Eversource 2002 Annual Report Download - page 32

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Operating Revenues
Total revenues decreased by $752 million or 13 percent in the year
2002, compared with the year 2001, primarily due to lower competitive
energy revenues ($377 million after intercompany eliminations) and
lower regulated subsidiaries revenues due to lower wholesale and
transmission revenues ($240 million after intercompany eliminations),
and lower regulated retail revenues ($135 million).
The competitive energy companies’revenue decrease in 2002 is primarily
due to lower wholesale marketing revenues from Select Energy full
requirements contracts, primarily due to lower energy prices. The
decrease in regulated wholesale revenues is primarily due to lower
sales associated with purchased-power contracts ($91 million), lower
PSNH wholesale sales ($94 million), primarily due to a reduction in
prices and a lower volume of bilateral transactions and sales of excess
capacity and energy, and the 2001 revenue associated with the sale of
Millstone output ($42 million). The regulated retail revenue decrease is
primarily due to the May 2001 rate decrease for PSNH ($22 million),
and the 2002 decrease in the WMECO standard offer energy rate
($77 million), lower Yankee revenue due to lower purchased gas
adjustment clause revenue ($59 million) and a combination of the April
2002 rate decrease and lower gas sales ($27 million), partially offset by
an increase resulting from the collection of CL&P deferred fuel costs
($25 million) and higher retail electric sales ($25 million). Regulated
retail electric kWh sales increased by 1.3 percent, and firm natural gas
volume sales decreased by 4.3 percent in 2002.
Total revenues increased by $92 million or 2 percent in the year 2001,
compared with the year 2000, primarily due to higher revenues from
the competitive energy subsidiaries ($164 million after intercompany
eliminations), higher revenues from Yankee Gas ($127 million) and
higher regulated retail electric revenues ($33 million), partially offset
by lower wholesale regulated revenues ($190 million) and lower
transmission revenues ($26 million). The competitive energy
subsidiaries’ increase is primarily due to higher revenues from Select
Energy as a result of new wholesale energy contracts. The Yankee Gas
increase was primarily due to a full year of revenue in 2001 versus ten
months post merger in 2000. The regulated retail increase is primarily
due to a 1.7 percent increase in sales ($41 million), the increase in
WMECO’s standard offer service rate ($59 million) and the recovery of
previously deferred fuel costs for CL&P ($19 million), partially offset by
the 5 and 11 percent rate decreases for PSNH that were effective
October 1, 2000 and May 1, 2001, respectively ($89 million). Wholesale
revenues were lower primarily due to the sale of Millstone at the end
of the first quarter of 2001.
Fuel, Purchased and Net Interchange Power
Fuel, purchased and net interchange power expense decreased by $610
million or 17 percent in the year 2002, primarily due to lower wholesale
sales from the competitive businesses ($301 million after intercompany
eliminations), lower Yankee expense primarily due to lower gas prices
($69 million), and lower purchased-power costs for the regulated
subsidiaries ($240 million net of eliminations).
Fuel, purchased and net interchange power expense increased in 2001,
primarily due to higher purchased energy and capacity costs as a result
of higher sales for Select Energy ($347 million, which reflects eliminations
of purchases from other NU subsidiaries), higher expense for Yankee
primarily due to a full year in 2001 and higher gas prices ($83 million),
and higher expense for WMECO primarily due to the increased cost
of the standard offer supply ($70 million), partially offset by lower
wholesale cost for CL&P and PSNH ($173 million, net of eliminations).
Other Operation and Maintenance
Other operation and maintenance expenses (O&M) decreased $16
million in 2002, primarily due to lower expenses associated with the
regulated businesses ($56 million), partially offset by higher competitive
companies’ expenses associated with Select Energy’s costs of goods
sold and the expansion of new businesses ($42 million). The regulated
O&M decrease is primarily due to lower nuclear expenses as a result
of the sale of the Millstone units at the end of the first quarter in 2001
($55 million).
Other O&M expenses decreased $90 million in 2001, primarily due to
lower nuclear expenses ($133 million) as a result of the sale of the
Millstone units at the end of the first quarter of 2001, partially offset by
higher O&M expenses for the competitive energy subsidiaries, primarily
due to an acquisition made by NGS ($49 million).
Depreciation
Depreciation increased $4 million in 2002, primarily due to higher
expense resulting from higher regulated plant balances ($11 million),
partially offset by the Millstone unit decommissioning expenses recorded
in 2001 ($8 million).
Depreciation expense decreased $39 million in 2001, primarily due to
the elimination of decommissioning expenses as a result of the sale of
the Millstone units at the end of the first quarter of 2001 ($25 million)
and the buydown of the Seabrook Power Contracts ($14 million).
Amortization
Amortization decreased $521 million in 2002, primarily due to the
amortization in 2001 related to the gain on sale of the Millstone units
($642 million) and lower amortization related to recovery of the
Millstone investment ($45 million), partially offset by the higher PSNH
amortization in 2002 primarily related to the gain on the sale of
Seabrook ($155 million) and higher amortization related to the regulated
companies recovery of stranded costs ($23 million).
Amortization of regulatory assets, net increased in 2001, primarily due
to the amortization in 2001 related to the gain on sale of the Millstone
units by CL&P and WMECO ($642 million) and higher amortization
related to restructuring.
Taxes Other Than Income Taxes
Taxes other than income taxes increased $8 million in 2002, primarily
due to CL&P’s payments to the Town of Waterford for its loss of property
tax revenue resulting from electric utility restructuring ($15 million) and
the favorable 2001 property tax settlement with the City of Meriden for
CL&P and Yankee, which decreased 2001 taxes ($15 million). These
increases were partially offset by the 2002 recognition of a Connecticut
sales and use tax audit settlement for the years 1993 through 2001
($8 million), lower gross earnings taxes ($6 million), lower New
Hampshire franchise taxes ($3 million) and lower property taxes
($4 million).
Taxes other than income taxes decreased by $19 million in 2001,
primarily due to the reduction in property tax for CL&P and WMECO