Eversource 2006 Annual Report Download - page 4

TO OUR SHAREHOLDERS, EMPLOYEES, CUSTOMERS AND BUSINESS PARTNERS
For Northeast Utilities, 2006 has been
ayear of achievement and strategic
execution. The pivotal decision made in
November 2005 to exit the competitive
business arena and focus entirely on
our regulated businesses culminated in
2006 with the successful sale of NU’s
competitive business portfolio and the
realignment of our organization to best
support our new business direction.
Wearenow a regulatedholding company
focused onour utility business, comprised
of transmission, distribution and
generationfunctions.
This strategic refocusing has positioned
us to better address the energy needs
of our region, leverage the expertise of
our employees and respond to the
opportunities of the marketplace –
advantages that havealready yielded
direct benefits forour shareholders,
customersand communities.
Our more focused business model
helped highlight NU’s most prominent
successes in 2006, as we provided greater
investment capital for ventures such as
our transmission build-out program,
and greater focus to realize high-benefit
projects such as the environmentally
friendly Northern Wood Power Project –
now generating electricity for customers
in New Hampshire through the burning
of wood chips.
As we continue to invest in our new
strategy, we expect to build on these
accomplishments and continue to
deliver strong business results in 2007
and beyond.
REWARDING OUR SHAREHOLDERS
In2006, our marketcapitalization
increasedfrom$3 billion to more
than $4.3 billionand we rewarded our
shareholders with the sixth straight
year of dividend growth at a rate well
ahead of the industry average.
The visibility and confidence in our
regulated investment program, combined
with the $1.34 billion sale of our
competitive generation assets, which
was a transformative transaction for the
company, contributed to a 43 percent
increase in the price of NU shares. In
December, NU’s share price rose to an
all-time high, a level that was subsequently
exceeded in February 2007, climaxing a
year of growth that provided our investors
with a 47 percent total shareholder
return for the year.
Fueled by investments in our regulated
utility assets, we expect our success to
continue. Earnings per share are projected
to grow at a compounded annual rate
of 10 to 14 percent from 2007 through
2011 – double the industry average for
regulated electric and gas delivery
companies. Consistent with this growth,
and aside from any potential impact of
marking-to-market our decreasing level
of competitive wholesale electricity
commitments, we are projecting earnings
of $1.30 to $1.55 per share in 2007.
SERVING OUR CUSTOMERS
Tohelp mitigatecongestion in the
regional electric transmission system that
costs NewEngland consumers hundreds
of millions of dollars annually, and to
ensure reliable energy for our customers,
thereis an urgent need to improve and
expand New England’s transmission
system. NU is a national leader in
identifying and resolving transmission
constraints. Our transmission construction
program represents nearly 60 percent of
the Independent System Operator of
New England’s (ISO-NE) approved plan
for infrastructure improvements.
Focusing on our regulated transmission
and distribution functions is a key part
of our growth strategy. In 2006, NU
redeployed hundreds of millions of
dollars of capital into the construction
and maintenance of energy delivery
facilities required to meet New England’s
growing energy needs. Totaling $925
million in 2006, NU’s capital investments
will increase to $1.2 billion in 2007 as
part of a five-year, nearly $5 billion
transmission and distribution upgrade
DIVIDENDS PAID/SHARE
SHARE PRICE
$15.17
$20.17 $18.85 $19.69
$28.16
0605040302
$0.525 $0.575 $0.625 $0.675 $0.725
0605040302