is primarily the result of the extended refueling and maintenance outage for Millstone 2. The Millstone Unit 2 refueling and maintenance outage extended into July 1995 in order to complete previously identified work. The Nuclear Regulatory Commission completed its assessment of the unit's readiness to restart in late June, and in a letter dated July 20, 1995, concluded that the deficiencies responsible for the extended shutdown had been addressed and sufficient progress had been demonstrated to support safe restart of the unit. Additional work identified during start-up testing was completed, and the unit returned to service on August 4, 1995. However, on August 8, 1995, the unit shut down due to a pipe break in the turbine building, and the unit's return to service is under evaluation. Total replacement power costs attributable to the extension of the outage for CL&P are in the range of $8 million per month. In addition, operation and maintenance (O&M) costs to be incurred during the outage are estimated to be $56 million, an increase of $29 million as a result of the extended outage. O&M costs associated with the refueling outage are deferred and amortized through rates for CL&P. The recovery of the replacement power and O&M costs is subject to prudence reviews in Connecticut. CL&P has a mechanism that has been in operation since 1979 designed to recover or refund certain non-nuclear fuel costs if the nuclear units do not operate at a predetermined capacity factor (the Generation Utilization Adjustment Clause or GUAC). On June 12, 1995, CL&P won its appeal in Connecticut Superior Court of the GUAC disallowance (approximately $8 million) that occurred for the 1992-1993 GUAC year. The DPUC, the Connecticut Office of Consumer Counsel(OCC) and the Connecticut Industrial Energy Consumers have subsequently appealed that decision to the Connecticut Appellate Court. The disallowed portion of the 1993-1994 GUAC balance (approximately $8 million) is also under appeal in Superior Court. However, a decision has not been issued in that case. In August 1995, CL&P filed its annual GUAC filing with the DPUC. Subject to regulatory approval, CL&P proposed to recover the GUAC amount for the period over eighteen months rather than twelve months. The GUAC deferral for the GUAC year ended July 31, 1995 was approximately $98 million. However, in calculating the amount to be recovered, CL&P is required by a previous order of the DPUC which is under appeal in the proceeding mentioned in the previous paragraph) to reduce the GUAC deferral by the amount of the base fuel "overrecoveries." The overrecovery amount for this GUAC period is estimated to be $25 million. The amount proposed to be billed to customers over the eighteen-month period commencing September 1, 1995, is, therefore, approximately $73 million. As of June 30, 1995, CL&P has reserved approximately $25 million for "overrecoveries" against the deferred GUAC costs. While the company is unable to predict the outcome of possible prudence reviews of its nuclear operations or the GUAC overrecoveries issues, management believes that the ultimate resolution of these matters will not have a material adverse impact on the company's financial position or the results of its operations. In June 1995, Maine Yankee Atomic Power Company (Maine Yankee) began an operation to sleeve all 17,000 tubes in the plant's three steam generators. Maine Yankee expects that the plant will return to service near the end of 1995. The approximate cost to Maine Yankee of the sleeving operation has been determined to be $40 million. The company will be billed by Maine Yankee for its pro rata share (12 percent) of these costs over the next six months, under its power contract. In addition, CL&P will incur additional costs for replacement power (estimated at $600,000 per month) until Maine Yankee returns to service. LIQUIDITY AND CAPITAL RESOURCES Cash provided from operations increased approximately $3 million for the first six months of 1995, as compared to 1994. Cash used for financing activities decreased approximately $14 million primarily due to higher reaquisitions and retirements of long-term debt in 1994, net of the change in short-term debt. Cash used for investments increased approximately $16 million primarily due to higher investments in the decommissioning trust in 1995. RESULTS OF OPERATIONS Comparison of the Second Quarter of 1995 with the Second Quarter ---------------------------------------------------------------- of 1994 ------- Operating revenues decreased approximately $26 million in the second quarter of 1995, as compared with the same period in 1994. The components of the change in operating revenues are as follows: Changes in Operating Revenues Increase/(Decrease) ----------------------------- ------------------- (Millions of Dollars) Regulatory decisions $ 13 Fuel and purchased power cost recoveries (22) Wholesale revenues (9) Other (8) ---- Total revenue change $(26) ==== Revenues related to regulatory decisions increased primarily because of the retail rate increase in July 1994. Fuel and purchased power cost recoveries decreased primarily due to lower fuel prices in 1995. Wholesale revenues decreased primarily due to capacity sales contracts that expired at the end of 1994. Retail kilowatt-hour sales were unchanged from 1994 for the quarter. Fuel, purchased, and net interchange power expense decreased approximately $14 million in the second quarter of 1995, as compared with 1994, primarily due to the timing in the recognition of fuel expenses under the provisions of CL&P's fuel adjustment clauses, partially offset by a higher level of energy purchases from other utilities as a result of the extended Millstone 2 outage and a $7 million increase in the reserve for overrecoveries against deferred GUAC costs. Amortization of regulatory assets, net decreased approximately $21 million in the second quarter of 1995, as compared with 1994, primarily because of the deferral of cogeneration expenses of $6 million a month which began in July 1994. Deferred nuclear plants return decreased approximately $4 million in the second quarter of 1995, as compared with 1994, primarily because the last 5 percent of the company's Millstone 3 investment was phased into rates on January 1, 1995. Other income decreased approximately $3 million in the first six months of 1995, as compared with 1994, primarily because of the amortization in 1994 of the customer portion of a 1993 property tax disallowance. Comparison of the First Six Months of 1995 with the First Six ------------------------------------------------------------- Months of 1994 -------------- Operating revenues decreased approximately $45 million in the first six months of 1995, as compared with 1994. The components of the change in operating revenues are as follows: Changes in Operating Revenues Increase/(Decrease) ----------------------------- ------------------ (Millions of Dollars) Regulatory decisions $ 32 Fuel and purchased power cost recoveries (34) Retail Sales volume (29) Wholesale revenues (12) Other (2) ---- Total revenue change $(45) ==== Revenues related to regulatory decisions increased primarily because of the retail rate increase for CL&P in July 1994 and higher conservation recoveries. Fuel and purchased-power cost recoveries decreased primarily due to lower fuel prices, lower retail sales in 1995 and lower revenues from sales to non-affiliated utilities. Retail sales volume decreased 3.3 percent for the first six months of 1995 from 1994 sales levels primarily due to mild weather in the first quarter of 1995. Wholesale revenues decreased primarily due to capacity sales contracts that expired at the end of 1994. Fuel, purchased, and net interchange power expense decreased approximately $5 million in the first six months of 1995, as compared with 1994, primarily due to the timing in the recovery of fuel expenses under the provisions of CL&P's fuel adjustment clauses, partially offset by a higher level of energy purchases from other utilities as a result of the extended Millstone 2 outage and a $12 million increase in the reserve for overrecoveries against deferred GUAC costs. Other operation expense increased approximately $8 million and maintenance expense decreased approximately $6 million. The increase in operation expense is due primarily to higher capacity charges from the regional nuclear units primarily due to Maine Yankee, which is in an extended refueling outage, and Vermont Yankee, which began an outage in March 1995 and higher conservation expenses. The decrease in maintenance expense is due primarily to lower maintenance costs at the nuclear and fossil units. Amortization of regulatory assets, net decreased approximately $41 million in the first six months of 1995, as compared with 1994, primarily because of the deferral of CL&P cogeneration expenses of $6 million a month which began in July 1994. Federal and state income taxes decreased approximately $19 million in the first six months of 1995, as compared with 1994, primarily because of lower book taxable income and a first quarter adjustment to the tax accrual for a favorable tax ruling. Deferred nuclear plants return decreased approximately $8 million in the first six months of 1995, as compared with 1994, primarily because the last 5 percent of CL&P's Millstone 3 investment was phased into rates on January 1, 1995. Other income decreased approximately $8 million in the first six months of 1995, as compared with 1994, primarily because of the write-down of CL&P's investment in Millstone 3 as a result of a settlement agreement with the town of Wallingford, Connecticut, and the amortization in 1994 of the customer portion of a 1993 property tax disallowance. PART II. OTHER INFORMATION Item 1. Legal Proceedings 1. On August 3, 1995, CL&P filed a petition for declaratory rulings with the DPUC to determine whether Texas-Ohio Power Company (Texas-Ohio), which has built a small cogeneration plant in Manchester, Connecticut, can sell electricity from that plant to two CL&P retail customers in that town. On that same date, CL&P also sought in Hartford Superior Court a temporary restraining order, preliminary injunction and permanent injunction against Texas-Ohio selling electricity to CL&P's retail customers. Item 4. Submission of Matters to a Vote of Security Holders At the Annual Meeting of Stockholders of CL&P held on June 12, 1995, stockholders voted to fix the number of directors for the ensuing year at nine. The vote fixing the number of directors at nine was 12,222,930 shares in favor, representing 100 percent of the issued and outstanding shares of common stock of CL&P. At the Annual Meeting, the following nine directors were elected, each by a vote of 12,222,930 shares in favor, to serve on the Board of Directors for the ensuing year: Robert G. Abair, Robert E. Busch, William B. Ellis, Bernard M. Fox, William T. Frain, Jr., Cheryl W. Grise, John B. Keane, Hugh C. MacKenzie, and John F. Opeka. Item 5. Other Information 1. On June 20, 1995, the staff of the Securities and Exchange Commission recommended "conditional repeal" of the Public Utility Holding Company Act of 1935 and substantial loosening of rules presently restricting NU's capital- raising and diversification activities. Repeal is subject to approving legislation in Congress, which has yet to be introduced. Comments on the rules are due in September. For additional information on this matter, see "Business - Public Utility Regulation" in CL&P's 1994 Form 10-K. 2. On July 14, 1995, the Connecticut Department of Public Utility Control (DPUC) issued its final decision in the Connecticut restructuring docket. The decision stressed the importance of retaining the benefits of the existing electric system, which it described as the "least costly and most reliable in the world." The decision established thirteen principles to guide the restructuring process in Connecticut. The decision also offered 25 recommendations for restructuring, which are generally consistent with NU's "Path to a Competitive Future" restructuring proposal. One key conclusion was that retail access could result in benefits to customers under certain circumstances, but addressing the many transition issues must precede such access. In addition, the decision concluded that utilities are entitled to a reasonable opportunity to recover costs potentially stranded by the evolution toward competitive markets. For additional information on this matter, see "Business - Subsequent Events" in CL&P's 1994 Form 10-K. 3. In June 1995, the State of South Carolina withdrew from membership in the Southeast Interstate Low-Level Radioactive Waste Management Compact and re-opened its Barnwell low-level radioactive waste (LLRW) disposal facility to low-level waste generators from states situated outside that compact's region. NU is arranging for disposal of its LLRW at Barnwell, and shipments are presently scheduled to begin in mid-August. NU continues to explore other LLRW disposal options. For additional information on this matter, see "Business - Electric Operations - Nuclear Generation - Low Level Radioactive Waste" in CL&P's 1994 Form 10-K. 4. On June 22, 1995, The United States Court of Federal Claims held in Yankee ------ Atomic Electric Company v. The United States that as applied to Yankee Atomic -------------------------------------------- Electric Company (YAEC), the Uranium Enrichment Decontamination and Decommissioning Fund, which pursuant to the 1992 Energy Policy Act imposes an annual "special assessment" on domestic utilities, is an unlawful add-on to the bargained-for contract price for enriched uranium. As a result, the federal government must refund the approximately $3.0 million that YAEC has paid into the fund since its inception. NU is evaluating the applicability of this decision to the $21 million that the System companies have already paid into the fund, and whether this alters the System companies' obligation to pay such special assessments in the future. This decision is subject to appeal. For additional information on this proceeding, see "Business - Electric Operations - Nuclear Generation - Decommissioning" in CL&P's 1994 Form 10-K. 5. On August 1, 1995, pursuant to a management succession plan that was introduced on January 29, 1992, William B. Ellis resigned as Chairman of NU's Board of Trustees, and Bernard M. Fox assumed that position. Mr. Ellis also resigned from the Board of Directors of CL&P and certain other NU subsidiaries. For more information regarding this matter, see "Item 5. Other Events" in CL&P's Form 8-K, dated January 29, 1992. Item 6. Exhibits and Reports on Form 8-K (a) Listing of Exhibits: Exhibit Number Description ------- ----------- 27 Financial Data Schedule (b) Reports on Form 8-K: No reports on Form 8-K have been filed during SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. THE CONNECTICUT LIGHT AND POWER COMPANY --------------------------------------- Registrant Date August 14, 1995 By /s/ Bernard M. Fox -------------------- ------------------------------ Bernard M. Fox Vice Chairman and Director Date August 14, 1995 By /s/ John W. Noyes -------------------- ----------------------------- John W. Noyes Vice President and Controller