Eversource 2012 Annual Report Download - page 36

23
and the demographics of plan participants. If our assumptions prove to be inaccurate, our future costs could increase significantly. In
2008 and 2009, due to the financial crisis, the value of our pension assets declined. As a result, we made a contribution of
approximately $222 million in 2012 and expect to make an approximate $285 million contribution in 2013. In addition, various factors,
including underperformance of plan investments and changes in law or regulation, could increase the amount of contributions required
to fund our pension plan in the future. Additional large funding requirements, when combined with the financing requirements of our
construction program, could impact the timing and amount of future equity and debt financings and negatively affect our financial
position, results of operations or cash flows.
Costs of compliance with environmental regulations, including climate change legislation, may increase and have an adverse
effect on our business and results of operations.
Our subsidiaries' operations are subject to extensive federal, state and local environmental statutes, rules and regulations that govern,
among other things, air emissions, water discharges and the management of hazardous and solid waste. Compliance with these
requirements requires us to incur significant costs relating to environmental monitoring, installation of pollution control equipment,
emission fees, maintenance and upgrading of facilities, remediation and permitting. The costs of compliance with existing legal
requirements or legal requirements not yet adopted may increase in the future. An increase in such costs, unless promptly recovered,
could have an adverse impact on our business and our financial position, results of operations or cash flows.
In addition, global climate change issues have received an increased focus from federal and state governments, which could potentially
lead to additional rules and regulations that impact how we operate our business, both in terms of the power plants we own and operate
as well as general utility operations. Although we would expect that any costs of these rules and regulations would be recovered from
customers, their impact on energy use by customers and the ultimate impact on our business would be dependent upon the specific
rules and regulations adopted and cannot be determined at this time. The impact of these additional costs to customers could lead to a
further reduction in energy consumption resulting in a decline in electricity and gas sales in our service territories, which would have an
adverse impact on our business and financial position, results of operations or cash flows.
Any failure by us to comply with environmental laws and regulations, even if due to factors beyond our control, or reinterpretations of
existing requirements, could also increase costs. Existing environmental laws and regulations may be revised or new laws and
regulations seeking to protect the environment may be adopted or become applicable to us. Revised or additional laws could result in
significant additional expense and operating restrictions on our facilities or increased compliance costs, which may not be fully
recoverable in distribution company rates. The cost impact of any such laws, rules or regulations would be dependent upon the specific
requirements adopted and cannot be determined at this time. For further information, see Item 1, Business - Other Regulatory and
Environmental Matters, included in this Annual Report on Form 10-K.
As a holding company with no revenue-generating operations, NU parent’s liquidity is dependent on dividends from its
subsidiaries, primarily the Regulated companies, its commercial paper program, and its ability to access the long-term debt
and equity capital markets.
NU parent is a holding company and as such, has no revenue-generating operations of its own. Its ability to meet its debt service
obligations and to pay dividends on its common shares is largely dependent on the ability of its subsidiaries to pay dividends to or repay
borrowings from NU parent, and/or NU parent’s ability to access its commercial paper program or the long-term debt and equity capital
markets. Prior to funding NU parent, the Regulated companies have financial obligations that must be satisfied, including among
others, their operating expenses, debt service, preferred dividends (in the case of CL&P and NSTAR Electric), and obligations to trade
creditors. Additionally, the Regulated companies could retain their free cash flow to fund their capital expenditures in lieu of receiving
equity contributions from NU parent. Should the Regulated companies not be able to pay dividends or repay funds due to NU parent,
or if NU parent cannot access its commercial paper programs or the long-term debt and equity capital markets, NU parent’s ability to
pay interest, dividends and its own debt obligations would be restricted.
Item 1B. Unresolved Staff Comments
We do not have any unresolved SEC staff comments.