Eversource 2010 Annual Report Download - page 19

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NORTHEAST UTILITIES
THE CONNECTICUT LIGHT AND POWER COMPANY
PUBLIC SERVICE COMPANY OF NEW HAMPSHIRE
WESTERN MASSACHUSETTS ELECTRIC COMPANY
PART I
Item 1. Business
Please refer to the Glossary of Terms for definitions of defined terms and abbreviations used in this Annual Report on Form 10-K.
PROPOSED MERGER WITH NSTAR
On October 18, 2010, we and NSTAR announced that each company’s Board of Trustees unanimously approved a Merger Agreement
(the merger agreement) to combine the two companies. The transaction was structured as a merger of equals in a tax-free exchange.
Upon the terms and subject to the conditions set forth in the merger agreement, at closing, NSTAR will become a wholly-owned
subsidiary of NU. The post-transaction company will provide electric and natural gas energy delivery service to nearly 3.5 million
electric and natural gas customers through six regulated electric and natural gas utilities in Connecticut, Massachusetts and New
Hampshire, representing over half of all the customers in New England.
Under the terms of the merger agreement, NSTAR shareholders would receive 1.312 NU common shares for each common share of
NSTAR that they own (the "exchange ratio"). The exchange ratio was structured to result in a no premium merger and is based on the
average closing share price of each company's common shares for the 20 trading days preceding the announcement. Following
completion of the merger, common shares of the post-transaction company will be owned approximately 56 percent by NU
shareholders and approximately 44 percent by former NSTAR shareholders. We anticipate that we will issue approximately 137 million
common shares to the NSTAR shareholders as a result of the merger. Following the closing of the merger, our next quarterly dividend
per common share will be increased to an amount that is equivalent to NSTAR’s last quarterly dividend per common share paid prior to
the closing, divided by the exchange ratio. Based on the last quarterly dividend paid by NSTAR of $0.425 per share, and assuming
there are no changes to such dividend prior to the closing of the merger, that would result in NU’s quarterly dividend being increased by
approximately 18 percent to approximately $0.325 per share, or approximately $1.30 per share on an annualized basis as compared to
NU's current annualized dividend of $1.10 per share. NU filed its joint proxy statement/prospectus with the SEC on January 5, 2011
and scheduled a special meeting of shareholders for March 4, 2011, at which shareholders will vote on whether to approve the merger.
Completion of the merger is subject to various customary conditions, including approval by holders of two-thirds of the outstanding
common shares of each company and receipt of all required regulatory approvals, including those of the Massachusetts DPU, the
FERC and the NRC. We received approval from the FCC on January 4, 2011, and on February 10, 2011, the applicable Hart-Scott-
Rodino waiting period expired. Several intervening parties have applied to participate in the regulatory review of the merger and have
raised various issues that they believe the regulatory agencies should examine in the course of the proceedings.
In November 2010, the DPUC issued a draft decision stating it lacked jurisdiction over the merger. In December 2010, the Connecticut
Office of Consumer Counsel, supported by the Connecticut Attorney General, petitioned the DPUC to reconsider its draft decision. In
January 2011, the DPUC issued an Administrative Order stating that it plans to hold a hearing to determine if it has jurisdiction over the
merger. Oral arguments surrounding the draft decision were held in February 2011. The DPUC plans to hold an informational hearing
at a date to be determined. In addition, legislation proposing to give the DPUC jurisdiction over the merger may be introduced in the
Connecticut legislature.
THE COMPANY
NU, headquartered in Hartford, Connecticut, is a public utility holding company subject to regulation by FERC under the Public Utility
Holding Company Act of 2005. We are engaged primarily in the energy delivery business through the following wholly-owned utility
subsidiaries:
● The Connecticut Light and Power Company (CL&P), a regulated electric utility that serves residential, commercial and
industrial customers in parts of Connecticut;
● Public Service Company of New Hampshire (PSNH), a regulated electric utility that serves residential, commercial and
industrial customers in parts of New Hampshire and continues to own generation assets used to serve customers;
● Western Massachusetts Electric Company (WMECO), a regulated electric utility that serves residential, commercial and
industrial customers in parts of western Massachusetts; and
● Yankee Gas Services Company (Yankee Gas), a regulated natural gas utility that serves residential, commercial and industrial
customers in parts of Connecticut.
NU also owns certain unregulated businesses through its wholly-owned subsidiary, NU Enterprises. As of December 31, 2010, NU
Enterprises’ business consisted of (i) Select Energy’s few remaining energy wholesale marketing contracts, which are being wound
down, and (ii) NU Enterprises’ electrical contracting business.