Eversource 2012 Annual Report Download - page 52

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replaced a prior $450 million NSTAR Electric revolving credit facility that was scheduled to expire on December 31, 2012. 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.
On July 31, 2012, the DPU approved NSTAR Electric's application for a new two-year financing plan that provides for the issuance of
long-term debt securities in an aggregate amount not to exceed $600 million prior to December 31, 2013.
On October 1, 2012, CL&P redeemed at par four different series of tax-exempt PCRBs totaling $116.4 million. The PCRBs carried
coupons that ranged from 5.85 percent to 5.95 percent and maturity dates that ranged from 2016 through 2028. On October 1, 2012,
WMECO redeemed at par $53.8 million of tax-exempt PCRBs. The PCRBs had a maturity date of 2028 and a coupon of 5.85 percent.
On October 4, 2012, WMECO issued at a premium $150 million of senior unsecured notes at a yield of 2.673 percent that will mature
on September 15, 2021. The senior unsecured notes are part of the same series of WMECO’s existing 3.5 percent coupon Series F
Notes that were initially issued in September 2011. As a result, the aggregate principal amount of WMECO’s outstanding Series F
Notes now totals $250 million.
On October 15, 2012, NSTAR Electric issued at a discount $400 million of 2.375 percent Debentures at a yield of 2.406 percent that will
mature on October 15, 2022. The proceeds, net of issuance costs, were used to pay $400 million of 4.875 percent Debentures that
matured on October 15, 2012.
On January 15, 2013, CL&P issued $400 million of 2.5 percent first mortgage bonds that will mature on January 15, 2023. The
proceeds, net of issuance costs, were used to repay CL&P’s revolving credit facility borrowings of $89 million and $305.8 million of its
commercial paper program borrowings.
NU, CL&P, NSTAR Electric, PSNH and WMECO use their available capital resources to fund their respective construction
expenditures, meet debt requirements, pay costs, including storm-related costs, pay dividends and fund other corporate obligations,
such as pension contributions. The current growth in NU’s transmission construction expenditures utilizes a significant amount of cash
for projects that have a long-term return on investment and recovery period. In addition, NU’s Regulated companies operate in an
environment where recovery of its electric and natural gas distribution construction expenditures takes place over an extended period of
time. This impacts the timing of the revenue stream designed to fully recover the total investment plus a return on the equity portion of
the cost and related financing costs. These factors have resulted in NU’s current liabilities exceeding current assets by approximately
$1.4 billion, $268 million, $198 million and $60 million at NU, CL&P, NSTAR Electric and WMECO, respectively, as of December 31,
2012.
As of December 31, 2012, approximately $730 million of NU's current liabilities relates to long-term debt that will be paid in the next 12
months, consisting of $550 million for NU parent, $55 million for WMECO, and $125 million for CL&P. NU, with its strong credit ratings,
has several options available in the financial markets to repay or refinance these maturities with the issuance of new long-term debt.
NU, CL&P, NSTAR Electric, and WMECO will reduce their short-term borrowings with cash received from operating cash flows or with
the issuance of new long-term debt, as deemed appropriate given our capital requirements and maintenance of our credit rating and
profile. Management expects the future operating cash flows of NU and its subsidiaries, along with the access to financial markets, will
be sufficient to meet any future operating requirements and capital investment forecasted opportunities.
Cash flows provided by operating activities in 2012 totaled $1.05 billion, compared with operating cash flows of $901.1 million in 2011
and $832.6 million in 2010 (all amounts are net of RRB payments, which are included in financing activities on the accompanying
consolidated statements of cash flows). The improved cash flows were due primarily to the addition of NSTAR, which contributed
$450.8 million of operating cash flows (net of RRB payments) to NU since the date of the merger, April 10, 2012. Offsetting the
favorable NSTAR cash flow impact was an increase of $100.6 million in cash disbursements made in 2012, compared to 2011,
associated with CL&P, PSNH and WMECO storm restoration costs related to Tropical Storm Irene, the October 2011 snowstorm, and
Hurricane Sandy, NUSCO Pension Plan cash contributions of $197.4 million in 2012, compared to $143.6 million in 2011, a total of $28
million of bill credits in 2012 to customers of CL&P and WMECO related to the merger, and $27 million in bill credits provided to CL&P
residential customers in 2012 related to the October 2011 snowstorm. In addition, there were approximately $42 million of NU parent
transaction cost payments related to the merger. The improved cash flows from 2010 to 2011 were due primarily to the impact of the
CL&P and PSNH 2010 distribution rate case decisions that were effective July 1, 2010, the WMECO distribution rate case decision that
was effective February 1, 2011, and income tax refunds of $76.6 million in 2011 largely attributable to accelerated depreciation tax
benefits, compared to income tax payments of $84.5 million in 2010. Offsetting these benefits was $143.6 million of Pension Plan cash
contributions in 2011, compared to $45 million in 2010, and approximately $157 million of cash disbursements made in 2011 associated
with Tropical Storm Irene and the October snowstorm.