Eversource 2012 Annual Report Download - page 51

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NU Parent and Other Companies: NU parent and other companies (which includes our competitive businesses held by NU Enterprises
and, from April 10, 2012, NSTAR LLC) recorded net losses of $46.9 million in 2012, compared with net losses of $25.7 million in 2011.
Excluding the impact of the 2012 and 2011 merger and related settlement agreement costs, NU parent and other companies recorded
earnings of $7.5 million and net losses of $14.4 million, respectively. The NU parent merger and related settlement agreement costs
primarily included fees paid to investment advisors and attorneys, a charge for the establishment of a fund to advance Connecticut
energy goals related to the Connecticut settlement agreement, and change in control costs and other compensation costs. Excluding
merger and related settlement agreement costs, improved results were due primarily to lower interest expense, a lower effective tax
rate and the inclusion of NSTAR Communications.
Major Storm Restoration Costs: A storm must meet certain criteria specific to each state and utility company to be declared a major
storm. Once a storm is declared major, all qualifying expenses incurred during storm restoration efforts, if deemed prudent, are
deferred and recovered from customers in future periods. In Connecticut, qualifying storm restoration costs must exceed $5 million for
a storm to be declared as a major storm. In Massachusetts, qualifying storm costs must exceed $1 million for NSTAR Electric and
$300,000 for WMECO and an emergency response plan must be initiated for a storm to be declared a major storm. In New Hampshire,
(1) at least 10 percent of customers must be without power with at least 200 concurrent locations requiring repairs (trouble spots), or (2)
at least 300 concurrent trouble spots must be reported for a storm to be declared a major storm.
On October 29, 2012, Hurricane Sandy caused extensive damage to our electric distribution system across all three states resulting in
deferred storm restoration costs of $204 million ($159.9 million for CL&P, $27.8 million for NSTAR Electric, $12.1 million for PSNH, and
$4.2 million for WMECO). Approximately 1.5 million of our 3.1 million electric distribution customers were without power during or
following the storm, with approximately 850,000 of those customers in Connecticut, approximately 472,000 in Massachusetts, and
approximately 137,000 in New Hampshire. We expect the storm restoration costs to meet the criteria for specific cost recovery in
Connecticut, Massachusetts, and New Hampshire and, as a result, we do not expect the storm to have a material impact on the results
of operations of CL&P, NSTAR Electric, PSNH or WMECO. Each operating company will seek recovery of these deferred storm
restoration costs through its applicable regulatory recovery process.
Liquidity
Consolidated: Cash and cash equivalents totaled $45.7 million as of December 31, 2012, compared with $6.6 million as of
December 31, 2011.
On March 22, 2012, NU parent issued $300 million of 18-month floating rate Series D Senior Notes with a maturity date of
September 20, 2013 and a coupon rate based on the three-month LIBOR rate plus a credit spread of 75 basis points, which resets
every three months. As of December 31, 2012, the interest rate on these notes was 1.059 percent. The proceeds, net of issuance
costs, were used to repay the NU parent $263 million Series A Senior Notes that matured on April 1, 2012, to repay short-term
borrowings and for other general corporate purposes.
On March 22, 2012, the FERC approved CL&P's application requesting to increase its total short-term borrowing capacity from a
maximum of $450 million to a maximum of $600 million through December 31, 2013.
On March 26, 2012, CL&P entered into a five-year $300 million unsecured revolving credit facility. The credit facility is intended to
finance short-term borrowings that CL&P incurred to fund costs of restoring power following Tropical Storm Irene and the October 2011
snowstorm. Under this new facility, CL&P can borrow either on a short-term or a long-term basis subject to any necessary regulatory
approval, and 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. As of December 31, 2012, CL&P had $89 million in borrowings outstanding under this credit facility. The weighted-
average interest rate on these borrowings as of December 31, 2012 was 3.325 percent.
On April 2, 2012, CL&P remarketed $62 million of tax-exempt PCRBs that were subject to mandatory tender on that date. The PCRBs,
which mature on May 1, 2031, carry a coupon rate of 1.55 percent during the current three-year fixed-rate period, and are subject to
mandatory tender for purchase on April 1, 2015.
On May 16, 2012, the FERC granted authorization to allow NSTAR Electric to issue total short-term debt securities in an aggregate
principal amount not to exceed $655 million outstanding at any one time, effective October 23, 2012 through October 23, 2014.
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 $400 million and
NU parent $500 million unsecured revolving credit facilities that were scheduled to expire on September 24, 2013. The new facility
expires on July 25, 2017. We expect the new facility to be used primarily to backstop the $1.15 billion commercial paper program at
NU, which commenced July 25, 2012. As of December 31, 2012, NU had $1.15 billion in borrowings outstanding under this 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).
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