Eversource 2004 Annual Report Download - page 65

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T. Restricted Cash – LMP Costs
Restricted cash — LMP costs represents incremental locational
marginal pricing (LMP) cost amounts that were collected by CL&P and
deposited into an escrow account.
At December 31, 2003, restricted cash — LMP costs totaled $93.6 million,
and an additional $30 million was deposited in 2004. During the third
quarter of 2004, $83 million of the amount was paid to CL&P’s standard
offer suppliers in accordance with the FERC approved Standard Market
Design (SMD) settlement. The remaining $41 million was released from
the escrow account in the third quarter of 2004 and was refunded to CL&P’s
customers as a credit on bills from September to December of 2004.
U. Excise Taxes
Certain excise taxes levied by state or local governments are collected
by NU from its customers. These excise taxes are accounted for on a
gross basis with collections in revenues and payments in expenses. For
the years ended December 31, 2004, 2003 and 2002, gross receipts taxes,
franchise taxes and other excise taxes of $97 million, $96.8 million, and
$88.8 million, respectively, are included in operating revenues and taxes
other than income taxes on the accompanying consolidated statements
of income.
V. Other Income/(Loss)
The pre-tax components of NU’s other income/(loss) items are as follows:
For the Years Ended December 31,
(Millions of Dollars) 2004 2003 2002
Other Income:
Seabrook-related gains $ — $ — $ 38.7
Investment income 16.5 17.1 25.4
CL&P procurement fee 11.7 — —
AFUDC — equity funds 3.8 6.5 5.8
Gain on sale of RMS 0.8 ——
Other 20.5 18.0 39.1
Total Other Income 53.3 41.6 109.0
Other Loss:
Investment write-downs (13.8) (1.4) (18.4)
Charitable donations (3.8) (8.4) (3.7)
Costs not recoverable from
regulated customers (5.6) (10.5) (2.7)
Other (15.6) (21.7) (40.4)
Total Other Loss (38.8) (42.0) (65.2)
Totals $ 14.5 $ (0.4) $ 43.8
Investment income includes equity in earnings of regional nuclear
generating and transmission companies of $2.6 million in 2004,
$4.5 million in 2003 and $11.2 million in 2002. Equity in earnings relates
to NU’s investment in the Yankee Companies and the Hydro-Quebec system.
None of the amounts in either other income — other or other loss —
other are individually significant.
W. Supplemental Cash Flow Information
For the Years Ended December 31,
(Millions of Dollars) 2004 2003 2002
Cash paid during the year for:
Interest, net of
amounts capitalized $227.7 $241.3 $259.9
Income taxes $ 74.3 $248.3 $114.4
X. Marketable Securities
NU currently maintains two trusts that hold marketable securities. The
trusts are used to fund NU’s Supplemental Executive Retirement Plan
(SERP) and WMECO’s prior spent nuclear fuel liability. NU’s marketable
securities are classified as available-for-sale, as defined by SFAS No. 115,
“Accounting for Certain Investments and Debt and Equity Securities.”
Unrealized gains and losses are reported as a component of accumulated
other comprehensive income in the consolidated statements of
shareholders’ equity. Realized gains and losses are included in other
income/(loss), in the consolidated statements of income.
For information regarding marketable securities, see Note 8,
“Marketable Securities,” to the consolidated financial statements.
Y. Counterparty Deposits
Balances collected from counterparties resulting from Select Energy’s
credit management activities totaled $57.7 million at December 31, 2004
and $46.5 million at December 31, 2003. These amounts are recorded
as current liabilities and included as counterparty deposits on the
accompanying consolidated balance sheets. To the extent Select Energy
requires collateral from counterparties, cash is received as a part of the
total collateral required. The right to receive such cash collateral in an
unrestricted manner is determined by the terms of Select Energy’s
agreements. Key factors affecting the unrestricted status of a portion of
this cash collateral include the financial standing of Select Energy and
of NU as its credit supporter.
Z. Provision for Uncollectible Accounts
NU maintains a provision for uncollectible accounts to record its receivables
at an estimated net realizable value. This provision is determined based
upon a variety of factors, including applying an estimated uncollectible
account percentage to each receivables aging category, historical collection
and write-off experience and management’s assessment of individual
customer collectibility. Management reviews at least quarterly the
collectibility of the receivables, and if circumstances change, collectibility
estimates are adjusted accordingly. Receivable balances are written-off
against the provision for uncollectible accounts when these balances
are deemed to be uncollectible.
2. Short-Term Debt
Limits: The amount of short-term borrowings that may be incurred by
NU and its operating companies is subject to periodic approval by either
the SEC under the 1935 Act or by the respective state regulators. On
June 30, 2004, the SEC granted authorization allowing NU, CL&P, PSNH,
WMECO, and Yankee Gas to incur total short-term borrowings up to a
maximum of $450 million, $450 million, $100 million, $200 million, and
$150 million, respectively, through June 30, 2007. The SEC also granted
authorization for borrowing through the NU Money Pool (Pool).
The charter of CL&P contains preferred stock provisions restricting the
amount of unsecured debt that CL&P may incur. At meetings in November
2003, CL&P obtained authorization from its stockholders to issue
unsecured indebtedness with a maturity of less than 10 years in excess
of the 10 percent of total capitalization limitation in CL&P’s charter,
provided that all unsecured indebtedness would not exceed 20 percent
of total capitalization for a ten-year period expiring March 2014. On
March 18, 2004, the SEC approved this change in CL&P’s charter. As
of December 31, 2004, CL&P is permitted to incur $394.8 million of
additional unsecured debt.