Eversource 2006 Annual Report Download - page 68

66 NU 2006 ANNUAL REPORT
Areconciliation of the beginning and ending carrying amounts of Utility
Group AROs is as follows:
(Millions of Dollars) 2006
Balance at beginning of year $(60.2)
Liabilities incurred during the period (5.7)
Liabilities settled during the period 1.6
Accretion (0.6)
Change in assumptions 3.7
Revisions in estimated cash flows 1.5
Balance at end of year $(59.7)
The following table presents the ARO liabilities as of the dates
indicated, as if FIN 47 had been applied for all periods affected
(millions of dollars):
At At
December 31, January 1,
2005 2004 2004
Utility Group $(60.2) $(53.5) $(52.7)
NU Enterprises (1.7) (1.7) (1.6)
The AROs outstanding related to NU Enterprises at December 31, 2005
were included in the sale of NGC and Mt. Tom generation assets.
The net negative effect on earnings, as if FIN 47 had been applied for
all periods affected, is as follows for the years ended December 31, 2005
and 2004 (millions of dollars):
2005 2004
Net (loss)/income as reported before
cumulativeeffect of accounting
change related to FIN 47 $(252.5) $116.6
Effect of application of FIN 47 (0.1) (0.1)
Pro forma net (loss)/income before
cumulative effect of accounting
change related to FIN 47 $(252.6) $116.5
EPS:
Basic and diluted – as reported $ (1.92) $ 0.91
Basic and diluted – pro forma $ (1.92) $ 0.91
N. Materials and Supplies
Materials and supplies include materials purchased primarily for
construction, operation and maintenance (O&M) purposes. Materials
and supplies are valued at the lower of average cost or market.
O. Cash and Cash Equivalents
Cash and cash equivalents include cash on hand and short-term
cash investments that are highly liquid in nature and have original
maturities of three months or less. At the end of each reporting period,
overdraft amounts are reclassified from cash and cash equivalents
to accounts payable.
P. Special Deposits
Aportion of special deposits represent amounts Select Energy has
on deposit with unaffiliated counterparties and brokerage firms in the
amounts of $48.5 million and $103.8 million at December 31, 2006 and
2005, respectively. SESI special deposits totaling $10.2 million were
included in assets held for sale on the accompanying consolidated
balance sheet at December 31, 2005.
The company also had amounts on deposit related to four special
purpose entities used to facilitate the issuance of rate reduction bonds
and certificates. These amounts, which totaled $102.5 million and
$55.5 million at December 31, 2006 and 2005, respectively, are
included in deferred debits and other assets – other on the
accompanying consolidated balance sheets.
Q. Other 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, 2006, 2005 and 2004, gross receipts
taxes, franchise taxes and other excise taxes of $114.1 million,
$112.7 million and $97 million, respectively, are included in operating
revenues and taxes other than income taxes on the accompanying
consolidated statements of income/(loss). Certain sales taxes are also
collected by the Utility Group from its customers as agent for state and
local governments and are recorded on a net basis with no impact on
the accompanying consolidated statements of income/(loss).
R. Other Income, Net
The pre-tax components of other income/(loss) items are as follows:
For the Years Ended December 31,
(Millions of Dollars) 2006 2005 2004
Other Income:
Investment income $24.9 $19.1 $12.2
CL&P procurement fee 11.0 17.8 11.7
AFUDC – equity funds 13.6 12.3 3.8
Conservation and load
management incentive 6.5 7.7 6.7
Equity in earnings of regional
nuclear generating and
transmission companies 0.3 3.3 2.6
Gain on sale of RMS ——0.8
Gain on sale of Globix 3.1 — —
Other 6.3 1.4 0.9
Total Other Income 65.7 61.6 38.7
Other Loss:
Investment write-downs —(6.9) (13.8)
Loss on investment in receivables (1.1) ——
Rental investment expense (0.2) (0.2) (2.2)
Total Other Loss (1.3) (7.1) (16.0)
Total Other Income, Net $64.4 $54.5 $22.7
None of the amounts in other income – other are individually significant.
Equity in earnings relates to NU’s investment in the Yankee Companies
and the two Hydro-Quebec transmission companies.
The CL&P procurement fee represents compensation approved by
the DPUC associated with Transitional Standard Offer (TSO) supply
procurement. The conservation and load management incentive
relates to incentives earned if certain energy and demand savings
goals are met.
Based on developments in July of 2006, CYAPC management concluded
that $10 million of CYAPC’s regulatory assets were no longer probable
of recovery and should be written off. NU included in 2006 other income,
net its 49 percent share of CYAPC’s after-tax write-off. For further
information regarding CYAPC, see Note 8E, “Commitments and
Contingencies – Deferred Contractual Obligations.”