Eversource 2009 Annual Report Download - page 67

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RESULTS OF OPERATIONS - PUBLIC SERVICE COMPANY OF NEW HAMPSHIRE 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 $ (31) (3)% $ 58 5 %
Operating Expenses:
Operation -
Fuel, purchased and net interchange power (38) (7) 28 5
Other operation 24 11 7 3
Maintenance (4) (4) 17 23
Depreciation 6 10 3 6
Amortization of regulatory (liabilities)/assets, net (39) (a) 2 24
Amortization of rate reduction bonds 2 4 (7) (13)
Taxes other than income taxes 6 13 2 7
Total operating expenses (43) (4) 52 5
Operating Income 12 9 6 5
Interest expense, net (4) (7) 4 8
Other income, net 2 30 1 9
Income before income tax expense 18 22 3 4
Income tax expense 10 45 (1) (4)
Net income $ 8 13 % $ 4 7 %
(a) Percent greater than 100 not shown since not meaningful.
Comparison of the Year 2009 to the Year 2008
Operating Revenues
Operating revenues decreased $31 million in 2009 due to lower distribution segment revenues ($46 million), partially offset by higher
transmission segment revenues ($15 million).
The distribution segment revenues decreased $46 million due primarily to a decrease in the portion of distribution revenues that does
not impact earnings ($57 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 $11 million primarily as a result of higher retail rates, partially offset by lower retail sales volumes. The
2009 retail sales as compared to the same period in 2008 decreased 8.2 percent for the industrial, 1.5 percent for the commercial, and
0.2 percent for the residential classes. Total retail sales decreased overall by 2.2 percent.
The $57 million decrease in the portion of distribution segment revenues that does not impact earnings was due primarily to a decrease
in the portions of retail revenues that are included in NHPUC approved tracking mechanisms that track the recovery of certain incurred
costs through PSNH's tariffs ($47 million) and transmission segment intracompany billings to the distribution segment that are
eliminated in consolidation ($9 million). The distribution revenues included in NHPUC approved tracking mechanisms decreased $47
million due primarily to lower purchased fuel and power costs ($99 million), partially offset by an increase in the SCRC ($27 million),
higher retail transmission revenues ($14 million), higher wholesale revenue ($8 million), and higher Northern Wood Power Plant
renewable energy certificate revenues ($4 million). The tracking mechanisms allow for rates to be changed periodically with
overcollections refunded to customers or undercollections recovered from customers in future periods.
Transmission segment revenues increased $15 million due primarily to a higher transmission investment base and higher expenses.
Fuel, Purchased and Net Interchange Power
Fuel, purchased and net interchange power costs decreased $38 million in 2009 due primarily to an increased level of migration of ES
customers to competitive supply and lower retail sales, partially offset by higher forward energy market prices.
Other Operation
Other operation expenses increased $24 million in 2009 as a result of higher distribution segment expenses ($15 million), mainly as a
result of higher administrative and general expenses, including higher pension and medical costs, and higher expenses related to
uncollectible receivable balances, and higher retail transmission expenses that are recovered through distribution tracking mechanisms
and have no earnings impact ($10 million).
Maintenance
Maintenance expenses decreased $4 million in 2009 due primarily to lower repair and maintenance of distribution lines ($7 million),
including lower storm costs, lower generation expenses primarily as a result of lower maintenance outage expenses at Merrimack