SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549-1004
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1995
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OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
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Commission File Number 0-404
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THE CONNECTICUT LIGHT AND POWER COMPANY
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(Exact name of registrant as specified in its charter)
CONNECTICUT 06-0303850
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(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
SELDEN STREET, BERLIN, CONNECTICUT 06037-1616
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(Address of principal executive offices) (Zip Code)
(203) 665-5000
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(Registrant's telephone number, including area code)
Not Applicable
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(Former name, former address and former fiscal year,
if changed since last report)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days.
Yes X No
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Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practicable date.
Class Outstanding at July 31, 1995
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Common Shares, $10.00 par value 12,222,930 shares
THE CONNECTICUT LIGHT AND POWER COMPANY AND SUBSIDIARIES
TABLE OF CONTENTS
Page No.
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Part I.Financial Information
Item 1. Financial Statements
Consolidated Balance Sheets - June 30, 1995
and December 31, 1994 2
Consolidated Statements of Income - Three and
Six Months Ended June 30, 1995 and 1994 4
Consolidated Statements of Cash Flows -
Six Months Ended June 30, 1995 and 1994 5
Notes to Consolidated Financial Statements 6
Item 2. Management's Discussion and Analysis
of Financial Condition and Results
of Operations 9
Part II. Other Information
Item 1. Legal Proceedings 15
Item 4. Submission of Matters to a Vote
of Security Holders 15
Item 5. Other Information 16
Item 6. Exhibits and Reports on Form 8-K 17
Signatures 18
PART I. FINANCIAL INFORMATION
THE CONNECTICUT LIGHT AND POWER COMPANY AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Unaudited)
<TABLE>
<CAPTION>
June 30, December 31,
1995 1994
------------- -------------
(Thousands of Dollars)
<S> <C> <C>
ASSETS
------
Utility Plant, at original cost:
Electric................................................ $ 6,099,589 $ 6,063,179
Less: Accumulated provision for depreciation......... 2,295,752 2,194,314
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3,803,837 3,868,865
Construction work in progress........................... 87,823 99,993
Nuclear fuel, net....................................... 160,898 164,795
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Total net utility plant............................. 4,052,558 4,133,653
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Other Property and Investments:
Nuclear decommissioning trusts, at market............... 211,567 171,950
Investments in regional nuclear generating
companies, at equity................................... 54,598 54,952
Other, at cost.......................................... 14,867 14,742
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281,032 241,644
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Current Assets:
Cash and special deposits............................... 1,245 2,017
Receivables, net........................................ 171,222 192,926
Accounts receivable from affiliated companies........... 3,700 9,367
Accrued utility revenues................................ 82,200 90,475
Fuel, materials, and supplies, at average cost.......... 68,252 64,003
Recoverable energy costs, net--current portion.......... 23,565 10,561
Prepayments and other................................... 37,654 43,654
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387,838 413,003
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Deferred Charges:
Regulatory assets:
Income taxes,net...................................... 926,671 949,134
Deferred costs--nuclear plants........................ 50,210 101,632
Unrecovered contract obligation--Yankee Atomic
Electric Company..................................... 94,747 100,003
Deferred demand-side-management costs................. 109,341 116,133
Recoverable energy costs, net......................... 101,679 61,040
Cogeneration costs.................................... 75,354 36,821
Other................................................. 60,869 45,571
Unamortized debt expense................................ 15,447 8,396
Other................................................... 9,243 10,427
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1,443,561 1,429,157
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Total Assets........................................ $ 6,164,989 $ 6,217,457
============= =============
</TABLE>
See accompanying notes to consolidated financial statements.
THE CONNECTICUT LIGHT AND POWER COMPANY AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Unaudited)
<TABLE>
<CAPTION>
June 30, December 31,
1995 1994
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(Thousands of Dollars)
<S> <C> <C>
CAPITALIZATION AND LIABILITIES
------------------------------
Capitalization:
Common stock--$10 par value. Authorized
24,500,000 shares; outstanding 12,222,930
shares................................................. $ 122,229 $ 122,229
Capital surplus, paid in................................ 637,014 632,117
Retained earnings....................................... 776,713 765,724
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Total common stockholder's equity.............. 1,535,956 1,520,070
Preferred stock not subject to mandatory
redemption............................................. 116,200 166,200
Preferred stock subject to mandatory redemption......... 158,750 226,250
Long-term debt.......................................... 1,812,919 1,815,579
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Total capitalization........................... 3,623,825 3,728,099
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Minority Interest in Consolidated Subsidiary.............. 100,000 -
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Obligations Under Capital Leases.......................... 129,997 120,268
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Current Liabilities:
Notes payable to banks.................................. 44,000 76,000
Notes payable to affiliated company..................... 104,250 92,750
Commercial paper........................................ 10,000 10,000
Long-term debt and preferred stock--current
portion................................................ 12,469 11,861
Obligations under capital leases--current
portion................................................ 48,098 55,701
Accounts payable........................................ 87,764 102,837
Accounts payable to affiliated companies................ 18,391 43,033
Accrued taxes........................................... 1,963 26,413
Accrued interest........................................ 30,786 30,682
Other................................................... 23,091 22,828
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380,812 472,105
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Deferred Credits:
Accumulated deferred income taxes....................... 1,553,358 1,544,021
Accumulated deferred investment tax credits............. 146,193 150,087
Deferred contract obligation--Yankee Atomic
Electric Company....................................... 94,747 100,003
Other................................................... 136,057 102,874
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1,930,355 1,896,985
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Commitments and Contingencies (Note 4)<F4>
Total Capitalization and Liabilities........... $ 6,164,989 $ 6,217,457
============= =============
</TABLE>
See accompanying notes to consolidated financial statement
THE CONNECTICUT LIGHT AND POWER COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
------------------- -----------------------
1995 1994 1995 1994
--------- --------- ----------- -----------
(Thousands of Dollars)
<S> <C> <C> <C> <C>
Operating Revenues................................. $525,147 $551,135 $1,126,341 $1,170,950
--------- --------- ----------- -----------
Operating Expenses:
Operation --
Fuel, purchased and net interchange power..... 123,008 137,249 282,923 288,378
Other......................................... 146,411 143,232 291,655 283,435
Maintenance...................................... 43,765 48,024 85,528 91,920
Depreciation..................................... 58,600 55,695 119,337 112,591
Amortization of regulatory assets, net........... 9,298 30,012 18,404 59,822
Federal and state income taxes................... 39,449 37,601 83,151 99,404
Taxes other than income taxes.................... 40,100 41,132 86,015 88,414
--------- --------- ----------- -----------
Total operating expenses................... 460,631 492,945 967,013 1,023,964
--------- --------- ----------- -----------
Operating Income................................... 64,516 58,190 159,328 146,986
--------- --------- ----------- -----------
Other Income:
Deferred nuclear plants return--other funds...... 1,154 3,376 2,397 6,938
Equity in earnings of regional nuclear
generating companies........................... 1,989 1,940 3,061 3,651
Other, net....................................... 862 3,562 (2,254) 5,451
Income taxes--credit............................. 2,161 1,531 5,623 3,315
--------- --------- ----------- -----------
Other income, net.......................... 6,166 10,409 8,827 19,355
--------- --------- ----------- -----------
Income before interest charges............. 70,682 68,599 168,155 166,341
--------- --------- ----------- -----------
Interest Charges:
Interest on long-term debt....................... 31,489 29,395 62,444 60,416
Other interest................................... 1,556 2,020 2,639 2,256
Deferred nuclear plants return--borrowed funds... (452) (1,978) (894) (4,083)
--------- --------- ----------- -----------
Interest charges, net...................... 32,593 29,437 64,189 58,589
--------- --------- ----------- -----------
Net Income......................................... $ 38,089 $ 39,162 $ 103,966 $ 107,752
========= ========= =========== ===========
</TABLE>
See accompanying notes to consolidated financial statements.
THE CONNECTICUT LIGHT AND POWER COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
Six Months Ended
June 30,
-----------------------
1995 1994
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(Thousands of Dollars)
<S> <C> <C>
Operating Activities:
Net Income................................................ $ 103,966 $ 107,752
Adjustments to reconcile to net cash
from operating activities:
Depreciation............................................ 119,337 112,591
Deferred income taxes and investment tax credits, net... 33,554 12,124
Deferred nuclear plants return, net of amortization..... 51,056 40,346
Recoverable energy costs, net of amortization........... (53,643) 5,646
Deferred demand-side management, net of amortization.... 6,792 3,687
Other sources of cash................................... 61,052 8,927
Other uses of cash...................................... (66,164) (28,901)
Changes in working capital:
Receivables and accrued utility revenues................ 35,646 49,354
Fuel, materials, and supplies........................... (4,249) (3,767)
Accounts payable........................................ (39,715) (66,591)
Accrued taxes........................................... (24,450) (12,409)
Other working capital (excludes cash)................... 6,367 (2,682)
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Net cash flows from operating activities.................... 229,549 226,077
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Financing Activities:
Issuance of long-term debt................................ - 395,000
Issuance of Monthly Income
Preferred Securities..................................... 100,000 -
Net (decrease) increase in short-term debt................ (20,500) 145,250
Reacquisitions and retirements of long-term debt.......... (6,669) (600,213)
Reacquisitions and retirements of preferred stock......... (117,500) -
Cash dividends on preferred stock......................... (13,405) (11,970)
Cash dividends on common stock............................ (79,572) (79,450)
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Net cash flows used for financing activities................ (137,646) (151,383)
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Investment Activities:
Investment in plant:
Electric utility plant.................................. (59,635) (70,129)
Nuclear fuel............................................ (7,006) 7,684
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Net cash flows used for investments in plant.............. (66,641) (62,445)
Other investment activities, net.......................... (26,034) (13,928)
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Net cash flows used for investments......................... (92,675) (76,373)
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Net Decrease In Cash For The Period......................... (772) (1,679)
Cash and special deposits - beginning of period............. 2,017 2,283
----------- -----------
Cash and special deposits - end of period................... $ 1,245 $ 604
=========== ===========
</TABLE>
See accompanying notes to consolidated financial statements.
THE CONNECTICUT LIGHT AND POWER COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
1. General
The accompanying unaudited consolidated financial statements should be read in
conjunction with the Annual Report of The Connecticut Light and Power Company
(the company or CL&P), a wholly owned subsidiary of Northeast Utilities (NU) on
Form 10-K for the year ended December 31, 1994 (1994 Form 10-K). In the opinion
of the company, the accompanying financial statements contain all adjustments
necessary to present fairly the financial position as of June 30, 1995, the
results of operations for the three and six months ended June 30, 1995 and 1994,
and the statements of cash flows for the six months ended June 30, 1995 and
1994. The results of operations for the three and six months ended June 30,
1995 and 1994 are not necessarily indicative of the results expected for a full
year.
Certain reclassifications of prior period data have been made to conform with
the current period presentation.
2. Accounting Change
The company's accounting policies and the accompanying consolidated financial
statements conform to generally accepted accounting principles applicable to
rate-regulated enterprises and reflect the effects of the ratemaking process in
accordance with Statement of Financial Accounting Standards No. 71, "Accounting
for Certain Types of Regulation" (SFAS 71). In the event that any portion of
the company's operations is no longer subject to the provisions of SFAS 71, as a
result of a change in the cost-of-service based regulatory structure or the
effects of competition, the company would be required to write off related
regulatory assets and liabilities. In addition, the company would be required
to determine any impairment to other assets and write down these assets to their
fair value.
Statement of Financial Accounting Standards No. 121, "Accounting for the
Impairment of Long-Lived Assets and Long-Lived Assets to be Disposed Of" (SFAS
121), issued in March 1995 and effective January 1, 1996, establishes accounting
standards for the impairment of long-lived assets. SFAS 121 requires that
regulatory assets which are no longer probable of recovery through future
revenues be charged to earnings. Based upon the current regulatory environment
in the company's operating service area, it is not expected that SFAS 121 would
have a material impact on the financial position or results of operations of the
company upon adoption. This conclusion may change in the future as competitive
factors influence wholesale and retail pricing in the electric utility industry,
or if the cost-of-service based regulatory structure were to change.
3. Derivative Financial Instruments
CL&P uses fuel-swap agreements with financial institutions to hedge against
well-defined fuel-price risk created by negotiated energy contracts. CL&P does
not use these agreements for trading purposes. Those fuel swap agreements
minimize exposure associated with rising fuel prices and effectively fix CL&P's
cost of fuel for these negotiated energy contracts. Under the swap agreements,
CL&P exchanges monthly payments based on the differential between a fixed or
variable price for the associated fuel. These swap agreements have been made
with various financial institutions, each of which is rated "A" or better by
Standards & Poor's rating group. CL&P is exposed to credit risk on its fuel
swaps if the counterparties fail to perform their obligations. However,
management anticipates that the counterparties will be able to fully satisfy
their obligations under the contracts.
As of August 10, 1995, CL&P had outstanding fuel-swap agreements with a total
notional value of approximately $257 million. As of July 31, 1995, the fuel-
swaps outstanding on that date had a negative mark-to-market position of
approximately $3 million.
For further information on Derivative Financial Instruments, see the Notes to
Consolidated Financial Statements in CL&P's March 31, 1995 Form 10-Q and in its
1994 Form 10-K.
4. Commitments and Contingencies
Construction Program: For information regarding CL&P's construction program,
see the Notes to Consolidated Financial Statements in CL&P's 1994 Form 10-K.
Nuclear Performance: For information regarding the performance of CL&P's
nuclear units, see "Management's Discussion and Analysis of Financial Condition
and Results of Operations" in this Form 10-Q and the Notes to Consolidated
Financial Statements in CL&P's March 31, 1995 Form 10-Q, and the Notes to
Consolidated Financial Statements in CL&P's 1994 Form 10-K.
Environmental Matters: For information regarding environmental matters, see the
Notes to Consolidated Financial Statements in CL&P's 1994 Form 10-K.
Nuclear Insurance Contingencies: For information regarding nuclear insurance
contingencies, see the Notes to Consolidated Financial Statements in CL&P's 1994
Form 10-K.
Purchased Power Arrangements: For information regarding purchased power
arrangements, see the Notes to Consolidated Financial Statements in CL&P's 1994
Form 10-K.
Hydro-Quebec: For information regarding Hydro-Quebec, see the Notes to
Consolidated Financial Statements in CL&P's 1994 Form 10-K.
5. Workforce Reduction
For information regarding the NU system's workforce reduction program, see
"Management's Discussion and Analysis of Financial Condition and Results of
Operations," in this Form 10-Q.
CONNECTICUT LIGHT AND POWER COMPANY AND SUBSIDIARIES
Management's Discussion and Analysis of Financial
Condition and Results of Operations
This section contains management's assessment of CL&P's (the company) financial
condition and the principal factors having an impact on the results of
operations. The company is a wholly owned subsidiary of Northeast Utilities
(NU). This discussion should be read in conjunction with the company's
consolidated financial statements and footnotes and Management's Discussion and
Analysis in the 1994 Form 10-K and the First Quarter 1995 Form 10-Q.
FINANCIAL CONDITION
Overview
The company's net income decreased to $104 million for the six months ended June
30, 1995, from $108 million for the same period in 1994. Net income decreased
slightly to $38 million for the three months ended June 30, 1995, from $39
million for the same period in 1994. The decrease in net income from 1994 for
the six-month period is primarily attributable to lower retail kilowatt-hour
sales as a result of mild weather in the first quarter of 1995, higher fuel
and purchased-power costs, net of fuel recoveries, lower wholesale revenues and
lower deferred nuclear plants return, partially offset by the continued deferral
of cogeneration expenses and increased revenues from regulatory decisions.
CL&P's retail kilowatt-hour sales through June 1995 were down by 3.3 percent
from 1994, which had colder than normal weather in the first quarter.
Workforce Reductions
In July 1995, NU announced a program aimed at reducing the nuclear
organization's total workforce by approximately 250 employees by the end of
January 1996. An early retirement program is available to approximately 155
eligible employees of NU's subsidiaries, who will be at least age 55 with ten
years of service as of January 1, 1996. The employees have until September 15,
1995, to make their decisions. The balance of the workforce reduction will be
achieved through attrition and layoffs. The NU system-wide estimated cost of
the early retirements and layoffs could be in the range of $10 to $12 million.
Retail Wheeling and Utility Restructuring
See "Part II. Item 5. Other Information" for updated information concerning
retail wheeling and utility restructuring.
Regulatory Matters
On June 30, 1995, the Department of Public Utility Control (DPUC) approved a
transaction between the company and the O'Brien EPA cogeneration facility
(O'Brien) which allows CL&P to terminate its existing agreement to purchase
power from O'Brien and, in turn, enter into an agreement to purchase an
equivalent amount of power at lower rates from Citizens Lehman Power LP. CL&P
will apply 100 percent of the savings from the new agreements to reduce the
balance of deferred cogeneration expenses ($73 million as of June 30, 1995).
The savings are estimated to be $59 million over 15 years with $39 million of
the savings anticipated in the first 5 years. The transaction is expected to
close in August 1995.
Nuclear Performance
The composite capacity factor of the five nuclear generating units that the NU
system operates -- including the Connecticut Yankee nuclear unit (CY) -- was
61.7 percent for the six months ended June 30, 1995, as compared with 61.0
percent for the same period in 1994. The low capacity factor in 1995 is
primarily the result of the extended refueling and maintenance outage for
Millstone 2.
The Millstone Unit 2 refueling and maintenance outage extended into July 1995 in
order to complete previously identified work. The Nuclear Regulatory Commission
completed its assessment of the unit's readiness to restart in late June, and in
a letter dated July 20, 1995, concluded that the deficiencies responsible for
the extended shutdown had been addressed and sufficient progress had been
demonstrated to support safe restart of the unit.
Additional work identified during start-up testing was completed, and the unit
returned to service on August 4, 1995. However, on August 8, 1995, the unit
shut down due to a pipe break in the turbine building, and the unit's return
to service is under evaluation.
Total replacement power costs attributable to the extension of the outage for
CL&P are in the range of $8 million per month. In addition, operation and
maintenance (O&M) costs to be incurred during the outage are estimated to be $56
million, an increase of $29 million as a result of the extended outage. O&M
costs associated with the refueling outage are deferred and amortized through
rates for CL&P. The recovery of the replacement power and O&M costs is subject
to prudence reviews in Connecticut.
CL&P has a mechanism that has been in operation since 1979 designed to recover
or refund certain non-nuclear fuel costs if the nuclear units do not operate at
a predetermined capacity factor (the Generation Utilization Adjustment Clause or
GUAC).
On June 12, 1995, CL&P won its appeal in Connecticut Superior Court of the GUAC
disallowance (approximately $8 million) that occurred for the 1992-1993 GUAC
year. The DPUC, the Connecticut Office of Consumer Counsel(OCC) and the
Connecticut Industrial Energy Consumers have subsequently appealed that decision
to the Connecticut Appellate Court. The disallowed portion of the 1993-1994
GUAC balance (approximately $8 million) is also under appeal in Superior Court.
However, a decision has not been issued in that case.
In August 1995, CL&P filed its annual GUAC filing with the DPUC. Subject to
regulatory approval, CL&P proposed to recover the GUAC amount for the period
over eighteen months rather than twelve months. The GUAC deferral for the GUAC
year ended July 31, 1995 was approximately $98 million. However, in calculating
the amount to be recovered, CL&P is required by a previous order of the DPUC
which is under appeal in the proceeding mentioned in the previous paragraph)
to reduce the GUAC deferral by the amount of the base fuel "overrecoveries." The
overrecovery amount for this GUAC period is estimated to be $25 million. The
amount proposed to be billed to customers over the eighteen-month period
commencing September 1, 1995, is, therefore, approximately $73 million. As of
June 30, 1995, CL&P has reserved approximately $25 million for "overrecoveries"
against the deferred GUAC costs.
While the company is unable to predict the outcome of possible prudence reviews
of its nuclear operations or the GUAC overrecoveries issues, management believes
that the ultimate resolution of these matters will not have a material adverse
impact on the company's financial position or the results of its operations.
In June 1995, Maine Yankee Atomic Power Company (Maine Yankee) began an
operation to sleeve all 17,000 tubes in the plant's three steam generators.
Maine Yankee expects that the plant will return to service near the end of 1995.
The approximate cost to Maine Yankee of the sleeving operation has been
determined to be $40 million. The company will be billed by Maine Yankee for
its pro rata share (12 percent) of these costs over the next six months, under
its power contract. In addition, CL&P will incur additional costs for
replacement power (estimated at $600,000 per month) until Maine Yankee returns
to service.
LIQUIDITY AND CAPITAL RESOURCES
Cash provided from operations increased approximately $3 million for the first
six months of 1995, as compared to 1994. Cash used for financing activities
decreased approximately $14 million primarily due to higher reaquisitions and
retirements of long-term debt in 1994, net of the change in short-term debt.
Cash used for investments increased approximately $16 million primarily due to
higher investments in the decommissioning trust in 1995.
RESULTS OF OPERATIONS
Comparison of the Second Quarter of 1995 with the Second Quarter
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of 1994
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Operating revenues decreased approximately $26 million in the second quarter of
1995, as compared with the same period in 1994. The components of the change in
operating revenues are as follows:
Changes in Operating Revenues Increase/(Decrease)
----------------------------- -------------------
(Millions of Dollars)
Regulatory decisions $ 13
Fuel and purchased power cost recoveries (22)
Wholesale revenues (9)
Other (8)
----
Total revenue change $(26)
====
Revenues related to regulatory decisions increased primarily because of the
retail rate increase in July 1994. Fuel and purchased power cost recoveries
decreased primarily due to lower fuel prices in 1995. Wholesale revenues
decreased primarily due to capacity sales contracts that expired at the end of
1994. Retail kilowatt-hour sales were unchanged from 1994 for the quarter.
Fuel, purchased, and net interchange power expense decreased approximately $14
million in the second quarter of 1995, as compared with 1994, primarily due to
the timing in the recognition of fuel expenses under the provisions of CL&P's
fuel adjustment clauses, partially offset by a higher level of energy purchases
from other utilities as a result of the extended Millstone 2 outage and a $7
million increase in the reserve for overrecoveries against deferred GUAC costs.
Amortization of regulatory assets, net decreased approximately $21 million in
the second quarter of 1995, as compared with 1994, primarily because of the
deferral of cogeneration expenses of $6 million a month which began in July
1994.
Deferred nuclear plants return decreased approximately $4 million in the second
quarter of 1995, as compared with 1994, primarily because the last 5 percent of
the company's Millstone 3 investment was phased into rates on January 1, 1995.
Other income decreased approximately $3 million in the first six months of 1995,
as compared with 1994, primarily because of the amortization in 1994 of the
customer portion of a 1993 property tax disallowance.
Comparison of the First Six Months of 1995 with the First Six
-------------------------------------------------------------
Months of 1994
--------------
Operating revenues decreased approximately $45 million in the first six months
of 1995, as compared with 1994. The components of the change in operating
revenues are as follows:
Changes in Operating Revenues Increase/(Decrease)
----------------------------- ------------------
(Millions of Dollars)
Regulatory decisions $ 32
Fuel and purchased power cost recoveries (34)
Retail Sales volume (29)
Wholesale revenues (12)
Other (2)
----
Total revenue change $(45)
====
Revenues related to regulatory decisions increased primarily because of the
retail rate increase for CL&P in July 1994 and higher conservation recoveries.
Fuel and purchased-power cost recoveries decreased primarily due to lower fuel
prices, lower retail sales in 1995 and lower revenues from sales to
non-affiliated utilities. Retail sales volume decreased 3.3 percent for the
first six months of 1995 from 1994 sales levels primarily due to mild weather in
the first quarter of 1995. Wholesale revenues decreased primarily due to
capacity sales contracts that expired at the end of 1994.
Fuel, purchased, and net interchange power expense decreased approximately $5
million in the first six months of 1995, as compared with 1994, primarily due to
the timing in the recovery of fuel expenses under the provisions of CL&P's fuel
adjustment clauses, partially offset by a higher level of energy purchases from
other utilities as a result of the extended Millstone 2 outage and a $12 million
increase in the reserve for overrecoveries against deferred GUAC costs.
Other operation expense increased approximately $8 million and maintenance
expense decreased approximately $6 million. The increase in operation expense
is due primarily to higher capacity charges from the regional nuclear units
primarily due to Maine Yankee, which is in an extended refueling outage, and
Vermont Yankee, which began an outage in March 1995 and higher conservation
expenses. The decrease in maintenance expense is due primarily to lower
maintenance costs at the nuclear and fossil units.
Amortization of regulatory assets, net decreased approximately $41 million in
the first six months of 1995, as compared with 1994, primarily because of the
deferral of CL&P cogeneration expenses of $6 million a month which began in July
1994.
Federal and state income taxes decreased approximately $19 million in the first
six months of 1995, as compared with 1994, primarily because of lower book
taxable income and a first quarter adjustment to the tax accrual for a favorable
tax ruling.
Deferred nuclear plants return decreased approximately $8 million in the first
six months of 1995, as compared with 1994, primarily because the last 5 percent
of CL&P's Millstone 3 investment was phased into rates on January
1, 1995.
Other income decreased approximately $8 million in the first six months of 1995,
as compared with 1994, primarily because of the write-down of CL&P's investment
in Millstone 3 as a result of a settlement agreement with the town of
Wallingford, Connecticut, and the amortization in 1994 of the customer portion
of a 1993 property tax disallowance.
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
1. On August 3, 1995, CL&P filed a petition for declaratory rulings with the
DPUC to determine whether Texas-Ohio Power Company (Texas-Ohio), which has built
a small cogeneration plant in Manchester, Connecticut, can sell electricity from
that plant to two CL&P retail customers in that town. On that same date, CL&P
also sought in Hartford Superior Court a temporary restraining order,
preliminary injunction and permanent injunction against Texas-Ohio selling
electricity to CL&P's retail customers.
Item 4. Submission of Matters to a Vote of Security Holders
At the Annual Meeting of Stockholders of CL&P held on June 12, 1995,
stockholders voted to fix the number of directors for the ensuing year at nine.
The vote fixing the number of directors at nine was 12,222,930 shares in favor,
representing 100 percent of the issued and outstanding shares of common stock of
CL&P.
At the Annual Meeting, the following nine directors were elected, each by a vote
of 12,222,930 shares in favor, to serve on the Board of Directors for the
ensuing year: Robert G. Abair, Robert E. Busch, William B. Ellis, Bernard M.
Fox, William T. Frain, Jr., Cheryl W. Grise, John B. Keane, Hugh C. MacKenzie,
and John F. Opeka.
Item 5. Other Information
1. On June 20, 1995, the staff of the Securities and Exchange Commission
recommended "conditional repeal" of the Public Utility Holding Company Act of
1935 and substantial loosening of rules presently restricting NU's capital-
raising and diversification activities. Repeal is subject to approving
legislation in Congress, which has yet to be introduced. Comments on the rules
are due in September.
For additional information on this matter, see "Business - Public Utility
Regulation" in CL&P's 1994 Form 10-K.
2. On July 14, 1995, the Connecticut Department of Public Utility Control
(DPUC) issued its final decision in the Connecticut restructuring docket. The
decision stressed the importance of retaining the benefits of the existing
electric system, which it described as the "least costly and most reliable in
the world." The decision established thirteen principles to guide the
restructuring process in Connecticut. The decision also offered 25
recommendations for restructuring, which are generally consistent with NU's
"Path to a Competitive Future" restructuring proposal. One key conclusion was
that retail access could result in benefits to customers under certain
circumstances, but addressing the many transition issues must precede such
access. In addition, the decision concluded that utilities are entitled to a
reasonable opportunity to recover costs potentially stranded by the evolution
toward competitive markets.
For additional information on this matter, see "Business - Subsequent Events" in
CL&P's 1994 Form 10-K.
3. In June 1995, the State of South Carolina withdrew from membership in the
Southeast Interstate Low-Level Radioactive Waste Management Compact and
re-opened its Barnwell low-level radioactive waste (LLRW) disposal facility to
low-level waste generators from states situated outside that compact's region.
NU is arranging for disposal of its LLRW at Barnwell, and shipments are
presently scheduled to begin in mid-August. NU continues to explore other LLRW
disposal options.
For additional information on this matter, see "Business - Electric Operations -
Nuclear Generation - Low Level Radioactive Waste" in CL&P's 1994 Form 10-K.
4. On June 22, 1995, The United States Court of Federal Claims held in Yankee
------
Atomic Electric Company v. The United States that as applied to Yankee Atomic
--------------------------------------------
Electric Company (YAEC), the Uranium Enrichment Decontamination and
Decommissioning Fund, which pursuant to the 1992 Energy Policy Act imposes an
annual "special assessment" on domestic utilities, is an unlawful add-on to the
bargained-for contract price for enriched uranium. As a result, the federal
government must refund the approximately $3.0 million that YAEC has paid into
the fund since its inception. NU is evaluating the applicability of this
decision to the $21 million that the System companies have already paid into the
fund, and whether this alters the System companies' obligation to pay such
special assessments in the future. This decision is subject to appeal.
For additional information on this proceeding, see "Business - Electric
Operations - Nuclear Generation - Decommissioning" in CL&P's 1994 Form 10-K.
5. On August 1, 1995, pursuant to a management succession plan that was
introduced on January 29, 1992, William B. Ellis resigned as Chairman of NU's
Board of Trustees, and Bernard M. Fox assumed that position. Mr. Ellis also
resigned from the Board of Directors of CL&P and certain other NU subsidiaries.
For more information regarding this matter, see "Item 5. Other Events" in
CL&P's Form 8-K, dated January 29, 1992.
Item 6. Exhibits and Reports on Form 8-K
(a) Listing of Exhibits:
Exhibit
Number Description
------- -----------
27 Financial Data Schedule
(b) Reports on Form 8-K:
No reports on Form 8-K have been filed during
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
THE CONNECTICUT LIGHT AND POWER COMPANY
---------------------------------------
Registrant
Date August 14, 1995 By /s/ Bernard M. Fox
-------------------- ------------------------------
Bernard M. Fox
Vice Chairman and Director
Date August 14, 1995 By /s/ John W. Noyes
-------------------- -----------------------------
John W. Noyes
Vice President and
Controller
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