Eversource 2001 Annual Report Download - page 4

Dear Fellow
Shareowner
Electric (WMECO)— are now positioned for growth.
We are pushing hard into the arena of interstate trans-
mission, and we believe this will be an important
opportunity for us to expand our regulated earnings
base and fulfill our obligations to serve all of our cus-
tomers as cost effectively as we can.
Our competitive businesses are hitting their top
line revenue targets for growth, although they do need
to deliver improved profitability.
Absolute earnings of our regulated businesses were
down in 2001 due to the sale of Millstone early in the
year and the resulting loss of wholesale revenues.
Earnings before preferred dividends for CL&P fell to
$109.8 million from $148.1 million in 2000. Results
at PSNH and North Atlantic Energy Company
(NAEC) declined as a result of implementation of
industry restructuring and an 11 percent reduction of
retail rates. While the combined earnings before pre-
ferred dividends of PSNH and NAEC totaled $86 mil-
lion in 2001, compared to $100 million the previous
year, we were able to use the proceeds of restructuring
to buy back 10 percent of our common shares in 2001.
Results at NU’s competitive businesses showed
significant gains in revenue growth, but yielded lower
earnings. Revenues reached $3 billion in 2001
and delivered earnings of $5 million compared to
revenues of $1.9 billion and a contribution towards
NU’s consolidated earnings of $13.6 million in 2000.
Management will be keenly focused in 2002 on
improving the bottom line at those businesses as
revenues continue to grow.
Many aspects of our performance at Select Energy
Stronger, brighter and a sharp focus on delivering
results— I believe these words best describe Northeast
Utilities as we enter the second year of the new century.
2001 was a year in which we accomplished most of
what we set out to do. Revenues topped the $6.8 bil-
lion mark, and we now serve nearly two million retail
electric and gas customers in an 11 state region. We
successfully met a number of our long-term goals—
including the sale of Millstone Station for a record
price, the issuance of $2.1 billion of rate reduction
bonds on behalf of our three regulated electric compa-
nies, and the introduction of industry restructuring in
New Hampshire. At $243.5 million, reported earn-
ings were the best we have recorded since 1995, sup-
ported greatly by a $115.6 million gain from the sale
of Millstone Station. In those few areas where we did
not achieve our targets, we consistently improved per-
formance and set the stage for substantial growth in
coming years.
NU has never been financially stronger. Our bal-
ance sheet improvements resulted in multiple rounds
of credit upgrades, ending the year at the highest lev-
els in decades. Our capitalization ratios were signifi-
cantly stronger at the end of 2001 than a year earlier.
Our current ratio— 52 percent debt, two percent pre-
ferred stock and 46 percent common equity— is
among the best in our history. Additionally, we refi-
nanced more than $1.7 billion of debt and credit
lines, generally all with more favorable terms. All of
these moves give us a high level of financial strength
and flexibility to fund our future growth.
And, that future is bright. Our key regulated busi-
nesses— Connecticut Light & Power (CL&P) and
Yankee Gas as well as Public Service of New
Hampshire (PSNH) and Western Massachusetts
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