Eversource 2009 Annual Report Download - page 69

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Fuel, Purchased and Net Interchange Power
Fuel, purchased and net interchange power costs increased $28 million in 2008 due primarily to higher forward energy market prices,
partially offset by a decrease in payments to higher priced IPPs in 2008 as contracts expired.
Other Operation
Other operation expenses increased $7 million in 2008 as a result of higher costs that are recovered through distribution tracking
mechanisms and have no earnings impact ($13 million) due primarily to retail transmission. In addition, there were higher distribution
segment expenses ($10 million) due primarily to higher customer account and storm restoration expenses, and higher transmission
segment expenses ($2 million), partially offset by lower transmission segment intracompany billings to the distribution segment that are
eliminated in consolidation ($18 million).
Maintenance
Maintenance expenses increased $17 million in 2008 due primarily to higher generation segment expenses that are tracked and
recovered through an NHPUC approved tracking mechanism ($15 million) primarily as a result of the Merrimack Station maintenance
outages with the remainder of the increase due primarily to higher distribution segment expenses related to storms and the Reliability
Enhancement Program (REP) that began on July 1, 2007.
Depreciation
Depreciation expense increased $3 million in 2008 due primarily to higher utility plant balances resulting from completed construction
programs placed into service.
Amortization of Regulatory (Liabilities)/Assets, Net
Amortization of regulatory (liabilities)/assets, net expense increased $2 million in 2008 primarily as a result of increased recoveries of
previously deferred storm costs.
Amortization of Rate Reduction Bonds
Amortization of RRBs expense decreased $7 million in 2008 due primarily to the retirement of $50 million of RRBs in the first quarter of
2008.
Taxes Other Than Income Taxes
Taxes other than income taxes expenses increased $2 million in 2008 due primarily to higher property taxes ($3 million) as a result of
higher net plant balances and higher local municipal tax rates, partially offset by lower payroll taxes ($1 million).
Interest Expense, Net
Interest expense, net increased $4 million in 2008 due primarily to higher long-term debt interest ($7 million) resulting primarily from the
$70 million debt issuance in September 2007 and the $110 million debt issuance in May 2008, partially offset by lower RRB interest
resulting from lower principal balances outstanding ($2 million).
Other Income, Net
Other income, net increased $1 million in 2008 due primarily to higher AFUDC equity income as a result of a higher eligible CWIP and
lower short-term debt resulting in an increase in CWIP financed by equity ($2 million) and higher interest income related to the federal
tax settlement in 2008 ($2 million), partially offset by higher investment losses ($2 million) due primarily to the NU supplement benefit
trust and lower investment income ($1 million).
Income Tax Expense
Income tax expense decreased $1 million in 2008 due primarily to lower flow-through items related to property, plant and equipment,
partially offset by higher pre-tax earnings.
LIQUIDITY
PSNH had cash flows provided by operating activities in 2009 of $58.2 million, compared with operating cash flows of $116.4 million in
2008 and $95.5 million in 2007, all amounts are net of RRB payments included in financing activities. The decrease in 2009 operating
cash flows is due primarily to an increase of $119.7 million in the negative cash flow effect of accounts payable balances as a result of,
among other things, costs related to the major storm in December 2008 that were paid to vendors in 2009 and deferred. These costs
are currently recovered from customers at an annual rate of $6 million, beginning August 1, 2009, pursuant to the temporary rate case
settlement. This level of recovery could be modified once PSNH's permanent distribution rate case is decided in mid-2010. In addition,
the 2009 operating cash flow decrease was due to the $11.7 million change in the amount of income tax refunds or payments. The
operating cash flow decrease was offset by improved operating results, insurance settlement proceeds and a decrease in the negative
cash flow impact from various other working capital items, such as fuel, materials and supplies of $26.3 million.