Eversource 2009 Annual Report Download - page 63

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RESULTS OF OPERATIONS - THE CONNECTICUT LIGHT AND POWER COMPANY AND SUBSIDIARIES
The components of significant income statement variances, higher/(lower) in comparison to the previous year, are provided in the table
below.
Income Statement Variances 2009 versus 2008 2008 versus 2007
(Millions of Dollars) Amount Percent Amount Percent
Operating Revenues $ (134) (4)% $ (123) (3)%
Operating Expenses:
Operation -
Fuel, purchased and net interchange power (155) (8) (432) (19)
Other operation 13 2 22 4
Maintenance (12) (10) 22 21
Depreciation 24 15 11 7
Amortization of regulatory assets, net (118) (72) 144 (a)
Amortization of rate reduction bonds 10 7 10 7
Taxes other than income taxes 12 7 11 7
Total operating expenses (226) (7) (212) (6)
Operating Income 92 25 89 31
Interest expense, net 10 7 8 6
Other income, net (16) (38) 2 5
Income before income tax expense 66 25 83 45
Income tax expense 41 53 25 49
Net income $ 25 13 % $ 58 43 %
(a) Percent greater than 100 not shown since not meaningful.
Comparison of the Year 2009 to the Year 2008
Operating Revenues
Operating revenues decreased $134 million in 2009 due to lower distribution segment revenues ($264 million), partially offset by higher
transmission segment revenues ($130 million).
The distribution segment revenues decreased $264 million due primarily to a decrease in the portion of distribution revenues that does
not impact earnings ($289 million). These revenues do not impact earnings, primarily as a result of the inclusion of these distribution
revenues in regulatory tracking mechanisms and intracompany revenues that are eliminated in consolidation. The portion of revenues
that impacts earnings increased $25 million.
The $289 million decrease in distribution segment revenues that does not impact earnings was due primarily to a decrease in the
portions of retail revenues that are included in DPUC approved tracking mechanisms that track the recovery of certain incurred costs
through CL&P's tariffs ($265 million) and transmission segment intracompany billings to the distribution segment that are eliminated in
consolidation ($24 million). The distribution revenues included in DPUC approved tracking mechanisms decreased $265 million due
primarily to a decrease in revenues associated with the recovery of GSC and supply-related FMCC ($184 million) and lower wholesale
revenues as a result of decreased market revenue related to sales of CL&P's IPP purchased generation output to ISO-NE due to a
decrease in the market price of energy ($163 million), partially offset by higher retail transmission revenues ($75 million). The lower
GSC and supply-related FMCC revenue was due primarily to lower retail sales, lower customer rates resulting from lower average
supply prices and additional customer migration to third-party suppliers in 2009 as compared to 2008. The tracking mechanisms allow
for rates to be changed periodically with overcollections refunded to customers or undercollections recovered from customers in future
periods.
The portion of revenues that impacts earnings increased $25 million primarily as a result of rate changes, partially offset by lower retail
sales. The 2009 retail sales as compared to the same period in 2008 decreased 17.6 percent for the industrial, 2.9 percent for the
commercial, and 0.7 percent for the residential classes. Total retail sales decreased overall by 3.8 percent.
Transmission segment revenues increased $130 million due primarily to a higher transmission investment base as a result of the
completion of our southwest Connecticut projects in 2008 and higher overall expenses.
Fuel, Purchased and Net Interchange Power
Fuel, purchased and net interchange power expenses decreased $155 million in 2009 due primarily to lower GSC supply costs ($280
million) and other purchased power costs ($41 million), partially offset by an increase in deferred fuel costs ($165 million), all of which
are included in DPUC approved tracking mechanisms. The $280 million decrease in GSC supply costs was due primarily to lower retail
sales, lower average supply prices and additional customer migration to third-party suppliers. These GSC supply costs are the
contractual amounts CL&P must pay to various suppliers that have been awarded the right to supply SS and LRS load through a
competitive solicitation process. The $165 million increase in deferred fuel costs was due primarily to the combined effect of the twelve