Eversource 2012 Annual Report Download - page 104

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CL&P's certificate of incorporation contains preferred stock provisions restricting the amount of unsecured debt that CL&P may incur,
including limiting unsecured indebtedness with a maturity of less than 10 years to 10 percent of total capitalization. In November 2003,
CL&P obtained from its preferred stockholders a waiver of such 10 percent limit for a ten-year period expiring in March 2014, provided
that all unsecured indebtedness does not exceed 20 percent of total capitalization. As of December 31, 2012, CL&P had $482 million
of unsecured debt capacity available under this authorization.
Yankee Gas and NSTAR Gas are not required to obtain approval from any state or federal authority to incur short-term debt.
Credit Agreements and Commercial Paper Programs: On July 25, 2012, NU, CL&P, NSTAR LLC, NSTAR Gas, PSNH, WMECO, and
Yankee Gas jointly entered into a five-year $1.15 billion revolving credit facility. The new facility replaced (1) the NSTAR LLC revolving
credit facility of $175 million that served to backstop a commercial paper program utilized by NSTAR LLC and was scheduled to expire
on December 31, 2012, (2) the NSTAR Gas revolving credit facility of $75 million that expired on June 8, 2012, and (3) the CL&P,
PSNH, WMECO, and Yankee Gas joint three-year $400 million and NU parent three-year $500 million unsecured revolving credit
facilities that were scheduled to expire on September 24, 2013. The new facility expires on July 25, 2017. Management expects the
new facility to be used primarily to backstop the $1.15 billion commercial paper program at NU, which commenced July 25, 2012. The
commercial paper program allows NU parent to issue commercial paper as a form of short-term debt. Under the terms of the
agreement, NU parent may provide intercompany loans to its subsidiaries, including CL&P, PSNH and WMECO.
On July 25, 2012, NSTAR Electric entered into a five-year $450 million revolving credit facility. This new facility serves to backstop
NSTAR Electric’s existing $450 million commercial paper program. The new facility expires on July 25, 2017. This new facility
replaced a prior $450 million NSTAR Electric revolving credit facility that was scheduled to expire on December 31, 2012.
As of December 31, 2012, NU had $1.15 billion in short-term borrowings outstanding under its commercial paper program. The
weighted-average interest rate on these borrowings as of December 31, 2012 was 0.46 percent, which is generally based on money
market rates. As of December 31, 2012, there were inter-company loans of $987.5 million from NU to its subsidiaries ($405.1 million
for CL&P, $63.3 million for PSNH, and $31.9 million for WMECO). As of December 31, 2012, NSTAR Electric had $276 million in short-
term borrowings outstanding under its commercial paper program, leaving $174 million of available borrowing capacity. The weighted-
average interest rate on these borrowings as of December 31, 2012 was 0.31 percent, which is generally based on money market
rates.
As of December 31, 2011, CL&P and Yankee Gas had $31 million and $30 million, respectively, in short-term borrowings outstanding
under the joint $400 million revolving credit facility with weighted average interest rates of 4.03 percent and 2.07 percent, respectively.
As of December 31, 2011, NU parent had $256 million in short-term borrowings outstanding under its $500 million revolving credit
facility with a weighted average interest rate of 2.20 percent. As of December 31, 2011, there were also $17.9 million, $4 million and
$5.4 million in LOCs outstanding under the NU parent credit facility for NU, CL&P and PSNH, respectively. As of December 31, 2011,
NSTAR Electric had $141.5 million in short-term borrowings outstanding under its existing commercial paper program with a weighted
average interest rate of 0.16 percent.
Under the credit facilities, NU and its subsidiaries must comply with certain financial and non-financial covenants, including a
consolidated debt to total capitalization ratio. NU and its subsidiaries were in compliance with these covenants as of December 31,
2012 and 2011. If NU or its subsidiaries were not in compliance with these covenants, an event of default would occur requiring all
outstanding borrowings by such borrower to be repaid and additional borrowings by such borrower would not be permitted under the
respective credit facility.
Amounts outstanding under the commercial paper program are included in Notes Payable for NU and NSTAR Electric and classified in
current liabilities on the accompanying consolidated balance sheet as management anticipates that all borrowings under these credit
facilities will be outstanding for no more than 364 days at one time. Intercompany loans from NU to PSNH and WMECO are included in
Notes Payable to Affiliated Companies and classified in current liabilities on the accompanying consolidated balance sheet.
On January 15, 2013, CL&P issued $400 million of Series A First and Refunding Mortgage Bonds with a coupon rate of 2.5 percent and
a maturity date of January 15, 2023. The proceeds, net of issuance costs, were used to pay short-term borrowings outstanding under
the CL&P credit agreement and the NU commercial paper program. As a result, as of December 31, 2012, CL&P's credit agreement
borrowings of $89 million and intercompany loans related to the commercial paper program of $305.8 million have been classified as
Long-Term Debt on the accompanying consolidated balance sheet.
CL&P Credit Agreement: On March 26, 2012, CL&P entered into a five-year unsecured revolving credit facility in the amount of $300
million, which expires on March 26, 2017. Under this facility, CL&P can borrow either on a short-term or a long-term basis subject to
regulatory approval. As of December 31, 2012, CL&P had $89 million in borrowings outstanding under this credit agreement with a
weighted average interest rate of 3.325 percent.
Under this facility, CL&P may borrow at prime rates or LIBOR-based rates, plus an applicable margin based on the higher of S&P’s or
Moody’s credit ratings.
In addition, CL&P must comply with certain financial and non-financial covenants, including a consolidated debt to total capitalization
ratio. CL&P was in compliance with these covenants as of December 31, 2012. If CL&P was not in compliance with these covenants,
an event of default would occur requiring all outstanding borrowings to be repaid and additional borrowings would not be permitted
under this credit facility.