Eversource 2006 Annual Report Download - page 66

64 NU 2006 ANNUAL REPORT
At December 31, 2005, NU had state net operating loss carry forwards
of $371.6 million that expire between December 31, 2007 and
December 31, 2025. At December 31, 2005, NU also had state credit
carry forwards of $21.2 million that expire on December 31, 2010.
H. Other Investments
NU maintains certain other investments. These investments include
Acumentrics Corporation (Acumentrics), a developer of fuel cell and
power quality equipment, and BMC Energy LLC (BMC), an operator
of renewable energy projects.
Acumentrics: Management determined that the value of NU’s
investment in Acumentrics debt securities declined in 2004 and that
the decline was other than temporary. Total pre-tax investment
write-downs of $9.1 million were recorded in 2004 to reduce the
carrying value of the investment. In July of 2006, Acumentrics was
recapitalized, and NU’s debt securities were converted into equity
shares. NU’s cost method investment in Acumentrics totaled
$0.6 million at December 31, 2006 and is included in deferred debits
and other assets – other on the accompanying consolidated
balancesheets.
BMC: In 2005 and 2004, based on revised information that negatively
impacted undiscounted cash flow projections and fair value estimates,
management determined that the fair value of the note receivable from
BMC had declined and that the notewas impaired. As a result, NU
recorded pre-tax investment write-downs of $0.8 million and $2.5 million
in 2005 and 2004, respectively. The remaining note receivable from
BMC, which is included in deferred debits and other assets – other on
the accompanying consolidated balance sheets, was $0.5 million at
both December 31, 2006 and 2005.
RMS: NU had an investment in R.M. Services, Inc. (RMS), a provider of
consumer collection services. On June 30, 2004, NU sold virtually all of
the assets and liabilities of RMS for $3 million and recorded a pre-tax
gain on the sale totaling $0.8 million.
The Acumentrics and BMC investment write-downs and the RMS gain
areincluded in other income, net on the accompanying consolidated
statements of income/(loss). For further information, see Note 1R,
“Summary of Significant Accounting Policies – Other Income, Net,”
tothe consolidated financial statements.
I. Property, Plant and Equipment and Depreciation
The following table summarizes NU’s investments in utility plant
at December 31, 2006 and 2005 and the average depreciable life
at December 31, 2006:
Average At December 31,
Depreciable Life2006 2005
(Years) (Millions of Dollars)
Distribution 30.5 $5,950.4 $5,617.4
Transmission 48.8 1,460.9 1,084.3
Generation 30.4 577.2 503.0
Competitive energy 28.9 17.9 908.8
Other 14.9 281.5 254.6
Total property, plant and equipment 8,287.9 8,368.1
Less: Accumulated depreciation (2,615.1) (2,551.3)
Net property, plant and equipment 5,672.8 5,816.8
Construction work in progress 569.4 600.4
Total property, plant and equipment, net $6,242.2 $6,417.2
The decrease in the competitive energy property, plant and equipment
in 2006 was due to the sale of NGC and Mt. Tom.
The provision for depreciation on utility assets is calculated using the
straight-line method based on the estimated remaining useful lives
of depreciable plant in-service, adjusted for salvage value and removal
costs, as approved by the appropriate regulatory agency, where
applicable. Depreciation rates are applied to plant-in-service from
the time it is placed in service. When plant is retired from service,
the original cost of the plant, including costs of removal less salvage,
is charged to the accumulated provision for depreciation. Cost of
removal is classified as a regulatory liability. The depreciation rates
for the several classes of electric utility plant-in-service are equivalent
to a composite rate of 3.2 percent in both 2006 and 2005, and
3.3 percent in 2004.
J. Jointly Owned Electric Utility Plant
Regional Nuclear Companies: At December 31, 2006, CL&P, PSNH
and WMECO own common stock in three regional nuclear companies
(Yankee Companies). Each of the Yankee Companies owns a single
nuclear generating plant which is being decommissioned. NU’s
ownership interests in the Yankee Companies at December 31, 2006,
which are accounted for on the equity method, are 49 percent of
CYAPC, 38.5 percent of the YAEC, and 20 percent of the MYAPC. The
total carrying value of NU’s ownership interests in CYAPC, MYAPC and
YAEC, which is included in deferred debits and other assets – other on
the accompanying consolidated balance sheets and the Utility Group –
electric distribution reportable segment, totaled $9.9 million and
$28.6 million at December 31, 2006 and 2005, respectively. The
decrease in the carrying value at December 31, 2006 is primarily related
to the repurchase of CYAPC’s stock owned by CL&P, PSNH and
WMECO in the amount of $13.6 million in the fourth quarter of 2006.
Earnings related to these equity investments are included in other
income, net on the accompanying consolidated statements of income/
(loss). For further information, see Note 1R, “Summary of Significant
Accounting Policies – Other Income, Net,” to the consolidated financial
statements.
For further information, see Note 8E, “Commitments and
Contingencies – Deferred Contractual Obligations,” tothe
consolidated financial statements.
Hydro-Quebec: NU Parent has a 22.7 percent equity ownership
interest in two companies that transmit electricity imported from the
Hydro-Quebec system in Canada. NU’s investment, which is included
in deferred debits and other assets – other on the accompanying
consolidated balance sheets, totaled $7.9 million and $8.5 million at
December 31, 2006 and 2005, respectively.