Eversource 2004 Annual Report Download - page 44

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42
Operating Revenues
Total revenues increased $617 million in 2004, compared with 2003,
due to higher revenues from NU Enterprises ($387 million), higher
electric distribution revenues ($172 million), higher gas distribution
revenues ($46 million) and higher regulated transmission revenues
($13 million).
The NU Enterprises’ revenue increase of $387 million is primarily due
to higher revenues for the merchant retail energy business ($197 million),
the 2003 revenue reduction recorded for the settlement of a wholesale
power dispute associated with CL&P standard offer supply ($56 million),
and an increased level of competitive energy services business ($42 million).
Higher revenues for the merchant retail energy business resulted from
higher electric volumes ($119 million), higher gas prices ($48 million),
higher electric prices ($28 million), and higher gas volumes ($2 million).
The competitive energy services business revenue increase resulted
from higher revenues from a cogeneration project and higher volumes
in the mechanical contracting group.
The electric distribution revenue increase of $172 million is primarily
due to non-earnings components of CL&P, PSNH and WMECO retail
rates ($141 million). The distribution component of these companies
and the retail transmission component of CL&P and PSNH that flow
through to earnings increased $33 million, primarily due to the CL&P
retail transmission rate increase effective in January 2004. The non-
earnings components increase of $141 million is primarily due to the
pass through of energy supply costs ($269 million) and CL&P FMCC
($151 million), partially offset by the resolution of SMD cost recovery
which was being collected from CL&P customers in 2003 and early
2004 and subsequently refunded beginning in late 2004 ($71 million),
lower CL&P EAC revenue as a result of the end of EAC billings in 2003
($44 million), lower transition cost recoveries for CL&P and WMECO
($44 million) and lower CL&P system benefit cost recoveries ($31 million).
Regulated retail sales increased 0.9 percent in 2004 compared with
2003. On a weather adjusted basis, retail sales increased 1.9 percent
as a result of improved economic conditions and increasing use per
customer. In addition, electric wholesale revenues decreased $72 million,
primarily due to lower Utility Group sales related to IPP contracts and
the expiration of long-term contracts.
The higher gas distribution revenue of $46 million is primarily due to
the increased recovery of gas costs ($17 million) and the absence of
the 2003 unbilled revenue adjustment ($28 million).
Transmission revenues were higher primarily due to the October 2003
implementation of the transmission rate case approved at the FERC.
Total revenues increased $832 million in 2003, compared with 2002,
due to higher revenues from NU Enterprises ($588 million), higher
Utility Group electric revenues ($165 million) and higher Utility Group
gas revenues ($79 million).
The NU Enterprises’ revenue increase of $588 million is primarily due
to higher wholesale and retail requirements sales volumes ($386 million)
and higher prices ($339 million).
Results of Operations
The components of significant income statement variances for the past two years are provided in the table below.
Income Statement Variances 2004 over/(under) 2003 2003 over/(under) 2002
(Millions of Dollars) Amount Percent Amount Percent
Operating Revenues $617 10% $ 832 16%
Operating Expenses:
Fuel, purchased and net interchange power 496 13 686 23
Other operation 131 14 138 17
Maintenance 13 8 (24) (12)
Depreciation 20 10 (1) (1)
Amortization (53) (28) (129) (40)
Amortization of rate reduction bonds 12 8 5 3
Taxes other than income taxes 10 4 5 2
Gain on sale of utility plant —— 187 100
Total operating expenses 629 11 867 18
Operating Income (12) (3) (35) (8)
Interest expense, net 7 3 (24) (9)
Other income/(loss), net 15 (a) (44) (a)
Income before income tax expense (4) (2) (55) (24)
Income tax expense 1 2 (24) (32)
Preferred dividends of subsidiaries — — — —
Income before cumulative effect of accounting changes (5) (4) (31) (20)
Cumulative effect of accounting changes, net of tax benefits 5100 (5) (100)
Net income/(loss) $— —% $ (36) (23)%
(a) Percent greater than 100.