Eversource 2004 Annual Report Download - page 74

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is comprised of the operations of SESI, NGS and Woods Network. As a
result, NU’s reporting units that maintain goodwill are as follows: the
Yankee Gas reporting unit, which is classified under the Utility Group —
gas reportable segment; the merchant energy reporting unit, which is
classified under the NU Enterprises — merchant energy reportable
segment; and the energy services reporting unit, which is classified
under NU Enterprises — services and other.
NU has completed its impairment analyses as of October 1, 2004, for
all reporting units that maintain goodwill and has determined that no
impairment exists. In completing these analyses, the fair values of
the reporting units were estimated using both discounted cash flow
methodologies and an analysis of comparable companies or
transactions.
At December 31, 2004, NU maintained $319.9 million of goodwill that is
no longer being amortized, $10.8 million of identifiable intangible assets
subject to amortization and $8.5 million of intangible assets not subject
to amortization. At December 31, 2003, NU maintained $319.9 million of
goodwill that is no longer being amortized, $14.4 million of identifiable
intangible assets subject to amortization and $8.5 million of intangible
assets not subject to amortization. A summary of NU’s goodwill balances
at December 31, 2004 and December 31, 2003, by reportable segment
and reporting unit is as follows:
At December 31,
(Millions of Dollars) 2004 2003
Utility Group — Gas:
Yankee Gas $287.6 $287.6
NU Enterprises:
Merchant Energy 3.2 3.2
Energy Services 29.1 29.1
Totals $319.9 $319.9
The goodwill recorded related to the acquisition of Yankee Gas is not
being recovered from the customers of Yankee Gas.
At December 31, 2004 and December 31, 2003, NU’s intangible assets
and accumulated amortization, all of which relates to NU Enterprises,
consisted of the following:
At December 31, 2004
Gross Accumulated Net
(Millions of Dollars) Balance Amortization Balance
Intangible assets subject
to amortization:
Exclusivity agreement $17.7 $ 9.8 $ 7.9
Customer list 6.6 3.7 2.9
Totals $24.3 $13.5 $10.8
Intangible assets not
subject to amortization:
Customer relationships $ 5.2
Tradenames 3.3
Totals $ 8.5
At December 31, 2003
Gross Accumulated Net
(Millions of Dollars) Balance Amortization Balance
Intangible assets subject
to amortization:
Exclusivity agreement $17.7 $7.2 $10.5
Customer list 6.6 2.7 3.9
Totals $24.3 $9.9 $14.4
Intangible assets not
subject to amortization:
Customer relationships $ 5.2
Tradenames 3.3
Totals $ 8.5
NU recorded amortization expense of $3.6 million and $3.7 million for
the years ended December 31, 2004 and 2003, 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 from 2005 through 2009 is $3.6 million in 2005 through 2007 and
no amortization expense in 2008 or 2009. These amounts may vary as
acquisitions and dispositions occur in the future.
6. Commitments and Contingencies
A. Regulatory Developments and Rate Matters
Connecticut:
CTA and SBC Reconciliation: The CTA allows CL&P to recover stranded costs,
such as securitization costs associated with the rate reduction bonds,
amortization of regulatory assets, and IPP over market costs, while the
SBC allows CL&P to recover certain regulatory and energy public policy
costs, such as public education outreach costs, hardship protection costs,
transition period property taxes, and displaced worker protection costs.
On April 1, 2004, CL&P filed its 2003 CTA and SBC reconciliation with
the Connecticut Department of Public Utility Control (DPUC), which
compares CTA and SBC revenues to revenue requirements. A final decision
in the 2003 CTA and SBC docket was issued on August 4, 2004 and
ordered a refund to customers of $88.5 million over a seven-month
period beginning with October 2004 consumption.