Eversource 2009 Annual Report Download - page 66

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Other Income, Net
Other income, net increased $2 million in 2008 due primarily to higher AFUDC equity income ($9 million) as a result of higher eligible
CWIP due to the transmission construction program, higher interest income related to the federal tax settlement in 2008 ($6 million) and
higher EIA incentives ($2 million), partially offset by higher investment losses ($10 million) due primarily to the NU supplemental benefit
trust, a decrease in conservation and load management (C&LM) incentive income ($3 million), and a decrease in investment income
($2 million).
Income Tax Expense
Income tax expense increased $25 million in 2008 due primarily to higher pre-tax earnings being subject to tax at marginal rates,
partially offset by flow-through items associated with property plant and equipment differences and uncollectible account reserves,
thereby reducing the effective tax rate.
LIQUIDITY
CL&P had cash flows from operating activities in 2009 of $482.2 million, compared with operating cash flows of $267.3 million in 2008
and $4.5 million in 2007 (all amounts are net of RRB payments, which are included in financing activities). The improved cash flows in
2009 were due primarily to higher transmission revenues after significant projects were placed in service in late 2008 as well as cost
management efforts; a decrease of approximately $200 million related primarily to amounts spent on the FMCC, GSC and C&LM, the
costs of which are passed on to customers; a cash flow increase due to improved collections of accounts receivable in 2009 offset by
increases in the negative cash flow effect of our accounts payable balances related to operating activities and change in the amount of
income tax refunds or payments. We project cash flows provided by operating activities at CL&P of approximately $440 million in 2010,
net of RRB payments.
In 2009, CL&P reduced its borrowings under the $400 million credit facility it shares with the other regulated companies by $188 million.
CL&P can borrow up to $200 million under this facility. Other financing activities in 2009 included the $250 million bond issuance in
February 2009, the remarketing of $62 million of tax-exempt PCRBs and cash capital contributions from NU parent of $147.6 million,
offset by $102.7 million in repayment of NU Money Pool borrowings and $113.8 million in common dividends paid to NU parent.
Cash capital expenditures included on the accompanying consolidated statements of cash flows do not include amounts incurred on
capital projects but not yet paid, cost of removal, the AFUDC related to equity funds, and the capitalized portions of pension and PBOP
expense or income. CL&P's cash capital expenditures totaled $435.7 million in 2009, compared with $849.5 million in 2008. This
decrease was primarily the result of lower transmission segment capital expenditures in 2009 due to the completion in 2008 of three
major transmission projects in southwest Connecticut. Other investing activities in 2009 included lendings to the NU Money Pool of
$97.8 million. We project capital expenditures at CL&P of $441 million in 2010 (including non-cash factors).
While the impact of continued market volatility and the extent and impacts of the declining economic environment cannot be predicted,
we are confident that CL&P currently has operating flexibility and access to funding sources to maintain adequate liquidity. In the
second half of 2009, all three rating agencies reaffirmed all of their existing credit ratings and stable outlooks on CL&P. On January 22,
2010, Fitch downgraded CL&P’s preferred stock rating from BBB to BBB- as a result of revised guidelines for rating preferred stock and
hybrid securities in general. Capital contributions from NU parent and other internal sources of funding are provided to CL&P as
necessary. CL&P has the mandatory tender of $62 million in 2010, which it plans to remarket, but does not have any long-term debt
maturities until 2014, and there are no CL&P debt issuances planned for 2010.