Eversource 2003 Annual Report Download - page 42

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Special Purpose Entities: In addition to SPEs that are described in the
“Off-Balance Sheet Arrangements” section of this Management’s
Discussion and Analysis, during 2001 and 2002, to facilitate the issuance
of rate reduction bonds and certificates intended to finance certain
stranded costs, NU established four SPEs: CL&P Funding LLC, PSNH
Funding LLC, PSNH Funding LLC 2 and WMECO Funding LLC (the funding
companies). The funding companies were created as part of state-sponsored
securitization programs. The funding companies are restricted from
engaging in non-related activities and are required to operate in a
manner intended to reduce the likelihood that they would be included in
their respective parent company’s bankruptcy estate if they ever became
involved in a bankruptcy proceeding. The funding companies and the
securitization amounts are consolidated in the accompanying consolidated
financial statements.
During 1999, SESI established an SPE, HEC/Tobyhanna Energy Project, LLC
(HEC/Tobyhanna), in connection with a federal energy savings performance
project located at the United States Army Depot in Tobyhanna,
Pennsylvania. HEC/Tobyhanna sold $26.5 million of Certificates related to
the project and used the funds to repay SESI for the costs of the project.
HEC/Tobyhanna’s activities and Certificates are included in NU’s consoli-
dated financial statements.
For further information regarding the matters in this “Critical Accounting
Policies and Estimates” section see Note 1, “Summary of Significant
Accounting Policies,” Note 3, “Derivative Instruments, Market Risk and
Risk Management,” Note 4, “Employee Benefits,” Note 5, “Goodwill and
Other Intangible Assets,” and Note 7C, “Commitments and Contingencies
— Environmental Matters,” to the consolidated financial statements.
Other Matters
Commitments and Contingencies: For further information regarding
other commitments and contingencies, see Note 7, “Commitments and
Contingencies,” to the consolidated financial statements.
Contractual Obligations and Commercial Commitments: Information
regarding NU’s contractual obligations and commercial commitments at
December 31, 2003 is summarized through 2008 and thereafter as follows:
Rate reduction bond amounts are non-recourse to NU, have no required
payments over the next five years and are not included in this table.
The Utility Group’s standard offer service contracts and default service
contracts and NU’s expected contribution to the PBOP Plan in 2004 of
$41.3 million are also not included in this table. For further information
regarding NU’s contractual obligations and commercial commitments,
see the Consolidated Statements of Capitalization and related footnotes,
and Note 2, “Short-Term Debt,” Note 9, “Leases,” and Note 7F,
“Commitments and Contingencies — Long-Term Contractual
Arrangements,” to the consolidated financial statements.
Forward Looking Statements: This discussion and analysis includes
forward looking statements, which are statements of future expectations
and not facts including, but not limited to, statements regarding future
earnings, refinancings, regulatory proceedings, the use of proceeds from
restructuring, and the recovery of operating costs. Words such as
estimates, expects, anticipates, intends, plans, and similar expressions
identify forward looking statements. Actual results or outcomes could
differ materially as a result of further actions by state and federal
regulatory bodies, competition and industry restructuring, changes in
economic conditions, changes in weather patterns, changes in laws,
developments in legal or public policy doctrines, technological develop-
ments, volatility in electric and natural gas commodity markets, and
other presently unknown or unforeseen factors.
Website: Additional financial information is available through NU’s
website at www.nu.com.
(Millions of Dollars) 2004 2005 2006 2007 2008 Thereafter
Notes payable to banks (a) $ 105.0 $ — $ — $ — $ — $ —
Long-term debt (a) 64.9 92.1 27.8 9.6 161.2 1,941.7
Capital leases (b) (c) 3.1 3.1 2.9 2.6 2.3 20.1
Operating leases (c) (d) 21.9 19.6 17.6 14.2 12.0 27.4
Long-term contractual arrangements (c) (d) 546.3 528.3 522.4 430.0 301.7 1,759.7
Select Energy purchase agreements (c) (d) (e) 4,471.0 761.5 142.9 84.3 84.7 275.4
Totals $5,212.2 $1,404.6 $713.6 $540.7 $561.9 $4,024.3
(a) Included in NU’s debt agreements are usual and customary positive, negative and financial covenants. Non-compliance with certain covenants, for example the timely
payment of principal and interest, may constitute an event of default, which could cause an acceleration of principal in the absence of receipt by the company of a waiver
or amendment. Such acceleration would change the obligations outlined in the table of contractual obligations and commercial commitments.
(b) The capital lease obligations include imputed interest of $18.2 million.
(c) NU has no provisions in its capital or operating lease agreements or agreements related to its long-term contractual arrangements or Select Energy purchase commitments
that could trigger a change in terms and conditions, such as acceleration of payment obligations.
(d) Amounts are not included on NU’s consolidated balance sheets.
(e) Select Energy’s purchase agreement amounts can exceed the amount expected to be reported in fuel, purchased and net interchange power because energy trading
purchases are classified in revenues.