FORM 10-Q
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, 1997
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission File Number 1-11419
THE CONNECTICUT LIGHT AND POWER COMPANY
(Exact name of registrant as specified in its charter)
CONNECTICUT 06-0303850
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
SELDEN STREET, BERLIN, CONNECTICUT 06037-1616
(Address of principal executive offices) (Zip Code)
(860) 665-5000
(Registrant's telephone number, including area code)
Not Applicable
(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
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, 1997
Common Shares, $10.00 par value 12,222,930 shares
THE CONNECTICUT LIGHT AND POWER COMPANY AND SUBSIDIARIES
TABLE OF CONTENTS
Page No.
Part I. Financial Information
Item 1. Financial Statements
Consolidated Balance Sheets - June 30, 1997
and December 31, 1996 2
Consolidated Statements of Income - Three
Months and Six Months Ended June 30, 1997 and 1996 4
Consolidated Statements of Cash Flows -
Six Months Ended June 30, 1997 and 1996 5
Notes to Consolidated Financial Statements 6
Item 2. Management's Discussion and Analysis
of Financial Condition and Results
of Operations 13
Part II. Other Information
Item 1. Legal Proceedings 22
Item 4. Submission of Matters to a Vote
of Security Holders 23
Item 5. Other Information 23
Item 6. Exhibits and Reports on Form 8-K 24
Signatures 25
PART I. FINANCIAL INFORMATION
THE CONNECTICUT LIGHT AND POWER COMPANY AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Unaudited)
<TABLE>
<CAPTION>
June 30, December 31,
1997 1996
------------- -------------
(Thousands of Dollars)
<S> <C> <C>
ASSETS
- ------
Utility Plant, at original cost:
Electric................................................ $ 6,348,007 $ 6,283,736
Less: Accumulated provision for depreciation......... 2,776,198 2,665,519
------------- -------------
3,571,809 3,618,217
Construction work in progress........................... 92,073 95,873
Nuclear fuel, net....................................... 134,453 133,050
------------- -------------
Total net utility plant............................. 3,798,335 3,847,140
------------- -------------
Other Property and Investments:
Nuclear decommissioning trusts, at market............... 322,967 296,960
Investments in regional nuclear generating
companies, at equity................................... 59,532 56,925
Other, at cost.......................................... 39,884 16,565
------------- -------------
422,383 370,450
------------- -------------
Current Assets:
Cash.................................................... 263 404
Notes receivable from affiliated companies.............. 56,000 109,050
Receivables, net (Note 4)............................... 211,087 226,112
Accounts receivable from affiliated companies........... 3,615 3,481
Taxes receivable........................................ 57,986 40,134
Accrued utility revenues (Note 4)....................... 83,008 78,451
Fuel, materials, and supplies, at average cost.......... 84,367 79,937
Recoverable energy costs, net--current portion.......... 24,473 25,436
Prepayments and other................................... 80,059 63,344
------------- -------------
600,858 626,349
------------- -------------
Deferred Charges:
Regulatory assets:
Income taxes,net...................................... 722,085 753,390
Unrecovered contractual obligations................... 263,874 300,627
Deferred demand side management costs................. 52,800 90,129
Recoverable energy costs, net......................... 87,341 97,900
Cogeneration costs.................................... 49,817 66,205
Other................................................. 60,501 62,530
Unamortized debt expense................................ 19,938 17,033
Other................................................... 19,399 12,283
------------- -------------
1,275,755 1,400,097
------------- -------------
Total Assets........................................ $ 6,097,331 $ 6,244,036
============= =============
</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,
1997 1996
------------- -------------
(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................................ 640,495 639,657
Retained earnings....................................... 467,290 551,410
------------- -------------
Total common stockholder's equity.............. 1,230,014 1,313,296
Preferred stock not subject to mandatory
redemption............................................. 116,200 116,200
Preferred stock subject to mandatory redemption......... 155,000 155,000
Long-term debt.......................................... 2,018,462 1,834,405
------------- -------------
Total capitalization........................... 3,519,676 3,418,901
------------- -------------
Minority Interest in Consolidated Subsidiary.............. 100,000 100,000
------------- -------------
Obligations Under Capital Leases.......................... 144,583 143,347
------------- -------------
Current Liabilities:
Notes payable to banks.................................. 100,000 -
Long-term debt and preferred stock--current
portion................................................ 25,615 204,116
Obligations under capital leases--current
portion................................................ 12,407 12,361
Accounts payable........................................ 127,563 160,945
Accounts payable to affiliated companies................ 54,060 78,481
Accrued taxes........................................... 24,786 28,707
Accrued interest........................................ 29,695 31,513
Nuclear compliance...................................... 51,740 50,500
Other................................................... 26,107 34,433
------------- -------------
451,973 601,056
------------- -------------
Deferred Credits:
Accumulated deferred income taxes....................... 1,334,954 1,365,641
Accumulated deferred investment tax credits............. 131,397 135,080
Deferred contractual obligations........................ 271,372 305,627
Other................................................... 143,376 174,384
------------- -------------
1,881,099 1,980,732
------------- -------------
Commitments and Contingencies (Note 6)
Total Capitalization and Liabilities........... $ 6,097,331 $ 6,244,036
============= =============
</TABLE>
See accompanying notes to consolidated financial statements.
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,
------------------- -----------------------
1997 1996 1997 1996
--------- --------- ----------- -----------
(Thousands of Dollars)
<S> <C> <C> <C> <C>
Operating Revenues................................. $574,841 $542,999 $1,199,749 $1,202,354
--------- --------- ----------- -----------
Operating Expenses:
Operation --
Fuel, purchased and net interchange power..... 213,761 137,472 479,261 360,847
Other......................................... 213,191 196,726 355,336 386,570
Maintenance...................................... 97,753 83,120 168,374 132,168
Depreciation..................................... 59,050 61,784 118,969 124,500
Amortization of regulatory assets, net........... 15,492 6,725 31,361 3,975
Federal and state income taxes................... (29,642) 957 (28,806) 29,484
Taxes other than income taxes.................... 38,823 41,018 85,693 89,636
--------- --------- ----------- -----------
Total operating expenses................... 608,428 527,802 1,210,188 1,127,180
--------- --------- ----------- -----------
Operating (Loss) Income............................ (33,587) 15,197 (10,439) 75,174
--------- --------- ----------- -----------
Other Income:
Equity in earnings of regional nuclear
generating companies........................... 1,332 1,957 3,149 3,793
Other, net....................................... 3,496 4,958 8,106 9,046
Minority interest in income of subsidiary........ (2,325) (2,325) (4,650) (4,650)
Income taxes..................................... 509 91 414 (396)
--------- --------- ----------- -----------
Other income, net.......................... 3,012 4,681 7,019 7,793
--------- --------- ----------- -----------
(Loss) Income before interest charges...... (30,575) 19,878 (3,420) 82,967
--------- --------- ----------- -----------
Interest Charges:
Interest on long-term debt....................... 30,605 30,339 63,882 60,131
Other interest................................... 2,909 239 3,218 685
--------- --------- ----------- -----------
Interest charges, net...................... 33,514 30,578 67,100 60,816
--------- --------- ----------- -----------
Net (Loss) Income.................................. $(64,089) $(10,700) $ (70,520) $ 22,151
========= ========= =========== ===========
</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,
-----------------------
1997 1996
----------- -----------
(Thousands of Dollars)
<S> <C> <C>
Operating Activities:
Net (Loss) Income ........................................ $ (70,520) $ 22,151
Adjustments to reconcile to net cash
from operating activities:
Depreciation............................................ 118,969 124,500
Deferred income taxes and investment tax credits, net... (10,465) (46,362)
Deferred nuclear plants return, net of amortization..... (119) 6,272
Recoverable energy costs, net of amortization........... 11,522 (2,044)
Deferred cogeneration costs, net of amortization........ 16,388 6,193
Deferred demand-side-management
costs, net of amortization............................ 37,329 23,306
Deferred nuclear refueling outage, net of amortization.. (22,667) 24,797
Nuclear compliance, net................................. 1,240 38,447
Other sources of cash................................... 19,899 88,202
Other uses of cash...................................... (27,065) (45,096)
Changes in working capital:
Receivables and accrued utility revenues................ 10,334 31,484
Fuel, materials, and supplies........................... (4,430) (15,146)
Accounts payable........................................ (57,803) (5,940)
Accrued taxes........................................... (3,921) (38,199)
Other working capital (excludes cash)................... (44,711) 2,154
----------- -----------
Net cash flows (used for) from operating activities......... (26,020) 214,719
----------- -----------
Financing Activities:
Net increase (decrease) in short-term debt................ 100,000 (51,750)
Issuance of long-term debt................................ 200,000 222,000
Reacquisitions and retirements of long-term debt.......... (193,288) (9,479)
Cash dividends on preferred stock......................... (7,611) (7,611)
Cash dividends on common stock............................ (5,989) (103,528)
----------- -----------
Net cash flows from financing activities.................... 93,112 49,632
----------- -----------
Investment Activities:
Investment in plant:
Electric utility plant.................................. (74,494) (56,363)
Nuclear fuel............................................ (669) 2,255
----------- -----------
Net cash flows used for investments in plant.............. (75,163) (54,108)
NU System Money Pool...................................... 53,050 (187,950)
Investments in nuclear decommissioning trusts............. (19,194) (22,858)
Other investment activities, net.......................... (25,926) 437
----------- -----------
Net cash flows used for investments......................... (67,233) (264,479)
----------- -----------
Net Decrease In Cash For The Period......................... (141) (128)
Cash - beginning of period.................................. 404 337
----------- -----------
Cash - end of period........................................ $ 263 $ 209
=========== ===========
/Table>
See accompanying notes to consolidated financial statements.
THE CONNECTICUT LIGHT AND POWER COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
A. Presentation
The accompanying unaudited consolidated financial statements should
be read in conjunction with Management's Discussion and Analysis of
Financial Condition and Results of Operations (MD&A) in this Form 10-
Q, the Annual Report of the Connecticut Light and Power Company (the
company or CL&P) on Form 10-K for the year ended December 31, 1996
(1996 Form 10-K), the company's Form 10-Q for the quarter ended March
31, 1997, and the company's Form 8-Ks dated June 26, 1997 and July
22, 1997. In the opinion of the company, the accompanying financial
statements contain all adjustments necessary to present fairly the
financial position as of June 30, 1997, the results of operations for
the three-month and six-month periods ended June 30, 1997 and 1996,
and the statements of cash flows for the six months period ended June
30, 1997 and 1996. All adjustments are of a normal, recurring, nature
except those described below in Note 6B. The results of operations
for the three-month and six-month periods ended June 30, 1997 and
1996 are not necessarily indicative of the results expected for a full
year.
Northeast Utilities (NU) is the parent company of the Northeast Utilities
system (the system). The system furnishes franchised retail electric
service in Connecticut, New Hampshire, and western Massachusetts
through four wholly owned subsidiaries: CL&P, Public Service Company
of New Hampshire (PSNH), Western Massachusetts Electric Company
(WMECO), and Holyoke Water Power Company. A fifth wholly owned
subsidiary, North Atlantic Energy Corporation (NAEC), sells all of its
entitlement to the capacity and output of the Seabrook nuclear power
plant to PSNH. In addition to its franchised retail electric service,
the system furnishes firm and other wholesale electric services to
various municipalities and other utilities and, on a pilot basis
pursuant to state regulatory experiments, provides off-system retail
electric service. The system serves about 30 percent of New England's
electric needs and is one of the 20 largest electric utility systems
in the country as measured by revenues.
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and
liabilities and disclosures of contingent liabilities at the date of
the financial statements and the reported amounts of revenues and
expenses during the reporting period. Actual results could differ
from those estimates.
Certain reclassifications of prior period data have been made to
conform with the current period presentation.
B. New Accounting Standards
The Financial Accounting Standards Board (FASB) issued two new
accounting standards during June 1997, Statement of Financial
Accounting Standards (SFAS) No. 130, "Reporting Comprehensive Income"
and SFAS 131, "Disclosures about Segments of an Enterprise and Related
Information." SFAS 130 establishes standards for the reporting and
disclosure of comprehensive income. SFAS 131 determines the standards
for reporting and disclosing qualitative and quantitative information
about a company's operating segments. Both SFAS 130 and SFAS 131
will be effective in 1998. Management believes that the implementation
of SFAS 130 and SFAS 131 will not have a material impact on CL&P's
financial position or its results of operations.
For additional information regarding the adoption of new accounting
standards, see Note 4, "Sale of Customer Receivables and Accrued
Utility Revenues" in this Form 10-Q, CL&P's Form 10-Q for the quarter
ended March 31, 1997 and CL&P's 1996 Form 10-K.
C. Regulatory Accounting and Assets
For information regarding regulatory accounting and assets, see the
MD&A and Part II in this Form 10-Q, CL&P's Form 10-Q for the quarter
ended March 31, 1997 and CL&P's 1996 Form 10-K.
2. SHORT-TERM DEBT
In November 1996, NU, CL&P and WMECO entered into a three-year revolving
credit agreement (New Credit Agreement) with a group of 12 banks. Access
to the New Credit Agreement is contingent upon certain financial tests
being met. On May 30, 1997, NU entered into a First Amendment and Waiver,
amending the New Credit Agreement. Interest coverage and common equity
ratios were revised to enable the companies to meet certain financial
tests. CL&P and WMECO are able to borrow up to $225 million and $90
million, respectively, which amounts are secured by a like principal amount
of their respective first mortgage bonds. The NU parent company, which as
a holding company cannot issue first mortgage bonds, will be able to borrow
up to $50 million if CL&P, WMECO, and NU consolidated financial statements
meet certain interest coverage tests for two consecutive quarters. No more
than $313.75 million may be borrowed by all companies collectively at any
one time.
For information regarding short-term debt, see the MD&A in this Form
10-Q, CL&P's Form 10-Q for the quarter ended March 31, 1997 and CL&P's 1996
Form 10-K.
3. CAPITALIZATION
Bonds: On June 26, 1997, CL&P issued $200 million of First and Refunding
Mortgage Bonds, 1997 Series B (CL&P 1997 Series B Bonds). The CL&P 1997
Series B Bonds bear interest at an annual rate of 7.75% and will mature on
June 1, 2002.
Rocky River Realty Company (RRR): In April 1997, the holders of
approximately $38 million of RRR notes elected to have RRR repurchase the
notes at par. On July 1, 1997, RRR received commitments from alternative
purchasers to purchase approximately $12 million of the notes that RRR had
been required to repurchase. On July 30, 1997, approximately $6 million of
the $12 million was purchased by an alternative purchaser. The remaining $6
million are expected to be purchased by another purchaser by September 2,
1997.
RRR repurchased the remaining $26 million of the notes On July 14, 1997.
For additional information on these and other matters related to CL&P's
capitalization, see the MD&A in this Form 10-Q, CL&P's Form 10-Q for the
quarter ended March 31, 1997, CL&P's Form 8-K dated June 26, 1997 and
CL&P's 1996 Form 10-K.
4. SALE OF CUSTOMER RECEIVABLES AND ACCRUED UTILITY REVENUES
During 1996, CL&P entered into an agreement to sell up to $200 million of
eligible customer receivables and accrued utility revenues. As of June 30,
1997, CL&P had sold approximately $100 million of its accounts receivable
under its sales agreement.
The FASB issued SFAS 125, "Accounting for Transfers and Servicing of
Financial Assets and Extinguishments of Liabilities," in June 1996. SFAS
125 became effective on January 1, 1997, and establishes, in part, criteria
for concluding whether a transfer of financial assets in exchange for
consideration should be accounted for as a sale or as a secured borrowing.
CL&P is currently in the process of restructuring its accounts receivable
sales agreement to permit it to treat transactions occurring under the
agreement as a sale. At present, CL&P is required to record its sales of
customer accounts receivables and accrued utility revenues as secured
short-term borrowings.
For additional information regarding CL&P's sale of customer receivables
and accrued utility revenues, see the MD&A in this Form 10-Q, CL&P's Form
10-Q for the quarter ended March 31, 1997 and CL&P's 1996 Form 10-K.
5. FUEL PRICE MANAGEMENT
As of June 30, 1997, CL&P had outstanding fuel price management agreements
with a total notional value of approximately $318.4 million and a negative
mark-to-market position of approximately $7.6 million.
Under the terms of CL&P's fuel price management agreements, CL&P can be
required to post cash collateral with its counterparties approximately
equivalent to the amount of a negative mark-to-market position. In
general, the amount of collateral is to be returned to CL&P when the mark-
to-market position becomes positive, when CL&P meets specified credit
ratings, or when an agreement ends and all open positions are properly
settled.
These fuel price management agreements have been made with various
financial institutions, each of which is rated "A" or better by Standard &
Poor's ratings group. CL&P is exposed to credit risk on its fuel price
management instruments if the counterparties fail to perform their
obligations. However, management anticipates that the counterparties will
be able to fully satisfy their obligations under the agreements.
For further information on fuel price management instruments, see the MD&A
in this Form 10-Q, CL&P's Form 10-Q for the quarter ended March 31, 1997
and CL&P's 1996 Form 10-K.
6. COMMITMENTS AND CONTINGENCIES
A. Restructuring
For information on restructuring of the electric utility industry
within CL&P's jurisdiction, see the MD&A in this Form 10-Q, CL&P's
Form 10-Q for the quarter ended March 31, 1997 and CL&P's 1996 Form
10-K.
B. Nuclear Performance
Millstone: CL&P has a 81-percent ownership interest in Millstone 1
and 2 and a 52.93-percent ownership interest in Millstone 3. The
three Millstone units are managed by Northeast Nuclear Energy Company
(NNECO). Millstone units 1, 2, and 3 (Millstone) have been out of
service since November 4, 1995, February 21, 1996, and March 30, 1996,
respectively, and are on the Nuclear Regulatory Commission's (NRC)
watch list. Management has restructured its nuclear organization and
is currently implementing comprehensive plans to restart the units.
Management believes that Millstone 3 will be ready for restart by the
end of the third quarter of 1997, Millstone 2 in the fourth quarter
of 1997 and Millstone 1 in the first quarter of 1998. Because of the
need for completion of independent inspections and reviews and for the
NRC to complete its processes before the NRC Commissioners can vote on
permitting a unit to restart, the actual beginning of operations is
expected to take several months beyond the time when a unit is
declared ready for restart. The NRC's internal schedules at present
indicate that a meeting of the Commissioners to act upon a Millstone 3
restart request could occur by mid-December if NU, the independent
review teams and NRC staff concur that the unit can return to
operation by that time. A similar schedule indicates a mid-March
meeting of the Commissioners to act upon a Millstone 2 restart
request. Management hopes that Millstone 3 can begin operating by the
end of 1997.
Based on a recent review of work efforts and budgets, management
believes that the overall 1997 nuclear spending levels, which include
both nuclear O&M expenditures and associated support services and
capital expenditures, will be slightly higher than previously
estimated. The 1997 nuclear O&M expenditures are expected to increase,
while 1997 projected capital expenditures are expected to decrease.
CL&P's share of nonfuel O&M costs for Millstone to be expensed in
1997 are now projected to be approximately $353 million compared to
$309 million previously estimated. The 1997 projection includes $12
million of restart costs identified to date which are expected to be
incurred in 1998 and is net of $50 million of Millstone costs reserved
in 1996. CL&P's share of 1997 projected capital expenditures for
Millstone is expected to decrease from the $48 million previously
estimated to $35 million.
For the six months ended June 30, 1997, CL&P's share of nonfuel O&M
costs expensed for Millstone totaled $211 million. The actual
expenditures include $40 million reserved for future 1997
restart costs and $12 million reserved for 1998 restart costs, and is
net of $50 million of spending against the reserve established in
1996. The reserve balance at June 30, 1997, was approximately $52
million. Nonfuel O&M costs have been and will continue to be absorbed
by CL&P without adjustment to its current rates. Management will
continue to evaluate the costs to be incurred for the remainder of
1997 and in 1998 to determine whether adjustments to the existing
reserves are required.
As discussed above, management cannot predict when the NRC will allow
any of the Millstone units to return to service and thus cannot
estimate the total replacement power costs the company will
ultimately incur. Replacement power costs incurred by CL&P
attributable to the Millstone outages averaged approximately $23
million per month during the first six months of 1997, and are
projected to average approximately $21 million per month for the
remainder of 1997. Based on current estimates of expenditures and
restart dates, management believes the system has sufficient
resources to fund the restoration of the Millstone units and related
replacement power costs.
CL&P Prudence Investigation: In response to motions filed by various
parties and intervenors, the Connecticut Department of Public Utility
Control (DPUC) on June 27, 1997 orally granted summary judgment in
CL&P's nuclear outage investigation docket, disallowing recovery of
costs associated with the ongoing outages at Millstone.
On July 30, 1997, the DPUC issued a purported written decision in the
same case, which disallowed recovery of an estimated $600 million of
replacement power costs related to the Millstone outages, and found
that CL&P had waived recovery of an additional $360 million of
incremental O&M. The written decision, like the oral decision,
recognized CL&P's right to seek recovery, in a future rate proceeding,
of $40 million related to reliability enhancements. CL&P has appealed
the DPUC's decision.
CL&P has not requested cost recovery at this time and has said that
it will not seek recovery for a substantial portion of these costs
and will not request any cost recovery until the units are returned
to operation. Any requests for recovery would include only costs for
projects CL&P would have undertaken under normal operating conditions
or that provide long-term value for CL&P customers. CL&P does not
expect the DPUC's decision to have a material financial impact on
projected 1997 results. For additional information on this matter,
see the MD&A in this Form 10-Q.
Litigation: For information regarding litigation initiated by the non-
NU owners of Millstone 3, see Part II - Item 1 in this Form 10-Q and
CL&P's 1996 Form 10-K.
Maine Yankee Atomic Power Company (MYAPC): CL&P has a twelve percent
ownership interest in the Maine Yankee nuclear generating facility
(MY). At June 30, 1997, CL&P's equity investment in MYAPC was
approximately $8.9 million. The NU system companies had relied on MY
for approximately two percent of their capacity.
On August 6, 1997, the board of directors of MYAPC voted unanimously
to cease permanently the production of power at MY. MYAPC has begun
to prepare the regulatory filings intended to implement the
decommissioning and the recovery of remaining assets of MYAPC. During
the latter part of 1997, MYAPC plans to file an amendment to its
power contracts to clarify the obligations of its purchasing
utilities following the decision to cease power production. MYAPC is
currently updating its decommissioning cost estimates. These
estimates are expected to be completed during the third quarter of
1997. At this time, the company is unable to estimate its obligation
to MYAPC. Under the terms of the contracts with MYAPC, the
shareholders-sponsor companies, including CL&P, are responsible for
their proportionate share of the costs of the unit, including
decommissioning. Management expects that CL&P will be allowed to
recover these costs from its customers.
For further information regarding nuclear performance, see the MD&A
and Part II in this Form 10-Q, CL&P's Form 10-Q for the quarter ended
March 31, 1997, CL&P's Form 8-K dated June 26, 1997, and CL&P's 1996
Form 10-K.
C. Environmental Matters
For information regarding environmental matters, see the MD&A in this
Form 10-Q, CL&P's Form 10-Q for the quarter ended March 31, 1997 and
CL&P's 1996 Form 10-K.
D. Nuclear Insurance Contingencies
For information regarding nuclear insurance contingencies, see CL&P's
Form 10-Q for the quarter ended March 31, 1997 and CL&P's 1996 Form
10-K.
E. Construction Program
For information regarding CL&P'S construction program, see CL&P's Form
10-Q for the quarter ended March 31, 1997 and CL&P's 1996 Form 10-K.
F. Long-Term Contractual Arrangements
For information regarding long-term contractual arrangements, see
CL&P's 1996 Form 10-K.
7. LEASES
On June 21, 1996, CL&P entered into an operating lease with a third party
to acquire the use of four turbine generators having an installed cost of
approximately $70 million. During the first quarter of 1997, it was
determined that CL&P would not be in compliance with a financial coverage
test required under the lease agreement. CL&P has reached an agreement with
the lessors for a resolution of this matter. Management believes that the
terms and conditions of this agreement will not have a material adverse
impact on the company's financial position or results of operations. For
additional information on this matter, see CL&P's Form 10-Q for the quarter
ended March 31, 1997 and CL&P's 1996 Form 10-K.
THE 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 The Connecticut Light and Power
Company's and subsidiaries (CL&P or 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 CL&P's consolidated financial statements and footnotes
in this Form 10-Q, the First Quarter Form 10-Q, the 1996 Form 10-K, and the
Form 8-Ks dated June 26, 1997, and July 22, 1997.
FINANCIAL CONDITION
Overview
The outages at the three Millstone units (Millstone) continue to have a
substantial negative impact on CL&P's earnings. CL&P had a net loss of
approximately $64 million in the second quarter of 1997 compared to a net loss of
approximately $11 million in the second quarter of 1996, and a net loss of
approximately $71 million for the six months ended June 30, 1997, compared to
net income of approximately $22 million for the same period in 1996. The losses
for the three-and six-month periods were primarily attributable to replacement-
power and nuclear operation and maintenance (O&M) expenses for the Millstone
units in 1997 including amounts reserved for future spending. The loss for the
first six months of 1997 was also attributable to lower retail sales. Retail
kilowatt-hour sales for the first half of 1997 were 1.9 percent below the same
period in 1996 primarily due to mild weather in the first quarter of 1997.
In 1997, while all three units are out of service, CL&P expects to continue to
operate at a loss. Replacement-power costs attributable to the Millstone outages
averaged approximately $23 million a month during the first six months of 1997,
and are projected to average approximately $21 million a month for the remainder
of 1997. The company will continue to expense its replacement power costs in
1997.
Millstone Outages
CL&P has an 81 percent ownership interest in Millstone 1 and 2 and a 52.93
percent joint ownership interest in Millstone 3. Millstone units 1, 2 and 3
(Millstone) have been out of service since November 4, 1995, February 21, 1996,
and March 30, 1996, respectively.
Millstone 3 continues to be designated by management as the lead unit for
restart. Millstone 2 remains on a schedule to be ready for restart shortly after
Millstone 3. To provide the resources and focus for Millstone 3, the pace of
work on the restart of Millstone 1 was reduced until late in 1997 at which time
the full work effort is expected to be resumed.
Management believes that Millstone 3 will be ready for restart by the end of the
third quarter of 1997, Millstone 2 in the fourth quarter of 1997 and Millstone 1
in the first quarter of 1998. Because of the need for completion of independent
inspections and reviews and for the Nuclear Regulatory Commission (NRC) to
complete its processes before the NRC Commissioners can vote on permitting a
unit to restart, the actual beginning of operations is expected to take several
months beyond the time when a unit is declared ready for restart. The NRC's
internal schedules at present indicate that a meeting of the Commissioners to
act upon a Millstone 3 restart request could occur by mid-December if NU, the
independent review teams and NRC staff concur that the unit can return to
operation by that time. A similar schedule indicates a mid-March meeting of the
Commissioners to act upon a Millstone 2 restart request. Management hopes that
Millstone 3 can begin operating by the end of 1997.
As management continues to proceed with its current work towards restart, the
Independent Corrective Action Verification Program began on May 27, 1997 for
Millstone 3 and June 30, 1997 for Millstone 2. The program is expected to end in
mid-November 1997 for Millstone 3 and late November 1997 for Millstone 2. The
NRC Operational Safety Team Inspection for Millstone 3 is expected to begin in
October 1997.
Based on a recent review of work efforts and budgets, management believes that
the overall 1997 nuclear spending levels, which include both nuclear O&M
expenditures and associated support services and capital expenditures, will
be slightly higher than previously estimated. The 1997 projected nuclear O&M
expenditures are expected to increase, while 1997 projected capital
expenditures are expected to decrease. CL&P's share of nonfuel O&M costs for
Millstone to be expensed in 1997 is now projected to be approximately $353
million compared to $309 million previously estimated. The 1997 projection
includes $12 million of restart costs identified to date which are expected to
be incurred in 1998 and is net of $50 million of Millstone costs reserved in
1996. CL&P's share of 1997 projected capital expenditures for Millstone are
expected to decrease from the $48 million previously estimated to $35 million.
For the six months ended June 30, 1997, CL&P's share of nonfuel O&M costs
expensed for Millstone totaled $211 million. The actual expenditures include $40
million reserved for future 1997 restart costs and $12 million reserved for 1998
restart costs, and is net of $50 million of spending against the reserve
established in 1996. The reserve balance at June 30, 1997, was approximately $52
million. Nonfuel O&M costs have been and will continue to be absorbed by CL&P
without adjustment to its current rates.
Although 1998 nuclear operating budgets have not been established at this time,
management believes that the nuclear spending levels at Millstone will be
reduced considerably from 1997 levels, although they will be higher than before
the station was placed on the NRC's watch list. The actual level of 1998
spending will depend on when the units return to operation and the cost of
restoring them to service. The total cost to restart the units cannot be
estimated at this time. Management will continue to evaluate the costs to be
incurred for the remainder of 1997 and in 1998 to determine whether adjustments
to the existing reserves are required.
On July 1, 1997, the Company submitted continued unit operation studies to the
Connecticut Department of Public Utility Control (DPUC) showing that, under base
case assumptions, Millstone 1 will have a value to System customers (as compared
to the cost of shutting down the unit and incurring replacement power costs) of
approximately $70 million during the remaining thirteen years of its operating
license and Millstone 2 will have a value to System customers (on the same
assumptions as used with Millstone 1) of approximately $500 million during the
remaining eighteen years of its operating license. Two other cases submitted to
the DPUC based on higher assumed O&M costs, which CL&P considers less likely,
indicated that Millstone 1 would be uneconomic in varying degrees. Based on
these economic analyses, NU expects to continue operating both Millstone 1 and
Millstone 2 for the remaining terms of their respective operating licenses. The
DPUC has stated it will consider these analyses in the context of CL&P's next
integrated resource planning proceeding which begins in April 1998.
As a result of the nuclear situation, a number of civil lawsuits, criminal
investigations and regulatory proceedings have been initiated, including
litigation by NU's shareholders. On August 7, 1997, the non-NU owners of
Millstone 3 filed demands for arbitration with CL&P and Western Massachusetts
Electric Company (WMECO) as well as lawsuits in Massachusetts Superior Court
against Northeast Utilities and its current and former trustees. The NU
companies believe there is no legal basis for the claims and intend to defend
against them vigorously. To date, no reserves have been established for
existing or potential litigation. See Part II - Item 1 in this Form 10-Q and
CL&P's 1996 Form 10-K for further information on litigation. For further
information on the current Millstone outages, see CL&P's First Quarter Form 10-
Q, 1996 Form 10-K and Form 8-K dated June 26, 1997.
Capacity
During 1996 and continuing into 1997, the NU system companies have taken
measures to improve their capacity position due to the current Millstone
outages. CL&P anticipates spending approximately $56 million for additional
capacity-related costs in 1997, of which $38 million is expected to be expensed.
The projected 1997 capacity-related expenditures have increased from previous
estimates due to additional improvements to existing fossil units and CL&P's
estimated share of costs to reactivate generating units in New England. In the
first six months of 1997, CL&P spent approximately $29 million to ensure
adequate generating capacity, of which $14 million was expensed.
Despite record-breaking demand in mid-July, the NU system has been able to meet
capacity requirements without any supply interruptions. Assuming normal weather
conditions and generating unit availability, management expects that the Company
will have sufficient capacity to meet peak load demands for the remainder of
1997. If there are high levels of unplanned outages at other units in New
England, or if any transmission lines used to import power from other states are
unavailable, at times of peak load demand, the Company and the other New England
utilities may have to resort to operating procedures designed to reduce customer
demand.
On June 28, 1997, the Seabrook nuclear unit in New Hampshire returned to service
following a 50-day planned refueling and maintenance outage.
In December 1996, all of the seven power cables installed in the Long Island
Sound between CL&P's Norwalk Harbor and the Long Island Lighting Company's
Northport generating plants were damaged. Repair work has been completed and all
cables were back in service by June 26, 1997.
CL&P has a 12 percent ownership interest in the Maine Yankee nuclear generating
facility (MY). On August 6, 1997, the board of directors of Maine Yankee Atomic
Power Company (MYAPC) voted to permanently close the plant after efforts to sell
the nuclear power plant were unsuccessful. MYAPC had previously announced that
it was considering permanent closure of the plant based on economic concerns and
uncertainty about the operation of the plant.
For further information on capacity-related issues and MYAPC, see the "Notes to
Consolidated Financial Statements," Note 6B and CL&P's 1996 Form 10-K.
Liquidity and Capital Resources
Cash provided from operations decreased approximately $241 million in the first
six months of 1997, from 1996 and was a use of funds, primarily due to higher
1997 cash expenditures related to the Millstone outages, and the pay down of the
1996 year end accounts payable balance. The year end accounts payable balance
was relatively high due to costs related to a severe December storm and costs
associated with the Millstone outages that had been incurred but not yet paid by
the end of 1996. Net cash from financing activities increased approximately $43
million, primarily due to an increase in short-term borrowings through the use
of the $100 million of the accounts receivable facility established in 1996. Net
cash from financing activities was also impacted by lower cash dividends on
common shares, partially offset by higher long-term debt retirements. Cash used
for investments decreased approximately $197 million, primarily due to lower
investments in the NU system Money Pool.
On April 1, 1997, $193 million of CL&P's first mortgage bonds matured. CL&P
funded the maturity with cash available from long-term debt issuances that took
place in 1996 in anticipation of this maturity.
CL&P established facilities in 1996 under which it may sell up to $200 million
of its accounts receivable and accrued utility revenues. As of June 30, 1997,
CL&P had sold approximately $100 million.
Additionally, NU, CL&P and WMECO entered into a new three-year revolving credit
agreement (the New Credit Agreement) in November 1996. On May 30, 1997, the
First Amendment and Waiver to the New Credit Agreement became effective. This
amendment permits $313.75 million of credit in the aggregate to remain available
to CL&P and WMECO through the securing of such borrowings with first mortgage
bonds. Interest coverage and common equity ratios were revised to enable the
companies to meet certain financial tests. CL&P will be able to borrow up to
$225 million on the strength of bonds it has provided as collateral for
borrowings under the revolving credit agreement. WMECO will be able to borrow up
to $90 million on the basis of bonds it has provided as collateral. The NU
parent company, which as a holding company cannot issue first mortgage bonds,
will be able to borrow up to $50 million if CL&P, WMECO and NU consolidated
financial statements meet certain interest coverage tests for two consecutive
quarters. This is not expected to occur until mid-1998.
On June 26, 1997, CL&P issued $200 million of First and Refunding Mortgage
Bonds, 1997 Series B due June 1, 2002. The net proceeds of the sale of the Bonds
were used for repayment of short-term debt incurred for general working capital
purposes, including costs associated with the current outages at the Millstone
units. CL&P is obligated to effect the exchange of these bonds for publicly
tradable Bonds within 180 days after issuing the Bonds or the interest could
increase in stages up to a maximum amount of 1.50 percent per annum.
In April, 1997, Moody's Investors Services (Moody's) downgraded most of its
ratings of CL&P and WMECO securities because of the extended Millstone outages.
In May, 1997, Standard & Poor's (S&P) also downgraded its ratings of CL&P and
WMECO securities as a result of the Connecticut Legislature failing to approve a
utility restructuring bill during the recently completed legislature session.
As a result, all NU system securities are currently rated below investment grade
by Moody's and S&P. These actions could adversely affect the availability and
cost of funds for the NU system companies.
On April 17, 1997, the holders of $38 million of notes issued by NU's real
estate company (Rocky River Realty Company or RRR) required RRR to repurchase
the notes at par. The notes are secured by real estate leases between RRR as
lessor and Northeast Utilities Service Company as lessee. On July 1, 1997, RRR
received commitments for the purchase of approximately $12 million of notes and
RRR repurchased the remaining $26 million of notes on July 14, 1997. On July 30,
1997, approximately $6 million of the $12 million was purchased by an
alternative purchaser. The remaining $6 million of the notes is expected to be
purchased by another purchaser by September 2, 1997.
Each major company in the NU system finances its own needs. Neither CL&P nor
WMECO has any agreements containing cross defaults based on events or
occurrences involving NU, Public Service Company of New Hampshire (PSNH) or
North Atlantic Energy Corporation (NAEC). Similarly, neither PSNH nor NAEC has
any agreements containing cross defaults based on events or occurrences
involving NU, CL&P or WMECO. Nevertheless, it is possible that investors will
take negative operating results or regulatory developments at one company in the
NU system into account when evaluating other companies in the NU system. That
could, as a practical matter and despite the contractual and legal separations
among the NU companies, negatively affect each company's access to the financial
markets.
If the return to service of one or more of the Millstone units is delayed
substantially, or if some borrowing facilities become unavailable because of
difficulties in meeting borrowing conditions, or if the system encounters
additional significant costs or any other significant deviations from
management's current assumptions, the currently available borrowing facilities
could be insufficient to meet all of the system's cash requirements. In those
circumstances, management would take actions to reduce costs and cash outflows
and would attempt to take other actions to obtain additional sources of funds.
The availability of these funds would be dependent upon the general market
conditions and the NU system's credit and financial condition at the time.
Restructuring and Rate Matters
On June 4, 1997, the Connecticut legislature completed its session without
passage of a proposed electric industry restructuring bill. The legislature may
consider restructuring legislation in the future.
On January 15, 1997, the DPUC notified CL&P that it would be conducting its
prudence review of nuclear cost recovery issues in multiple phases. The first
phase, covering the period April 1 through June 30, 1996, was in progress
when various intervenors moved for summary judgment with respect to the costs
for the entire outage. On July 30, 1997, the DPUC issued a purported written
decision disallowing recovery of all of the replacement power costs associated
with the ongoing outages at Millstone. CL&P has not requested cost recovery at
this time and has said that it will not seek recovery for a substantial portion
of these costs and will not request any cost recovery until the units have
returned to operation. Any requests by CL&P for recovery would include only
costs for projects CL&P would have undertaken under normal operating conditions
or that provide long-term value for CL&P's customers. CL&P has appealed the
DPUC's decision to the Connecticut Superior Court. CL&P has expensed, and
continues to expense, the bulk of the Millstone outage costs as they are
incurred. Therefore, CL&P does not expect this decision to have a material
financial impact on projected 1997 results.
The DPUC is required to review a utility's rates every four years if there has
not been a rate proceeding during such period. On June 16, 1997, CL&P filed with
the DPUC certain financial information consistent with the DPUC's filing
requirements applicable to such four year review. CL&P expects hearings before
the DPUC to begin soon. The Company cannot predict the outcome of this
proceeding.
Risk Management Instruments
CL&P uses fuel price management instruments to reduce a portion of the fuel
price risk associated with certain of its long-term negotiated energy contracts
and replacement-power expense during the Millstone outages. CL&P's fuel price
management instruments seek to minimize exposure associated with rising fuel
prices and effectively fix the cost of fuel and maintain the profitability of
certain of its long-term negotiated contract sales.
These instruments are not used for trading purposes. The differential paid or
received as fuel prices change is recognized in income when realized.
As of June 30, 1997, CL&P had outstanding fuel price management instruments with
a total notional value of approximately $318 million. The settlement amounts for
the second quarter associated with the instruments decreased fuel expense by
approximately $0.8 million for the first quarter of 1997. For further
information on risk management instruments, see the "Notes to Consolidated
Financial Statements," Note 5, in this Form 10-Q.
Environmental Matters
The Company is potentially liable for environmental cleanup costs at a number of
sites inside and outside its service territory. To date, the future estimated
environmental remediation liability has not been material with respect to the
earnings or financial position of the Company. For the period ended June 30,
1997, the Company increased the environmental reserve by approximately $1
million to a total of approximately $8 million, the most probable amount as
required by SFAS No.5, "Accounting for Contingencies."
RESULTS OF OPERATIONS
Income Statement Variances
Increase/(Decrease)
Millions of Dollars
Second Year-
Quarter Percent to-Date Percent
Operating revenues $32 6% $(3) 0%
Fuel, purchased and net
interchange power 76 56 118 33
Other operation 16 8 (31) (8)
Maintenance 15 18 36 27
Amortization of
regulatory assets, net 9 (a) 27 (a)
Federal and state income taxes (31) (a) (59) (a)
Interest charges 3 10 6 10
Net Loss (53) (a) (93) (a)
(a) Percentage greater than 100
Comparison of the Second Quarter of 1997 to the Second Quarter of 1996
Total operating revenues increased in 1997, primarily due to higher fuel
recoveries ($23 million), higher transmission and other revenues ($8 million)
and higher revenues from regulatory decisions ($4 million), partially offset by
lower wholesale revenues ($5 million). Revenues from regulatory decisions
increased due to higher recoveries of demand-side-management costs. Wholesale
revenues decreased primarily due to lower 1997 capacity sales.
Fuel, purchased and net interchange power expense increased in 1997, primarily
due to higher replacement-power costs expensed in 1997 due to the nuclear
outages.
Other operation and maintenance expense increased $31 million in 1997. The major
factors were the higher costs associated with the Millstone outages ($70
million) including a net increase of $24 million over 1996 in the reserve for
future restart costs; higher transmission expenses ($5 million) and higher
capacity charges from MY ($5 million); partially offset by lower recognition of
nuclear refueling outage costs primarily as a result of the 1996 Rate Settlement
($22 million); lower administrative and general expenses primarily due to lower
pensions and benefit costs ($10 million) and lower 1997 costs associated with
meeting capacity requirements ($7 million).
Amortization of regulatory assets, net increased in 1997, primarily due to
higher amortization in 1997 of cogeneration deferrals ($7 million) and higher
amortizations as a result of the 1996 Rate Settlement ($5 million). These were
partially offset by the completion of the amortization of phase-in costs for
Seabrook in 1996 ($3 million).
Federal and state income taxes decreased in 1997, primarily due to lower book
taxable income.
Interest charges increased in 1997, primarily due to interest expense associated
with the sale of the accounts receivable.
Comparison of the First Six Months of 1997 to the First Six Months of 1996
Total operating revenues decreased in 1997, primarily due to lower retail sales
($16 million), lower wholesale revenues ($11 million), lower fuel recoveries ($8
million), partially offset by higher revenues from regulatory decisions ($14
million) and higher transmission and other revenues ($9 million). Wholesale
revenues decreased primarily due to lower 1997 capacity sales. Retail sales
decreased 1.9 percent primarily due to mild weather in the first quarter of
1997. Revenues from regulatory decisions increased primarily due to higher
recoveries of demand-side-management costs.
Fuel, purchased and net interchange power expense increased in 1997, primarily
due to higher replacement-power costs expensed in 1997 due to the nuclear
outages.
Other operation expense decreased $31 million and maintenance expense increased
$36 million in 1997. The major factors were the higher costs associated with the
Millstone outages ($60 million) and higher capacity charges from MY ($7
million); partially offset by lower recognition of nuclear refueling outage
costs as a result of the 1996 CL&P Rate Settlement ($34 million); lower 1997
administrative and general expenses primarily due to lower pensions and benefit
costs ($15 million) and lower capacity charges from purchased power ($9
million).
Amortization of regulatory assets, net increased in 1997, primarily due to the
higher amortization of CL&P cogeneration deferrals in 1997 ($23 million) and
higher amortizations as a result of the 1996 CL&P Rate Settlement ($9 million).
These were partially offset by the completion of the amortization of phase-in
costs for Seabrook ($6 million).
Federal and state income taxes decreased in 1997, primarily due to lower book
taxable income.
Interest charges increased in 1997, primarily due to higher 1997 average long-
term debt levels and interest expense associated with the sale of the accounts
receivable.
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
1. Under its Millstone Units 1 & 2 contract with CL&P, Connecticut Municipal
Electric Energy Cooperative (CMEEC) has a 3.49 percent life-of-unit interest in
each of the units. CMEEC and CL&P have been negotiating since May 1996 over
issues related to Millstone Units 1 & 2 and have taken preliminary steps to
prepare for arbitration of the matter. Since October 1996, CMEEC has failed to
make payment on its obligations of approximately $1.6 million per month,
claiming that CL&P materially breached its contractual obligations, and
requesting arbitration of the issues. CL&P has denied the allegations and filed
a petition on July 1, 1997 requesting the Connecticut Superior Court to order
CMEEC to pay its outstanding obligations (about $13.3 million) and make
continuing payments while the arbitration action is proceeding.
For additional information on this dispute, see "Item 3 - Legal
Proceedings" in CL&P's 1996 Form 10-K.
2. On July 17, 1997, CL&P filed an appeal of a June 6th order of the DPUC,
which had barred recovery of approximately $17 million of replacement power
costs incurred by CL&P as a result of the retirement of the Connecticut Yankee
nuclear power plant (CY) on December 4, 1996 through that part of CL&P's rate
structure known as the Energy Adjustment Clause. CL&P takes the position that
unless and until there is a determination that such post-retirement costs are
unreasonable, it is entitled to current recovery.
For additional information on the ongoing prudence proceeding at the
Federal Energy Regulatory Commission regarding the decision to retire CY prior
to the expiration of its operating license, see "Item 1. Business - Electric
Operations - Nuclear Generation" in CL&P's 1996 Form 10-K.
3. CL&P and WMECO, through NNECO, operate Millstone 3 at cost, and without
profit, under a Sharing Agreement that obligates them to utilize good utility
practice and requires the joint owners to share the risk of employee negligence
and other risks of operation and maintenance pro-rata in accordance with their
ownership shares. The Sharing Agreement also provides that CL&P and WMECO would
only be liable for damages to the non-NU owners for a deliberate violation of
the agreement pursuant to authorized corporate action.
On August 7, 1997, the non-NU owners of Millstone 3 filed demands for
arbitration with CL&P and WMECO as well as lawsuits in Massachusetts Superior
Court against Northeast Utilities and its current and former trustees. The non-
NU owners raise a number of contract, tort and statutory claims, arising out of
the operation of Millstone 3. The arbitrations and lawsuits seek to recover
compensatory damages, punitive damages, treble damages and attorneys' fees.
Owners representing approximately two-thirds of the non-NU interests in
Millstone 3 have claimed compensatory damages in excess of $200 million. In
addition, one of the lawsuits seeks to restrain NU from disposing of its shares
of the stock of WMECO and Holyoke Water Power Company, pending the outcome of
the lawsuit. The NU companies believe there is no legal basis for the claims and
intend to defend against them vigorously.
For further information on this matter, see "Item 3 - Legal Proceedings" in
CL&P's 1996 Form 10-K.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
At the Annual Meeting of Stockholders of CL&P held on June 9, 1997,
stockholders voted to fix the number of directors for the ensuing year at eight.
The vote fixing the number of directors at eight 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 eight 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, John H. Forsgren, Bernard M. Fox, William T.
Frain, Jr., Cheryl W. Grise, John B. Keane, Bruce D. Kenyon, and Hugh C.
MacKenzie.
ITEM 5. OTHER INFORMATION
On June 27, 1997, nuclear management of NU temporarily suspended all
nuclear training programs at Millstone to address programmatic deficiencies
identified by NNECO and NRC inspectors during reviews of the system's licensed
operator training programs at the system's four Connecticut nuclear units.
Since then, a Training Restart Plan has been established and various training
programs have been restarted, including the licensed operator training programs
for Millstone. Management continues to believe that the suspension will not
affect the schedule to restart the Millstone units
For additional information relating to this matter, see CL&P's Form 8-K
dated June 26, 1997 and "Item 1. Business - Nuclear Plant Performance and
Regulatory Oversight" and "Item 3. Legal Proceedings," in CL&P's 1996 Form 10-K.
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:
1. CL&P filed a Form 8-K dated June 26, 1997 disclosing:
. Nuclear management of NU temporarily suspended all nuclear
training programs at Millstone to address programmatic
deficiencies identified by NNECO and the NRC;
. The DPUC orally granted summary judgment in CL&P's prudence
docket, disallowing recovery of substantially all costs
associated with the ongoing outages at Millstone;
. Under the CL&P First and Refunding Mortgage Bond Indenture, the
sinking fund had been eliminated;
. On June 28, 1997, Seabrook nuclear generating unit returned to
service following a 50-day planned refueling and maintenance
outage;
. On July 1, 1997, CL&P submitted continued unit operation studies
to the DPUC;
. As a result of a trigger event set forth in the original note
agreement, RRR intends to repurchase approximately $26 million of
the total approximate $38 million of notes from the current
holders; the balance of the notes will be purchased by
alternative third party purchasers.
2. CL&P filed a Form 8-K dated July 22, 1997 disclosing information
concerning its second quarter 1997 loss.
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 12, 1997 By:/s/ John H. Forsgren
John H. Forsgren
Executive Vice President,
Chief Financial Officer and
Director
Date August 12, 1997 By: /s/ John J. Roman
John J. Roman
Vice President and Controller
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