Eversource 2002 Annual Report Download - page 52

Pension income attributable to earnings is as follows:
For the Years Ended December 31,
(Millions of Dollars) 2002 2001 2000
Pension income before
settlements, curtailments
and special termination benefits $(73.4) $(101.0) $(90.9)
Net pension income
capitalized as utility plant (a) 22.0 30.3 27.3
Net pension income before
settlements, curtailments
and special termination benefits (51.4) (70.7) (63.6)
Settlements, curtailments and
special termination benefits
reflected in earnings —7.5 —
Total pension income
included in earnings $(51.4) $(63.2) $(63.6)
(a) Net pension income capitalized as utility plant was calculated utilizing an
average of 30 percent.
On November 1, 2002, CL&P, NAEC and certain other joint owners
consummated the sale of their ownership interests in Seabrook to a
subsidiary of FPL. NAESCO, a wholly owned subsidiary of NU, ceased
having operational responsibility for Seabrook at that time. NAESCO
employees were transferred to FPL, which significantly reduced the
expected service lives of NAESCO employees who participated in the
Plan. As a result, NAESCO recorded pension curtailment income of
$29.1 million in 2002. As the curtailment related to the operation of
Seabrook, NAESCO credited the joint owners of Seabrook with this
amount. CL&P recorded its $1.2 million share of this income as a
reduction to stranded costs, and as such, there was no impact on 2002
CL&P earnings. PSNH was credited with its $10.5 million share of this
income through the Seabrook Power Contracts with NAEC. PSNH also
credited this income as a reduction to stranded costs, and as such,
there was no impact on 2002 PSNH earnings.
Additionally, in conjunction with the divestiture of its generation
assets, NU recorded $1.2 million in curtailment income in 2002 and
$6.6 million of curtailment income and $0.4 million of special termination
benefits income in 2000.
Effective February 1, 2002, certain CL&P and utility group employees
who were displaced were eligible for a Voluntary Retirement Program
(VRP). The VRP supplements NU’s Plan and provides special provisions.
Eligible employees include non-bargaining unit employees or employees
belonging to a collective bargaining unit that has agreed to accept the
VRP who are active participants in NU’s Plan at January 1, 2002, and
that have been displaced as part of the reorganization between January 22,
2002 and March 2003. Eligible employees received a special retirement
benefit under the VRP whose value was roughly equivalent to a multiple
of base pay based on years of credited service. During 2002, NU recorded
an expense of $8.1 million associated with special pension termination
benefits related to the VRP. NU believes that the cost of the VRP is
probable of recovery through regulated utility rates, and accordingly,
the $8.1 million was recorded as a regulatory asset with no impact
on 2002 earnings.
In conjunction with the Voluntary Separation Program (VSP) that was
announced in December 2000, NU recorded $26 million in settlement
income and $64.7 million in curtailment income in 2001. The VSP was
intended to reduce the generation-related support staff between March
1, 2001 and February 28, 2002, and was available to non-bargaining
unit employees who, by February 1, 2002, were at least age 50, with a
minimum of five years of credited service, and at December 15, 2000,
were assigned to certain groups and in eligible job classifications.
One component of the VSP included special pension termination benefits
equal to the greater of five years added to both age and credited service
of eligible participants or two weeks of pay for each year of service
subject to a minimum level of 12 weeks and a maximum of 52 weeks for
eligible participants. The special pension termination benefits expense
associated with the VSP totaled $93.3 million in 2001. The net total of the
settlement and curtailment income and the special termination benefits
expense was $2.6 million, of which $7.5 million of costs were included in
operating expenses, $5.1 million was deferred as a regulatory liability
and is expected to be returned to customers and $0.2 million was billed
to the joint owners of Millstone and Seabrook.
Postretirement Benefits Other Than Pensions (PBOP): NU’s subsidiaries
also provide certain health care benefits, primarily medical and dental,
and life insurance benefits through a benefit plan to retired employees.
These benefits are available for employees retiring from NU who have
met specified service requirements. For current employees and certain
retirees, the total benefit is limited to two times the 1993 per retiree
health care cost. These costs are charged to expense over the estimated
work life of the employee. NU annually funds postretirement costs
through external trusts with amounts that have been rate-recovered
and which also are tax deductible.
In 2002, NU recorded PBOP special termination benefits income of
$1.2 million related to the sale of Seabrook. CL&P and PSNH recorded
their shares of this curtailment as reductions to stranded costs. In 2001,
NU recorded PBOP curtailment expense and special termination benefits
expense totaling $11.9 million in connection with the VSP. This amount
was recorded as a regulatory asset and collected through regulated utility
rates in 2002.
Additionally, in conjunction with the divestiture of its generation assets,
NU recorded $0.4 million in special termination benefits income
in 2000.
In 2002, the PBOP plan was amended to change the claims experience
basis, to increase minimum retiree contributions and to reduce the cap
on the company’s subsidy to the dental plan. These amendments
resulted in a $34.2 million decrease in NU’s benefit obligation under
the PBOP plan at December 31, 2002.
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