Eversource 2008 Annual Report Download - page 63

S. Supplemental Cash Flow Information
For the Years Ended December 31,
(Millions of Dollars) 2008 2007 2006
Cash paid (received) during
the year for:
Interest, net of amounts
capitalized $261.4 $261.6 $277.2
Income taxes (36.1 ) 496.2 51.3
Non-cash investing activities:
Capital expenditures incurred
but not paid 132.8 184.4 105.2
Cash paid during the year for income taxes increased
from 2006 to 2007 as a result of the payment of
approximately $400 million in federal and state income
taxes in 2007 related to the 2006 sale of the competitive
generation business.
Regulatory (refunds and underrecoveries)/overrecoveries
on the accompanying consolidated statements of cash
flows represents the year-over-year change in regulatory
assets and regulatory liabilities, net of amortization
charged during the year and other adjustments for non-
cash items. These deferred amounts are expected to be
recovered from or refunded to customers through the
rate-making process.
T. Operating Expenses
Fuel, purchased and net interchange power: For the
years ended December 31, 2008, 2007, and 2006, fuel,
purchased and net interchange power included costs
related to fuel of $541.7 million, $524.1 million, and $492.2
million, respectively, which include gas costs from our gas
distribution segment of $358.8 million, 317.7 million and
$291.3 million, respectively.
Other operating expenses: For the years ended
December 31, 2008, 2007 and 2006, the majority of
the other operating expenses were for general and
administrative employee salaries, NUSCO’s salary
expenses, and conservation and load management
customer assistance costs.
U. Marketable Securities
Supplemental benefit trust and spent nuclear fuel
trust: NU maintains a supplemental benefit trust and a
spent nuclear fuel trust, both of which hold marketable
securities. The trusts are used to fund NU’s SERP/
non-SERP and WMECO’s prior period spent nuclear
fuel liability. NU’s marketable securities are classified
as available-for-sale, as defined by SFAS No. 115,
“Accounting for Certain Investments and Debt and Equity
Securities.” At December31, 2008, changes in the fair
value of securities in the supplemental benefit trust
relating to unrealized losses are considered other than
temporary because NU does not have the ability to hold
the securities to maturity and are recorded as a pre-tax
loss. Changes related to unrealized gains are recorded
in accumulated other comprehensive income. Realized
gains and losses and unrealized losses related to the
supplemental benefit trust are included in other income,
net, on the consolidated statements of income. Realized
gains, net of realized and unrealized losses associated
with the spent nuclear fuel trust are recorded as an oset
to the spent nuclear fuel trust obligation.
These trusts are not subject to regulatory oversight by
state or federal agencies.
For information regarding marketable securities, see Note
9, “Marketable Securities,” to the consolidated financial
statements.
V. Provision for Uncollectible Accounts
NU maintains a provision for uncollectible accounts to
record its receivables at an estimated net realizable
value. This provision is determined based upon a variety
of factors, including applying an estimated uncollectible
account percentage to each receivable aging category,
historical collection and write-o experience and
management’s assessment of collectibility from individual
customers. Management reviews at least quarterly the
collectibility of the receivables, and if circumstances
change, collectibility estimates are adjusted accordingly.
Receivable balances are written-o against the provision
for uncollectible accounts when these balances are
deemed to be uncollectible.
In November 2006, the DPUC issued an order allowing
CL&P and Yankee Gas to accelerate the recovery of
uncollectible hardship accounts receivable outstanding
for greater than 90 days. At December 31, 2008, CL&P
and Yankee Gas had uncollectible hardship accounts
receivable reserves in the amount of $41 million and $10
million, respectively, with the corresponding bad debt
expense recorded as regulatory assets as these amounts
are probable of recovery. At December 31, 2007, these
amounts totaled $24 million and $8 million, respectively.
For the year ended December31, 2008, the CL&P and
Yankee Gas reserves oset receivables. For the year
ended December31, 2007, the reserve oset amounts
sold to CRC by CL&P but not sold to the financial
institution. These amounts were classified as investments
in securitizable assets on the accompanying consolidated
balance sheets. For the year ended December31, 2007,
Yankee Gas reserves oset receivables.
W. Self-Insurance Accruals
NU is self-insured for employee medical coverage, long-
term disability coverage and general liability coverage
and up to certain limits for workers compensation
coverage. Liabilities for insurance claims include accruals
of estimated settlements for known claims, as well as
accruals of estimates of incurred but not reported claims.
These accruals are included in deferred credits and other
liabilities - other on the accompanying consolidated
balance sheets. In estimating these costs, NU considers
historical loss experience and makes judgments about
the expected levels of costs per claim. These claims are
accounted for based on estimates of the undiscounted
claims, including those claims incurred but not reported.
X. Related Parties
Several wholly-owned subsidiaries of NU provide support
services for NU and its subsidiaries. NUSCO provides
centralized accounting, administrative, engineering,
financial, information technology, legal, operational,
planning, purchasing, and other services to NU’s
companies. Three other subsidiaries construct, acquire
or lease some of the property and facilities used by NU’s
companies.
In 2007, NU and its subsidiaries made aggregate
discretionary contributions of $3 million to the NU
Foundation (Foundation), an independent not-for-profit
charitable entity designed to invest in projects that
emphasize economic development, workforce training
and education, and a clean and healthy environment.
In 2008, NU and its subsidiaries did not make any
contributions. The board of directors of the Foundation
consists of certain NU ocers. The Foundation is not
included in the consolidated financial statements of
NU because the Foundation is a not-for-profit entity
and because the company does not have title to the
Foundation’s assets and cannot receive contributions
back from the Foundation. Any donations made to the
Foundation negatively impact NU’s earnings.
2. Short-Term Debt
Limits: The amount of short-term borrowings that
may be incurred by the regulated companies is subject
to periodic approval by either the FERC or by their
respective state regulators. On December 12, 2007, the
FERC granted authorization to allow CL&P and WMECO
to incur total short-term borrowings up to a maximum of
$450 million and $200 million, respectively, eective as
of December31, 2007, through December 31, 2009. By
rule, the FERC has exempted all holding company system
money pools from active regulation.
PSNH is authorized by regulation of the NHPUC to incur
short-term borrowings up to 10 percent of net fixed plant.
In an order dated August 3, 2007, the NHPUC increased
the amount of short-term borrowings authorized for
PSNH to a maximum of 10 percent of net fixed plant plus
$35 million through the earlier of December 31, 2008, or
until PSNH utilized its long-term debt authorization. At
December31, 2008, after the expiration of this additional
authority, PSNH’s short-term debt authorization under the
10 percent of net fixed plant test totaled $146.6 million.
As a result of the NHPUC having jurisdiction over PSNH’s
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