Eversource 2010 Annual Report Download - page 44

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In November 2010, the DPUC issued a draft decision stating that 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.
Executive Summary
The following items in this executive summary are explained in more detail in this Annual Report:
Results:
• We earned $387.9 million, or $2.19 per share, in 2010, compared with $330 million, or $1.91 per share, in 2009. Improved results
were due primarily to the impact of the CL&P and PSNH 2010 distribution rate case decisions that were effective July 1, 2010,
higher retail electric sales due to weather impacts, the non-recurring benefits from the settlement of tax issues in the fourth quarter
of 2010, and our continued success in managing operation and maintenance costs. These benefits were partially offset by higher
pension and storm-related expenses and expenses related to our proposed merger with NSTAR.
• Our Regulated companies earned $384 million, or $2.16 per share, in 2010, compared with $323.5 million, or $1.87 per share, in
2009.
• Earnings from the distribution segment of our Regulated companies (which also includes the generation businesses of PSNH and
WMECO and the natural gas distribution business of Yankee Gas) totaled $206.2 million, or $1.16 per share, in 2010, compared
with $159.2 million, or $0.92 per share, in 2009. Earnings from the transmission segment of our Regulated companies totaled
$177.8 million, or $1.00 per share, in 2010, compared with $164.3 million, or $0.95 per share, in 2009.
• Our competitive businesses, which are held by NU Enterprises, earned $8.3 million, or $0.05 per share, in 2010, compared with
$15.8 million, or $0.09 per share, in 2009. NU Enterprises recorded $0.7 million of after-tax mark-to-market gains in 2010,
compared with $3.8 million of after-tax mark-to-market gains in 2009.
• NU parent and other companies recorded net expenses of $4.4 million, or $0.02 per share, in 2010, compared with net expenses
of $9.3 million, or $0.05 per share, in 2009. The 2010 results include a fourth quarter non-recurring benefit of $15.7 million, or
$0.09 per share, associated with the settlement of tax issues and a fourth quarter after-tax charge of $9.4 million, or $0.06 per
share, associated with expenses related to NU’s proposed merger with NSTAR.
Outlook:
• Excluding certain non-recurring costs related to our proposed merger with NSTAR of approximately $0.15 per share, we project
consolidated 2011 earnings of between $2.25 per share and $2.40 per share. This projection includes distribution segment
earnings of between $1.25 per share and $1.35 per share, transmission segment earnings of between $1.05 per share and $1.10
per share, and net expenses at NU parent and other companies of approximately $0.05 per share, excluding merger-related costs
of approximately $0.15 per share. The number of outstanding NU common shares used to calculate this guidance is approximately
177 million shares. Results from our competitive businesses are factored into the NU parent and other companies’ results. This
projection assumes we will operate on a stand-alone basis in 2011, although our proposed merger with NSTAR is expected to
close in the second half of 2011.
• We project a compound average annual EPS growth rate through 2015 of between 6 percent and 9 percent using 2009 EPS of
$1.91 per share as the base level. Assuming completion of our proposed merger with NSTAR, we expect our EPS growth rate will
be at the higher end of this range.
• We project capital expenditures for 2011 through 2015 of approximately $6.6 billion (approximately $1.2 billion in 2011). During
that time period, we expect our Regulated company rate base to increase from approximately $7.3 billion at the end of 2010 to
approximately $11.4 billion at the end of 2015, excluding any impacts from the merger.
• On February 8, 2011, our Board of Trustees declared a quarterly common dividend of $0.275 per share, payable on March 31,
2011 to shareholders of record as of March 1, 2011, which equates to $1.10 per share on an annualized basis. Assuming
completion of our proposed merger with NSTAR, 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, our first quarterly dividend per common share
declared would be approximately $0.325 per share, or approximately $1.30 per share on an annualized basis.
Strategy, Regulatory and Other Items:
• On June 30, 2010, the DPUC issued a final decision in CL&P's distribution rate case that approved annualized rate increases of
$63.4 million effective July 1, 2010 and an additional $38.5 million effective July 1, 2011. The decision approved CL&P’s proposal