Eversource 2003 Annual Report Download - page 72

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NU recorded amortization expense of $3.7 million and $2.1 million for
the years ended December 31, 2003 and 2002, respectively, related to
these intangible assets. Substantially all of the intangible assets subject
to amortization are being amortized over a period of 8.5 years. Based on
the current amount of intangible assets subject to amortization, the
estimated annual amortization expense for each of the succeeding
5 years is $3.6 million in 2004 through 2007 and no amortization
expense in 2008. These amounts may vary as acquisitions and disposi-
tions occur in the future.
The results for the year ended December 31, 2001, on a historical basis,
do not reflect the provisions of SFAS No. 142. Had NU adopted SFAS
No. 142 on January 1, 2001, historical income before the cumulative
effect of an accounting change, net income and basic and fully diluted
EPS amounts would have been adjusted as follows:
(Millions of Dollars, Net Basic Fully
except share data) Income EPS Diluted EPS
Year Ended December 31, 2003:
Reported income before cumulative
effect of accounting change $121.1 $0.95 $0.95
Reported net income $116.4 $0.91 $0.91
Year Ended December 31, 2002:
Reported income before cumulative
effect of accounting change $152.1 $1.18 $1.18
Reported net income $152.1 $1.18 $1.18
Year Ended December 31, 2001:
Reported income before cumulative
effect of accounting change $265.9 $1.97 $1.96
Add back: goodwill amortization 9.0 0.07 0.07
Adjusted income before cumulative
effect of accounting change $274.9 $2.04 $2.03
Reported net income $243.5 $1.80 $1.79
Add back: goodwill amortization 9.0 0.07 0.07
Adjusted net income $252.5 $1.87 $1.86
6. Nuclear Generation Asset Divestitures
Seabrook: On November 1, 2002, CL&P and NAEC consummated the
sale of their 40.04 percent combined ownership interest in Seabrook to
a subsidiary of FPL. CL&P, NAEC and certain other of the joint owners
collectively sold 88.2 percent of Seabrook to FPL. NU received approxi-
mately $367 million of total cash proceeds from the sale of Seabrook
and another approximately $17 million from Baycorp Holdings, Ltd.
(Baycorp), as a result of the sale of its interest in Seabrook. A portion of
this cash was used to repay all $90 million of NAEC’s outstanding debt
and other short-term debt, to return a portion of NAEC’s equity to NU
and was used to pay approximately $93 million in taxes. The remaining
proceeds received by NAEC were refunded to PSNH through the Seabrook
Power Contracts. As part of the sale, FPL assumed responsibility for
decommissioning Seabrook. NAEC and CL&P recorded a gain on the sale
in the amount of approximately $187 million, which was primarily used
to offset stranded costs.
In the third quarter of 2002, CL&P and NAEC received regulatory
approvals for the sale of Seabrook from the DPUC and the NHPUC.
As a result of these approvals, CL&P and NAEC eliminated $0.6 million
and $13.9 million, respectively, on an after-tax basis, of reserves related
to their respective ownership shares of certain Seabrook assets.
On October 10, 2000, NU reached an agreement with Baycorp, a 15
percent joint owner of Seabrook, under which NU guaranteed a minimum
sale price, and NU and Baycorp would share the excess proceeds if the
sale of Seabrook resulted in proceeds of more than $87.2 million for
Baycorp’s 15 percent ownership interest. The agreement also limited any
accelerated decommissioning funding required to be funded by Baycorp
as part of the sale process. NU received approximately $17 million in 2002
in connection with this agreement. This amount is included in the $38.7
million of pre-tax Seabrook-related gains included in other income/(loss), net.
VYNPC: On July 31, 2002, VYNPC consummated the sale of its nuclear
generating plant to a subsidiary of Entergy Corporation (Entergy) for
approximately $180 million. As part of the sale, Entergy assumed
responsibility for decommissioning VYNPC’s nuclear generating unit. On
November 7, 2003, CL&P, PSNH and WMECO sold their collective 17
percent ownership interest in VYNPC. CL&P, PSNH and WMECO will
continue to buy approximately 16 percent of the plant’s output through
March 2012 at a range of fixed prices.
7. Commitments and Contingencies
A. Restructuring and Rate Matters
Connecticut:
Impacts of Standard Market Design: On March 1, 2003, ISO-NE
implemented SMD. As part of SMD, LMP is utilized to assign value and
causation to transmission congestion and line losses.
CL&P was billed $186 million of incremental LMP costs by its standard
offer service suppliers or by ISO-NE. CL&P recovered a portion of these
costs through an additional charge on customer bills beginning on May 1,
2003. Billings were on a two-month lag and were recorded as operating
revenues when billed. Amounts were recovered subject to refund.
CL&P and its suppliers, including affiliate Select Energy, disputed the
responsibility for the $186 million of incremental LMP costs incurred. NU
recorded a pre-tax loss in 2003 of approximately $60 million ($36.9 million
after-tax) related to an agreement in principle to settle this dispute. On
February 23, 2004, CL&P, its suppliers, and other parties reached an
agreement in principle to settle the dispute. A settlement agreement is
subject to approval by the FERC.
The pre-tax loss of approximately $60 million was reflected in two line
items on the consolidated statements of income. Approximately
$58 million was recorded as a reduction to operating revenues, and
approximately $2 million was recorded in operating expenses.