Eversource 2004 Annual Report Download - page 46

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44
Gain on Sale of Utility Plant
Gain on the sale of utility plant decreased $187 million in 2003 due to
the gain recognized in 2002 resulting from CL&P’s and North Atlantic
Energy Corporation’s (NAEC) sale of Seabrook ($187 million).
Interest Expense, Net
Interest expense, net increased $7 million in 2004 primarily due to the
issuance of $75 million of ten-year notes at Yankee Gas in January 2004,
the issuance of $50 million of thirty-year senior notes at WMECO in
September 2004, and the issuance of $150 million of five-year notes
at NU Parent in June 2003.
Interest expense, net decreased $24 million in 2003 primarily due to
lower interest for the regulated subsidiaries resulting from lower rates
($12 million), lower interest at NU Parent as a result of the interest
rate swap related to its $263 million fixed-rate senior notes ($8 million),
capitalized interest on prepayments for generator interconnections
($4 million) and lower NAEC interest due to the retirement of debt
($3 million), partially offset by higher competitive business interest
as a result of higher debt levels ($6 million).
Other Income/(Loss), Net
Other income/(loss), net increased $15 million in 2004 primarily
due to the recognition, beginning in 2004, of a CL&P procurement
fee approved in the TSO docket decision ($12 million).
Other (loss)/income, net decreased $44 million in 2003 primarily due to
the 2002 elimination of certain reserves associated with NU’s ownership
share of Seabrook ($25 million), 2002 Seabrook related gains ($15 million),
lower equity in earnings from the Yankee companies in 2003 ($7 million),
a higher level of donations in 2003 ($5 million), RMS losses recorded
in 2003 ($4 million) and lower 2003 conservation and load management
incentive income ($2 million), partially offset by 2002 investment
write-downs ($18 million).
Income Taxes
Included in the notes to the consolidated financial statements is a
reconciliation of actual and expected tax expense. The tax effect of
temporary differences is accounted for in accordance with the
rate-making treatment of the applicable regulatory commissions.
In past years, this rate-making treatment has required the company
to provide the customers with a portion of the tax benefits associated
with accelerated tax depreciation in the year it is generated (flow-through
depreciation). As these flow-through differences turn around, higher
tax expense is recorded.
Income tax expense increased by $1 million in 2004 due to higher
reversal of prior flow-through depreciation and lower favorable
adjustments to tax expense, partially offset by lower state income
tax expense, due to increased state tax credits and favorable
unitary apportionment.
Income tax expense decreased by $24 million in 2003, primarily due
to lower taxable income.
Cumulative Effect of Accounting Change,
Net of Tax Benefit
A cumulative effect of accounting change, net of tax benefit ($5 million)
was recorded in the third quarter of 2003 in connection with the
adoption of FIN 46, which required NU to consolidate RMS into NU’s
financial statements and adjust its equity interest as a cumulative
effect of an accounting change.