Eversource 1999 Annual Report Download - page 7

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5
were out of service and disallowed a return on WMECO’s investment in Millstone 1, although
the company was allowed to recover its operating and maintenance costs for the unit. This, too,
was a very balanced implementation of Massachusetts’ restructuring law.
GROWTH IN UNREGULATED BUSINESSES
Select Energy realized an 18-fold increase in revenues in 1999 over the previous year, with sales
of approximately $550 million. It is registered to do business in all 11 Northeast states and is
actively marketing and serving customers in seven states. HEC Inc., our energy services company,
posted the highest sales and profits in its 18-year history, and Northeast Generation Services
Company exceeded its first-year revenue target with sales of $5 million. The growth in demand
for broadband communication services has resulted in an impressive increase in the value of our
Mode 1 telecommunications subsidiary’s investment in NorthEast Optic Network, Inc. (NEON).
MERGERS AND ACQUISITIONS
In June, NU announced a merger agreement with Yankee Energy System, Inc., the parent of
Yankee Gas Services Company, the largest natural gas distributor in Connecticut. All regulatory
and legal approvals have been received and we expect the merger to close in March. You can
read more about Yankee in the next section of this report.
On October 13, NU and Consolidated Edison, Inc. of New York (Con Edison) announced
a merger that valued NU at more than three times the level at which our shares traded three
years ago. When approved, the combined company will be among the largest electric and natural
gas distribution companies in the country.
With all the consolidation going on in the industry, we realized we needed to combine with
another company in order to grow in the new competitive environment. Con Edison is the ideal
fit – we share similar businesses, regulated and unregulated, and similar strategies for growth. In
fact, with this merger, NU achieves its vision of becoming an energy leader in the Northeast. The
enterprise value of the new company (market value of debt and equity) will be about $19 billion,
providing the financial resources needed to grow and prosper in the future.
The combined company will be headquartered in New York City. NU’s operating companies
(CL&P, WMECO, PSNH and Yankee) will continue to be based in their respective states.
Many of you stayed with us through all our difficulties of the past several years, and I thank
you for your support. I am pleased we are able to reward your patience with the increased value of
your investment in NU that our accomplishments of the past two years have made possible. I hope
you will remain with us once we merge with Con Edison and benefit from being a shareholder in
what I believe will be one of the strongest, most profitable energy companies in the United States.
Lastly, I want to thank the retirees of the NU system for their many years of productive
work and their strong support during these very trying times. Once the Con Edison merger is
complete, we all can be proud of the future NU.
Sincerely,
Michael G. Morris
Chairman, President
and Chief Executive Officer
February 9, 2000