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 March 31, 1995
--------------
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 1-6392
------
PUBLIC SERVICE COMPANY OF NEW HAMPSHIRE
---------------------------------------
(Exact name of registrant as specified in its charter)
NEW HAMPSHIRE 02-018150
------------- ------------
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
1000 ELM STREET, MANCHESTER, NEW HAMPSHIRE 03105
- -------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
(603) 669-4000
--------------
(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 April 28, 1995
----- -----------------------------
Common Shares, $10.00 par value 1,000 shares
PUBLIC SERVICE COMPANY OF NEW HAMPSHIRE
TABLE OF CONTENTS
Page No.
--------
Part I. Financial Information
Item 1. Financial Statements
Balance Sheets - March 31, 1995 and
and December 31, 1994 2
Statements of Income - Three Months Ended
March 31, 1995 and 1994 4
Statements of Cash Flows - Three Months
Ended March 31, 1995 and 1994 5
Notes to Financial Statements 6
Item 2. Management's Discussion and Analysis
of Financial Condition and Results
of Operations 7
Part II. Other Information
Item 5. Other Information 10
Item 6. Exhibits and Reports on Form 8-K 10
Signatures 11
PART I. FINANCIAL INFORMATION
PUBLIC SERVICE COMPANY OF NEW HAMPSHIRE
BALANCE SHEETS
(Unaudited)
<TABLE>
<CAPTION>
March 31, December 31,
1995 1994
------------- -------------
(Thousands of Dollars)
<S> <C> <C>
ASSETS
- ------
Utility Plant, at original cost:
Electric................................................ $ 2,046,563 $ 2,038,625
Less: Accumulated provision for depreciation......... 483,582 474,129
------------- -------------
1,562,981 1,564,496
Construction work in progress........................... 26,880 17,781
Nuclear fuel, net....................................... 2,103 2,248
------------- -------------
Total net utility plant............................. 1,591,964 1,584,525
------------- -------------
Other Property and Investments:
Nuclear decommissioning trusts, at market............... 1,964 1,815
Investments in regional nuclear generating
companies and subsidiary company, at equity............ 19,082 19,551
Other, at cost.......................................... 636 394
------------- -------------
21,682 21,760
------------- -------------
Current Assets:
Cash and special deposits............................... 217 322
Notes receivable from affiliated companies.............. 70,500 35,000
Receivables, net........................................ 81,157 76,173
Accounts receivable from affiliated companies........... 1,175 3,779
Accrued utility revenues................................ 33,022 36,547
Fuel, materials, and supplies, at average cost.......... 43,438 37,453
Prepayments and other................................... 2,351 20,829
------------- -------------
231,860 210,103
------------- -------------
Deferred Charges:
Regulatory asset:
Unamortized acquisition costs.......................... 656,458 678,974
Income taxes, net...................................... 68,106 66,466
Unrecovered contract obligation--Yankee Atomic
Electric Company...................................... 27,744 28,572
Recoverable energy costs............................... 201,946 194,994
Other.................................................. 2,475 2,499
Unamortized debt expense................................ 16,241 17,064
Deferred receivable from affiliated company............. 33,284 33,284
Other................................................... 4,113 7,726
------------- -------------
1,010,367 1,029,579
------------- -------------
Total Assets........................................ $ 2,855,873 $ 2,845,967
============= =============
</TABLE>
See accompanying notes to financial statements.
2
PUBLIC SERVICE COMPANY OF NEW HAMPSHIRE
BALANCE SHEETS
(Unaudited)
<TABLE>
<CAPTION>
March 31, December 31,
1995 1994
------------- -------------
(Thousands of Dollars)
<S> <C> <C>
CAPITALIZATION AND LIABILITIES
- ------------------------------
Capitalization:
Common stock--$1 par value.
Authorized and outstanding 1,000 shares................ $ 1 $ 1
Capital surplus, paid in................................ 421,930 421,784
Retained earnings....................................... 143,544 125,034
------------- -------------
Total common stockholder's equity.............. 565,475 546,819
Preferred stock subject to mandatory redemption......... 125,000 125,000
Long-term debt.......................................... 882,485 905,985
------------- -------------
Total capitalization........................... 1,572,960 1,577,804
------------- -------------
Obligations Under Seabrook Power Contract
and Other Capital Leases................................. 852,833 849,776
------------- -------------
Current Liabilities:
Long-term debt--current portion......................... 94,000 94,000
Obligations under capital leases--current
portion................................................ 39,399 38,191
Accounts payable........................................ 27,706 45,984
Accounts payable to affiliated companies................ 16,818 17,309
Accrued taxes........................................... 4,755 4,304
Accrued interest........................................ 23,634 10,496
Accrued pension benefits................................ 36,944 36,269
Other................................................... 18,221 20,350
------------- -------------
261,477 266,903
------------- -------------
Deferred Credits:
Accumulated deferred income taxes....................... 77,465 62,080
Accumulated deferred investment tax credits............. 5,476 5,614
Deferred contract obligation--Yankee Atomic
Electric Company....................................... 27,744 28,572
Deferred revenue from affiliated company................ 33,284 33,284
Other................................................... 24,634 21,934
------------- -------------
168,603 151,484
------------- -------------
Commitments and Contingencies (Note 2)<F2>
------------- -------------
Total Capitalization and Liabilities........... $ 2,855,873 $ 2,845,967
============= =============
</TABLE>
See accompanying notes to financial statements.
3
PUBLIC SERVICE COMPANY OF NEW HAMPSHIRE
STATEMENTS OF INCOME
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
--------------------------
1995 1994
----------- -----------
(Thousands of Dollars)
<S> <C> <C>
Operating Revenues.................................... $ 252,337 $ 249,279
----------- -----------
Operating Expenses:
Operation --
Fuel, purchased and net interchange power........ 74,130 68,925
Other............................................ 71,702 71,357
Maintenance......................................... 7,877 11,756
Depreciation........................................ 10,185 9,950
Amortization of regulatory assets, net.............. 14,136 14,308
Federal and state income taxes...................... 21,670 19,246
Taxes other than income taxes....................... 10,779 10,296
----------- -----------
Total operating expenses...................... 210,479 205,838
----------- -----------
Operating Income...................................... 41,858 43,441
----------- -----------
Other Income:
Equity in earnings of regional nuclear generating
companies and subsidiary company.................. 265 454
Other, net.......................................... (1,516) 249
Income taxes--credit................................ 978 (1,357)
----------- -----------
Other income, net............................. (273) (654)
----------- -----------
Income before interest charges................ 41,585 42,787
----------- -----------
Interest Charges:
Interest on long-term debt.......................... 19,818 18,382
Other interest...................................... (56) 127
----------- -----------
Interest charges, net......................... 19,762 18,509
----------- -----------
Net Income............................................ $ 21,823 $ 24,278
=========== ===========
</TABLE>
See accompanying notes to financial statements.
4
PUBLIC SERVICE COMPANY OF NEW HAMPSHIRE
STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
-----------------------
1995 1994
----------- -----------
(Thousands of Dollars)
<S> <C> <C>
Operating Activities:
Net Income.................................................$ 21,823 $ 24,278
Adjustments to reconcile to net cash
from operating activities:
Depreciation............................................. 10,185 9,950
Deferred income taxes and investment tax credits, net.... 18,941 19,374
Recoverable energy costs, net of amortization............ 1,250 (4,915)
Amortization of acquisition costs........................ 14,136 14,308
Other sources of cash.................................... 10,434 10,284
Other uses of cash....................................... - (11,217)
Changes in working capital:
Receivables and accrued utility revenues................. 1,145 (7,473)
Fuel, materials, and supplies............................ (5,985) 916
Accounts payable......................................... (18,769) (2,369)
Accrued taxes............................................ 451 1,356
Other working capital (excludes cash).................... 21,960 20,403
----------- -----------
Net cash flows from operating activities..................... 75,571 74,895
----------- -----------
Financing Activities:
Net decrease in short-term debt............................ - (2,500)
Reacquisitions and retirements of long-term debt........... (23,500) (23,500)
Cash dividends on preferred stock.......................... (3,313) (3,313)
----------- -----------
Net cash flows used for financing activities................. (26,813) (29,313)
----------- -----------
Investment Activities:
Investment in plant:
Electric utility plant................................... (13,279) (5,392)
Nuclear fuel............................................. (197) -
----------- -----------
Net cash flows used for investments in plant............... (13,476) (5,392)
NU System Money Pool....................................... (35,500) (44,500)
Other investment activities, net........................... 113 (87)
----------- -----------
Net cash flows used for investments.......................... (48,863) (49,979)
----------- -----------
Net Decrease in Cash For The Period.......................... (105) (4,397)
Cash and special deposits - beginning of period.............. 322 5,995
----------- -----------
Cash and special deposits - end of period....................$ 217 $ 1,598
=========== ===========
</TABLE>
See accompanying notes to financial statements.
5
PUBLIC SERVICE COMPANY OF NEW HAMPSHIRE
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
<F1>1. General
The accompanying unaudited financial statements should be read in conjunction
with the Annual Report of Public Service Company of New Hampshire (the company
or PSNH), 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 March 31, 1995, the results of
operations for the three months ended March 31, 1995 and 1994, and the
statements of cash flows for the three months ended March 31, 1995 and 1994.
The results of operations for the three months ended March 31, 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.
<F2>2. Commitments and Contingencies
Construction Program: For information regarding PSNH's construction program,
see the Notes to Financial Statements in PSNH's 1994 Form 10-K.
PSNH Rate Agreement: For information regarding the PSNH rate agreement, see the
Notes to Financial Statements in PSNH's 1994 Form 10-K.
Environmental Matters: On a periodic basis, PSNH reviews known waste disposal
sites, and related reserves, for which the company expects to bear legal
liability. As a result of its review in the first quarter, PSNH increased the
liability recorded for its estimated environmental remediation costs, excluding
any insurance recoveries or recoveries from third parties, by $3.0 million.
PSNH's environmental reserve is now $4.8 million.
For additional information regarding environmental matters, see the Notes to
Financial Statements in PSNH's 1994 Form 10-K.
Nuclear Insurance Contingencies: For information regarding nuclear insurance
contingencies, see the Notes to Financial Statements in PSNH's 1994 Form 10-K.
Purchased Power Arrangements: For information regarding purchased power
arrangements, see the Notes to Financial Statements in PSNH's 1994 Form 10-K.
Hydro-Quebec: For information regarding Hydro-Quebec, see the Notes to
Financial Statements in PSNH's 1994 Form 10-K.
Public Service Company of New Hampshire
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
- ----------------------------------------------------------------------
This section contains management's assessment of PSNH'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
financial statements, footnotes and management's discussion and analysis in the
1994 Form 10-K.
FINANCIAL CONDITION
Overview
Net income decreased to approximately $22 million for the three months ended
March 31, 1995, from approximately $24 million for the same period in 1994. The
decrease from 1994 is a result of lower retail kilowatt-hour sales as a result
of extremely mild weather in the first three months of 1995, partially offset by
lower maintenance expenses. PSNH's retail kilowatt-hour sales for 1995 were
down by approximately 4 percent from 1994, which had colder than normal weather
in the first three months.
Regulatory Matters
The costs associated with purchases from certain nonutility generators (NUGs)
over the level assumed in rates are deferred and recovered over ten-year periods
through the Fuel and Purchased Power Adjustment Clause (FPPAC). At March 31,
1995, the unrecovered deferrals were approximately $181 million.
PSNH has been negotiating sales agreements with eight wood-fired NUGs.
Settlements with two of the NUGs were completed last fall and the units were
closed. Confidential settlement terms have been filed with the New Hampshire
Public Commission (NHPUC) for another three units and active negotiations are
continuing with the owners of a fourth unit. No agreement has been reached
with the owner of the remaining two units.
On April 4, 1995, the NHPUC opened a proceeding to consider whether PSNH's $27
million of capital expenditures, including approximately $22 million for the
installation of the selective catalytic reduction (SCR) pollution control system
at Merrimack Station, and approximately $4 million of annual operating and
maintenance expenses necessary for current compliance with the Clean Air Act
Amendments of 1990 at PSNH's fossil generating stations are recoverable from
PSNH's customers under PSNH's 1989 Rate Agreement with the State of New
Hampshire
Nuclear Matters
In the first quarter of 1995, Seabrook operated at a capacity factor of 100
percent, as compared to 73.6 percent for the same period in 1994. The lower
1994 capacity factor was primarily the result of a shutdown on January 25, 1994
for an unplanned outage. The unit returned to service on February 18, 1994.
Maine Yankee Atomic Power Company (Maine Yankee) is the owner of an 860 MW
nuclear electric generating unit (the Plant). The company owns 5% of the common
stock of Maine Yankee and purchases approximately the same percentage of the
Plant's output at a rate based on Maine Yankee's costs. Like other pressurized
water reactors, the Plant has been experiencing degradation of its steam
generator tubes, primarily in the form of circumferential cracking. Until early
1995, the cracking was believed to be limited to a relatively small number of
tubes.
During the current refueling and maintenance outage that began in February 1995,
Maine Yankee detected substantially increased degradation of the steam generator
tubes. Maine Yankee is continuing to assess the extent of the cracking and
evaluating its options. The extent of tube cracking is sufficiently great that
the Plant cannot return to operation without repairs that will result in
substantial additional expenditures by Maine Yankee, with PSNH being responsible
for its pro rata share of non-capital costs under its power contract. In
addition, PSNH will incur additional costs for replacement power (estimated at
approximately $250,000 per month) until the Plant returns to service.
Maine Yankee intends to sleeve all 17,000 tubes in the Plant's three steam
generators. Maine Yankee expects that the sleeving operation would begin in June
and that the Plant would return to service near the end of 1995. The cost to
Maine Yankee of the sleeving operation has not been determined, but could be
approximately $40 million. If the capital cost of the sleeving operation exceeds
the funds available to Maine Yankee itself (which is not currently expected),
Maine Yankee might request equity contributions from its common stockholders,
including PSNH, under its capital funds agreement with them. If requested, the
stockholders are required to contribute their pro rata shares, subject in some
cases to regulatory approval.
Environmental Matters
The company is potentially liable for environmental cleanup costs at a number of
sites both 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. In the first quarter of
1995 the company increased the liability recorded by approximately $3 million to
approximately $5 million.
Liquidity And Capital Resources
Cash provided from operations and cash used for investments remained relatively
flat for the first three months of 1995, as compared with the same period in
1994. Cash flows used for financing activities was approximately $3 million
lower in 1995, as compared with 1994, primarily due to lower repayment of short-
term debt in 1995.
PSNH's construction program expenditures amounted to approximately $13 million
for the first three months of 1995, as compared to approximately $5 million in
1994, primarily due to the costs associated with the installation of the SCR
pollution control system at Merrimack Station.
Results of Operations
Comparison of the First Quarter 1995 with the First Quarter of 1994
- -------------------------------------------------------------------
Operating revenues increased approximately $3 million in the first quarter 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 $6
Fuel, purchased power,
and FPPAC cost recoveries 5
Sales volume (6)
Sales to other utilities (2)
--
Total revenue change $3
==
Revenues related to regulatory decisions increased primarily because of the June
1994 retail rate increase. Fuel, purchased power, and FPPAC cost recoveries
increased primarily due to higher energy and purchased power costs. Sales
volume decreased as a result of lower retail kilowatt-hour sales in 1995.
Retail sales decreased 4.0 percent for the first quarter of 1995 from 1994 sales
levels primarily due to extremely mild weather in the first three months of
1995.
Fuel, purchased and net interchange power expense increased approximately $5
million in the first quarter of 1995, as compared with 1994, primarily due to
the timing in the recognition of fuel expenses under the FPPAC.
Maintenance expense decreased approximately $4 million in the first quarter of
1995, as compared with 1994. The decrease is primarily due to lower storm costs
in 1995.
Other, net decreased approximately $2 million in the first quarter of 1995, as
compared with 1994, primarily because of an increase to the environmental
reserve established for the Laconia, New Hampshire coal tar site.
PART II. OTHER INFORMATION
Item 5. Other Information
1. On April 10, 1995, in connection with PSNH's 1994 integrated least cost
resource plan filing, the New Hampshire Public Utilities Commission (NHPUC)
ordered PSNH to conduct future least cost planning by evaluating resource
options available to PSNH based on the economics of only the PSNH system, rather
than the combined NU system. This ruling could have an adverse effect on the
System's future resource planning. PSNH plans to seek rehearing of the NHPUC's
decision regarding combined system planning.
2. On March 24, 1995, PSNH introduced a proposal for electric utility
restructuring in the ongoing roundtable set up by the NHPUC, which is similar to
the comments entitled "Path To a Competitive Future" that were submitted by The
Connecticut Light and Power Company to the Connecticut Department of Public
Utility Control on March 22, 1995.
For additional information on this matter, see "Item 1. Business - Subsequent
Events" in the PSNH's 1994 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:
No reports on Form 8-K have been filed during this reporting period.
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.
PUBLIC SERVICE COMPANY OF NEW HAMPSHIRE
---------------------------------------
Registrant
Date May 11, 1995 By /s/ Bernard M. Fox
-------------------- -----------------------------
Bernard M. Fox
Vice Chairman and Chief
Executive Officer,
and Director
Date May 11, 1995 By /s/ John W. Noyes
-------------------- -----------------------------
John W. Noyes
Vice President and
Controller
<TABLE> <S> <C>
<ARTICLE> UT
<CIK> 0000315256
<NAME>PUBLIC SERVICE COMPANY OF NEW HAMPSHIRE
<MULTIPLIER>1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> MAR-31-1995
<BOOK-VALUE> PER-BOOK
<TOTAL-NET-UTILITY-PLANT> 1,591,964
<OTHER-PROPERTY-AND-INVEST> 21,682
<TOTAL-CURRENT-ASSETS> 231,860
<TOTAL-DEFERRED-CHARGES> 1,010,367
<OTHER-ASSETS> 0
<TOTAL-ASSETS> 2,855,873
<COMMON> 1
<CAPITAL-SURPLUS-PAID-IN> 421,930
<RETAINED-EARNINGS> 143,544
<TOTAL-COMMON-STOCKHOLDERS-EQ> 565,475
125,000
0
<LONG-TERM-DEBT-NET> 882,485
<SHORT-TERM-NOTES> 0
<LONG-TERM-NOTES-PAYABLE> 0
<COMMERCIAL-PAPER-OBLIGATIONS> 0
<LONG-TERM-DEBT-CURRENT-PORT> 94,000
0
<CAPITAL-LEASE-OBLIGATIONS> 852,833
<LEASES-CURRENT> 39,399
<OTHER-ITEMS-CAPITAL-AND-LIAB> 296,681
<TOT-CAPITALIZATION-AND-LIAB> 2,855,873
<GROSS-OPERATING-REVENUE> 252,337
<INCOME-TAX-EXPENSE> 20,692
<OTHER-OPERATING-EXPENSES> 188,809
<TOTAL-OPERATING-EXPENSES> 210,479
<OPERATING-INCOME-LOSS> 41,858
<OTHER-INCOME-NET> (1,251)
<INCOME-BEFORE-INTEREST-EXPEN> 41,585
<TOTAL-INTEREST-EXPENSE> 19,762
<NET-INCOME> 21,823
3,313
<EARNINGS-AVAILABLE-FOR-COMM> 18,510
<COMMON-STOCK-DIVIDENDS> 0
<TOTAL-INTEREST-ON-BONDS> 0
<CASH-FLOW-OPERATIONS> 75,571
<EPS-PRIMARY> 0.00
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</TABLE>
