Eversource 2005 Annual Report Download - page 45

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(Loss)/Income from Discontinued Operations
Beginning with the quarter ended September 30, 2005, the operations
of SESI, SECI-NH, Woods Network and Woods Electrical were presented
as discounted operations as a result of meeting certain criteria requiring
this presentation. Under this presentation, revenues and expenses of
these businesses are included in the (loss)/income from discontinued
operations on the consolidated statements of income. See Note 4,
“Assets Held for Sale and Discontinued Operations,” to the
consolidated financial statements for a description and explanation
of the discontinued operations.
Cumulative Effects of Accounting Changes,
Net of Tax Benefits
Acumulative effect of accounting change, net of tax benefit ($1 million)
was recorded in the fourth quarter of 2005 in connection with the
adoption of FIN 47, which required NU to recognize a liability for the
fair value of an ARO.
2004 Compared to 2003
Operating Revenues
Operating revenues increased $599 million in 2004 due to higher revenues
from NU Enterprises ($369 million), higher electric distribution revenues
($172 million), higher gas distribution revenues ($46 million) and higher
regulated transmission revenues ($13 million).
The NU Enterprises’ revenue increase of $369 million is primarily due
to higher revenues for the retail marketing business ($197 million), the
2003 revenue reduction recorded for the settlement of a wholesale
power dispute associated with CL&P standardoffer supply ($56 million),
and an increased level of competitive energy services business ($24
million). Higher revenues for the retail marketing business resulted
from higher electric volumes ($119 million), higher gas prices ($48
million), higher electric prices ($28 million), and higher gas volumes
($2 million). The competitive energy services business revenue
increase resulted from higher revenues from a cogeneration project
and higher volumes in the mechanical contracting group.
The electric distribution revenue increase of $172 million is primarily
due to non-earnings components of CL&P, PSNH and WMECO retail
rates ($141 million). The distribution component of these companies
and the retail transmission component of CL&P and PSNH that flow
through to earnings increased $33 million, primarily due to the CL&P
retail transmission rate increase effective in January of 2004. The non-
earnings components increase of $141 million is primarily due to the
pass through of energy supply costs ($269 million) and CL&P FMCC
($151 million), partially offset by the resolution of SMD cost recovery
which was being collected from CL&P customers in 2003 and early
2004 and subsequently refunded beginning in late 2004 ($71 million),
lower CL&P EAC revenue as a result of the end of EAC billings in 2003
($44 million), lower transition cost recoveries for CL&P and WMECO
($44 million) and lower CL&P system benefit cost recoveries ($31 million).
Regulated retail sales increased 0.9 percent in 2004 compared with
2003. On a weather adjusted basis, retail sales increased 1.9 percent
as a result of improved economic conditions and increasing use per
customer. In addition, electric wholesale revenues decreased $72 million,
primarily due to lower Utility Group sales related to IPP contracts and
the expiration of long-termcontracts.
The higher gas distribution revenue of $46 million is primarily due to
the recovery of increased gas costs ($17 million) and the absence of
the 2003 unbilled revenue adjustment ($28 million).
Transmission revenues were higher primarily due to the October 2003
implementation of the transmission rate case approved at the FERC.
Fuel, Purchased and Net Interchange Power
Fuel, purchased and net interchange power expense increased $496
million in 2004, primarily due to higher wholesale costs at NU Enterprises
($224 million) and higher purchased power costs for the Utility Group
($272 million). The increase for the Utility Group is primarily due to an
increase in the standard offer supply costs for CL&P ($152 million) and
WMECO ($16 million), higher Yankee Gas expenses ($33 million) primarily
due to increased gas prices, higher expenses for PSNH ($10 million)
primarily due to higher energy and capacity purchases, partially offset
by the 2003 CL&P recovery of certain fuel costs ($44 million).
Other Operation
Other operation expenses increased $104 million in 2004, primarily due
to higher expenses for NU Enterprises resulting from the increased
volume in the contracting business ($44 million), higher CL&P RMR
costs and other power pool related expenses ($71 million), higher
PSNH fossil production expense ($6 million), and higher distribution
expenses ($4 million), partially offset by lower Conservation and Load
Management (C&LM) expense ($20 million).
Maintenance
Maintenance expense increased $13 million in 2004, primarily due to
higher expenses for NU Enterprises at its generating plants ($5 million),
the absence of the 2003 positive resolution of the Millstone use of
proceeds docket ($5 million) and higher electric distribution expenses
($5 million).
Depreciation
Depreciation increased $21 million in 2004 due to higher Utility Group
plant balances and higher depreciation rates at CL&P resulting from
the distribution rate case decision effective in January of 2004.
Amortization
Amortization decreased $54 million in 2004 primarily due to lower
Utility Group recovery of stranded costs and a decrease in amortization
expense resulting from the amortization of GSC over-recoveries
allowed in the CL&P distribution rate case effective in Januaryof 2004
($29 million).
Amortization of Rate Reduction Bonds
Amortization of rate reduction bonds increased $12 million in 2004 due
to the repayment of a higher principal amount as compared to 2003.
Taxes Other Than Income Taxes
Taxes other than income taxes increased $11 million in 2004 primarily
due to higher payroll taxes ($4 million), higher sales tax ($3 million) and
higher local property taxes ($2 million).