Eversource 1999 Annual Report Download - page 25

23
LIQUIDITY
During 1999, strong sales growth, improved nuclear perform-
ance and continued control of O&M expenses resulted in net
cash flows provided by operations of $614.2 million in 1999,
compared to $663.3 million in 1998 and $340.6 million in 1997.
On December 15, 1999, CL&P closed on the sale of 2,235
megawatts (MW) of fossil generation assets with an unaffiliated
company. Proceeds from the sale totaled $516.9 million, including
payments for fuel and inventory. CL&P used the proceeds pri-
marily to par call $406 million of first mortgage bonds in
December 1999. CL&P also used $57.5 million to buy out its
lease of four 40 MW turbines.
On July 26, 1999, WMECO closed on the sale of 290 MW
of fossil and hydroelectric generation assets with an affiliate of
Con Edison. Proceeds from the sale were $48.5 million.
Proceeds from these generation asset sales are included in
net cash flows provided by investing activities. Including construc-
tion expenditures and investments in nuclear decommissioning
trusts, net cash flows provided by investing activities were $151.2
million in 1999, compared with net cash flows used in investing
activities of $295.2 million in 1998 and $293 million in 1997.
The strong operating cash flows provided by NU’s regulated
businesses and the proceeds from generation asset sales enabled
the NU system to substantially reduce its outstanding debt. As
of December 31, 1999, the NU system’s total debt level, includ-
ing capital lease obligations, was $3.3 billion, compared with
$3.9 billion as of December 31, 1998, and $4.1 billion as of
December 31, 1997.
The net cash flows used in financing activities were $646.4
million in 1999, compared to $375.3 million in 1998 and $98.5
million in 1997. This included $864 million paid in 1999 to
retire long-term debt and preferred stock, compared to $331.8
million in 1998 and $313.8 million in 1997. Cash dividends
on common shares paid in 1999 were $13.2 million, compared
to no cash dividends in 1998 and $32.1 million in 1997.
Payments made for preferred stock dividends were $22.8 million,
$26.4 million and $30.3 million for 1999, 1998 and 1997,
respectively.
The NU system’s access to capital also benefited from the
strong operating performance at Millstone 2 and 3, continued
progress toward the resolution of all restructuring issues in
New Hampshire and the announced merger with Con Edison.
During 1999, NU system securities received several upgrades
from three credit rating agencies. CL&P’s and WMECO’s senior
secured bonds achieved investment grade ratings for the first
time since early 1997 and PSNH’s bonds were upgraded to invest-
ment grade by Standard & Poor’s (S&P) for the first time since
early 1994. At year end, all securities were under review for
possible upgrades, or on “credit watch” with positive impli-
cations by S&P, Moody’s Investors Service and Fitch IBCA.
The rating agency upgrades benefited NU’s efforts to broaden
its credit lines. On November 19, 1999, NU parent entered into
a $350 million, 364-day unsecured revolving credit facility which
allows NU parent access to $350 million in a combination of cash
and letters of credit. NU parent provides credit assurance in the
form of guarantees of letters of credit, performance guarantees and
other assurances for the financial performance obligations of
certain of its unregulated subsidiaries, particularly Select Energy.
Over the course of 1999, NU parent sought and received approval
from the SEC to increase the limit of such credit assurance arrange-
ments from $75 million to $500 million. However, NU is limited
under certain loan agreements to $350 million of such arrange-
ments without creditor approval. As of December 31, 1999, NU
had provided approximately $190 million of such credit assurances.
Also on November 19, 1999, CL&P and WMECO entered into
a new 364-day revolving credit facility for $500 million, replacing
the previous $313.75 million facility which was to expire on
November 21, 1999. The revolving credit facility, which is
secured by second mortgages on Millstone 2 and 3, will be used
to bridge gaps in working capital and provide short-term liquid-
ity. CL&P may draw up to $300 million and WMECO may
draw up to $200 million under the facility. Once CL&P and
WMECO receive the proceeds from securitization, the $500 mil-
lion facility will be reduced to $300 million, with a $200 million
limit for CL&P and a $100 million limit for WMECO. As of
December 31, 1999, CL&P had $90 million and WMECO had
$123 million outstanding under this facility.
For further information regarding the NU parent revolving credit
facility and the CL&P and WMECO revolving credit facility, see
Note 3, “Short-Term Debt,” to the consolidated financial statements.
PSNH’s $75 million revolving credit agreement was terminated
on April 14, 1999. PSNH currently funds its operations through
cash on hand and operating cash flows. As of December 31, 1999,
PSNH had $182.6 million of cash and cash equivalents. On
April 14, 1999, PSNH renewed bank letters of credit that sup-
port nearly $110 million of taxable variable-rate pollution
control bonds.
CL&P also has arranged financing through the sale of its
accounts receivable. CL&P can finance up to $200 million
through this facility. As of December 31, 1999, CL&P had
$170 million outstanding under this facility. WMECO termi-
nated its $40 million accounts receivable credit facility on
June 30, 1999.