Eversource 2009 Annual Report Download - page 42

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dividends to NU parent. The Federal Power Act limits the payment of dividends by CL&P, PSNH and WMECO to their respective
retained earnings balances unless a higher amount is approved by FERC; PSNH is required to reserve an additional amount of retained
earnings under its FERC hydroelectric license conditions. In addition, relevant state statutes may impose additional limitations on the
payment of dividends by the regulated companies. CL&P, PSNH, WMECO and Yankee Gas also are parties to a revolving credit
agreement that imposes leverage restrictions.
In general, the regulated companies pay approximately 60 percent of their earnings to NU parent in the form of common dividends. In
2009, CL&P, PSNH, WMECO, and Yankee Gas paid $113.8 million, $40.8 million, $18.2 million, and $19.1 million, respectively, in
common dividends to NU parent. In 2009, NU parent made equity contributions of $147.6 million, $68.9 million, $0.9 million and $2.7
million to CL&P, PSNH, WMECO and Yankee Gas, respectively.
Cash capital expenditures included on the accompanying consolidated statements of cash flows and described in this "Liquidity" section
do not include amounts incurred on capital projects but not yet paid, cost of removal, the allowance for funds used during construction
(AFUDC) related to equity funds, and the capitalized portions of pension and postretirement benefits other than pension (PBOP)
expense or income. A summary of our cash capital expenditures by company for the years ended December 31, 2009, 2008 and 2007
is as follows:
For the Years Ended December 31,
(Millions of Dollars) 2009 2008 2007
CL&P $ 435.7 $ 849.5 $ 826.2
PSNH 266.4 238.9 167.7
WMECO 105.4 78.3 47.3
Yankee Gas 54.8 58.3 57.6
Other 45.8 30.4 16.0
Totals $ 908.1 $ 1,255.4 $ 1,114.8
The decrease in our total cash capital expenditures was primarily the result of lower transmission segment capital expenditures,
particularly at CL&P, due to the completion in 2008 of three major transmission projects in southwest Connecticut, offset by increases at
PSNH and WMECO resulting from higher generation capital expenditures related to the PSNH Clean Air Project and higher
transmission capital expenditures related to WMECO's expenditures for the NEEWS project (refer to "Business Development and
Capital Expenditures" of this Management's Discussion and Analysis for further discussion).
As a result of Lehman Brothers Commercial Bank's (LBCB) refusal in 2008 to continue to fund its commitment of approximately $56
million under our credit facilities, our aggregate borrowing capacity under our credit facilities was reduced from $900 million to $844
million. This borrowing capacity, when combined with our access to other funding sources, provides us with adequate liquidity.
NU parent’s credit facility, in a nominal aggregate amount of $500 million, $482.3 million excluding the commitment of LBCB, expires on
November 6, 2010. As of December 31, 2009, NU parent had $41 million of LOCs issued for the benefit of certain subsidiaries
(primarily PSNH) and $100.3 million of borrowings outstanding under this facility. The weighted-average interest rate on these short-
term borrowings as of December 31, 2009 was 0.63 percent, which is based on a variable rate plus an applicable margin based on NU
parent's credit ratings. NU parent had approximately $341 million of borrowing availability on this facility as of December 31, 2009,
excluding LBCB's commitment, as compared to $101.3 million of availability as of December 31, 2008.
The regulated companies maintain a joint credit facility in a nominal aggregate amount of $400 million, $361.8 million excluding the
commitment of LBCB, which also expires on November 6, 2010. There were no borrowings outstanding under this facility as of
December 31, 2009, and the $361.8 million facility was available. The regulated companies had approximately $56.5 million of
aggregate borrowing availability on this facility as of December 31, 2008, excluding LBCB's commitment and subject to each individual
company's borrowing limits.
Our credit facilities and bond indentures require that NU parent and certain of its subsidiaries, including CL&P, PSNH and WMECO,
comply with certain financial and non-financial covenants as are customarily included in such agreements, including maintaining a ratio
of consolidated debt to total capitalization of no more than 65 percent. All such companies currently are, and expect to remain, in
compliance with these covenants. Refer to Note 2, "Short-Term Debt," and Note 11, "Long-Term Debt," to our consolidated financial
statements included in this Annual Report on Form 10-K for further discussion of material terms and conditions of these agreements.
Impact of Financial Market Conditions: While the impact of continued market volatility and the extent and impacts of the declining
economic environment cannot be predicted, we are confident that we currently have operating flexibility and access to funding sources
to maintain adequate liquidity. The credit outlooks for NU parent and its regulated companies are all stable. Our companies have low
risk of calls for collateral due to our business model, and we have no long-term debt maturing until April 2012. An estimated cash
contribution to our pension plan of approximately $45 million is expected to be made in the third quarter of 2010, and we project capital
expenditures for 2010 of approximately $1.1 billion. However, we project cash flows provided by operating activities for 2010 of
approximately $700 million, net of RRB payments, and, based on our successful financings in 2009, we expect to be able to access the
capital markets in 2010 for our total planned debt issuances of approximately $145 million.
While we expect to renew our credit facilities before their November 6, 2010 expiration dates, costs associated with the new facilities will
likely be higher than those associated with the existing credit facilities due to changes in credit market conditions.