Eversource 2009 Annual Report Download - page 61

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Other Income, Net
Other income, net decreased $13 million in 2009 due primarily to lower AFUDC equity income ($20 million) as a result of lower eligible
CWIP balances, the absence of interest income related to the federal tax settlement in 2008 ($10 million), and lower CL&P Energy
Independence Act incentives ($6 million), partially offset by higher investment income due primarily to improved results from NU's
supplemental benefit trust and the absence of other-than-temporary impairments recorded in 2008 ($24 million).
Income Tax Expense
Income tax expense increased $74 million in 2009 due primarily to higher pre-tax earnings ($50 million), lower tax benefits associated
with less capital expenditures ($10 million), lower federal and state tax credits ($4 million), and increases in allowance for uncollectible
accounts reserves ($3 million).
Comparison of 2008 to 2007
Operating Revenues
For the Twelve Months Ended December 31,
(Millions of Dollars) 2008 2007 Variance
Electric distribution $ 4,714 $ 4,927 $ (213)
Gas distribution 577 514 63
Total distribution 5,291 5,441 (150)
Transmission 396 283 113
Regulated companies 5,687 5,724 (37)
Competitive businesses 113 98 15
NU $ 5,800 $ 5,822 $ (22)
Operating revenues decreased $22 million in 2008 due primarily to lower revenues from the regulated companies ($37 million), partially
offset by higher revenues from competitive businesses ($15 million). The lower regulated companies revenues were due primarily to
the recovery of a lower level of CL&P distribution related expenses passed through to customers through regulatory tracking
mechanisms. Competitive businesses revenues increased $15 million despite our continued exit from components of the competitive
businesses due to higher Boulos revenues resulting from increased contractor billings ($10 million) and higher market prices for the
remaining Select Energy wholesale contracts. Certain Select Energy contracts expired during 2008.
Revenues from the regulated companies decreased $37 million due to lower distribution segment revenues ($150 million), partially
offset by higher transmission segment revenues ($113 million). Distribution segment revenues decreased $150 million due primarily to
lower electric distribution revenues ($213 million), partially offset by higher gas distribution revenues ($63 million). Transmission
segment revenues increased $113 million due primarily to a higher transmission investment base, the impact of the March 24, 2008
FERC ROE decision and higher operating expenses that are passed through to customers under FERC-approved transmission tariffs.
Electric distribution revenues decreased $213 million due primarily to the portion of revenues that does not impact earnings ($281
million) as a result of distribution revenue being included in regulatory tracking mechanisms and consolidation eliminations of
transmission segment intracompany billings to the distribution segment, partially offset by the component of revenues that impacts
earnings ($68 million). The portion of the electric distribution segment revenues that impacts earnings increased $68 million due
primarily to increases in retail rates at each of the regulated companies ($89 million), partially offset by lower retail electric sales ($16
million). Retail electric sales decreased 3.5 percent in 2008 compared with 2007. Gas distribution revenues increased $63 million due
primarily to increased recovery of fuel costs, the rate increase effective July 1, 2007 and higher firm gas sales. Firm gas sales
increased 2.1 percent in 2008 compared with 2007.
The $281 million electric distribution revenue decrease that does not impact earnings was due to the portions of distribution revenues
that are included in regulatory commission approved tracking mechanisms that track the recovery of certain incurred costs ($179
million) and revenues that are eliminated in consolidation ($102 million). The distribution revenue tracking components decreased $179
million due primarily to lower recovery of generation service and related congestion charges ($233 million) and CL&P delivery-related
FMCC ($75 million) and lower PSNH SCRC ($55 million), partially offset by higher CL&P wholesale revenues due primarily to an
increase in the market revenue related to sales of IPP generation to ISO-NE ($59 million) and higher CL&P and PSNH retail
transmission revenues ($82 million) mainly as a result of the higher 2008 retail rates and higher CL&P SBC revenue ($36 million). The
tracking mechanisms allow for rates to be changed periodically with overcollections refunded to customers or undercollections
recovered from customers in future periods.
Fuel, Purchased and Net Interchange Power
Fuel, purchased and net interchange power expenses decreased $354 million in 2008 due to lower costs at the regulated companies
($364 million), partially offset by higher competitive businesses expenses ($9 million). Fuel and purchased power expense from the
regulated companies decreased primarily at CL&P due to lower GSC supply costs, a decrease in deferred fuel costs and lower other
purchased power costs. The decrease in GSC supply costs was due primarily to a reduction in load caused primarily by customer
migration to third party suppliers and lower retail sales ($432 million), partially offset by higher Yankee Gas expenses ($41 million) due
primarily to higher fuel prices in 2008 and higher PSNH fuel expense ($28 million) due primarily to higher forward energy market prices,
partially offset by a decrease in payments to higher priced IPPs in 2008 as contracts expired. Competitive businesses' expenses
increased due to higher Select Energy purchased power expenses related to the remaining wholesale contracts.