Northeast Utilities earned $260.8 million, or $1.67 per share, in 2008, compared with 2007 earnings of $246.5 million, or $1.59 per share. Results for 2008 include a first-quarter charge of $29.8 million, or $0.19 per share, associated with the settlement of litigation. Absent that charge, Northeast Utilities earned $290.6 million, or $1.86 per share1, in 2008. In the fourth quarter of 2008, Northeast Utilities earned $71.9 million, or $0.46 per share, compared with earnings of $72.7 million, or $0.47 per share, in the fourth quarter of 2007.
Shivery said Northeast Utilities continues to develop a number of proposals to help New England meet its energy and environmental goals. For example:
In December 2008, Northeast Utilities and NSTAR filed an application for a declaratory order with the Federal Energy Regulatory Commission, taking the first step toward building a high-voltage direct current line in New Hampshire to access significant new sources of low-carbon power generated by Hydro-Quebec;
In February 2009, Western Massachusetts Electric Company (WMECO) filed an application with Massachusetts regulators seeking to install at least 6 megawatts of solar generation under the state’s new Green Communities Act; and
Currently, The Connecticut Light and Power Company (CL&P) is signing up 3,000 of its customers for a pilot Advanced Metering Infrastructure program it will run in Connecticut this summer.
Transmission results
Shivery attributed Northeast Utilities’s improved operating results in 2008 primarily to growth in the company’s transmission segment, where the company has invested heavily in recent years to improve the reliability of the region’s energy grid. Northeast Utilities’s transmission segment earned $34.7 million in the fourth quarter of 2008 and $138.3 million for the full year of 2008, compared with earnings of $25.5 million in the fourth quarter of 2007 and $82.5 million for the full year 2007.
Distribution and Generation results
Northeast Utilities’s distribution and generation segments earned $36.0 million in the fourth quarter of 2008 and $150.8 million for the full year of 2008, compared with earnings of $46.1 million in the fourth quarter of 2007 and $146.2 million for the full year of 2007.
CL&P’s distribution segment earned $12.8 million in the fourth quarter of 2008, including a $3.5 million after-tax regulatory charge, and $70 million for the full year 2008. This compares to earnings of $17.1 million in the fourth quarter of 2007 and $61.4 million for the full year 2007. Improved full-year results were due primarily to tariff changes that took effect February 1, 2008, partially offset by higher operation and interest expense and the $3.5 million charge referenced above. The fourth-quarter charge related to a Connecticut Department of Public Utility Control decision in January 2009 denying CL&P a procurement incentive for electricity it purchased for CL&P customers in 2004. The final decision reversed a draft decision issued more than three years ago.
Public Service Company of New Hampshire’s (PSNH) distribution and generation segment earned $9.1 million in the fourth quarter of 2008 and $41.4 million for the full year of 2008, compared with earnings of $12 million in the fourth quarter of 2007 and $43.7 million for the full year 2007. Shivery attributed the weaker fourth quarter results primarily to higher depreciation and interest expense and a 6.8 % decrease in retail sales compared with the fourth quarter of 2007.
Shivery said an ice storm that struck New Hampshire and Massachusetts the night of December 11, 2008, had a modest negative impact on PSNH’s fourth quarter results. That storm resulted in power outages that affected around 320,000 of PSNH’s 490,000 customers. The cost of the storm to PSNH is expected to total around $85 million. PSNH expects to recover its costs associated with the storm.
WMECO’s distribution segment earned $2.2 million in the fourth quarter of 2008 and $12.3 million for the full year 2008, compared with earnings of $4.9 million in the fourth quarter of 2007 and $18.5 million for the full year 2007. Shivery said lower WMECO results in both the fourth quarter and for the full year were due primarily to a 4.2 % decline in full-year sales, higher uncollectible expense and higher interest expense. WMECO incurred $14 million of costs associated with the December 11 ice storm. WMECO expects to recover its costs associated with the storm.
Overall, Northeast Utilities’s electric sales were down 3.5 % for the full year 2008, compared with 2007, and were off 2.6 % on a weather-adjusted basis. Residential sales were down 3.6 %, commercial sales were off 1.4 %, and industrial sales were down 8.6 %. The decline in industrial sales was due primarily to weaker economic conditions and a state and utility supported program to encourage the installation of distributed generation in Connecticut.
Yankee Gas Services Company earned $11.9 million in the fourth quarter of 2008 and $27.1 million for the full year 2008, compared with earnings of $12.1 million in the fourth quarter of 2007 and $22.6 million for the full year 2007. Improved full-year 2008 results were primarily due to the impact of new rates that were effective in July 2007 and a 2.1 % increase in firm sales in 2008.
Competitive business results
Northeast Utilities Enterprises, Inc. (NUEI), the holding company for Northeast Utilities’s competitive businesses, earned $4.3 million in the fourth quarter of 2008 and $13.1 million for the full year 2008, compared with $3.6 million in the fourth quarter of 2007 and $11.7 million for the full year 2007. The improved results were primarily due to favorable mark-to-market results and improved margins on remaining wholesale marketing contracts.
Northeast Utilities Parent and other company results
Northeast Utilities parent and other companies had net expenses of $3.1 million in the fourth quarter of 2008 and, excluding the first quarter litigation charge, compared with net expenses of $2.5 million in the fourth quarter of 2007. Lower results primarily reflect the absence of interest earned on Northeast Utilities parent’s higher cash balances in 2007, which were the result of the sale of the company’s competitive generation facilities in late 2006.
2009 earnings guidance
Northeast Utilities reaffirmed its 2009 consolidated earnings guidance of between $1.80 per share and $2.00 per share. That guidance includes estimates of between $1.00 per share and $1.101 per share for its distribution and generation segment, between $0.85 per share and $0.901 per share for its transmission segment, between $0.00 and $0.051 per share for its remaining competitive businesses, and net expenses of around $0.051 per share for Northeast Utilities parent and other companies.
“In addition to these strong full-year financial results, we successfully accomplished a number of our key operational and strategic objectives in 2008,”said Charles W. Shivery, Northeast Utilities’s chairman, president and chief executive officer. “In December, we completed our $1.6 billion upgrade of the transmission system in southwest Connecticut ahead of schedule and $80 million below budget. We are proud of the work we have accomplished to help the region meet its long-term energy goals of increasing reliability, while also providing improved access to lower cost, as well as more efficient and lower carbon electricity sources.”
“These programs are very supportive of both federal and state energy policies to increase energy efficiency and reduce the environmental impact of electricity generation,” Shivery said. “As these programs develop, they will provide long-term benefits to our customers and communities, while continuing to provide competitive returns to investors.”