PUBLIC SERVICE COMPANY OF NEW HAMPSHIRE AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF COMMON STOCKHOLDER'S EQUITY
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Three Months Ended March 31, 2021
|
|
|
Common Stock
|
|
Capital
Surplus,
Paid In
|
|
Retained
Earnings
|
|
Accumulated
Other
Comprehensive
Loss
|
|
Total
Common
Stockholder's
Equity
|
|
(Thousands of Dollars, Except Stock Information)
|
Stock
|
|
Amount
|
|
|
|
|
|
Balance as of January 1, 2021
|
301
|
|
|
$
|
—
|
|
|
$
|
928,134
|
|
|
$
|
615,018
|
|
|
$
|
(613)
|
|
|
$
|
1,542,539
|
|
|
Net Income
|
|
|
|
|
|
|
44,676
|
|
|
|
|
44,676
|
|
|
Dividends on Common Stock
|
|
|
|
|
|
|
(25,200)
|
|
|
|
|
(25,200)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other Comprehensive Income
|
|
|
|
|
|
|
|
|
255
|
|
|
255
|
|
|
Balance as of March 31, 2021
|
301
|
|
|
$
|
—
|
|
|
$
|
928,134
|
|
|
$
|
634,494
|
|
|
$
|
(358)
|
|
|
$
|
1,562,270
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Three Months Ended March 31, 2020
|
|
|
Common Stock
|
|
Capital
Surplus,
Paid In
|
|
Retained
Earnings
|
|
Accumulated
Other
Comprehensive
Loss
|
|
Total
Common
Stockholder's
Equity
|
|
(Thousands of Dollars, Except Stock Information)
|
Stock
|
|
Amount
|
|
|
|
|
|
Balance as of January 1, 2020
|
301
|
|
|
$
|
—
|
|
|
$
|
903,134
|
|
|
$
|
490,306
|
|
|
$
|
(1,707)
|
|
|
$
|
1,391,733
|
|
|
Net Income
|
|
|
|
|
|
|
39,601
|
|
|
|
|
39,601
|
|
|
Dividends on Common Stock
|
|
|
|
|
|
|
(22,300)
|
|
|
|
|
(22,300)
|
|
|
Adoption of Accounting Standards Update 2016-13
|
|
|
|
|
|
|
(300)
|
|
|
|
|
(300)
|
|
|
Other Comprehensive Income
|
|
|
|
|
|
|
|
|
278
|
|
|
278
|
|
|
Balance as of March 31, 2020
|
301
|
|
|
$
|
—
|
|
|
$
|
903,134
|
|
|
$
|
507,307
|
|
|
$
|
(1,429)
|
|
|
$
|
1,409,012
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
PUBLIC SERVICE COMPANY OF NEW HAMPSHIRE AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Three Months Ended March 31,
|
|
(Thousands of Dollars)
|
2021
|
|
2020
|
|
|
|
|
|
|
Operating Activities:
|
|
|
|
|
Net Income
|
$
|
44,676
|
|
|
$
|
39,601
|
|
|
Adjustments to Reconcile Net Income to Net Cash Flows Provided by Operating Activities:
|
|
|
|
|
Depreciation
|
29,468
|
|
|
24,334
|
|
|
Deferred Income Taxes
|
(378)
|
|
|
4,167
|
|
|
Uncollectible Expense
|
1,221
|
|
|
666
|
|
|
Regulatory Underrecoveries, Net
|
(14,645)
|
|
|
(22,977)
|
|
|
Amortization of Regulatory Assets, Net
|
18,547
|
|
|
20,110
|
|
|
|
|
|
|
|
|
|
|
|
|
Other
|
(6,654)
|
|
|
(3,885)
|
|
|
Changes in Current Assets and Liabilities:
|
|
|
|
|
Receivables and Unbilled Revenues, Net
|
3,223
|
|
|
2,843
|
|
|
Materials, Supplies and REC Inventory
|
(2,296)
|
|
|
(3,526)
|
|
|
Taxes Receivable/Accrued, Net
|
9,867
|
|
|
6,110
|
|
|
Accounts Payable
|
(21,025)
|
|
|
(18,064)
|
|
|
Other Current Assets and Liabilities, Net
|
12,897
|
|
|
9,118
|
|
|
Net Cash Flows Provided by Operating Activities
|
74,901
|
|
|
58,497
|
|
|
|
|
|
|
|
Investing Activities:
|
|
|
|
|
Investments in Property, Plant and Equipment
|
(68,278)
|
|
|
(88,694)
|
|
|
Other Investing Activities
|
137
|
|
|
126
|
|
|
Net Cash Flows Used in Investing Activities
|
(68,141)
|
|
|
(88,568)
|
|
|
|
|
|
|
|
Financing Activities:
|
|
|
|
|
Cash Dividends on Common Stock
|
(25,200)
|
|
|
(22,300)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Repayment of Rate Reduction Bonds
|
(21,605)
|
|
|
(21,605)
|
|
|
Retirement of Long-Term Debt
|
(122,000)
|
|
|
—
|
|
|
Increase in Notes Payable to Eversource Parent
|
150,500
|
|
|
57,700
|
|
|
Other Financing Activities
|
(22)
|
|
|
(22)
|
|
|
Net Cash Flows (Used in)/Provided by Financing Activities
|
(18,327)
|
|
|
13,773
|
|
|
Net Decrease in Cash and Restricted Cash
|
(11,567)
|
|
|
(16,298)
|
|
|
Cash and Restricted Cash - Beginning of Period
|
39,555
|
|
|
36,688
|
|
|
Cash and Restricted Cash - End of Period
|
$
|
27,988
|
|
|
$
|
20,390
|
|
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
EVERSOURCE ENERGY AND SUBSIDIARIES
THE CONNECTICUT LIGHT AND POWER COMPANY
NSTAR ELECTRIC COMPANY AND SUBSIDIARY
PUBLIC SERVICE COMPANY OF NEW HAMPSHIRE AND SUBSIDIARIES
COMBINED NOTES TO CONDENSED FINANCIAL STATEMENTS (Unaudited)
Refer to the Glossary of Terms included in this combined Quarterly Report on Form 10-Q for abbreviations and acronyms used throughout the combined notes to the unaudited condensed financial statements.
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
A. Basis of Presentation
Eversource Energy is a public utility holding company primarily engaged, through its wholly-owned regulated utility subsidiaries, in the energy delivery business. Eversource Energy's wholly-owned regulated utility subsidiaries consist of CL&P, NSTAR Electric and PSNH (electric utilities), Yankee Gas, NSTAR Gas and Eversource Gas Company of Massachusetts (EGMA) (natural gas utilities) and Aquarion (water utilities). Eversource provides energy delivery and/or water service to approximately 4.3 million electric, natural gas and water customers through nine regulated utilities in Connecticut, Massachusetts and New Hampshire.
The unaudited condensed consolidated financial statements of Eversource, NSTAR Electric and PSNH include the accounts of each of their respective subsidiaries. Intercompany transactions have been eliminated in consolidation. The accompanying unaudited condensed consolidated financial statements of Eversource, NSTAR Electric and PSNH and the unaudited condensed financial statements of CL&P are herein collectively referred to as the "financial statements."
The combined notes to the financial statements have been prepared pursuant to the rules and regulations of the SEC. Certain information and footnote disclosures included in annual financial statements prepared in accordance with GAAP have been omitted pursuant to such rules and regulations. The accompanying financial statements should be read in conjunction with the Combined Notes to Financial Statements included in Item 8, "Financial Statements and Supplementary Data," of the Eversource 2020 Form 10-K, which was filed with the SEC on February 17, 2021. The preparation of the financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent liabilities as of 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.
The financial statements contain, in the opinion of management, all adjustments (including normal, recurring adjustments) necessary to present fairly Eversource's, CL&P's, NSTAR Electric's and PSNH's financial position as of March 31, 2021 and December 31, 2020, and the results of operations, comprehensive income, common shareholders' equity, and cash flows for the three months ended March 31, 2021 and 2020. The results of operations, comprehensive income and cash flows for the three months ended March 31, 2021 and 2020 are not necessarily indicative of the results expected for a full year.
Eversource's consolidated financial information includes the results of the acquisition of the assets of Columbia Gas of Massachusetts (CMA) on October 9, 2020. The natural gas distribution assets acquired from CMA on October 9, 2020 were assigned to EGMA.
Eversource consolidates the operations of CYAPC and YAEC, both of which are inactive regional nuclear power companies engaged in the long-term storage of their spent nuclear fuel. Eversource consolidates CYAPC and YAEC because CL&P's, NSTAR Electric's and PSNH's combined ownership and voting interests in each of these entities is greater than 50 percent. Intercompany transactions between CL&P, NSTAR Electric, PSNH and the CYAPC and YAEC companies have been eliminated in consolidation of the Eversource financial statements.
Eversource holds several equity ownership interests that are not consolidated and are accounted for under the equity method.
Eversource's utility subsidiaries' electric, natural gas and water distribution and transmission businesses are subject to rate-regulation that is based on cost recovery and meets the criteria for application of accounting guidance for entities with rate-regulated operations, which considers the effect of regulation on the differences in the timing of the recognition of certain revenues and expenses from those of other businesses and industries. See Note 2, "Regulatory Accounting," for further information.
COVID-19 continues to adversely affect customers, workers and the U.S. economy. We continue to operate under our pandemic response plan, which requires remote work arrangements for nearly half of our workforce and other mitigating requirements for those that are required onsite in our electric, natural gas and water operations, construction and management functions. We continue to address the impacts of the COVID-19 pandemic and how the related developments affect Eversource. We have not experienced significant impacts directly related to the pandemic that have materially affected our current operations, our workforce, or results of operations. The extent of the impact to us in the future will vary, and depend on the duration, scope and severity of the pandemic and the resulting impact on economic, health care and capital market conditions. The future impact will also depend on the outcome of future proceedings before our state regulatory commissions to recover our incremental costs associated with COVID-19, which include uncollectible customer receivable expenses.
Based on the status of our COVID-19 regulatory dockets, communications with our state regulatory commissions, and policies and practices in each of our jurisdictions, we believe each of our state regulatory commissions will allow us to recover our incremental costs associated with COVID-19, which include uncollectible customer receivable expenses, while balancing the impact on our customers’ bills and our operating cash flows. See Note 1C, "Summary of Significant Accounting Policies - Allowance for Uncollectible Accounts," for discussion of our evaluation of the allowance for doubtful accounts as of March 31, 2021 in light of the COVID-19 pandemic and Note 2, "Regulatory Accounting," for the amount of net incremental COVID-19 costs deferred on our balance sheet.
Certain reclassifications of prior period data were made in the accompanying financial statements to conform to the current period presentation.
B. Accounting Standards
Accounting Standards Recently Adopted: On January 1, 2021, the Company adopted Accounting Standards Update (ASU) 2019-12, Income Taxes (Topic 740) - Simplifying the Accounting for Income Taxes, which eliminates certain exceptions to the general principles of current income tax guidance in ASC 740 and simplifies and improves consistency in application of that income tax guidance through clarifications of and amendments to ASC 740. The ASU did not have a material impact on the financial statements of Eversource, CL&P, NSTAR Electric and PSNH.
C. Allowance for Uncollectible Accounts
Receivables, Net on the balance sheets primarily includes trade receivables from retail customers and customers related to wholesale transmission contracts, wholesale market sales, sales of RECs and property rentals. Receivables, Net also includes customer receivables for the purchase of electricity from a competitive third party supplier, the current portion of customer energy efficiency loans, property damage receivables and other miscellaneous receivables. There is no material concentration of receivables. Receivables are recorded at amortized cost, net of a credit loss provision (or allowance for uncollectible accounts).
Receivables are presented net of expected credit losses at estimated net realizable value by maintaining an allowance for uncollectible accounts. The current expected credit loss (CECL) model is applied to receivables for purposes of calculating the allowance for uncollectible accounts. This model is based on expected losses and results in the recognition of estimated expected credit losses, including uncollectible amounts for both billed and unbilled revenues, over the life of the receivable at the time a receivable is recorded.
The allowance for uncollectible accounts is determined based upon a variety of judgments and factors, including the application of an estimated uncollectible percentage to each receivable aging category. Factors in determining credit loss include historical collection, write-off experience, and management's assessment of collectability from customers, including current conditions, reasonable forecasts, and expectations of future collectability and collection efforts. Management continuously assesses the collectability of receivables and adjusts estimates based on actual experience and future expectations based on economic indicators, collection efforts and other factors. Management also monitors the aging analysis of receivables to determine if there are changes in the collections of accounts receivable. Receivable balances are written off against the allowance for uncollectible accounts when the customer accounts are no longer in service and these balances are deemed to be uncollectible.
As of March 31, 2021, management evaluated the adequacy of the allowance for uncollectible accounts in light of the COVID-19 pandemic and the related economic downturn. This evaluation included an analysis of collection and customer payment trends, economic conditions, delinquency statistics, aging-based quantitative assessments, the impact on residential customer bills because of energy usage and change in rates, flexible payment plans and financial hardship arrearage management programs being offered to customers, and COVID-19 developments, including any potential federal governmental pandemic relief programs and the expansion of unemployment benefit initiatives, which help to mitigate the potential for increasing customer account delinquencies. Additionally, management considered past economic declines and corresponding uncollectible reserves as part of the current assessment. This evaluation has shown that our operating companies have experienced an increase in aged receivables and lower cash collections from customers because of the moratorium on disconnections and the economic slowdown resulting from the COVID-19 pandemic. Based upon the evaluation performed, in the first quarter of 2021, management increased the allowance for uncollectible accounts for amounts incurred as a result of COVID-19 by $15.5 million for Eversource ($5.6 million for CL&P, $3.7 million for NSTAR Electric, and $6.2 million at our natural gas businesses). These COVID-19 related uncollectible amounts were deferred either as incremental regulatory costs or deferred through existing regulatory tracking mechanisms that recover uncollectible energy supply costs, as management believes it is probable that these costs will ultimately be recovered from customers in future rates. As of March 31, 2021, the total amount incurred as a result of COVID-19 included in the allowance for uncollectible accounts was $47.0 million at Eversource ($8.4 million at CL&P, $14.7 million at NSTAR Electric, $2.3 million at PSNH, and $21.6 million at our natural gas businesses).
Management concluded that the reserve balance as of March 31, 2021 adequately reflected the collection risk and net realizable value for Eversource’s receivables. Management will continue to evaluate the adequacy of the uncollectible allowance in future reporting periods based on an ongoing assessment of accounts receivable collections, delinquency statistics, and analysis of aging-based quantitative assessments.
The PURA allows CL&P and Yankee Gas to accelerate the recovery of accounts receivable balances attributable to qualified customers under financial or medical duress (uncollectible hardship accounts receivable) outstanding for greater than 180 days and 90 days, respectively. The DPU allows NSTAR Electric, NSTAR Gas and EGMA to recover in rates amounts associated with certain uncollectible hardship accounts receivable. These uncollectible hardship customer account balances are included in Regulatory Assets or Other Long-Term Assets on the balance sheets. Hardship customers are protected from shut-off in certain circumstances, and historical collection experience has reflected a higher default risk as compared to the rest of the receivable population. Management uses a higher credit risk profile for this pool of trade receivables as compared to non-hardship receivables. The allowance for uncollectible hardship accounts is included in the total uncollectible allowance balance.
The total allowance for uncollectible accounts is included in Receivables, Net on the balance sheets. The activity in the allowance for uncollectible accounts by portfolio segment is as follows:
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Eversource
|
|
CL&P
|
|
NSTAR Electric
|
|
PSNH
|
|
(Millions of Dollars)
|
Hardship Accounts
|
|
Retail (Non-Hardship),
Wholesale, and Other Receivables
|
|
Total Allowance
|
|
Hardship Accounts
|
|
Retail (Non-Hardship),
Wholesale and Other Receivables
|
|
Total Allowance
|
|
Hardship Accounts
|
|
Retail (Non-Hardship),
Wholesale, and Other Receivables
|
|
Total Allowance
|
|
Total Allowance
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended 2021
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Beginning Balance
|
$
|
194.8
|
|
|
$
|
164.1
|
|
|
$
|
358.9
|
|
|
$
|
129.1
|
|
|
$
|
28.3
|
|
|
$
|
157.4
|
|
|
$
|
39.7
|
|
|
$
|
51.9
|
|
|
$
|
91.6
|
|
|
$
|
17.2
|
|
|
Uncollectible Expense
|
—
|
|
|
16.3
|
|
|
16.3
|
|
|
—
|
|
|
3.8
|
|
|
3.8
|
|
|
—
|
|
|
3.9
|
|
|
3.9
|
|
|
1.2
|
|
|
Uncollectible Costs
Deferred (1)
|
5.4
|
|
|
27.1
|
|
|
32.5
|
|
|
11.9
|
|
|
7.5
|
|
|
19.4
|
|
|
(8.5)
|
|
|
8.4
|
|
|
(0.1)
|
|
|
1.2
|
|
|
Write-Offs
|
(3.3)
|
|
|
(16.7)
|
|
|
(20.0)
|
|
|
(2.9)
|
|
|
(4.0)
|
|
|
(6.9)
|
|
|
(0.1)
|
|
|
(7.5)
|
|
|
(7.6)
|
|
|
(2.5)
|
|
|
Recoveries Collected
|
0.4
|
|
|
3.6
|
|
|
4.0
|
|
|
0.3
|
|
|
1.1
|
|
|
1.4
|
|
|
—
|
|
|
1.5
|
|
|
1.5
|
|
|
0.2
|
|
|
Ending Balance
|
$
|
197.3
|
|
|
$
|
194.4
|
|
|
$
|
391.7
|
|
|
$
|
138.4
|
|
|
$
|
36.7
|
|
|
$
|
175.1
|
|
|
$
|
31.1
|
|
|
$
|
58.2
|
|
|
$
|
89.3
|
|
|
$
|
17.3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended 2020
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Beginning Balance
|
$
|
143.3
|
|
|
$
|
81.5
|
|
|
$
|
224.8
|
|
|
$
|
80.1
|
|
|
$
|
17.2
|
|
|
$
|
97.3
|
|
|
$
|
43.9
|
|
|
$
|
31.5
|
|
|
$
|
75.4
|
|
|
$
|
10.5
|
|
ASU 2016-13
Implementation Impact
on January 1, 2020
|
21.6
|
|
|
2.2
|
|
|
23.8
|
|
|
21.3
|
|
|
0.9
|
|
|
22.2
|
|
|
(1.6)
|
|
|
0.3
|
|
|
(1.3)
|
|
|
0.3
|
|
|
Uncollectible Expense
|
—
|
|
|
11.4
|
|
|
11.4
|
|
|
—
|
|
|
3.2
|
|
|
3.2
|
|
|
—
|
|
|
3.7
|
|
|
3.7
|
|
|
0.7
|
|
|
Uncollectible Costs
Deferred (1)
|
11.8
|
|
|
8.5
|
|
|
20.3
|
|
|
12.9
|
|
|
1.8
|
|
|
14.7
|
|
|
(3.4)
|
|
|
3.4
|
|
|
—
|
|
|
1.3
|
|
|
Write-Offs
|
(4.7)
|
|
|
(16.8)
|
|
|
(21.5)
|
|
|
(3.8)
|
|
|
(3.5)
|
|
|
(7.3)
|
|
|
(0.4)
|
|
|
(8.0)
|
|
|
(8.4)
|
|
|
(1.7)
|
|
|
Recoveries Collected
|
0.2
|
|
|
3.1
|
|
|
3.3
|
|
|
0.2
|
|
|
0.6
|
|
|
0.8
|
|
|
—
|
|
|
1.7
|
|
|
1.7
|
|
|
0.1
|
|
|
Ending Balance
|
$
|
172.2
|
|
|
$
|
89.9
|
|
|
$
|
262.1
|
|
|
$
|
110.7
|
|
|
$
|
20.2
|
|
|
$
|
130.9
|
|
|
$
|
38.5
|
|
|
$
|
32.6
|
|
|
$
|
71.1
|
|
|
$
|
11.2
|
|
(1) The current period provision for expected credit losses is deferred as a regulatory cost on the balance sheets, as this amount is ultimately
recovered in rates. Amounts include uncollectible costs for hardship accounts and other customer receivables, including uncollectible
amounts related to COVID-19.
D. Fair Value Measurements
Fair value measurement guidance is applied to derivative contracts that are not elected or designated as "normal purchases" or "normal sales" (normal) and to the marketable securities held in trusts. Fair value measurement guidance is also applied to valuations of the investments used to calculate the funded status of pension and PBOP plans, the nonrecurring fair value measurements of nonfinancial assets such as goodwill, long-lived assets, equity method investments, and AROs, and in the valuation of the acquisition of CMA's assets in 2020. The fair value measurement guidance was also applied in estimating the fair value of preferred stock, long-term debt and RRBs.
Fair Value Hierarchy: In measuring fair value, Eversource uses observable market data when available in order to minimize the use of unobservable inputs. Inputs used in fair value measurements are categorized into three fair value hierarchy levels for disclosure purposes. The entire fair value measurement is categorized based on the lowest level of input that is significant to the fair value measurement. Eversource evaluates the classification of assets and liabilities measured at fair value on a quarterly basis. The levels of the fair value hierarchy are described below:
Level 1 - Inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities as of the reporting date. Active markets are those in which transactions for the asset or liability occur in sufficient frequency and volume to provide pricing information on an ongoing basis.
Level 2 - Inputs are quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active, and model-derived valuations in which all significant inputs are observable.
Level 3 - Quoted market prices are not available. Fair value is derived from valuation techniques in which one or more significant inputs or assumptions are unobservable. Where possible, valuation techniques incorporate observable market inputs that can be validated to external sources such as industry exchanges, including prices of energy and energy-related products.
Uncategorized - Investments that are measured at net asset value are not categorized within the fair value hierarchy.
Determination of Fair Value: The valuation techniques and inputs used in Eversource's fair value measurements are described in Note 4, "Derivative Instruments," Note 5, "Marketable Securities," Note 10, "Fair Value of Financial Instruments," and Note 17, "Acquisition of Assets of Columbia Gas of Massachusetts," to the financial statements.
E. Other Income, Net
The components of Other Income, Net on the statements of income were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Three Months Ended
|
|
|
March 31, 2021
|
|
March 31, 2020
|
|
(Millions of Dollars)
|
Eversource
|
|
CL&P
|
|
NSTAR Electric
|
|
PSNH
|
|
Eversource
|
|
CL&P
|
|
NSTAR Electric
|
|
PSNH
|
Pension, SERP and PBOP Non-Service
Income Components
|
$
|
20.1
|
|
|
$
|
2.7
|
|
|
$
|
10.1
|
|
|
$
|
2.7
|
|
|
$
|
12.7
|
|
|
$
|
1.1
|
|
|
$
|
7.9
|
|
|
$
|
1.9
|
|
|
AFUDC Equity
|
9.2
|
|
|
1.7
|
|
|
6.2
|
|
|
0.6
|
|
|
10.6
|
|
|
3.9
|
|
|
5.0
|
|
|
1.5
|
|
|
Equity in Earnings of Unconsolidated Affiliates
|
3.7
|
|
|
—
|
|
|
0.1
|
|
|
—
|
|
|
4.0
|
|
|
—
|
|
|
0.1
|
|
|
—
|
|
|
Investment (Loss)/Income
|
(0.6)
|
|
|
0.4
|
|
|
0.2
|
|
|
0.1
|
|
|
(4.3)
|
|
|
(3.4)
|
|
|
(1.3)
|
|
|
(0.5)
|
|
|
Interest Income
|
1.5
|
|
|
0.1
|
|
|
0.1
|
|
|
0.7
|
|
|
0.7
|
|
|
0.3
|
|
|
0.1
|
|
|
0.3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other
|
0.3
|
|
|
—
|
|
|
0.1
|
|
|
0.1
|
|
|
0.4
|
|
|
—
|
|
|
0.4
|
|
|
—
|
|
|
Total Other Income, Net
|
$
|
34.2
|
|
|
$
|
4.9
|
|
|
$
|
16.8
|
|
|
$
|
4.2
|
|
|
$
|
24.1
|
|
|
$
|
1.9
|
|
|
$
|
12.2
|
|
|
$
|
3.2
|
|
F. Other Taxes
Eversource's companies that serve customers in Connecticut collect gross receipts taxes levied by the state of Connecticut from their customers. These gross receipts taxes are recorded separately with collections in Operating Revenues and with payments in Taxes Other Than Income Taxes on the statements of income as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Three Months Ended
|
|
|
|
(Millions of Dollars)
|
March 31, 2021
|
|
March 31, 2020
|
|
|
|
|
|
Eversource
|
$
|
48.6
|
|
|
$
|
43.1
|
|
|
|
|
|
|
CL&P
|
39.2
|
|
|
35.5
|
|
|
|
|
|
As agents for state and local governments, Eversource's companies that serve customers in Connecticut and Massachusetts collect certain sales taxes that are recorded on a net basis with no impact on the statements of income.
G. Supplemental Cash Flow Information
Non-cash investing activities include plant additions included in Accounts Payable as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Millions of Dollars)
|
As of March 31, 2021
|
|
As of March 31, 2020
|
|
Eversource
|
$
|
262.9
|
|
|
$
|
273.7
|
|
|
CL&P
|
70.9
|
|
|
85.0
|
|
|
NSTAR Electric
|
68.2
|
|
|
70.2
|
|
|
PSNH
|
23.5
|
|
|
37.9
|
|
The following table reconciles cash as reported on the balance sheets to the cash and restricted cash balance as reported on the statements of cash flows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As of March 31, 2021
|
|
As of December 31, 2020
|
|
(Millions of Dollars)
|
Eversource
|
|
CL&P
|
|
NSTAR Electric
|
|
PSNH
|
|
Eversource
|
|
CL&P
|
|
NSTAR Electric
|
|
PSNH
|
|
Cash as reported on the Balance Sheets
|
$
|
34.1
|
|
|
$
|
9.3
|
|
|
$
|
0.1
|
|
|
$
|
2.0
|
|
|
$
|
106.6
|
|
|
$
|
90.8
|
|
|
$
|
0.1
|
|
|
$
|
0.1
|
|
|
Restricted cash included in:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Special Deposits
|
58.4
|
|
|
8.6
|
|
|
17.2
|
|
|
22.2
|
|
|
73.6
|
|
|
8.7
|
|
|
17.2
|
|
|
36.8
|
|
|
Marketable Securities
|
38.4
|
|
|
0.4
|
|
|
0.1
|
|
|
0.6
|
|
|
41.2
|
|
|
0.3
|
|
|
0.1
|
|
|
0.6
|
|
|
Other Long-Term Assets
|
44.7
|
|
|
—
|
|
|
—
|
|
|
3.2
|
|
|
43.6
|
|
|
—
|
|
|
—
|
|
|
2.1
|
|
|
Cash and Restricted Cash as reported on the
Statements of Cash Flows
|
$
|
175.6
|
|
|
$
|
18.3
|
|
|
$
|
17.4
|
|
|
$
|
28.0
|
|
|
$
|
265.0
|
|
|
$
|
99.8
|
|
|
$
|
17.4
|
|
|
$
|
39.6
|
|
Special Deposits represent cash collections related to the PSNH RRB customer charges that are held in trust, required ISO-NE cash deposits, and CYAPC and YAEC cash balances. Special Deposits are included in Current Assets on the balance sheets. Restricted cash included in Marketable Securities represents money market funds held in trusts to fund certain non-qualified executive benefits and restricted trusts to fund CYAPC and YAEC's spent nuclear fuel storage obligations. Restricted cash included in Other Long-Term Assets includes $41.5 million related to an Energy Relief Fund for energy efficiency and clean energy measures in the Merrimack Valley, and an additional energy efficiency program established under the terms of the EGMA settlement agreement.
2. REGULATORY ACCOUNTING
Eversource's utility companies are subject to rate regulation that is based on cost recovery and meets the criteria for application of accounting guidance for rate-regulated operations, which considers the effect of regulation on the timing of the recognition of certain revenues and expenses. The regulated companies' financial statements reflect the effects of the rate-making process. The rates charged to the customers of Eversource's regulated companies are designed to collect each company's costs to provide service, plus a return on investment.
The application of accounting guidance for rate-regulated enterprises results in recording regulatory assets and liabilities. Regulatory assets represent the deferral of incurred costs that are probable of future recovery in customer rates. Regulatory assets are amortized as the incurred costs are recovered through customer rates. Regulatory liabilities represent either revenues received from customers to fund expected costs that have not yet been incurred or probable future refunds to customers.
Management believes it is probable that each of the regulated companies will recover its respective investments in long-lived assets and the regulatory assets that have been recorded. If management were to determine that it could no longer apply the accounting guidance applicable to rate-regulated enterprises, or if management could not conclude it is probable that costs would be recovered from customers in future rates, the applicable costs would be charged to net income in the period in which the determination is made.
Regulatory Assets: The components of regulatory assets were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As of March 31, 2021
|
|
As of December 31, 2020
|
|
(Millions of Dollars)
|
Eversource
|
|
CL&P
|
|
NSTAR
Electric
|
|
PSNH
|
|
Eversource
|
|
CL&P
|
|
NSTAR
Electric
|
|
PSNH
|
|
Benefit Costs
|
$
|
2,733.6
|
|
|
$
|
618.5
|
|
|
$
|
674.2
|
|
|
$
|
262.3
|
|
|
$
|
2,794.2
|
|
|
$
|
632.3
|
|
|
$
|
690.0
|
|
|
$
|
267.6
|
|
|
Income Taxes, Net
|
751.7
|
|
|
459.1
|
|
|
111.4
|
|
|
17.4
|
|
|
747.1
|
|
|
458.9
|
|
|
110.4
|
|
|
15.2
|
|
|
Securitized Stranded Costs
|
511.3
|
|
|
—
|
|
|
—
|
|
|
511.3
|
|
|
522.1
|
|
|
—
|
|
|
—
|
|
|
522.1
|
|
|
Storm Restoration Costs, Net
|
789.5
|
|
|
529.8
|
|
|
184.3
|
|
|
75.4
|
|
|
765.6
|
|
|
515.1
|
|
|
186.4
|
|
|
64.1
|
|
|
Regulatory Tracker Mechanisms
|
856.1
|
|
|
284.3
|
|
|
360.5
|
|
|
87.5
|
|
|
850.5
|
|
|
246.6
|
|
|
332.2
|
|
|
95.3
|
|
|
Derivative Liabilities
|
293.4
|
|
|
293.1
|
|
|
—
|
|
|
—
|
|
|
296.3
|
|
|
293.1
|
|
|
—
|
|
|
—
|
|
|
Goodwill-related
|
310.5
|
|
|
—
|
|
|
266.5
|
|
|
—
|
|
|
314.7
|
|
|
—
|
|
|
270.2
|
|
|
—
|
|
|
Asset Retirement Obligations
|
114.9
|
|
|
32.6
|
|
|
53.8
|
|
|
3.9
|
|
|
118.4
|
|
|
32.1
|
|
|
58.6
|
|
|
3.9
|
|
|
Other Regulatory Assets
|
151.6
|
|
|
32.6
|
|
|
53.7
|
|
|
19.4
|
|
|
161.0
|
|
|
33.7
|
|
|
56.1
|
|
|
20.9
|
|
|
Total Regulatory Assets
|
6,512.6
|
|
|
2,250.0
|
|
|
1,704.4
|
|
|
977.2
|
|
|
6,569.9
|
|
|
2,211.8
|
|
|
1,703.9
|
|
|
989.1
|
|
|
Less: Current Portion
|
1,081.1
|
|
|
386.1
|
|
|
430.4
|
|
|
107.3
|
|
|
1,076.6
|
|
|
345.6
|
|
|
399.9
|
|
|
115.9
|
|
|
Total Long-Term Regulatory Assets
|
$
|
5,431.5
|
|
|
$
|
1,863.9
|
|
|
$
|
1,274.0
|
|
|
$
|
869.9
|
|
|
$
|
5,493.3
|
|
|
$
|
1,866.2
|
|
|
$
|
1,304.0
|
|
|
$
|
873.2
|
|
Regulatory Costs in Long-Term Assets: Eversource's regulated companies had $215.5 million (including $98.0 million for CL&P, $66.5 million for NSTAR Electric and $3.7 million for PSNH) and $196.9 million (including $84.1 million for CL&P, $69.8 million for NSTAR Electric and $4.3 million for PSNH) of additional regulatory costs as of March 31, 2021 and December 31, 2020, respectively, that were included in long-term assets on the balance sheets. These amounts represent incurred costs for which recovery has not yet been specifically approved by the applicable regulatory agency. However, based on regulatory policies or past precedent on similar costs, management believes it is probable that these costs will ultimately be approved and recovered from customers in rates.
As of March 31, 2021 and December 31, 2020, these regulatory costs included net incremental COVID-19 related costs deferred of $33.8 million and $24.0 million at Eversource, respectively, of which $27.3 million and $15.8 million, respectively, related to non-tracked uncollectible expense and the remainder related to facilities and fleet cleaning, sanitizing costs and supplies for personal protective equipment. Net incremental COVID-19 related costs deferred at CL&P, NSTAR Electric and PSNH totaled $8.8 million, $13.6 million and $0.6 million, respectively, as of March 31, 2021, and $4.7 million, $11.9 million and $1.1 million, respectively, as of December 31, 2020, and primarily related to non-tracked uncollectible expense deferred.
Regulatory Liabilities: The components of regulatory liabilities were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As of March 31, 2021
|
|
As of December 31, 2020
|
|
(Millions of Dollars)
|
Eversource
|
|
CL&P
|
|
NSTAR
Electric
|
|
PSNH
|
|
Eversource
|
|
CL&P
|
|
NSTAR
Electric
|
|
PSNH
|
|
EDIT due to Tax Cuts and Jobs Act of 2017
|
$
|
2,762.3
|
|
|
$
|
1,008.1
|
|
|
$
|
1,037.3
|
|
|
$
|
366.5
|
|
|
$
|
2,778.6
|
|
|
$
|
1,010.7
|
|
|
$
|
1,044.0
|
|
|
$
|
371.5
|
|
|
Cost of Removal
|
644.2
|
|
|
105.1
|
|
|
372.1
|
|
|
16.4
|
|
|
624.8
|
|
|
98.4
|
|
|
363.6
|
|
|
12.9
|
|
|
Benefit Costs
|
79.1
|
|
|
—
|
|
|
68.7
|
|
|
—
|
|
|
83.6
|
|
|
—
|
|
|
72.5
|
|
|
—
|
|
|
Regulatory Tracker Mechanisms
|
467.0
|
|
|
175.2
|
|
|
165.2
|
|
|
40.4
|
|
|
366.5
|
|
|
148.9
|
|
|
139.7
|
|
|
47.8
|
|
|
AFUDC - Transmission
|
77.8
|
|
|
44.3
|
|
|
33.5
|
|
|
—
|
|
|
76.8
|
|
|
44.6
|
|
|
32.2
|
|
|
—
|
|
|
Other Regulatory Liabilities
|
353.4
|
|
|
73.3
|
|
|
70.1
|
|
|
11.2
|
|
|
309.9
|
|
|
39.5
|
|
|
63.2
|
|
|
9.8
|
|
|
Total Regulatory Liabilities
|
4,383.8
|
|
|
1,406.0
|
|
|
1,746.9
|
|
|
434.5
|
|
|
4,240.2
|
|
|
1,342.1
|
|
|
1,715.2
|
|
|
442.0
|
|
|
Less: Current Portion
|
520.8
|
|
|
202.4
|
|
|
190.5
|
|
|
48.0
|
|
|
389.4
|
|
|
137.2
|
|
|
164.8
|
|
|
58.8
|
|
|
Total Long-Term Regulatory Liabilities
|
$
|
3,863.0
|
|
|
$
|
1,203.6
|
|
|
$
|
1,556.4
|
|
|
$
|
386.5
|
|
|
$
|
3,850.8
|
|
|
$
|
1,204.9
|
|
|
$
|
1,550.4
|
|
|
$
|
383.2
|
|
Recent Regulatory Developments:
CL&P Tropical Storm Isaias Costs: On August 4, 2020, Tropical Storm Isaias caused catastrophic damage to our electric distribution system, which resulted in significant numbers and durations of customer outages, primarily in Connecticut. In terms of customer outages, this storm was one of the worst in CL&P’s history. PURA will investigate the prudence of costs incurred by CL&P to restore service in response to Tropical Storm Isaias. That investigation is expected to occur either in a separate proceeding not yet initiated or as part of CL&P’s next rate review proceeding. Tropical Storm Isaias resulted in deferred storm restoration costs of approximately $231 million at CL&P and $249 million at Eversource as of March 31, 2021. The estimated cost of restoration will change as additional cost information becomes available and final storm costs are deferred or capitalized. Although PURA found that CL&P’s performance in its preparation for and response to Tropical Storm Isaias fell below applicable performance standards in certain instances, CL&P believes it will be able to present credible evidence in a future proceeding demonstrating there is no reasonably close causal connection between the alleged sub-standard performance and the storm costs incurred. While some amount of storm costs may be disallowed by PURA in a future proceeding, any such amount cannot be estimated at this time. CL&P continues to believe that these storm restoration costs associated with Tropical Storm Isaias were prudently incurred and meet the criteria for cost recovery; and as a result, management does not expect the storm costs to have a material impact on the financial position or results of operations of Eversource or CL&P.
CL&P Tropical Storm Isaias Response Investigation: On April 28, 2021, PURA issued a final decision on CL&P’s compliance with its emergency response plan that concluded CL&P failed to comply with certain applicable storm performance standards and was imprudent in certain instances. See Note 9G, “Commitments and Contingencies - CL&P Tropical Storm Isaias Response Investigation,” for an estimated assessment by PURA accrued and recorded within current regulatory liabilities on CL&P’s balance sheet and for further information.
3. PROPERTY, PLANT AND EQUIPMENT AND ACCUMULATED DEPRECIATION
The following tables summarize property, plant and equipment by asset category:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Eversource
|
As of March 31, 2021
|
|
As of December 31, 2020
|
|
(Millions of Dollars)
|
|
|
Distribution - Electric
|
$
|
16,941.8
|
|
|
$
|
16,703.2
|
|
|
Distribution - Natural Gas
|
6,158.4
|
|
|
6,111.2
|
|
|
Transmission - Electric
|
12,099.4
|
|
|
11,954.0
|
|
|
Distribution - Water
|
1,749.0
|
|
|
1,743.1
|
|
|
Solar
|
200.4
|
|
|
201.5
|
|
|
Utility
|
37,149.0
|
|
|
36,713.0
|
|
|
Other (1)
|
1,365.2
|
|
|
1,269.0
|
|
|
Property, Plant and Equipment, Gross
|
38,514.2
|
|
|
37,982.0
|
|
|
Less: Accumulated Depreciation
|
|
|
|
|
Utility
|
(8,628.0)
|
|
|
(8,476.3)
|
|
|
Other
|
(499.0)
|
|
|
(477.6)
|
|
|
Total Accumulated Depreciation
|
(9,127.0)
|
|
|
(8,953.9)
|
|
|
Property, Plant and Equipment, Net
|
29,387.2
|
|
|
29,028.1
|
|
|
Construction Work in Progress
|
1,878.6
|
|
|
1,854.4
|
|
|
Total Property, Plant and Equipment, Net
|
$
|
31,265.8
|
|
|
$
|
30,882.5
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As of March 31, 2021
|
|
As of December 31, 2020
|
|
(Millions of Dollars)
|
CL&P
|
|
NSTAR
Electric
|
|
PSNH
|
|
CL&P
|
|
NSTAR
Electric
|
|
PSNH
|
|
Distribution - Electric
|
$
|
6,919.2
|
|
|
$
|
7,640.4
|
|
|
$
|
2,422.5
|
|
|
$
|
6,820.7
|
|
|
$
|
7,544.4
|
|
|
$
|
2,378.4
|
|
|
Transmission - Electric
|
5,561.0
|
|
|
4,782.9
|
|
|
1,757.2
|
|
|
5,512.0
|
|
|
4,701.3
|
|
|
1,742.4
|
|
|
Solar
|
—
|
|
|
200.4
|
|
|
—
|
|
|
—
|
|
|
201.5
|
|
|
—
|
|
|
Property, Plant and Equipment, Gross
|
12,480.2
|
|
|
12,623.7
|
|
|
4,179.7
|
|
|
12,332.7
|
|
|
12,447.2
|
|
|
4,120.8
|
|
|
Less: Accumulated Depreciation
|
(2,523.8)
|
|
|
(3,130.9)
|
|
|
(862.7)
|
|
|
(2,475.4)
|
|
|
(3,074.1)
|
|
|
(848.9)
|
|
|
Property, Plant and Equipment, Net
|
9,956.4
|
|
|
9,492.8
|
|
|
3,317.0
|
|
|
9,857.3
|
|
|
9,373.1
|
|
|
3,271.9
|
|
|
Construction Work in Progress
|
388.4
|
|
|
759.5
|
|
|
95.8
|
|
|
377.3
|
|
|
750.0
|
|
|
102.4
|
|
|
Total Property, Plant and Equipment, Net
|
$
|
10,344.8
|
|
|
$
|
10,252.3
|
|
|
$
|
3,412.8
|
|
|
$
|
10,234.6
|
|
|
$
|
10,123.1
|
|
|
$
|
3,374.3
|
|
(1) These assets are primarily comprised of computer software, hardware and equipment at Eversource Service and buildings at The Rocky River Realty Company.
4. DERIVATIVE INSTRUMENTS
The electric and natural gas companies purchase and procure energy and energy-related products, which are subject to price volatility, for their customers. The costs associated with supplying energy to customers are recoverable from customers in future rates. These regulated companies manage the risks associated with the price volatility of energy and energy-related products through the use of derivative and non-derivative contracts.
Many of the derivative contracts meet the definition of, and are designated as, normal and qualify for accrual accounting under the applicable accounting guidance. The costs and benefits of derivative contracts that meet the definition of normal are recognized in Operating Expenses on the statements of income, as applicable, as electricity or natural gas is delivered.
Derivative contracts that are not designated as normal are recorded at fair value as current or long-term Derivative Assets or Derivative Liabilities on the balance sheets. For the electric and natural gas companies, regulatory assets or regulatory liabilities are recorded to offset the fair values of derivatives, as contract settlement amounts are recovered from, or refunded to, customers in their respective energy supply rates.
The gross fair values of derivative assets and liabilities with the same counterparty are offset and reported as net Derivative Assets or Derivative Liabilities, with current and long-term portions, on the balance sheets. The following table presents the gross fair values of contracts, categorized by risk type, and the net amounts recorded as current or long-term derivative assets or liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As of March 31, 2021
|
|
As of December 31, 2020
|
|
(Millions of Dollars)
|
Fair Value Hierarchy
|
|
Commodity Supply and Price Risk
Management
|
|
Netting (1)
|
|
Net Amount
Recorded as a Derivative
|
|
Commodity Supply and Price Risk
Management
|
|
Netting (1)
|
|
Net Amount
Recorded as
a Derivative
|
|
Current Derivative Assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CL&P
|
Level 3
|
|
$
|
13.9
|
|
|
$
|
(0.4)
|
|
|
$
|
13.5
|
|
|
$
|
13.7
|
|
|
$
|
(0.4)
|
|
|
$
|
13.3
|
|
|
Long-Term Derivative Assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CL&P
|
Level 3
|
|
58.5
|
|
|
(1.8)
|
|
|
56.7
|
|
|
58.7
|
|
|
(1.8)
|
|
|
56.9
|
|
|
Current Derivative Liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CL&P
|
Level 3
|
|
(69.7)
|
|
|
—
|
|
|
(69.7)
|
|
|
(68.8)
|
|
|
—
|
|
|
(68.8)
|
|
|
Other
|
Level 2
|
|
(0.3)
|
|
|
—
|
|
|
(0.3)
|
|
|
(3.3)
|
|
|
0.1
|
|
|
(3.2)
|
|
|
Long-Term Derivative Liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CL&P
|
Level 3
|
|
(293.6)
|
|
|
—
|
|
|
(293.6)
|
|
|
(294.5)
|
|
|
—
|
|
|
(294.5)
|
|
(1) Amounts represent derivative assets and liabilities that Eversource elected to record net on the balance sheets. These amounts are subject to master netting agreements or similar agreements for which the right of offset exists.
For further information on the fair value of derivative contracts, see Note 1D, "Summary of Significant Accounting Policies - Fair Value Measurements," to the financial statements.
Derivative Contracts at Fair Value with Offsetting Regulatory Amounts
Commodity Supply and Price Risk Management: As required by regulation, CL&P, along with UI, has capacity-related contracts with generation facilities. CL&P has a sharing agreement with UI, with 80 percent of the costs or benefits of each contract borne by or allocated to CL&P and 20 percent borne by or allocated to UI. The combined capacities of these contracts as of both March 31, 2021 and December 31, 2020 were 675 MW. The capacity contracts extend through 2026 and obligate both CL&P and UI to make or receive payments on a monthly basis to or from the generation facilities based on the difference between a set capacity price and the capacity market price received in the ISO-NE capacity markets.
As of March 31, 2021 and December 31, 2020, Eversource had New York Mercantile Exchange (NYMEX) financial contracts for natural gas futures in order to reduce variability associated with the price of 1.2 million and 8.9 million MMBtu of natural gas, respectively.
For the three months ended March 31, 2021 and 2020, there were losses of $11.1 million and $18.0 million, respectively, deferred as regulatory costs, which reflect the change in fair value associated with Eversource's derivative contracts.
Fair Value Measurements of Derivative Instruments
Derivative contracts classified as Level 2 in the fair value hierarchy relate to the financial contracts for natural gas futures. Prices are obtained from broker quotes and are based on actual market activity. The contracts are valued using NYMEX natural gas prices. Valuations of these contracts also incorporate discount rates using the yield curve approach.
The fair value of derivative contracts classified as Level 3 utilizes significant unobservable inputs. The fair value is modeled using income techniques, such as discounted cash flow valuations adjusted for assumptions related to exit price. Significant observable inputs for valuations of these contracts include energy and energy-related product prices in future years for which quoted prices in an active market exist. Fair value measurements categorized in Level 3 of the fair value hierarchy are prepared by individuals with expertise in valuation techniques, pricing of energy and energy-related products, and accounting requirements. The future capacity prices for periods that are not quoted in an active market or established at auction are based on available market data and are escalated based on estimates of inflation in order to address the full term of the contract.
Valuations of derivative contracts using a discounted cash flow methodology include assumptions regarding the timing and likelihood of scheduled payments and also reflect non-performance risk, including credit, using the default probability approach based on the counterparty's credit rating for assets and the Company's credit rating for liabilities. Valuations incorporate estimates of premiums or discounts that would be required by a market participant to arrive at an exit price, using historical market transactions adjusted for the terms of the contract.
The following is a summary of Level 3 derivative contracts and the range of the significant unobservable inputs utilized in the valuations over the duration of the contracts:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As of March 31, 2021
|
|
As of December 31, 2020
|
|
|
|
CL&P
|
Range
|
|
Weighted Average (1)
|
|
|
|
Period Covered
|
|
Range
|
|
Weighted Average (1)
|
|
|
|
Period Covered
|
|
Capacity Prices
|
$2.59
|
|
$
|
2.59
|
|
|
per kW-Month
|
|
2025 - 2026
|
|
$
|
4.30
|
|
|
—
|
|
$5.30
|
|
$
|
4.63
|
|
|
per kW-Month
|
|
2024 - 2026
|
|
Forward Reserve Prices
|
$
|
0.54
|
|
|
—
|
|
$0.90
|
|
$
|
0.72
|
|
|
per kW-Month
|
|
2021 - 2024
|
|
$
|
0.54
|
|
|
—
|
|
$0.90
|
|
$
|
0.72
|
|
|
per kW-Month
|
|
2021 - 2024
|
(1) Unobservable inputs were weighted by the relative future capacity and forward reserve prices and contractual MWs over the periods covered.
Exit price premiums of 6.6 percent through 10.9 percent, or a weighted average of 9.8 percent, are also applied to these contracts and reflect the uncertainty and illiquidity premiums that would be required based on the most recent market activity available for similar type contracts. The risk premium was weighted by the relative fair value of the net derivative instruments.
Significant increases or decreases in future capacity or forward reserve prices in isolation would decrease or increase, respectively, the fair value of the derivative liability. Any increases in risk premiums would increase the fair value of the derivative liability. Changes in these fair values are recorded as a regulatory asset or liability and do not impact net income.
Valuations using significant unobservable inputs: The following table presents changes in the Level 3 category of derivative assets and derivative liabilities measured at fair value on a recurring basis. The derivative assets and liabilities are presented on a net basis.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CL&P
|
For the Three Months Ended March 31,
|
|
(Millions of Dollars)
|
2021
|
|
2020
|
|
Derivatives, Net:
|
|
|
|
|
Fair Value as of Beginning of Period
|
$
|
(293.1)
|
|
|
$
|
(329.2)
|
|
|
Net Realized/Unrealized Losses Included
in Regulatory Assets
|
(12.5)
|
|
|
(16.4)
|
|
|
Settlements
|
12.5
|
|
|
11.8
|
|
|
Fair Value as of End of Period
|
$
|
(293.1)
|
|
|
$
|
(333.8)
|
|
5. MARKETABLE SECURITIES
Eversource holds marketable securities that are primarily used to fund certain non-qualified executive benefits. The trusts that hold marketable securities are not subject to regulatory oversight by state or federal agencies. CYAPC and YAEC maintain legally restricted trusts, each of which holds marketable securities, to fund the spent nuclear fuel removal obligations of their nuclear fuel storage facilities.
Equity Securities: Unrealized gains and losses on equity securities held in Eversource's non-qualified executive benefit trust are recorded in Other Income, Net on the statements of income. The fair value of these equity securities as of March 31, 2021 and December 31, 2020 was $39.2 million and $40.9 million, respectively. For the three months ended March 31, 2021 and 2020, there were unrealized gains of $1.1 million and unrealized losses of $9.1 million, respectively, recorded in Other Income, Net related to these equity securities.
Eversource's equity securities also include CYAPC's and YAEC's marketable securities held in spent nuclear fuel trusts, which had fair values of $203.3 million and $205.1 million as of March 31, 2021 and December 31, 2020, respectively. Unrealized gains and losses for these spent nuclear fuel trusts are subject to regulatory accounting treatment and are recorded in Marketable Securities with the corresponding offset to Other Long-Term Liabilities on the balance sheets, with no impact on the statements of income.
Available-for-Sale Debt Securities: The following is a summary of the available-for-sale debt securities, which are recorded at fair value and are included in current and long-term Marketable Securities on the balance sheets.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As of March 31, 2021
|
|
As of December 31, 2020
|
|
Eversource
(Millions of Dollars)
|
Amortized Cost
|
|
Pre-Tax
Unrealized Gains
|
|
Pre-Tax
Unrealized
Losses
|
|
Fair Value
|
|
Amortized Cost
|
|
Pre-Tax
Unrealized Gains
|
|
Pre-Tax
Unrealized
Losses
|
|
Fair Value
|
|
Debt Securities
|
$
|
214.3
|
|
|
$
|
5.4
|
|
|
$
|
(0.4)
|
|
|
$
|
219.3
|
|
|
$
|
213.1
|
|
|
$
|
11.2
|
|
|
$
|
(0.1)
|
|
|
$
|
224.2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Eversource's debt securities include CYAPC's and YAEC's marketable securities held in spent nuclear fuel trusts in the amounts of $186.9 million and $192.5 million as of March 31, 2021 and December 31, 2020, respectively.
Unrealized gains and losses on available-for-sale debt securities held in Eversource's non-qualified benefit trust are recorded in Accumulated Other Comprehensive Income, excluding amounts related to credit losses or losses on securities intended to be sold, which are recorded in Other Income, Net. There have been no significant unrealized losses and no credit losses for the three months ended March 31, 2021 and 2020, and no allowance for credit losses as of March 31, 2021. Factors considered in determining whether a credit loss exists include adverse conditions specifically affecting the issuer, the payment history, ratings and rating changes of the security, and the severity of the impairment. For asset-backed debt securities, underlying collateral and expected future cash flows are also evaluated. Debt securities included in Eversource's non-qualified benefit trust portfolio are investment-grade bonds with a lower default risk based on their credit quality.
As of March 31, 2021, the contractual maturities of available-for-sale debt securities were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Eversource
(Millions of Dollars)
|
Amortized Cost
|
|
Fair Value
|
|
Less than one year (1)
|
$
|
40.4
|
|
|
$
|
40.4
|
|
|
One to five years
|
60.6
|
|
|
62.3
|
|
|
Six to ten years
|
52.4
|
|
|
53.3
|
|
|
Greater than ten years
|
60.9
|
|
|
63.3
|
|
|
Total Debt Securities
|
$
|
214.3
|
|
|
$
|
219.3
|
|
(1) Amounts in the Less than one year category include securities in the CYAPC and YAEC spent nuclear fuel trusts, which are restricted and are classified in long-term Marketable Securities on the balance sheets.
Realized Gains and Losses: Realized gains and losses are recorded in Other Income, Net for Eversource's benefit trust and are offset in Other Long-Term Liabilities for CYAPC and YAEC. Eversource utilizes the specific identification basis method for the Eversource non-qualified benefit trust, and the average cost basis method for the CYAPC and YAEC spent nuclear fuel trusts to compute the realized gains and losses on the sale of marketable securities.
Fair Value Measurements: The following table presents the marketable securities recorded at fair value on a recurring basis by the level in which they are classified within the fair value hierarchy:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Eversource
(Millions of Dollars)
|
As of March 31, 2021
|
|
As of December 31, 2020
|
|
Level 1:
|
|
|
|
|
Mutual Funds and Equities
|
$
|
242.5
|
|
|
$
|
246.0
|
|
|
Money Market Funds
|
38.4
|
|
|
41.2
|
|
|
Total Level 1
|
$
|
280.9
|
|
|
$
|
287.2
|
|
|
Level 2:
|
|
|
|
|
U.S. Government Issued Debt Securities (Agency and Treasury)
|
$
|
93.9
|
|
|
$
|
72.9
|
|
|
Corporate Debt Securities
|
58.5
|
|
|
63.8
|
|
|
Asset-Backed Debt Securities
|
10.9
|
|
|
11.9
|
|
|
Municipal Bonds
|
6.8
|
|
|
24.0
|
|
|
Other Fixed Income Securities
|
10.8
|
|
|
10.4
|
|
|
Total Level 2
|
$
|
180.9
|
|
|
$
|
183.0
|
|
|
Total Marketable Securities
|
$
|
461.8
|
|
|
$
|
470.2
|
|
U.S. government issued debt securities are valued using market approaches that incorporate transactions for the same or similar bonds and adjustments for yields and maturity dates. Corporate debt securities are valued using a market approach, utilizing recent trades of the same or similar instruments and also incorporating yield curves, credit spreads and specific bond terms and conditions. Asset-backed debt securities include collateralized mortgage obligations, commercial mortgage backed securities, and securities collateralized by auto loans, credit card loans or receivables. Asset-backed debt securities are valued using recent trades of similar instruments, prepayment assumptions, yield curves, issuance and maturity dates, and tranche information. Municipal bonds are valued using a market approach that incorporates reported trades and benchmark yields. Other fixed income securities are valued using pricing models, quoted prices of securities with similar characteristics, and discounted cash flows.
6. SHORT-TERM AND LONG-TERM DEBT
Short-Term Debt - Commercial Paper Programs and Credit Agreements: Eversource parent has a $2.00 billion commercial paper program allowing Eversource parent to issue commercial paper as a form of short-term debt. Eversource parent, CL&P, PSNH, NSTAR Gas, Yankee Gas and Aquarion Water Company of Connecticut are parties to a five-year $1.45 billion revolving credit facility, which terminates on December 6, 2024. Eversource parent and EGMA have a short-term $550 million revolving credit facility, which terminates on October 20, 2021. These revolving credit facilities serve to backstop Eversource parent's $2.00 billion commercial paper program.
NSTAR Electric has a $650 million commercial paper program allowing NSTAR Electric to issue commercial paper as a form of short-term debt. NSTAR Electric is also a party to a five-year $650 million revolving credit facility, which terminates on December 6, 2024. The revolving credit facility serves to backstop NSTAR Electric's $650 million commercial paper program.
The amount of borrowings outstanding and available under the commercial paper programs were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Borrowings Outstanding as of
|
|
Available Borrowing Capacity as of
|
|
Weighted-Average Interest Rate as of
|
|
|
March 31, 2021
|
|
December 31, 2020
|
|
March 31, 2021
|
|
December 31, 2020
|
|
March 31, 2021
|
|
December 31, 2020
|
|
(Millions of Dollars)
|
|
|
|
|
|
|
Eversource Parent Commercial Paper Program
|
$
|
1,475.7
|
|
|
$
|
1,054.3
|
|
|
$
|
524.3
|
|
|
$
|
945.7
|
|
|
0.23
|
%
|
|
0.25
|
%
|
|
NSTAR Electric Commercial Paper Program
|
443.5
|
|
|
195.0
|
|
|
206.5
|
|
|
455.0
|
|
|
0.13
|
%
|
|
0.16
|
%
|
There were no borrowings outstanding on the revolving credit facilities as of March 31, 2021 or December 31, 2020.
On May 15, 2020, CL&P and PSNH entered into uncommitted line of credit agreements, which will expire by May 14, 2021. The CL&P agreements total $450 million and the PSNH agreements total $300 million. There are no borrowings outstanding on either the CL&P or PSNH uncommitted line of credit agreements as of March 31, 2021.
Amounts outstanding under the commercial paper programs are included in Notes Payable and classified in current liabilities on the Eversource and NSTAR Electric balance sheets, as all borrowings are outstanding for no more than 364 days at one time. As a result of the Aquarion Water Company of Connecticut long-term debt issuance in April 2021, $40.0 million of the current portion of long-term debt and $46.8 million of commercial paper borrowings under the Eversource parent commercial paper program were classified as Long-Term Debt as of March 31, 2021.
The Company expects the future operating cash flows of Eversource, CL&P, NSTAR Electric and PSNH, along with existing borrowing availability and access to both debt and equity markets, will be sufficient to meet any working capital and future operating requirements, and capital investment forecasted opportunities.
Intercompany Borrowings: Eversource parent uses its available capital resources to provide loans to its subsidiaries to assist in meeting their short-term borrowing needs. Eversource parent records intercompany interest income from its loans to subsidiaries, which is eliminated in consolidation. Intercompany loans from Eversource parent to its subsidiaries are eliminated in consolidation on Eversource's balance sheets. As of March 31, 2021, there were intercompany loans from Eversource parent to CL&P of $32.1 million, to PSNH of $196.8 million, and to a subsidiary of NSTAR Electric of $22.5 million. As of December 31, 2020, there were intercompany loans from Eversource parent to PSNH of $46.3 million, and to a subsidiary of NSTAR Electric of $21.3 million. Intercompany loans from Eversource parent are included in Notes Payable to Eversource Parent and classified in current liabilities on the respective subsidiary's balance sheets.
Long-Term Debt Issuance Authorizations: On February 10, 2021, PURA approved Aquarion Water Company of Connecticut’s request for authorization to issue up to $100 million in long-term debt through December 31, 2021. On March 18, 2021, PSNH filed an application with the NHPUC for authorization to issue up to $350 million in long-term debt through December 31, 2021. On March 22, 2021, CL&P filed an application with PURA for authorization to issue up to $350 million in long-term debt through December 31, 2021. On March 31, 2021, the DPU approved NSTAR Electric's request for authorization to issue up to $1.6 billion in long-term debt through December 31, 2023.
Long-Term Debt Issuances and Repayments: The following table summarizes long-term debt issuances and repayments:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Millions of Dollars)
|
Issuance/(Repayment)
|
|
Issue Date or Repayment Date
|
|
Maturity Date
|
|
Use of Proceeds for Issuance/
Repayment Information
|
|
PSNH:
|
|
|
|
|
|
|
|
|
4.05% Series Q First Mortgage Bonds
|
$
|
(122.0)
|
|
|
March 2021
|
|
June 2021
|
|
Paid on par call date in advance of maturity date
|
|
Other:
|
|
|
|
|
|
|
|
|
Eversource Parent 2.50% Series I Senior Notes
|
(450.0)
|
|
|
February 2021
|
|
March 2021
|
|
Paid on par call date in advance of maturity date
|
|
Eversource Parent 2.55% Series S Senior Notes
|
350.0
|
|
|
March 2021
|
|
March 2031
|
|
Repaid short-term debt, including short-term debt used to redeem Series I Senior Notes
|
|
Aquarion Water Company of Connecticut 3.31% Senior
Notes
|
100.0
|
|
|
April 2021
|
|
April 2051
|
|
Repaid 5.50% Notes, redeemed short-term debt, paid capital expenditures and working capital
|
|
Aquarion Water Company of Connecticut 5.50% Notes
|
(40.0)
|
|
|
April 2021
|
|
April 2021
|
|
Paid at maturity
|
In April 2021, PSNH provided a redemption notice to the holders of the PSNH 3.20% Series R First Mortgage Bonds that PSNH will redeem the $160 million of bonds on June 1, 2021, the par call date, in advance of the September 1, 2021 maturity date. In April 2021, NSTAR Electric provided a redemption notice to the holders to the NSTAR Electric 3.50% Series F Senior Notes that NSTAR Electric will redeem the $250 million of senior notes on June 15, 2021, the par call date, in advance of the September 15, 2021 maturity date.
7. RATE REDUCTION BONDS AND VARIABLE INTEREST ENTITIES
Rate Reduction Bonds: In May 2018, PSNH Funding, a wholly-owned subsidiary of PSNH, issued $635.7 million of securitized RRBs in multiple tranches with a weighted average interest rate of 3.66 percent, and final maturity dates ranging from 2026 to 2035. The RRBs are expected to be repaid by February 1, 2033. RRB payments consist of principal and interest and are paid semi-annually, beginning on February 1, 2019. The RRBs were issued pursuant to a finance order issued by the NHPUC in January 2018 to recover remaining costs resulting from the divestiture of PSNH’s generation assets.
PSNH Funding was formed solely to issue RRBs to finance PSNH's unrecovered remaining costs associated with the divestiture of its generation assets. PSNH Funding is considered a VIE primarily because the equity capitalization is insufficient to support its operations. PSNH has the power to direct the significant activities of the VIE and is most closely associated with the VIE as compared to other interest holders. Therefore, PSNH is considered the primary beneficiary and consolidates PSNH Funding in its consolidated financial statements. The following tables summarize the impact of PSNH Funding on PSNH's balance sheets and income statements:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Millions of Dollars)
|
|
|
|
|
Balance Sheet:
|
As of March 31, 2021
|
|
As of December 31, 2020
|
|
Restricted Cash - Current Portion (included in Current Assets)
|
$
|
21.9
|
|
|
$
|
36.8
|
|
|
Restricted Cash - Long-Term Portion (included in Other Long-Term Assets)
|
3.2
|
|
|
2.1
|
|
|
Securitized Stranded Cost (included in Regulatory Assets)
|
511.3
|
|
|
522.1
|
|
|
Other Regulatory Liabilities (included in Regulatory Liabilities)
|
11.5
|
|
|
9.1
|
|
|
Accrued Interest (included in Other Current Liabilities)
|
3.1
|
|
|
8.0
|
|
|
Rate Reduction Bonds - Current Portion
|
43.2
|
|
|
43.2
|
|
|
Rate Reduction Bonds - Long-Term Portion
|
475.3
|
|
|
496.9
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Millions of Dollars)
Income Statement:
|
For the Three Months Ended
|
|
March 31, 2021
|
|
March 31, 2020
|
|
Amortization of RRB Principal (included in Amortization of Regulatory Assets, Net)
|
$
|
10.8
|
|
|
$
|
10.8
|
|
|
Interest Expense on RRB Principal (included in Interest Expense)
|
4.7
|
|
|
5.0
|
|
8. PENSION BENEFITS AND POSTRETIREMENT BENEFITS OTHER THAN PENSION
Eversource provides defined benefit retirement plans (Pension Plans) that cover eligible employees. In addition to the Pension Plans, Eversource maintains non-qualified defined benefit retirement plans (SERP Plans), which provide benefits in excess of Internal Revenue Code limitations to eligible participants consisting of current and retired employees. Eversource also provides defined benefit postretirement plans (PBOP Plans) that provide life insurance and a health reimbursement arrangement created for the purpose of reimbursing retirees and dependents for health insurance premiums and certain medical expenses to eligible employees that meet certain age and service eligibility requirements.
The components of net periodic benefit expense/(income) for the Pension, SERP and PBOP Plans, prior to amounts capitalized as Property, Plant and Equipment or deferred as regulatory assets for future recovery, are shown below. The service cost component of net periodic benefit expense/(income), less the capitalized portion, is included in Operations and Maintenance expense on the statements of income. The remaining components of net periodic benefit expense/(income), less the deferred portion, are included in Other Income, Net on the statements of income. Pension, SERP and PBOP expense reflected in the statements of cash flows for CL&P, NSTAR Electric and PSNH does not include the intercompany allocations or the corresponding capitalized and deferred portion, as these amounts are cash settled on a short-term basis.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pension and SERP
|
|
PBOP
|
|
|
For the Three Months Ended March 31, 2021
|
|
For the Three Months Ended March 31, 2021
|
|
(Millions of Dollars)
|
Eversource
|
|
CL&P
|
|
NSTAR Electric
|
|
PSNH
|
|
Eversource
|
|
CL&P
|
|
NSTAR Electric
|
|
PSNH
|
|
Service Cost
|
$
|
21.3
|
|
|
$
|
6.3
|
|
|
$
|
4.0
|
|
|
$
|
2.2
|
|
|
$
|
3.5
|
|
|
$
|
0.6
|
|
|
$
|
0.6
|
|
|
$
|
0.3
|
|
|
Interest Cost
|
32.6
|
|
|
7.3
|
|
|
6.7
|
|
|
3.6
|
|
|
4.4
|
|
|
0.8
|
|
|
1.1
|
|
|
0.5
|
|
|
Expected Return on Plan Assets
|
(108.9)
|
|
|
(21.6)
|
|
|
(26.9)
|
|
|
(11.9)
|
|
|
(19.7)
|
|
|
(2.6)
|
|
|
(9.3)
|
|
|
(1.5)
|
|
|
Actuarial Loss
|
61.6
|
|
|
13.0
|
|
|
15.5
|
|
|
4.9
|
|
|
2.6
|
|
|
0.4
|
|
|
0.6
|
|
|
0.3
|
|
|
Prior Service Cost/(Credit)
|
0.3
|
|
|
—
|
|
|
0.1
|
|
|
—
|
|
|
(5.3)
|
|
|
0.2
|
|
|
(4.2)
|
|
|
0.1
|
|
|
Total Net Periodic Benefit Expense/(Income)
|
$
|
6.9
|
|
|
$
|
5.0
|
|
|
$
|
(0.6)
|
|
|
$
|
(1.2)
|
|
|
$
|
(14.5)
|
|
|
$
|
(0.6)
|
|
|
$
|
(11.2)
|
|
|
$
|
(0.3)
|
|
|
Intercompany Allocations
|
N/A
|
|
$
|
1.3
|
|
|
$
|
1.5
|
|
|
$
|
0.5
|
|
|
N/A
|
|
$
|
(0.3)
|
|
|
$
|
(0.4)
|
|
|
$
|
(0.1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pension and SERP
|
|
PBOP
|
|
|
For the Three Months Ended March 31, 2020
|
|
For the Three Months Ended March 31, 2020
|
|
(Millions of Dollars)
|
Eversource
|
|
CL&P
|
|
NSTAR
Electric
|
|
PSNH
|
|
Eversource
|
|
CL&P
|
|
NSTAR
Electric
|
|
PSNH
|
|
Service Cost
|
$
|
19.6
|
|
|
$
|
5.7
|
|
|
$
|
3.8
|
|
|
$
|
2.2
|
|
|
$
|
2.6
|
|
|
$
|
0.5
|
|
|
$
|
0.6
|
|
|
$
|
0.2
|
|
|
Interest Cost
|
44.3
|
|
|
9.5
|
|
|
9.6
|
|
|
4.9
|
|
|
6.1
|
|
|
1.2
|
|
|
1.7
|
|
|
0.6
|
|
|
Expected Return on Plan Assets
|
(100.3)
|
|
|
(20.0)
|
|
|
(25.8)
|
|
|
(11.3)
|
|
|
(18.1)
|
|
|
(2.4)
|
|
|
(8.5)
|
|
|
(1.4)
|
|
|
Actuarial Loss
|
49.3
|
|
|
10.0
|
|
|
13.3
|
|
|
4.1
|
|
|
2.1
|
|
|
0.4
|
|
|
0.7
|
|
|
0.1
|
|
|
Prior Service Cost/(Credit)
|
0.3
|
|
|
—
|
|
|
0.1
|
|
|
—
|
|
|
(5.4)
|
|
|
0.2
|
|
|
(4.2)
|
|
|
0.1
|
|
|
Total Net Periodic Benefit Expense/(Income)
|
$
|
13.2
|
|
|
$
|
5.2
|
|
|
$
|
1.0
|
|
|
$
|
(0.1)
|
|
|
$
|
(12.7)
|
|
|
$
|
(0.1)
|
|
|
$
|
(9.7)
|
|
|
$
|
(0.4)
|
|
|
Intercompany Allocations
|
N/A
|
|
$
|
1.9
|
|
|
$
|
1.9
|
|
|
$
|
0.6
|
|
|
N/A
|
|
$
|
(0.4)
|
|
|
$
|
(0.4)
|
|
|
$
|
(0.2)
|
|
Eversource Contributions: Eversource currently expects to make contributions of $180 million to the Pension Plans in 2021, of which $99 million and $30 million will be contributed by CL&P and NSTAR Electric, respectively.
9. COMMITMENTS AND CONTINGENCIES
A. Environmental Matters
Eversource, CL&P, NSTAR Electric and PSNH are subject to environmental laws and regulations intended to mitigate or remove the effect of past operations and improve or maintain the quality of the environment. These laws and regulations require the removal or the remedy of the effect on the environment of the disposal or release of certain specified hazardous substances at current and former operating sites. Eversource, CL&P, NSTAR Electric and PSNH have an active environmental auditing and training program and each believes it is substantially in compliance with all enacted laws and regulations.
The number of environmental sites and related reserves for which remediation or long-term monitoring, preliminary site work or site assessment is being performed are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As of March 31, 2021
|
|
As of December 31, 2020
|
|
|
Number of Sites
|
|
Reserve
(in millions)
|
|
Number of Sites
|
|
Reserve
(in millions)
|
|
Eversource
|
62
|
|
|
$
|
100.0
|
|
|
63
|
|
|
$
|
102.4
|
|
|
CL&P
|
14
|
|
|
11.1
|
|
|
15
|
|
|
12.3
|
|
|
NSTAR Electric
|
12
|
|
|
4.2
|
|
|
12
|
|
|
4.7
|
|
|
PSNH
|
9
|
|
|
7.0
|
|
|
9
|
|
|
7.1
|
|
Included in the number of sites and reserve amounts above are former MGP sites that were operated several decades ago and manufactured natural gas from coal and other processes, which resulted in certain by-products remaining in the environment that may pose a potential risk to human health and the environment, for which Eversource may have potential liability. The reserve balances related to these former MGP sites were $91.5 million and $92.2 million as of March 31, 2021 and December 31, 2020, respectively, and related primarily to the natural gas business segment.
These reserve estimates are subjective in nature as they take into consideration several different remediation options at each specific site. The reliability and precision of these estimates can be affected by several factors, including new information concerning either the level of contamination at the site, the extent of Eversource's, CL&P's, NSTAR Electric's and PSNH's responsibility for remediation or the extent of remediation required, recently enacted laws and regulations or changes in cost estimates due to certain economic factors. It is possible that new information or future developments could require a reassessment of the potential exposure to required environmental remediation. As this information becomes available, management will continue to assess the potential exposure and adjust the reserves accordingly.
B. Long-Term Contractual Arrangements
The following is an update to the current status of long-term contractual arrangements set forth in Note 13B of the Eversource 2020 Form 10-K.
Renewable Energy: Renewable energy contracts include non-cancelable commitments under contracts of NSTAR Electric for the purchase of energy and RECs from renewable energy facilities.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NSTAR Electric
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Millions of Dollars)
|
2021
|
|
2022
|
|
2023
|
|
2024
|
|
2025
|
|
Thereafter
|
|
Total
|
|
Renewable Energy
|
$
|
72.7
|
|
|
$
|
100.0
|
|
|
$
|
227.4
|
|
|
$
|
338.3
|
|
|
$
|
345.2
|
|
|
$
|
6,516.1
|
|
|
$
|
7,599.7
|
|
The table has been updated to include long-term commitments of NSTAR Electric pertaining to the Massachusetts Clean Energy 83D contract, for which construction has commenced in 2021. Estimated costs under this contract are expected to begin in 2023 and range between $150 million and $415 million per year under a 20-year contract, totaling approximately $6.7 billion.
C. Guarantees and Indemnifications
In the normal course of business, Eversource parent provides credit assurances on behalf of its subsidiaries, including CL&P, NSTAR Electric and PSNH, in the form of guarantees. Management does not anticipate a material impact to net income or cash flows as a result of these various guarantees and indemnifications.
Guarantees issued on behalf of unconsolidated entities, including equity method offshore wind investments, for which Eversource parent is the guarantor, are recorded at fair value as a liability on the balance sheet at the inception of the guarantee. Eversource regularly reviews performance risk under these guarantee arrangements, and in the event it becomes probable that Eversource parent will be required to perform under the guarantee, the amount of probable payment will be recorded. The fair value of guarantees issued on behalf of unconsolidated entities are recorded within Other Long-Term Liabilities on the balance sheet, and was $0.5 million as of March 31, 2021.
The following table summarizes Eversource parent's exposure to guarantees and indemnifications of its subsidiaries and affiliates to external parties as of March 31, 2021:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Company (Obligor)
|
|
Description
|
|
Maximum Exposure
(in millions)
|
|
Expiration Dates
|
|
North East Offshore LLC
|
|
Construction-related purchase agreements with third-party contractors (1)
|
|
$
|
29.3
|
|
|
(1)
|
|
Eversource Investment LLC
|
|
Funding and indemnification obligations of North East Offshore LLC (2)
|
|
—
|
|
|
(2)
|
|
Sunrise Wind LLC
|
|
OREC capacity production (3)
|
|
2.2
|
|
|
(3)
|
|
South Fork Wind, LLC
|
|
Transmission interconnection
|
|
1.7
|
|
|
—
|
|
Bay State Wind LLC
|
|
Real estate purchase
|
|
2.5
|
|
|
2021
|
|
Various
|
|
Surety bonds (4)
|
|
57.3
|
|
|
2021 - 2023
|
Rocky River Realty Company and
Eversource Service
|
|
Lease payments for real estate
|
|
4.8
|
|
|
2024
|
(1) Eversource parent issued guarantees on behalf of its 50 percent-owned affiliate, North East Offshore LLC (NEO), under which Eversource parent agreed to guarantee 50 percent of NEO’s performance of obligations under certain purchase agreements with third-party contactors, in an amount not to exceed $1.3 billion with an expiration date in 2025. Eversource parent also issued a separate guarantee to Ørsted on behalf of NEO, under which Eversource parent agreed to guarantee 50 percent of NEO’s payment obligations under certain offshore wind project construction-related agreements with Ørsted in an aggregate amount not to exceed $62.5 million. Any amounts paid under this guarantee to Ørsted will count toward, but not increase, the maximum amount of the Funding Guarantee described in Note 2, below. The guarantee expires upon the full performance of the guaranteed obligations.
(2) Eversource parent issued a guarantee (Funding Guarantee) on behalf of Eversource Investment LLC (EI), its wholly-owned subsidiary that holds a 50 percent ownership interest in NEO, under which Eversource parent agreed to guarantee certain funding obligations and certain indemnification payments of EI under the Amended and Restated Limited Liability Company Operating Agreement of NEO, in an amount not to exceed $910 million. The guaranteed obligations include payment of EI's funding obligations during the construction phase of NEO’s underlying offshore wind projects and indemnification obligations associated with third party credit support for its investment in NEO. Eversource parent’s obligations under the Funding Guarantee expire upon the full performance of the guaranteed obligations.
(3) Eversource parent issued a guarantee on behalf of its 50 percent-owned affiliate, Sunrise Wind LLC, whereby Eversource parent will guarantee Sunrise Wind LLC's performance of certain obligations, in an amount not to exceed $15.4 million, under the Offshore Wind Renewable Energy Certificate Purchase and Sale Agreement (the Agreement). The Agreement was executed on October 23, 2019, by and between the New York State Energy Research and Development Authority (NYSERDA) and Sunrise Wind LLC. The guarantee expires upon the full performance of the guaranteed obligations.
(4) Surety bond expiration dates reflect termination dates, the majority of which will be renewed or extended. Certain surety bonds contain credit ratings triggers that would require Eversource parent to post collateral in the event that the unsecured debt credit ratings of Eversource parent are downgraded.
Letter of Credit: On September 16, 2020, Eversource parent entered into a guarantee on behalf of EI, which holds Eversource's investments in offshore wind-related equity method investments, under which Eversource parent would guarantee EI's obligations under a letter of credit facility with a financial institution that EI may request in an aggregate amount of up to approximately $25 million.
D. Spent Nuclear Fuel Obligations - Yankee Companies
CL&P, NSTAR Electric and PSNH have plant closure and fuel storage cost obligations to the Yankee Companies, which have each completed the physical decommissioning of their respective nuclear power facilities and are now engaged in the long-term storage of their spent fuel. The Yankee Companies fund these costs through litigation proceeds received from the DOE and, to the extent necessary, through wholesale, FERC-approved rates charged under power purchase agreements with several New England utilities, including CL&P, NSTAR Electric and PSNH. CL&P, NSTAR Electric and PSNH, in turn recover these costs from their customers through state regulatory commission-approved retail rates. The Yankee Companies collect amounts that management believes are adequate to recover the remaining plant closure and fuel storage cost estimates for the respective plants. Management believes CL&P and NSTAR Electric will recover their shares of these obligations from their customers. PSNH has recovered its total share of these costs from its customers.
Spent Nuclear Fuel Litigation:
The Yankee Companies have filed complaints against the DOE in the Court of Federal Claims seeking monetary damages resulting from the DOE's failure to accept delivery of, and provide for a permanent facility to store, spent nuclear fuel pursuant to the terms of the 1983 spent fuel and high-level waste disposal contracts between the Yankee Companies and the DOE. The court previously awarded the Yankee Companies damages for Phases I, II, III and IV of litigation resulting from the DOE's failure to meet its contractual obligations. These Phases covered damages incurred in the years 1998 through 2016, and the awarded damages have been received by the Yankee Companies with certain amounts of the damages refunded to their customers.
DOE Phase V Damages - On March 25, 2021, each of the Yankee Companies filed a fifth set of lawsuits against the DOE in the Court of Federal Claims. The Yankee Companies are seeking monetary damages for CYAPC, YAEC and MYAPC, resulting from the DOE's failure to begin accepting spent nuclear fuel for disposal covering the years from 2017 to 2020 (DOE Phase V).
E. FERC ROE Complaints
Four separate complaints were filed at the FERC by combinations of New England state attorneys general, state regulatory commissions, consumer advocates, consumer groups, municipal parties and other parties (collectively, the Complainants). In each of the first three complaints, filed on October 1, 2011, December 27, 2012, and July 31, 2014, respectively, the Complainants challenged the NETOs' base ROE of 11.14 percent that had been utilized since 2005 and sought an order to reduce it prospectively from the date of the final FERC order and for the separate 15-month complaint periods. In the fourth complaint, filed April 29, 2016, the Complainants challenged the NETOs' base ROE billed of 10.57 percent and the maximum ROE for transmission incentive (incentive cap) of 11.74 percent, asserting that these ROEs were unjust and unreasonable.
The ROE originally billed during the period October 1, 2011 (beginning of the first complaint period) through October 15, 2014 consisted of a base ROE of 11.14 percent and incentives up to 13.1 percent. On October 16, 2014, the FERC set the base ROE at 10.57 percent and the incentive cap at 11.74 percent for the first complaint period. This was also effective for all prospective billings to customers beginning October 16, 2014. This FERC order was vacated on April 14, 2017 by the U.S. Court of Appeals for the D.C. Circuit (the Court).
All amounts associated with the first complaint period have been refunded, which totaled $38.9 million (pre-tax and excluding interest) at Eversource and reflected both the base ROE and incentive cap prescribed by the FERC order. The refund consisted of $22.4 million for CL&P, $13.7 million for NSTAR Electric and $2.8 million for PSNH.
Eversource has recorded a reserve of $39.1 million (pre-tax and excluding interest) for the second complaint period as of March 31, 2021 and December 31, 2020. This reserve represents the difference between the billed rates during the second complaint period and a 10.57 percent base ROE and 11.74 percent incentive cap. The reserve consisted of $21.4 million for CL&P, $14.6 million for NSTAR Electric and $3.1 million for PSNH as of March 31, 2021 and December 31, 2020.
On October 16, 2018, FERC issued an order on all four complaints describing how it intends to address the issues that were remanded by the Court. FERC proposed a new framework to determine (1) whether an existing ROE is unjust and unreasonable and, if so, (2) how to calculate a replacement ROE. Initial briefs were filed by the NETOs, Complainants and FERC Trial Staff on January 11, 2019 and reply briefs were filed on March 8, 2019. The NETOs' brief was supportive of the overall ROE methodology determined in the October 16, 2018 order provided the FERC does not change the proposed methodology or alter its implementation in a manner that has a material impact on the results.
The FERC order included illustrative calculations for the first complaint using FERC's proposed frameworks with financial data from that complaint. Those illustrative calculations indicated that for the first complaint period, for the NETOs, which FERC concludes are of average financial risk, the preliminary just and reasonable base ROE is 10.41 percent and the preliminary incentive cap on total ROE is 13.08 percent.
If the results of the illustrative calculations were included in a final FERC order for each of the complaint periods, then a 10.41 percent base ROE and a 13.08 percent incentive cap would not have a significant impact on our financial statements for all of the complaint periods. These preliminary calculations are not binding and do not represent what we believe to be the most likely outcome of a final FERC order.
On November 21, 2019, FERC issued Opinion No. 569 affecting the two pending transmission ROE complaints against the Midcontinent ISO (MISO) transmission owners, in which FERC adopted a new methodology for determining base ROEs. Various parties sought rehearing. On December 23, 2019, the NETOs filed supplementary materials in the NETOs' four pending cases to respond to this new methodology because of the uncertainty of the applicability to the NETOs’ cases.
On May 21, 2020, the FERC issued its order in Opinion No. 569-A on the rehearing of the MISO transmission owners' cases, in which FERC again changed its methodology for determining the MISO transmission owners' base ROEs. Various parties appealed the MISO transmission owners' opinion. On November 19, 2020, the FERC issued Opinion No. 569-B denying rehearing of Opinion No. 569-A and reaffirmed the methodology previously adopted in Opinion No. 569-A. The new methodology differs significantly from the methodology proposed by FERC in its October 16, 2018 order to determine the NETOs' base ROEs in its four pending cases.
Given the significant uncertainty regarding the applicability of the FERC opinions in the MISO transmission owners' two complaint cases to the NETOs' pending four complaint cases, Eversource concluded that there is no reasonable basis for a change to the reserve or recognized ROEs for any of the complaint periods at this time. As well, Eversource cannot reasonably estimate a range of any gain or loss for any of the four complaint proceedings at this time.
Eversource, CL&P, NSTAR Electric and PSNH currently record revenues at the 10.57 percent base ROE and incentive cap at 11.74 percent established in the October 16, 2014 FERC order.
A change of 10 basis points to the base ROE used to establish the reserves would impact Eversource's after-tax earnings by an average of approximately $3 million for each of the four 15-month complaint periods.
F. Eversource and NSTAR Electric Boston Harbor Civil Action
In 2016, the United States Attorney on behalf of the United States Army Corps of Engineers filed a civil action in the United States District Court for the District of Massachusetts against NSTAR Electric, HEEC, and the Massachusetts Water Resources Authority (together with NSTAR Electric and HEEC, the "Defendants"). The action alleged that the Defendants failed to comply with certain permitting requirements related to the placement of the HEEC-owned electric distribution cable beneath Boston Harbor.
The parties reached a settlement pursuant to which HEEC agreed to install a new 115kV distribution cable across Boston Harbor to Deer Island, utilizing a different route, and remove portions of the existing cable. Construction of the new distribution cable was completed in August 2019 and removal of the portions of the existing cable was completed in January 2020. All issues surrounding the current permit from the United States Army Corps of Engineers are expected to be resolved, and subsequently, such litigation then dismissed with prejudice.
G. CL&P Tropical Storm Isaias Response Investigation
In August 2020, PURA opened a docket to investigate the preparation for and response to Tropical Storm Isaias by Connecticut utilities, including CL&P. On April 28, 2021, PURA issued a final decision on CL&P’s compliance with its emergency response plan that concluded CL&P failed to comply with certain applicable storm performance standards and was imprudent in certain instances. Specifically, PURA concluded that CL&P did not satisfy the performance standards for managing its municipal liaison program, timely removing electrical hazards from blocked roads, communicating critical information to its customers, or meeting its obligation to secure adequate external contractor and mutual aid resources in a timely manner. Based on its findings, PURA ordered CL&P to adjust its future rates, in a pending or future rate proceeding, to reflect a monetary penalty in the form of a downward adjustment of 90 basis points in its allowed rate of return on equity (ROE). The decision also requires CL&P to enhance and submit updated emergency response programs incorporating the changes noted within the decision for PURA’s approval by June 30, 2021. PURA explained that additional monetary penalties and further enforcement orders pursuant to Connecticut statute would be considered in a separate proceeding that was initiated on May 6, 2021.
On May 6, 2021, as part of the penalty proceeding, PURA issued a notice of violation that included an assessment of $30 million, consisting of a $28.4 million civil penalty for non-compliance with performance standards to be provided as credits on customer bills and a $1.6 million fine for violations of accident reporting requirements to be paid to the State of Connecticut’s general fund. PURA directed the $28.4 million to be returned to customers beginning on August 1, 2021 through July 31, 2022. The $28.4 million is the maximum statutory penalty amount under applicable Connecticut law in effect at the time of Tropical Storm Isaias, which is 2.5 percent of CL&P’s annual distribution revenues. Management has accrued the $30 million as the best estimate of the liability at this time. As of March 31, 2021, the total liability was recorded as a current regulatory liability on CL&P’s balance sheet and as a charge to Operations and Maintenance expense on the income statement. We believe we have meritorious defenses and intend to vigorously defend CL&P’s position, but do not have a better estimate of CL&P’s ultimate liability at this time. Hearings will occur in this proceeding with a final decision currently anticipated on July 14, 2021. CL&P also intends to appeal the April 28, 2021 PURA decision.
The estimated annual impact of a 90 basis point ROE reduction at CL&P would be a decrease of approximately $31 million of future annual revenues and approximately $21 million of lower annual earnings. The ROE reduction would impact the income statement prospectively, once new rates are established. We cannot estimate the timing or final impact of any potential ROE change at this time.
10. FAIR VALUE OF FINANCIAL INSTRUMENTS
The following methods and assumptions were used to estimate the fair value of each of the following financial instruments:
Preferred Stock, Long-Term Debt and Rate Reduction Bonds: The fair value of CL&P's and NSTAR Electric's preferred stock is based upon pricing models that incorporate interest rates and other market factors, valuations or trades of similar securities and cash flow projections. The fair value of long-term debt and RRB debt securities is based upon pricing models that incorporate quoted market prices for those issues or similar issues adjusted for market conditions, credit ratings of the respective companies and treasury benchmark yields. The fair values provided in the table below are classified as Level 2 within the fair value hierarchy. Carrying amounts and estimated fair values are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Eversource
|
|
CL&P
|
|
NSTAR Electric
|
|
PSNH
|
|
(Millions of Dollars)
|
Carrying
Amount
|
|
Fair
Value
|
|
Carrying
Amount
|
|
Fair
Value
|
|
Carrying
Amount
|
|
Fair
Value
|
|
Carrying
Amount
|
|
Fair
Value
|
|
As of March 31, 2021:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Preferred Stock Not Subject to Mandatory Redemption
|
$
|
155.6
|
|
|
$
|
168.3
|
|
|
$
|
116.2
|
|
|
$
|
123.2
|
|
|
$
|
43.0
|
|
|
$
|
45.1
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
Long-Term Debt
|
15,993.9
|
|
|
17,198.2
|
|
|
3,914.7
|
|
|
4,423.9
|
|
|
3,643.8
|
|
|
4,063.7
|
|
|
977.3
|
|
|
1,011.0
|
|
|
Rate Reduction Bonds
|
518.5
|
|
|
568.0
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
518.5
|
|
|
568.0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As of December 31, 2020:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Preferred Stock Not Subject to Mandatory Redemption
|
$
|
155.6
|
|
|
$
|
169.1
|
|
|
$
|
116.2
|
|
|
$
|
123.4
|
|
|
$
|
43.0
|
|
|
$
|
45.7
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
Long-Term Debt
|
16,179.1
|
|
|
18,420.1
|
|
|
3,914.8
|
|
|
4,800.9
|
|
|
3,643.2
|
|
|
4,294.0
|
|
|
1,099.1
|
|
|
1,207.0
|
|
|
Rate Reduction Bonds
|
540.1
|
|
|
603.4
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
540.1
|
|
|
603.4
|
|
Derivative Instruments and Marketable Securities: Derivative instruments and investments in marketable securities are carried at fair value. For further information, see Note 4, "Derivative Instruments," and Note 5, "Marketable Securities," to the financial statements.
See Note 1D, "Summary of Significant Accounting Policies – Fair Value Measurements," for the fair value measurement policy and the fair value hierarchy.
11. ACCUMULATED OTHER COMPREHENSIVE INCOME/(LOSS)
The changes in accumulated other comprehensive income/(loss) by component, net of tax, are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Three Months Ended March 31, 2021
|
|
For the Three Months Ended March 31, 2020
|
|
Eversource
(Millions of Dollars)
|
Qualified
Cash Flow
Hedging
Instruments
|
|
Unrealized
Gains/(Losses) on Marketable
Securities
|
|
Defined
Benefit Plans
|
|
Total
|
|
Qualified
Cash Flow
Hedging
Instruments
|
|
Unrealized
Gains on Marketable
Securities
|
|
Defined
Benefit Plans
|
|
Total
|
|
Balance as of January 1st
|
$
|
(1.4)
|
|
|
$
|
1.1
|
|
|
$
|
(76.1)
|
|
|
$
|
(76.4)
|
|
|
$
|
(3.0)
|
|
|
$
|
0.7
|
|
|
$
|
(62.8)
|
|
|
$
|
(65.1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OCI Before Reclassifications
|
—
|
|
|
(0.7)
|
|
|
—
|
|
|
(0.7)
|
|
|
—
|
|
|
0.2
|
|
|
—
|
|
|
0.2
|
|
|
Amounts Reclassified from AOCI
|
0.4
|
|
|
—
|
|
|
1.5
|
|
|
1.9
|
|
|
0.2
|
|
|
—
|
|
|
1.6
|
|
|
1.8
|
|
|
Net OCI
|
0.4
|
|
|
(0.7)
|
|
|
1.5
|
|
|
1.2
|
|
|
0.2
|
|
|
0.2
|
|
|
1.6
|
|
|
2.0
|
|
|
Balance as of March 31st
|
$
|
(1.0)
|
|
|
$
|
0.4
|
|
|
$
|
(74.6)
|
|
|
$
|
(75.2)
|
|
|
$
|
(2.8)
|
|
|
$
|
0.9
|
|
|
$
|
(61.2)
|
|
|
$
|
(63.1)
|
|
Defined benefit plan OCI amounts before reclassifications relate to actuarial gains and losses that arose during the year and were recognized in AOCI. The unamortized actuarial gains and losses and prior service costs on the defined benefit plans are amortized from AOCI into Other Income, Net over the average future employee service period, and are reflected in amounts reclassified from AOCI.
12. COMMON SHARES
The following table sets forth the Eversource parent common shares and the shares of common stock of CL&P, NSTAR Electric and PSNH that were authorized and issued, as well as the respective per share par values:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares
|
|
|
|
|
Authorized as of March 31, 2021 and December 31, 2020
|
|
Issued as of
|
|
|
Par Value
|
|
|
March 31, 2021
|
|
December 31, 2020
|
|
Eversource
|
$
|
5
|
|
|
380,000,000
|
|
|
357,818,402
|
|
|
357,818,402
|
|
|
CL&P
|
$
|
10
|
|
|
24,500,000
|
|
|
6,035,205
|
|
|
6,035,205
|
|
|
NSTAR Electric
|
$
|
1
|
|
|
100,000,000
|
|
|
200
|
|
|
200
|
|
|
PSNH
|
$
|
1
|
|
|
100,000,000
|
|
|
301
|
|
|
301
|
|
Treasury Shares: As of March 31, 2021 and December 31, 2020, there were 14,384,104 and 14,864,379 Eversource common shares held as treasury shares, respectively. As of March 31, 2021 and December 31, 2020, Eversource common shares outstanding were 343,434,298 and 342,954,023, respectively.
Eversource issues treasury shares to satisfy awards under the Company's incentive plans, shares issued under the dividend reinvestment and share purchase plan, and matching contributions under the Eversource 401k Plan. The issuance of treasury shares represents a non-cash transaction, as the treasury shares were used to fulfill Eversource's obligations that require the issuance of common shares.
13. COMMON SHAREHOLDERS' EQUITY AND NONCONTROLLING INTERESTS
Dividends on the preferred stock of CL&P and NSTAR Electric totaled $1.9 million for each of the three months ended March 31, 2021 and 2020. These dividends were presented as Net Income Attributable to Noncontrolling Interests on the Eversource statements of income. Noncontrolling Interest – Preferred Stock of Subsidiaries on the Eversource balance sheets totaled $155.6 million as of March 31, 2021 and December 31, 2020. On the Eversource balance sheets, Common Shareholders' Equity was fully attributable to Eversource parent and Noncontrolling Interest – Preferred Stock of Subsidiaries was fully attributable to the noncontrolling interest.
14. EARNINGS PER SHARE
Basic EPS is computed based upon the weighted average number of common shares outstanding during each period. Diluted EPS is computed on the basis of the weighted average number of common shares outstanding plus the potential dilutive effect of certain share-based compensation awards as if they were converted into outstanding common shares. The dilutive effect of unvested RSU and performance share awards is calculated using the treasury stock method. RSU and performance share awards are included in basic weighted average common shares outstanding as of the date that all necessary vesting conditions have been satisfied. Earnings per share dilution in 2020 also included the impact of the 2019 equity forward sale agreement, which was calculated using the treasury stock method until the settlement of the forward sale agreement on March 26, 2020. For the three months ended March 31, 2021 and 2020, there were no antidilutive share awards excluded from the computation of diluted EPS.
The following table sets forth the components of basic and diluted EPS:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Eversource
(Millions of Dollars, except share information)
|
|
|
For the Three Months Ended
|
|
|
|
|
|
March 31, 2021
|
|
March 31, 2020
|
|
Net Income Attributable to Common Shareholders
|
|
|
|
|
$
|
366.1
|
|
|
$
|
334.8
|
|
|
Weighted Average Common Shares Outstanding:
|
|
|
|
|
|
|
|
|
Basic
|
|
|
|
|
343,678,243
|
|
|
331,102,237
|
|
|
Dilutive Effect of:
|
|
|
|
|
|
|
|
|
Share-Based Compensation Awards and Other
|
|
|
|
|
656,446
|
|
|
747,233
|
|
|
Equity Forward Sale Agreement
|
|
|
|
|
—
|
|
|
1,087,683
|
|
|
Total Dilutive Effect
|
|
|
|
|
656,446
|
|
|
1,834,916
|
|
|
Diluted
|
|
|
|
|
344,334,689
|
|
|
332,937,153
|
|
|
Basic EPS
|
|
|
|
|
$
|
1.07
|
|
|
$
|
1.01
|
|
|
Diluted EPS
|
|
|
|
|
$
|
1.06
|
|
|
$
|
1.01
|
|
15. REVENUES
The following tables present operating revenues disaggregated by revenue source:
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Three Months Ended March 31, 2021
|
|
Eversource
(Millions of Dollars)
|
Electric
Distribution
|
|
Natural Gas
Distribution
|
|
Electric
Transmission
|
|
Water Distribution
|
|
Other
|
|
Eliminations
|
|
Total
|
|
Revenues from Contracts with Customers
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Retail Tariff Sales
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Residential
|
$
|
1,066.0
|
|
|
$
|
466.3
|
|
|
$
|
—
|
|
|
$
|
27.7
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
1,560.0
|
|
|
Commercial
|
559.9
|
|
|
207.6
|
|
|
—
|
|
|
13.8
|
|
|
—
|
|
|
(1.4)
|
|
|
779.9
|
|
|
Industrial
|
83.0
|
|
|
55.9
|
|
|
—
|
|
|
1.0
|
|
|
—
|
|
|
(3.5)
|
|
|
136.4
|
|
|
Total Retail Tariff Sales Revenues
|
1,708.9
|
|
|
729.8
|
|
|
—
|
|
|
42.5
|
|
|
—
|
|
|
(4.9)
|
|
|
2,476.3
|
|
|
Wholesale Transmission Revenues
|
—
|
|
|
—
|
|
|
394.3
|
|
|
—
|
|
|
19.2
|
|
|
(321.0)
|
|
|
92.5
|
|
|
Wholesale Market Sales Revenues
|
149.1
|
|
|
26.4
|
|
|
—
|
|
|
0.8
|
|
|
—
|
|
|
—
|
|
|
176.3
|
|
|
Other Revenues from Contracts with Customers
|
18.2
|
|
|
1.3
|
|
|
3.4
|
|
|
1.2
|
|
|
323.8
|
|
|
(321.3)
|
|
|
26.6
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Revenues from Contracts with Customers
|
1,876.2
|
|
|
757.5
|
|
|
397.7
|
|
|
44.5
|
|
|
343.0
|
|
|
(647.2)
|
|
|
2,771.7
|
|
|
Alternative Revenue Programs
|
23.0
|
|
|
22.8
|
|
|
2.7
|
|
|
1.8
|
|
|
—
|
|
|
2.2
|
|
|
52.5
|
|
|
Other Revenues (1)
|
1.1
|
|
|
0.2
|
|
|
0.2
|
|
|
0.1
|
|
|
—
|
|
|
—
|
|
|
1.6
|
|
|
Total Operating Revenues
|
$
|
1,900.3
|
|
|
$
|
780.5
|
|
|
$
|
400.6
|
|
|
$
|
46.4
|
|
|
$
|
343.0
|
|
|
$
|
(645.0)
|
|
|
$
|
2,825.8
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Three Months Ended March 31, 2020
|
|
Eversource
(Millions of Dollars)
|
Electric
Distribution
|
|
Natural Gas
Distribution
|
|
Electric
Transmission
|
|
Water Distribution
|
|
Other
|
|
Eliminations
|
|
Total
|
|
Revenues from Contracts with Customers
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Retail Tariff Sales
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Residential
|
$
|
963.8
|
|
|
$
|
238.0
|
|
|
$
|
—
|
|
|
$
|
27.8
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
1,229.6
|
|
|
Commercial
|
607.0
|
|
|
134.6
|
|
|
—
|
|
|
14.8
|
|
|
—
|
|
|
(1.0)
|
|
|
755.4
|
|
|
Industrial
|
79.8
|
|
|
28.3
|
|
|
—
|
|
|
1.1
|
|
|
—
|
|
|
(3.2)
|
|
|
106.0
|
|
|
Total Retail Tariff Sales Revenues
|
1,650.6
|
|
|
400.9
|
|
|
—
|
|
|
43.7
|
|
|
—
|
|
|
(4.2)
|
|
|
2,091.0
|
|
|
Wholesale Transmission Revenues
|
—
|
|
|
—
|
|
|
336.3
|
|
|
—
|
|
|
17.3
|
|
|
(283.6)
|
|
|
70.0
|
|
|
Wholesale Market Sales Revenues
|
91.0
|
|
|
13.2
|
|
|
—
|
|
|
0.8
|
|
|
—
|
|
|
—
|
|
|
105.0
|
|
|
Other Revenues from Contracts with Customers
|
21.4
|
|
|
1.4
|
|
|
3.4
|
|
|
1.1
|
|
|
277.3
|
|
|
(276.2)
|
|
|
28.4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Revenues from Contracts with Customers
|
1,763.0
|
|
|
415.5
|
|
|
339.7
|
|
|
45.6
|
|
|
294.6
|
|
|
(564.0)
|
|
|
2,294.4
|
|
|
Alternative Revenue Programs
|
38.8
|
|
|
32.2
|
|
|
29.8
|
|
|
1.1
|
|
|
—
|
|
|
(27.4)
|
|
|
74.5
|
|
|
Other Revenues (1)
|
3.5
|
|
|
0.9
|
|
|
0.2
|
|
|
0.2
|
|
|
—
|
|
|
—
|
|
|
4.8
|
|
|
Total Operating Revenues
|
$
|
1,805.3
|
|
|
$
|
448.6
|
|
|
$
|
369.7
|
|
|
$
|
46.9
|
|
|
$
|
294.6
|
|
|
$
|
(591.4)
|
|
|
$
|
2,373.7
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Three Months Ended March 31, 2021
|
|
For the Three Months Ended March 31, 2020
|
|
(Millions of Dollars)
|
CL&P
|
|
NSTAR Electric
|
|
PSNH
|
|
CL&P
|
|
NSTAR Electric
|
|
PSNH
|
|
Revenues from Contracts with Customers
|
|
|
|
|
|
|
|
|
|
|
|
|
Retail Tariff Sales
|
|
|
|
|
|
|
|
|
|
|
|
|
Residential
|
$
|
545.8
|
|
|
$
|
362.4
|
|
|
$
|
157.8
|
|
|
$
|
489.9
|
|
|
$
|
331.0
|
|
|
$
|
142.9
|
|
|
Commercial
|
214.2
|
|
|
268.3
|
|
|
77.8
|
|
|
226.4
|
|
|
301.9
|
|
|
79.1
|
|
|
Industrial
|
36.7
|
|
|
24.6
|
|
|
21.7
|
|
|
34.0
|
|
|
26.8
|
|
|
19.0
|
|
|
Total Retail Tariff Sales Revenues
|
796.7
|
|
|
655.3
|
|
|
257.3
|
|
|
750.3
|
|
|
659.7
|
|
|
241.0
|
|
|
Wholesale Transmission Revenues
|
189.0
|
|
|
147.1
|
|
|
58.2
|
|
|
151.8
|
|
|
134.8
|
|
|
49.7
|
|
|
Wholesale Market Sales Revenues
|
109.7
|
|
|
24.4
|
|
|
15.0
|
|
|
64.7
|
|
|
14.4
|
|
|
11.9
|
|
|
Other Revenues from Contracts with Customers
|
7.3
|
|
|
11.7
|
|
|
3.2
|
|
|
8.8
|
|
|
10.7
|
|
|
6.0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Revenues from Contracts with Customers
|
1,102.7
|
|
|
838.5
|
|
|
333.7
|
|
|
975.6
|
|
|
819.6
|
|
|
308.6
|
|
|
Alternative Revenue Programs
|
8.9
|
|
|
13.8
|
|
|
3.0
|
|
|
44.6
|
|
|
19.3
|
|
|
4.7
|
|
|
Other Revenues (1)
|
0.2
|
|
|
1.1
|
|
|
—
|
|
|
1.7
|
|
|
1.4
|
|
|
0.6
|
|
|
Eliminations
|
(124.5)
|
|
|
(116.4)
|
|
|
(43.3)
|
|
|
(122.2)
|
|
|
(106.5)
|
|
|
(37.5)
|
|
|
Total Operating Revenues
|
$
|
987.3
|
|
|
$
|
737.0
|
|
|
$
|
293.4
|
|
|
$
|
899.7
|
|
|
$
|
733.8
|
|
|
$
|
276.4
|
|
(1) Other Revenues include certain fees charged to customers that are not considered revenue from contracts with customers. Other Revenues also include lease revenues under lessor accounting guidance of $1.6 million (including $0.2 million at CL&P and $1.1 million at NSTAR Electric) and $1.1 million (including $0.2 million at CL&P and $0.7 million at NSTAR Electric) for the three months ended March 31, 2021 and 2020, respectively.
16. SEGMENT INFORMATION
Eversource is organized into the Electric Distribution, Electric Transmission, Natural Gas Distribution and Water Distribution reportable segments and Other based on a combination of factors, including the characteristics of each segments' services, the sources of operating revenues and expenses and the regulatory environment in which each segment operates. These reportable segments represent substantially all of Eversource's total consolidated revenues. Revenues from the sale of electricity, natural gas and water primarily are derived from residential, commercial and industrial customers and are not dependent on any single customer. The Electric Distribution reportable segment includes the results of NSTAR Electric's solar power facilities. Eversource's reportable segments are determined based upon the level at which Eversource's chief operating decision maker assesses performance and makes decisions about the allocation of company resources.
The remainder of Eversource's operations is presented as Other in the tables below and primarily consists of 1) the equity in earnings of Eversource parent from its subsidiaries and intercompany interest income, both of which are eliminated in consolidation, and interest expense related to the debt of Eversource parent, 2) the revenues and expenses of Eversource Service, most of which are eliminated in consolidation, 3) the operations of CYAPC and YAEC, 4) the results of other unregulated subsidiaries, which are not part of its core business, and 5) Eversource parent's equity ownership interests that are not consolidated, which primarily include the offshore wind business, a natural gas pipeline owned by Enbridge, Inc., and a renewable energy investment fund.
In the ordinary course of business, Yankee Gas, NSTAR Gas and EGMA purchase natural gas transmission services from the Enbridge, Inc. natural gas pipeline project described above. These affiliate transaction costs total $77.7 million annually and are classified as Purchased Power, Fuel and Transmission on the Eversource statements of income.
Each of Eversource's subsidiaries, including CL&P, NSTAR Electric and PSNH, has one reportable segment.
Cash flows used for investments in plant included in the segment information below are cash capital expenditures that do not include amounts incurred but not paid, cost of removal, AFUDC related to equity funds, and the capitalized portions of pension and PBOP expense.
Eversource's segment information is as follows:
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|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Three Months Ended March 31, 2021
|
|
Eversource
(Millions of Dollars)
|
Electric Distribution
|
|
Natural Gas Distribution
|
|
Electric Transmission
|
|
Water Distribution
|
|
Other
|
|
Eliminations
|
|
Total
|
|
Operating Revenues
|
$
|
1,900.3
|
|
|
$
|
780.5
|
|
|
$
|
400.6
|
|
|
$
|
46.4
|
|
|
$
|
343.0
|
|
|
$
|
(645.0)
|
|
|
$
|
2,825.8
|
|
|
Depreciation and Amortization
|
(221.9)
|
|
|
(45.7)
|
|
|
(73.5)
|
|
|
(11.3)
|
|
|
(27.3)
|
|
|
1.0
|
|
|
(378.7)
|
|
|
Other Operating Expenses
|
(1,530.5)
|
|
|
(535.8)
|
|
|
(115.4)
|
|
|
(25.1)
|
|
|
(299.5)
|
|
|
644.8
|
|
|
(1,861.5)
|
|
|
Operating Income
|
$
|
147.9
|
|
|
$
|
199.0
|
|
|
$
|
211.7
|
|
|
$
|
10.0
|
|
|
$
|
16.2
|
|
|
$
|
0.8
|
|
|
$
|
585.6
|
|
|
Interest Expense
|
$
|
(53.3)
|
|
|
$
|
(13.9)
|
|
|
$
|
(32.7)
|
|
|
$
|
(7.9)
|
|
|
$
|
(41.6)
|
|
|
$
|
11.6
|
|
|
$
|
(137.8)
|
|
|
Other Income, Net
|
20.7
|
|
|
3.9
|
|
|
5.5
|
|
|
1.0
|
|
|
424.1
|
|
|
(421.0)
|
|
|
34.2
|
|
|
Net Income Attributable to Common Shareholders
|
93.2
|
|
|
147.6
|
|
|
135.4
|
|
|
3.6
|
|
|
394.9
|
|
|
(408.6)
|
|
|
366.1
|
|
|
Cash Flows Used for Investments in Plant
|
256.6
|
|
|
131.8
|
|
|
225.2
|
|
|
27.6
|
|
|
47.8
|
|
|
—
|
|
|
689.0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Three Months Ended March 31, 2020
|
|
Eversource
(Millions of Dollars)
|
Electric
Distribution
|
|
Natural Gas
Distribution (1)
|
|
Electric
Transmission
|
|
Water Distribution
|
|
Other (1)
|
|
Eliminations (1)
|
|
Total
|
|
Operating Revenues
|
$
|
1,805.3
|
|
|
$
|
448.6
|
|
|
$
|
369.7
|
|
|
$
|
46.9
|
|
|
$
|
294.6
|
|
|
$
|
(591.4)
|
|
|
$
|
2,373.7
|
|
|
Depreciation and Amortization
|
(167.3)
|
|
|
(19.1)
|
|
|
(67.5)
|
|
|
(11.4)
|
|
|
(21.3)
|
|
|
0.6
|
|
|
(286.0)
|
|
|
Other Operating Expenses
|
(1,439.6)
|
|
|
(311.6)
|
|
|
(106.8)
|
|
|
(25.0)
|
|
|
(257.0)
|
|
|
591.4
|
|
|
(1,548.6)
|
|
|
Operating Income
|
$
|
198.4
|
|
|
$
|
117.9
|
|
|
$
|
195.4
|
|
|
$
|
10.5
|
|
|
$
|
16.3
|
|
|
$
|
0.6
|
|
|
$
|
539.1
|
|
|
Interest Expense
|
$
|
(53.1)
|
|
|
$
|
(11.4)
|
|
|
$
|
(30.6)
|
|
|
$
|
(8.7)
|
|
|
$
|
(42.7)
|
|
|
$
|
11.8
|
|
|
$
|
(134.7)
|
|
|
Other Income, Net
|
12.5
|
|
|
1.4
|
|
|
5.2
|
|
|
0.1
|
|
|
383.7
|
|
|
(378.8)
|
|
|
24.1
|
|
|
Net Income Attributable to Common Shareholders
|
130.1
|
|
|
85.9
|
|
|
126.8
|
|
|
2.1
|
|
|
356.3
|
|
|
(366.4)
|
|
|
334.8
|
|
|
Cash Flows Used for Investments in Plant
|
315.8
|
|
|
99.1
|
|
|
232.8
|
|
|
18.5
|
|
|
59.3
|
|
|
—
|
|
|
725.5
|
|
(1) On October 9, 2020, Eversource completed the CMA asset acquisition, with Yankee Energy System, Inc. (Yankee parent) as the acquiring entity. Yankee parent is the parent company of Yankee Gas, NSTAR Gas, EGMA and Hopkinton LNG Corp. As a result of the acquisition, in the fourth quarter of 2020, our chief operating decision maker assessed the performance of the Natural Gas Distribution segment including Yankee parent. Previously, Yankee parent was presented within Other and its equity in earnings were eliminated in consolidation. Prior comparative periods were revised to conform to the current period segment presentation.
The following table summarizes Eversource's segmented total assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Eversource
(Millions of Dollars)
|
Electric
Distribution
|
|
Natural Gas
Distribution
|
|
Electric
Transmission
|
|
Water Distribution
|
|
Other
|
|
Eliminations
|
|
Total
|
|
As of March 31, 2021
|
$
|
25,033.9
|
|
|
$
|
6,576.5
|
|
|
$
|
11,713.1
|
|
|
$
|
2,391.0
|
|
|
$
|
21,468.2
|
|
|
$
|
(20,664.5)
|
|
|
$
|
46,518.2
|
|
|
As of December 31, 2020
|
24,981.9
|
|
|
6,450.5
|
|
|
11,695.0
|
|
|
2,375.2
|
|
|
22,089.4
|
|
|
(21,492.4)
|
|
|
46,099.6
|
|
17. ACQUISITION OF ASSETS OF COLUMBIA GAS OF MASSACHUSETTS
On October 9, 2020, Eversource acquired certain assets and liabilities that comprised the NiSource Inc. (NiSource) natural gas distribution business in Massachusetts, which was previously doing business as CMA, pursuant to an asset purchase agreement (the Agreement) entered into on February 26, 2020 between Eversource and NiSource. The cash purchase price was $1.1 billion, plus a working capital amount of $68.6 million, as finalized in the first quarter of 2021. The natural gas distribution assets acquired from CMA were assigned to EGMA, an indirect wholly-owned subsidiary of Eversource formed in 2020. The LNG assets acquired from CMA were assigned to Hopkinton LNG Corp.
Preliminary Purchase Price Allocation: The purchase price allocation reflects measurement period adjustments recorded as of March 31, 2021 to reduce the fair values of certain regulatory and plant assets acquired, resulting in a corresponding increase to Goodwill, based on new information received during the measurement period.
The preliminary allocation of the cash purchase price is as follows:
|
|
|
|
|
|
|
|
(Millions of Dollars)
|
|
|
Current Assets
|
$
|
138
|
|
|
Restricted Cash
|
57
|
|
|
PP&E
|
1,193
|
|
|
Goodwill
|
49
|
|
|
Other Noncurrent Assets, excluding Goodwill
|
130
|
|
|
Other Current Liabilities
|
(81)
|
|
|
Other Noncurrent Liabilities
|
(317)
|
|
|
Cash Purchase Price
|
$
|
1,169
|
|
EVERSOURCE ENERGY AND SUBSIDIARIES
Management's Discussion and Analysis of Financial Condition and Results of Operations
The following discussion and analysis should be read in conjunction with our unaudited condensed consolidated financial statements and related combined notes included in this combined Quarterly Report on Form 10-Q, as well as the Eversource 2020 combined Annual Report on Form 10-K. References in this combined Quarterly Report on Form 10-Q to "Eversource," the "Company," "we," "us," and "our" refer to Eversource Energy and its consolidated subsidiaries. All per-share amounts are reported on a diluted basis. The unaudited condensed consolidated financial statements of Eversource, NSTAR Electric and PSNH and the unaudited condensed financial statements of CL&P are herein collectively referred to as the "financial statements."
Refer to the Glossary of Terms included in this combined Quarterly Report on Form 10-Q for abbreviations and acronyms used throughout this Management's Discussion and Analysis of Financial Condition and Results of Operations.
The only common equity securities that are publicly traded are common shares of Eversource. The earnings and EPS of each business discussed below do not represent a direct legal interest in the assets and liabilities of such business but rather represent a direct interest in our assets and liabilities as a whole. EPS by business is a financial measure not recognized under GAAP, calculated by dividing the Net Income Attributable to Common Shareholders of each business by the weighted average diluted Eversource common shares outstanding for the period. Our earnings discussion also includes a non-GAAP financial measure referencing our 2021 and 2020 earnings and EPS excluding certain acquisition costs and transition costs.
We use these non-GAAP financial measures to evaluate and provide details of earnings results by business and to more fully compare and explain our 2021 and 2020 results without including these items. We believe the acquisition and transition costs are not indicative of our ongoing costs and performance. Due to the nature and significance of the effect of these items on Net Income Attributable to Common Shareholders and EPS, we believe that the non-GAAP presentation is a more meaningful representation of our financial performance and provides additional and useful information to readers of this report in analyzing historical and future performance of our business. These non-GAAP financial measures should not be considered as alternatives to reported Net Income Attributable to Common Shareholders or EPS determined in accordance with GAAP as indicators of operating performance.
From time to time, we make statements concerning our expectations, beliefs, plans, objectives, goals, strategies, assumptions of future events, future financial performance or growth and other statements that are not historical facts. These statements are "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. You can generally identify our forward-looking statements through the use of words or phrases such as "estimate," "expect," "anticipate," "intend," "plan," "project," "believe," "forecast," "should," "could," and other similar expressions. Forward-looking statements are based on the current expectations, estimates, assumptions or projections of management and are not guarantees of future performance. These expectations, estimates, assumptions or projections may vary materially from actual results. Accordingly, any such statements are qualified in their entirety by reference to, and are accompanied by, the following important factors that could cause our actual results to differ materially from those contained in our forward-looking statements, including, but not limited to:
•cyberattacks or breaches, including those resulting in the compromise of the confidentiality of our proprietary information and the personal information of our customers,
• disruptions in the capital markets or other events that make our access to necessary capital more difficult or costly,
• the negative impacts of the novel coronavirus (COVID-19) pandemic on our customers, vendors, employees, regulators, and operations,
• changes in economic conditions, including impact on interest rates, tax policies, and customer demand and payment ability,
• ability or inability to commence and complete our major strategic development projects and opportunities,
• acts of war or terrorism, physical attacks or grid disturbances that may damage and disrupt our electric transmission and electric, natural gas, and water distribution systems,
• actions or inaction of local, state and federal regulatory, public policy and taxing bodies,
• substandard performance of third-party suppliers and service providers,
• fluctuations in weather patterns, including extreme weather due to climate change,
• changes in business conditions, which could include disruptive technology or development of alternative energy sources related to our current or future business model,
• contamination of, or disruption in, our water supplies,
• changes in levels or timing of capital expenditures,
• changes in laws, regulations or regulatory policy, including compliance with environmental laws and regulations,
• changes in accounting standards and financial reporting regulations,
• actions of rating agencies, and
• other presently unknown or unforeseen factors.
Other risk factors are detailed in our reports filed with the SEC and updated as necessary, and we encourage you to consult such disclosures.
All such factors are difficult to predict and contain uncertainties that may materially affect our actual results, many of which are beyond our control. You should not place undue reliance on the forward-looking statements, as each speaks only as of the date on which such statement is made, and, except as required by federal securities laws, we undertake no obligation to update any forward-looking statement or statements to reflect events or circumstances after the date on which such statement is made or to reflect the occurrence of unanticipated events. New factors emerge from time to time and it is not possible for us to predict all of such factors, nor can we assess the impact of each such factor on the business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-
looking statements. For more information, see Item 1A, Risk Factors, included in this combined Quarterly Report on Form 10-Q and in Eversource's 2020 combined Annual Report on Form 10-K. This combined Quarterly Report on Form 10-Q and Eversource's 2020 combined Annual Report on Form 10-K also describe material contingencies and critical accounting policies in the accompanying Management's Discussion and Analysis of Financial Condition and Results of Operations and Combined Notes to Financial Statements. We encourage you to review these items.
Financial Condition and Business Analysis
Executive Summary
The following items in this executive summary are explained in more detail in this combined Quarterly Report on Form 10-Q:
Earnings Overview and Future Outlook:
•We earned $366.1 million, or $1.06 per share, in the first quarter of 2021, compared with $334.8 million, or $1.01 per share, in the first quarter of 2020. Our results include after-tax transition and acquisition costs of $6.2 million, or $0.02 per share, in the first quarter of 2021, compared with $3.5 million, or $0.01 per share, in the first quarter of 2020. Excluding those transition and acquisition costs, we earned $372.3 million, or $1.08 per share, in the first quarter of 2021, compared with $338.3 million, or $1.02 per share, in the first quarter of 2020.
•Our electric distribution segment earned $93.2 million, or $0.27 per share, in the first quarter of 2021, compared with $130.1 million, or $0.39 per share, in the first quarter of 2020. First quarter of 2021 electric distribution segment earnings include an after-tax charge of $0.07 per share at CL&P primarily for customer bill credits assessed by PURA as a result of CL&P’s preparation for and response to Tropical Storm Isaias in August 2020. Our electric transmission segment earned $135.4 million, or $0.39 per share, in the first quarter of 2021, compared with $126.8 million, or $0.38 per share in the first quarter of 2020. Our natural gas distribution segment earned $147.6 million, or $0.43 per share, in the first quarter of 2021, compared with $85.9 million, or $0.26 per share, in the first quarter of 2020. Our water distribution segment earned $3.6 million, or $0.01 per share, in the first quarter of 2021, compared with $2.1 million, or $0.01 per share, in the first quarter of 2020.
•Eversource parent and other companies had a net loss of $13.7 million, or $0.04 per share, in the first quarter of 2021, compared with a net loss of $10.1 million, or $0.03 per share, in the first quarter of 2020. Excluding transition and acquisition costs, Eversource parent and other companies had a net loss of $7.5 million, or $0.02 per share, in the first quarter of 2021, compared with a net loss of $6.6 million, or $0.02 per share, in the first quarter of 2020.
•We reaffirmed our projection of our long-term EPS growth rate through 2025 from our regulated utility businesses in the upper half of the 5 to 7 percent range. We now estimate to earn toward the lower end of the 2021 non-GAAP earnings guidance range of between $3.81 per share and $3.93 per share, which excludes the impact of transition costs related to our October 2020 purchase of the assets of CMA. That 2021 non-GAAP earnings estimate includes the $0.07 per share charge for the penalty proceeding for CL&P’s Tropical Storm Isaias response that the PURA commenced on May 6, 2021.
Liquidity:
•Cash flows provided by operating activities totaled $411.4 million in the first quarter of 2021, compared with $420.3 million in the first quarter of 2020. Investments in property, plant and equipment totaled $689.0 million in the first quarter of 2021, compared with $725.5 million in the first quarter of 2020. Cash totaled $34.1 million as of March 31, 2021, compared with $106.6 million as of December 31, 2020. Our available borrowing capacity under our commercial paper programs totaled $730.8 million as of March 31, 2021.
•In the first quarter of 2021, we issued $350 million of new long-term debt at Eversource parent and we repaid $572 million of long-term debt, consisting of $450 million at Eversource parent and $122 million at PSNH.
•On May 5, 2021, our Board of Trustees approved a common share dividend payment of $0.6025 per share, payable on June 30, 2021 to shareholders of record as of May 20, 2021.
Business Development and Regulatory Items:
•On April 30, 2021, Revolution Wind received BOEM’s Notice of Intent to prepare an Environmental Impact Statement for the review of the Construction Operations Plan application submitted by Revolution Wind.
•On April 28, 2021, PURA issued a final decision on CL&P’s compliance with its emergency response plan that concluded CL&P failed to comply with certain applicable storm performance standards and was imprudent in certain instances. Based on its findings, PURA ordered CL&P to adjust its future rates, in a pending or future rate proceeding, to reflect a monetary penalty in the form of a downward adjustment of 90 basis points in its allowed rate of return on equity (ROE). On May 6, 2021, as part of a separate penalty proceeding, PURA issued a notice of violation to CL&P that included an assessment of $30 million, consisting of $28.4 million to be provided as credits on customer bills and a $1.6 million fine to be paid to the State of Connecticut’s general fund. The $30 million assessment was accrued in the first quarter of 2021 and resulted in an after-tax charge of $0.07 per share. We believe we have meritorious defenses and intend to vigorously defend CL&P’s position, but do not have a better estimate of CL&P’s ultimate liability at this time.
Earnings Overview
Consolidated: Below is a summary of our earnings by business, which also reconciles the non-GAAP financial measures of consolidated non-GAAP earnings and EPS, as well as EPS by business, to the most directly comparable GAAP measures of consolidated Net Income Attributable to Common Shareholders and diluted EPS.
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For the Three Months Ended March 31,
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2021
|
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2020
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(Millions of Dollars, Except Per Share Amounts)
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Amount
|
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Per Share
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Amount
|
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Per Share
|
|
Net Income Attributable to Common Shareholders (GAAP)
|
|
|
|
|
|
|
|
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$
|
366.1
|
|
|
$
|
1.06
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|
|
$
|
334.8
|
|
|
$
|
1.01
|
|
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Regulated Companies (1)
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$
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379.8
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|
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$
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1.10
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$
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344.9
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$
|
1.04
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Eversource Parent and Other Companies (non-GAAP) (1)
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(7.5)
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(0.02)
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(6.6)
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(0.02)
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Non-GAAP Earnings
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$
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372.3
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|
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$
|
1.08
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|
|
$
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338.3
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|
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$
|
1.02
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Transition and Acquisition Costs (after-tax) (2)
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(6.2)
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(0.02)
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(3.5)
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(0.01)
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Net Income Attributable to Common Shareholders (GAAP)
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|
|
|
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$
|
366.1
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|
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$
|
1.06
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$
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334.8
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|
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$
|
1.01
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|
(1) The 2020 amounts were revised to conform to the current period segment presentation.
(2) The 2020 acquisition costs are associated with our purchase of the assets of CMA on October 9, 2020. The 2021 costs are for the transition of systems as a result of the CMA acquisition and costs associated with our pending water business acquisition.
Regulated Companies: Our regulated companies comprise the electric distribution, electric transmission, natural gas distribution and water distribution segments. A summary of our segment earnings and EPS is as follows:
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For the Three Months Ended March 31,
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2021
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2020
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(Millions of Dollars, Except Per Share Amounts)
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Amount
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Per Share
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Amount
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Per Share
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Net Income - Regulated Companies
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|
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$
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379.8
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|
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$
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1.10
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|
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$
|
344.9
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|
|
$
|
1.04
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Electric Distribution
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|
|
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$
|
93.2
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|
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$
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0.27
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|
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$
|
130.1
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|
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$
|
0.39
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Electric Transmission
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|
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|
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135.4
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|
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0.39
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|
|
126.8
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|
|
0.38
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Natural Gas Distribution (1)
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|
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147.6
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0.43
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85.9
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|
|
0.26
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Water Distribution
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3.6
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|
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0.01
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2.1
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|
0.01
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Net Income - Regulated Companies
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$
|
379.8
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|
|
$
|
1.10
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|
|
$
|
344.9
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|
|
$
|
1.04
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|
(1) The 2020 amounts were revised to conform to the current period segment presentation.
Our electric distribution segment earnings decreased $36.9 million in the first quarter of 2021, as compared to the first quarter of 2020, due primarily to an after-tax charge of $0.07 per share at CL&P for the accrual of a $30 million estimated assessment by PURA as a result of CL&P’s preparation for and response to Tropical Storm Isaias in August 2020. For further information, see "Regulatory Developments and Rate Matters - Connecticut" included in this Management’s Discussion and Analysis. Earnings were also unfavorably impacted by higher operations and maintenance expense driven by higher storm restoration costs and higher employee-related expenses due to timing of capital work (primarily meter installations) delayed as a result of increased storms and the impact of COVID-19, as well as higher depreciation expense and higher property tax expense. The earnings decrease was partially offset by base distribution rate increases at CL&P effective May 1, 2020, at NSTAR Electric effective January 1, 2021, and at PSNH effective January 1, 2021, higher earnings from CL&P's capital tracker mechanism due to increased electric system improvements, and the impact in 2021 of a new tracker mechanism at PSNH approved as part of the 2020 rate settlement agreement.
Our electric transmission segment earnings increased $8.6 million in the first quarter of 2021, as compared to the first quarter of 2020, due primarily to a higher transmission rate base as a result of our continued investment in our transmission infrastructure.
Our natural gas distribution segment earnings increased $61.7 million in the first quarter of 2021, as compared to the first quarter of 2020, due primarily to the addition of Eversource Gas Company of Massachusetts (EGMA) earnings of $47.3 million. Additionally, the earnings increase was due to base distribution rate increases at NSTAR Gas effective November 1, 2020 and at Yankee Gas effective January 1, 2021 (in customer rates beginning March 1, 2021). The earnings increase was partially offset by higher operations and maintenance expense, higher depreciation expense and higher property tax expense.
Our water distribution segment earnings increased $1.5 million in the first quarter of 2021, as compared to the first quarter of 2020, due primarily to lower interest expense.
Eversource Parent and Other Companies: Eversource parent and other companies' had an increased loss of $3.6 million in the first quarter of 2021, as compared to the first quarter of 2020, due primarily to an increase in the acquisition and related transition costs of the CMA asset acquisition of $2.7 million.
Impact of COVID-19
COVID-19 continues to adversely affect customers, workers and the U.S. economy. We continue to operate under our pandemic response plan, which requires remote work arrangements for nearly half of our workforce and other mitigating requirements for those that are required onsite in our electric, natural gas and water operations, construction and management functions. We continue to address the impacts of the COVID-19 pandemic and how the related developments affect Eversource. We have not experienced significant impacts directly related to the pandemic that have materially affected our current operations, our workforce, or results of operations. The extent of the impact to us in the future will vary, and depend on the duration, scope and severity of the pandemic and the resulting impact on economic, health care and capital market conditions. The future impact will also depend on the outcome of future proceedings before our state regulatory commissions to recover our incremental costs associated with COVID-19, which include uncollectible customer receivable expenses.
The current and expected future financial impacts of COVID-19 as it relates to our businesses primarily relate to collectability of customer receivables and customer payment plans and increased expenses for cleaning and supplies for personal protective equipment.
As of March 31, 2021, our allowance for uncollectible customer receivable balance of $391.7 million, of which $197.3 million relates to hardship accounts that are specifically recovered in rates charged to customers, adequately reflected the collection risk and net realizable value for our receivables. We continue to evaluate the adequacy of the uncollectible allowance based on an ongoing assessment of accounts receivable collections and customer payment trends, economic conditions, delinquency statistics, aging-based quantitative assessments, the impact on residential customer bills because of energy usage and change in rates, flexible payment plans and financial hardship arrearage management programs being offered to customers, and COVID-19 developments, including any potential federal governmental pandemic relief programs and the expansion of unemployment benefit initiatives, which help to mitigate the potential for increasing customer account delinquencies. Additionally, management considered past economic declines and corresponding uncollectible reserves as part of the current assessment. This evaluation has shown that our operating companies have experienced an increase in aged receivables and lower cash collections from customers because of the moratorium on disconnections and the economic slowdown resulting from the COVID-19 pandemic.
Based upon the evaluation performed, in the first quarter of 2021, we increased the allowance for uncollectible accounts for amounts incurred as a result of COVID-19 by $15.5 million for Eversource ($5.6 million for CL&P, $3.7 million for NSTAR Electric, and $6.2 million at our natural gas businesses). These COVID-19 related uncollectible amounts were deferred either as incremental regulatory costs or deferred through existing regulatory tracking mechanisms that recover uncollectible energy supply costs, as we believe it is probable that these costs will ultimately be recovered from customers in future rates. As of March 31, 2021, the total amount incurred as a result of COVID-19 included in the allowance for uncollectible accounts was $47.0 million at Eversource ($8.4 million at CL&P, $14.7 million at NSTAR Electric, $2.3 million at PSNH, and $21.6 million at our natural gas businesses). Based on the status of our COVID-19 regulatory dockets, communications with our state regulatory commissions, and policies and practices in each of our jurisdictions, we believe each of our state regulatory commissions will allow us to recover our incremental costs associated with COVID-19, which include uncollectible customer receivable expenses, while balancing the impact on our customers’ bills and our operating cash flows.
We continue to work closely with our state regulatory commissions and consumer advocates on customer assistance measures, including payment plan options in order to mitigate the impact on customer rates in the future, as well as financial hardship and arrearage management programs for those customers who are unable to pay their utility bills. We developed these long-term solutions for customers in order to help minimize the extent of the impact of COVID-19 on customer receivable balances and customers’ affordability in light of the current financial impact they may experience.
In the first quarter of 2021, net incremental costs incurred as a result of COVID-19 totaled $10.2 million, and related to uncollectible expense that impacts earnings, facilities and fleet cleaning, sanitizing costs and supplies for personal protective equipment, net of cost savings and expected benefits under the CARES Act. In the first quarter of 2021, we deferred $9.8 million of these net incremental COVID-19 costs on the balance sheet. Net incremental COVID-19 expenses that reduced pre-tax earnings totaled $0.4 million on the statement of income. As of March 31, 2021, we deferred $33.8 million of net incremental COVID-19 costs on the balance sheet, of which $27.3 million of that deferral related to uncollectible expense that impacts earnings and $6.5 million related to cleaning and supplies for personal protective equipment.
Liquidity
Cash totaled $34.1 million as of March 31, 2021, compared with $106.6 million as of December 31, 2020.
Short-Term Debt - Commercial Paper Programs and Credit Agreements: Eversource parent has a $2.00 billion commercial paper program allowing Eversource parent to issue commercial paper as a form of short-term debt. Eversource parent, CL&P, PSNH, NSTAR Gas, Yankee Gas and Aquarion Water Company of Connecticut are parties to a five-year $1.45 billion revolving credit facility, which terminates on December 6, 2024. Eversource parent and EGMA have a short-term $550 million revolving credit facility, which terminates on October 20, 2021. These revolving credit facilities serve to backstop Eversource parent's $2.00 billion commercial paper program.
NSTAR Electric has a $650 million commercial paper program allowing NSTAR Electric to issue commercial paper as a form of short-term debt. NSTAR Electric is also a party to a five-year $650 million revolving credit facility, which terminates on December 6, 2024. The revolving credit facility serves to backstop NSTAR Electric's $650 million commercial paper program.
The amount of borrowings outstanding and available under the commercial paper programs were as follows:
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Borrowings Outstanding as of
|
|
Available Borrowing Capacity as of
|
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Weighted-Average Interest Rate as of
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|
|
March 31, 2021
|
|
December 31, 2020
|
|
March 31, 2021
|
|
December 31, 2020
|
|
March 31, 2021
|
|
December 31, 2020
|
|
(Millions of Dollars)
|
|
|
|
|
|
|
Eversource Parent Commercial Paper Program
|
$
|
1,475.7
|
|
|
$
|
1,054.3
|
|
|
$
|
524.3
|
|
|
$
|
945.7
|
|
|
0.23
|
%
|
|
0.25
|
%
|
|
NSTAR Electric Commercial Paper Program
|
443.5
|
|
|
195.0
|
|
|
206.5
|
|
|
455.0
|
|
|
0.13
|
%
|
|
0.16
|
%
|
There were no borrowings outstanding on the revolving credit facilities as of March 31, 2021 or December 31, 2020.
On May 15, 2020, CL&P and PSNH entered into uncommitted line of credit agreements, which will expire by May 14, 2021. The CL&P agreements total $450 million and the PSNH agreements total $300 million. There are no borrowings outstanding on either the CL&P or PSNH uncommitted line of credit agreements as of March 31, 2021.
Amounts outstanding under the commercial paper programs are included in Notes Payable and classified in current liabilities on the Eversource and NSTAR Electric balance sheets, as all borrowings are outstanding for no more than 364 days at one time. As a result of the Aquarion Water Company of Connecticut long-term debt issuance in April 2021, $40.0 million of the current portion of long-term debt and $46.8 million of commercial paper borrowings under the Eversource parent commercial paper program were classified as Long-Term Debt as of March 31, 2021.
Intercompany Borrowings: Eversource parent uses its available capital resources to provide loans to its subsidiaries to assist in meeting their short-term borrowing needs. Eversource parent records intercompany interest income from its loans to subsidiaries, which is eliminated in consolidation. Intercompany loans from Eversource parent to its subsidiaries are eliminated in consolidation on Eversource's balance sheets. As of March 31, 2021, there were intercompany loans from Eversource parent to CL&P of $32.1 million, to PSNH of $196.8 million, and to a subsidiary of NSTAR Electric of $22.5 million. As of December 31, 2020, there were intercompany loans from Eversource parent to PSNH of $46.3 million, and to a subsidiary of NSTAR Electric of $21.3 million. Intercompany loans from Eversource parent are included in Notes Payable to Eversource Parent and classified in current liabilities on the respective subsidiary's balance sheets.
Long-Term Debt Issuance Authorizations: On February 10, 2021, PURA approved Aquarion Water Company of Connecticut’s request for authorization to issue up to $100 million in long-term debt through December 31, 2021. On March 18, 2021, PSNH filed an application with the NHPUC for authorization to issue up to $350 million in long-term debt through December 31, 2021. On March 22, 2021, CL&P filed an application with PURA for authorization to issue up to $350 million in long-term debt through December 31, 2021. On March 31, 2021, the DPU approved NSTAR Electric's request for authorization to issue up to $1.6 billion in long-term debt through December 31, 2023.
Long-Term Debt Issuances and Repayments: The following table summarizes long-term debt issuances and repayments:
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|
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|
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|
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|
|
(Millions of Dollars)
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Issuance/(Repayment)
|
|
Issue Date or Repayment Date
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Maturity Date
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|
Use of Proceeds for Issuance/
Repayment Information
|
|
PSNH:
|
|
|
|
|
|
|
|
|
4.05% Series Q First Mortgage Bonds
|
$
|
(122.0)
|
|
|
March 2021
|
|
June 2021
|
|
Paid on par call date in advance of maturity date
|
|
Other:
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|
|
|
|
|
|
|
|
Eversource Parent 2.50% Series I Senior Notes
|
(450.0)
|
|
|
February 2021
|
|
March 2021
|
|
Paid on par call date in advance of maturity date
|
|
Eversource Parent 2.55% Series S Senior Notes
|
350.0
|
|
|
March 2021
|
|
March 2031
|
|
Repaid short-term debt, including short-term debt used to redeem Series I Senior Notes
|
Aquarion Water Company of Connecticut 3.31% Senior
Notes
|
100.0
|
|
|
April 2021
|
|
April 2051
|
|
Repaid 5.50% Notes, redeemed short-term debt, paid capital expenditures and working capital
|
|
Aquarion Water Company of Connecticut 5.50% Notes
|
(40.0)
|
|
|
April 2021
|
|
April 2021
|
|
Paid at maturity
|
In April 2021, PSNH provided a redemption notice to the holders of the PSNH 3.20% Series R First Mortgage Bonds that PSNH will redeem the $160 million of bonds on June 1, 2021, the par call date, in advance of the September 1, 2021 maturity date. In April 2021, NSTAR Electric provided a redemption notice to the holders to the NSTAR Electric 3.50% Series F Senior Notes that NSTAR Electric will redeem the $250 million of senior notes on June 15, 2021, the par call date, in advance of the September 15, 2021 maturity date.
Rate Reduction Bonds: PSNH's RRB payments consist of principal and interest and are paid semi-annually. PSNH paid $21.6 million of RRB principal payments and $9.6 million of interest payments in the first quarter of 2021, and paid $21.6 million of RRB principal payments and $10.3 million of interest payments in the first quarter of 2020.
Cash Flows: Cash flows provided by operating activities totaled $411.4 million in the first quarter of 2021, compared with $420.3 million in the first quarter of 2020. Operating cash flows were unfavorably impacted by the timing of cash collections on our accounts receivable, the timing of cash payments made on our accounts payable, income tax payments made of $15.8 million in the first quarter of 2021, compared to income tax refunds received of $40.5 million in the same period of 2020, cash payments made in the first quarter of 2021 for storm restoration costs of approximately $44 million related to Tropical Storm Isaias at CL&P, and a $30.3 million increase in Pension and PBOP contributions made in the first quarter of 2021, as compared to 2020. Partially offsetting these unfavorable impacts was the timing of collections for regulatory tracking mechanisms primarily related to the deferred fuel costs at our natural gas distribution business, the addition of EGMA, and the timing of other working capital items.
On May 5, 2021, our Board of Trustees approved a common share dividend payment of $0.6025 per share, payable on June 30, 2021 to shareholders of record as of May 20, 2021. On February 9, 2021, our Board of Trustees approved a common share dividend payment of $0.6025 per share, which was paid on March 31, 2021 to shareholders of record as of March 4, 2021. In the first quarter of 2021, we paid cash dividends of $201.0 million and issued non-cash dividends of $5.9 million in the form of treasury shares, totaling dividends of $206.9 million. In the first quarter of 2020, we paid cash dividends of $181.6 million and issued non-cash dividends of $5.9 million in the form of treasury shares, totaling dividends of $187.5 million.
Eversource issues treasury shares to satisfy awards under the Company's incentive plans, shares issued under the dividend reinvestment and share purchase plan, and matching contributions under the Eversource 401k Plan.
In the first quarter of 2021, CL&P, NSTAR Electric and PSNH paid $70.1 million, $206.4 million, and $25.2 million, respectively, in common stock dividends to Eversource parent.
Investments in Property, Plant and Equipment on the statements of cash flows do not include amounts incurred on capital projects but not yet paid, cost of removal, AFUDC related to equity funds, and the capitalized and deferred portions of pension and PBOP expense. In the first quarter of 2021, investments for Eversource, CL&P, NSTAR Electric, and PSNH were $689.0 million, $198.0 million, $215.5 million, and $68.3 million, respectively.
We expect the future operating cash flows of Eversource, CL&P, NSTAR Electric and PSNH, along with our existing borrowing availability and access to both debt and equity markets, will be sufficient to meet any working capital and future operating requirements, and capital investment forecasted opportunities.
Credit Ratings: On May 6, 2021, S&P changed CL&P’s outlook from stable to negative and affirmed its existing outlook for Eversource parent, NSTAR Electric and PSNH.
Business Development and Capital Expenditures
Our consolidated capital expenditures, including amounts incurred but not paid, cost of removal, AFUDC, and the capitalized and deferred portions of pension and PBOP expense (all of which are non-cash factors), totaled $620.7 million in the first quarter of 2021, compared to $655.7 million in the first quarter of 2020. These amounts included $47.8 million and $55.4 million in the first quarter of 2021 and 2020, respectively, related to information technology and facilities upgrades and enhancements, primarily at Eversource Service and The Rocky River Realty Company.
Electric Transmission Business: Our consolidated electric transmission business capital expenditures decreased by $20.6 million in the first quarter of 2021, as compared to the first quarter of 2020. A summary of electric transmission capital expenditures by company is as follows:
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|
|
For the Three Months Ended March 31,
|
|
(Millions of Dollars)
|
2021
|
|
2020
|
|
CL&P
|
$
|
81.3
|
|
|
$
|
84.8
|
|
|
NSTAR Electric
|
82.0
|
|
|
76.7
|
|
|
PSNH
|
23.9
|
|
|
46.3
|
|
|
Total Electric Transmission Segment
|
$
|
187.2
|
|
|
$
|
207.8
|
|
Eastern Massachusetts Transmission Projects: These projects consist of a portfolio of electric transmission upgrades in southern New Hampshire, northern Massachusetts and continuing into the greater Boston metropolitan area, of which 28 upgrades are in Eversource's service territory (two in New Hampshire and 26 in Massachusetts). The two New Hampshire upgrades, including the Merrimack Valley Reliability Project, have been placed in service, and 23 Massachusetts upgrades have been placed in service. On December 17, 2019, the Massachusetts Siting Board issued a favorable decision on the Sudbury-Hudson Reliability Project, the last project requiring such approval. On January 17, 2020, the Town of Sudbury and Protect Sudbury, a community group, appealed the decision to the Massachusetts Supreme Judicial Court. Oral arguments were held on March 1, 2021. The remaining two upgrades are under construction and are expected to be placed in service in 2022. We estimate our portion of the investment will be approximately $750 million, of which $534 million has been spent and capitalized through March 31, 2021.
Southeastern Massachusetts Transmission Projects: These projects consist of a portfolio of electric transmission and substation upgrades in southeastern Massachusetts, including Cape Cod, required to reinforce the Southeastern Massachusetts transmission system and bring the system into compliance with applicable national and regional reliability standards. ISO-NE reassessed the need for projects that had yet to be constructed and reconfirmed the need for the majority of the originally identified reinforcements in July 2020. Twelve upgrades in Eversource's service territory were reconfirmed, and a single upgrade was deemed to no longer be required. Of the twelve upgrades, four require siting approvals from the Massachusetts regulatory agencies, of which one has received approval, two are before the agencies and one, a joint project with National Grid, has yet to be filed. Three substation projects will be permitted locally, three projects are under construction and two projects have been placed in-service. We estimate our portion of the investment will be approximately $175 million, of which $32 million has been spent and capitalized through March 31, 2021.
All project costs are anticipated to be fully recoverable through transmission rates.
Distribution Business: A summary of distribution capital expenditures is as follows:
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For the Three Months Ended March 31,
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(Millions of Dollars)
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CL&P
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NSTAR Electric
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PSNH
|
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Total Electric
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Natural Gas
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|
Water
|
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Total
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|
2021
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|
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Basic Business
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$
|
45.0
|
|
|
$
|
31.3
|
|
|
$
|
13.6
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|
|
$
|
89.9
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|
|
$
|
25.4
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|
|
$
|
1.7
|
|
|
$
|
117.0
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Aging Infrastructure
|
34.1
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|
|
46.1
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|
|
19.5
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|
|
99.7
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|
|
77.2
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|
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16.7
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|
|
193.6
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Load Growth and Other
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20.3
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|
|
35.3
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|
|
7.7
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|
|
63.3
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|
|
12.8
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|
|
0.1
|
|
|
76.2
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Total Distribution
|
99.4
|
|
|
112.7
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|
|
40.8
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|
|
252.9
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|
|
115.4
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|
|
18.5
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|
|
386.8
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|
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Solar
|
—
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|
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(1.1)
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|
|
—
|
|
|
(1.1)
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|
|
—
|
|
|
—
|
|
|
(1.1)
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|
|
Total
|
$
|
99.4
|
|
|
$
|
111.6
|
|
|
$
|
40.8
|
|
|
$
|
251.8
|
|
|
$
|
115.4
|
|
|
$
|
18.5
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|
|
$
|
385.7
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|
|
2020
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|
|
|
|
|
|
|
|
|
|
|
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|
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Basic Business
|
$
|
43.7
|
|
|
$
|
59.6
|
|
|
$
|
9.8
|
|
|
$
|
113.1
|
|
|
$
|
20.0
|
|
|
$
|
1.9
|
|
|
$
|
135.0
|
|
|
Aging Infrastructure
|
44.1
|
|
|
54.4
|
|
|
22.5
|
|
|
121.0
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|
|
67.3
|
|
|
15.8
|
|
|
204.1
|
|
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Load Growth and Other
|
15.0
|
|
|
24.0
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|
|
3.1
|
|
|
42.1
|
|
|
10.8
|
|
|
0.1
|
|
|
53.0
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Total Distribution
|
102.8
|
|
|
138.0
|
|
|
35.4
|
|
|
276.2
|
|
|
98.1
|
|
|
17.8
|
|
|
392.1
|
|
|
Solar
|
—
|
|
|
0.4
|
|
|
—
|
|
|
0.4
|
|
|
—
|
|
|
—
|
|
|
0.4
|
|
|
Total
|
$
|
102.8
|
|
|
$
|
138.4
|
|
|
$
|
35.4
|
|
|
$
|
276.6
|
|
|
$
|
98.1
|
|
|
$
|
17.8
|
|
|
$
|
392.5
|
|
For the electric distribution business, basic business includes the purchase of meters, tools, vehicles, information technology, transformer replacements, equipment facilities, and the relocation of plant. Aging infrastructure relates to reliability and the replacement of overhead lines, plant substations, underground cable replacement, and equipment failures. Load growth and other includes requests for new business and capacity additions on distribution lines and substation additions and expansions.
For the natural gas distribution business, basic business addresses daily operational needs including meters, pipe relocations due to public works projects, vehicles, and tools. Aging infrastructure projects seek to improve the reliability of the system through enhancements related to cast iron and bare steel replacement of main and services, corrosion mediation, and station upgrades. Load growth and other reflects growth in existing service territories including new developments, installation of services, and expansion.
For the water distribution business, basic business addresses daily operational needs including periodic meter replacement, water main relocation, facility maintenance, and tools. Aging infrastructure relates to reliability and the replacement of water mains, regulators, storage tanks, pumping stations, wellfields, reservoirs, and treatment facilities. Load growth and other reflects growth in our service territory, including improvements of acquisitions, installation of new services, and interconnections of systems.
Pending Acquisition of New England Service Company: On April 8, 2021, Aquarion and New England Service Company (NESC) entered into a definitive agreement pursuant to which Aquarion would acquire all outstanding shares of NESC. NESC provides regulated water service to approximately 10,000 customers in Connecticut, Massachusetts, and New Hampshire. The acquisition will be structured as a stock-for-stock exchange and Eversource will issue approximately 463,000 common shares at closing. The transaction requires approval from the PURA, DPU, NHPUC and other regulators and is expected to close by the end of 2021.
Offshore Wind Business: Our offshore wind business includes 50 percent ownership interests in both North East Offshore and Bay State Wind, which together hold PPAs and contracts for the Revolution Wind, South Fork Wind and Sunrise Wind projects, as well as offshore leases issued by BOEM. Our offshore wind projects are being developed and constructed through a joint and equal partnership with Ørsted. This partnership also participates in new procurement opportunities for offshore wind energy in the Northeast U.S.
The offshore leases include a 257 square-mile ocean lease off the coasts of Massachusetts and Rhode Island and a separate, adjacent 300-square-mile ocean lease located approximately 25 miles south of the coast of Massachusetts. In aggregate, these ocean lease sites jointly-owned by Eversource and Ørsted could eventually develop at least 4,000 MW of clean, renewable offshore wind energy.
We are preparing our final project designs and advancing the appropriate federal, state and local siting and permitting processes along with our offshore wind partner, Ørsted, all of which is competitively sensitive. We currently expect to make investments in our offshore wind business of approximately $300 million to $500 million during 2021, subject to advancing our final project designs and federal, state and local permitting processes. As of March 31, 2021 and December 31, 2020, Eversource's total equity investment balance in its offshore wind business was $921.0 million and $887.1 million, respectively.
The following table provides a summary of the Eversource and Ørsted major projects with announced contracts:
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Wind Project
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State Servicing
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Size (MW)
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Term (Years)
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Price per MWh
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Pricing Terms
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Contract Status
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Revolution Wind
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Rhode Island
|
400
|
20
|
$98.43
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Fixed price contract; no price escalation
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Approved
|
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Revolution Wind
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Connecticut
|
304
|
20
|
(1)
|
Fixed price contracts; no price escalation
|
Approved
|
|
South Fork Wind
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New York (LIPA)
|
90
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20
|
$160.33
|
2 percent average price escalation
|
Approved
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|
South Fork Wind
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New York (LIPA)
|
42
|
20
|
$86.25
|
2 percent average price escalation
|
Approved
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Sunrise Wind
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New York (NYSERDA)
|
924 (2)
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25
|
$110.37 (3)
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Fixed price contract; no price escalation
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Approved
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(1) The pricing for the Revolution Wind contracts in Connecticut has not been publicly disclosed.
(2) The contractual capacity increased from 880 MWs to 924 MWs, as allowed under the original agreement with NYSERDA.
(3) Index Offshore Wind Renewable Energy Certificate (OREC) strike price.
Our offshore wind projects are subject to receipt of federal, state and local approvals necessary to construct and operate the projects. The federal permitting process is governed by BOEM, and state approvals are required from New York, Rhode Island and Massachusetts. Significant delays in the siting and permitting process resulting from the timeline for obtaining approval from BOEM and the state and local agencies could adversely impact the timing of these projects' in-service dates.
Federal Siting and Permitting Process: The South Fork Wind project has commenced the federal siting and permitting process with the filing of its Construction Operations Plan (COP) application with BOEM in 2018. The first major milestone in the BOEM review process is an issuance of a Notice of Intent (NOI) to complete an Environmental Impact Statement (EIS), which South Fork Wind received in 2018. In August 2020, we received the final review schedule from BOEM regarding South Fork Wind’s COP approval. In January 2021, BOEM released its Draft EIS for the South Fork Wind project, which assessed the environmental, social, and economic impacts of constructing the project. Identified impacts were negligible to major adverse impacts to marine and terrestrial archaeological resources and to historic, and non-historic visual resources from project construction and operations. The Draft EIS also analyzed four alternatives to be evaluated as part of the process. Each of the identified alternative configurations had a similar level of environmental impacts, and if an alternative configuration was selected, the South Fork Wind project would still meet the contractual output under its PPA. A Final EIS is expected in the third quarter of 2021 and a final decision is expected in January 2022.
Based on BOEM’s final review schedule and final United States Army Corps of Engineers approval, we expect to start construction on South Fork in early 2022. South Fork Wind is designated as a “Covered Project” pursuant to Title 41 of the Fixing America’s Surface Transportation Act (FAST41) and a Major Infrastructure Project under Section 3(e) of Executive Order 13807, which provides greater federal attention on meeting the project’s permitting timelines.
Revolution Wind and Sunrise Wind filed their COP applications with BOEM in March 2020 and September 2020, respectively. Both projects received FAST41 designation in 2020. On April 30, 2021, Revolution Wind received BOEM’s NOI to prepare an EIS for the review of the COP submitted by Revolution Wind. We are awaiting BOEM to outline its timeline for completing the review of Sunrise Wind’s COP in an NOI, which we expect to receive in 2021.
State and Local Siting and Permitting Process: South Fork Wind commenced the New York state siting process in 2018. On September 17, 2020, South Fork Wind filed a Joint Proposal in the New York State Article VII siting application. Amongst other things, the Joint Proposal included proposed mitigations to certain environmental, community and construction impacts associated with constructing electrical infrastructure. South Fork Wind was initially joined by PSEG Long Island and several citizens advocacy organizations. On October 9, 2020, the Joint Proposal was signed by the New York Departments of Public Service, Environmental Conservation, Transportation and State as well as the Office of Parks, Recreation and Historic Preservation. On March 18, 2021, the New York Public Service Commission approved an order adopting the Joint Proposal and granting a Certificate of Environmental Compatibility and Public Need. Two petitions for re-hearing of the New York Public Service Commission decision have been filed, and South Fork Wind responded on May 3, 2021 opposing the re-hearing requests.
On September 10, 2020, the Town of East Hampton and the East Hampton Town Trustees announced that they had reached an agreement with South Fork Wind to issue the necessary easements and other real estate rights necessary to construct the South Fork Wind project. The Town approved the easements on January 21, 2021 and Trustees approved the lease on January 25, 2021.
State permitting applications in Rhode Island for Revolution Wind and in New York for Sunrise Wind were filed in December 2020. The Revolution Wind application was deemed complete on January 22, 2021 and the preliminary hearing was completed on March 22, 2021. On April 26, 2021, the Rhode Island Energy Facilities Siting Board issued a Preliminary Decision and Order on scheduling with Advisory Opinions for local and state agencies to be submitted by August 26, 2021, and evidentiary hearings will begin prior to October 12, 2021.
Projected In-Service Dates: Based on BOEM’s confirmed permit schedule outlining when BOEM will complete its review of the South Fork Wind COP, we now expect the South Fork Wind project to be in-service by the end of 2023. For Revolution Wind, we recently received BOEM’s NOI and for Sunrise Wind, we do not have a definitive timeline on when we will receive BOEM’s NOI. Additionally, for both Revolution Wind and Sunrise Wind, we also do not have a definitive timeline on other siting and permitting milestones, and execution of certain large generator interconnection agreements. At this time, we believe that it is unlikely that the projected in-service dates of the end of 2023 and the end of 2024 for Revolution Wind and Sunrise Wind, respectively, will be met. We anticipate concluding on projected in-service dates for Revolution Wind and Sunrise Wind in the second half of 2021, once both BOEM NOIs have been received and analyzed.
FERC Regulatory Matters
FERC ROE Complaints: Four separate complaints were filed at the FERC by combinations of New England state attorneys general, state regulatory commissions, consumer advocates, consumer groups, municipal parties and other parties (collectively, the Complainants). In each of the first three complaints, filed on October 1, 2011, December 27, 2012, and July 31, 2014, respectively, the Complainants challenged the NETOs' base ROE of 11.14 percent that had been utilized since 2005 and sought an order to reduce it prospectively from the date of the final FERC order and for the separate 15-month complaint periods. In the fourth complaint, filed April 29, 2016, the Complainants challenged the NETOs' base ROE billed of 10.57 percent and the maximum ROE for transmission incentive (incentive cap) of 11.74 percent, asserting that these ROEs were unjust and unreasonable.
The ROE originally billed during the period October 1, 2011 (beginning of the first complaint period) through October 15, 2014 consisted of a base ROE of 11.14 percent and incentives up to 13.1 percent. On October 16, 2014, the FERC set the base ROE at 10.57 percent and the incentive cap at 11.74 percent for the first complaint period. This was also effective for all prospective billings to customers beginning October 16, 2014. This FERC order was vacated on April 14, 2017 by the U.S. Court of Appeals for the D.C. Circuit (the Court).
All amounts associated with the first complaint period have been refunded. Eversource has recorded a reserve of $39.1 million (pre-tax and excluding interest) for the second complaint period as of March 31, 2021 and December 31, 2020. This reserve represents the difference between the billed rates during the second complaint period and a 10.57 percent base ROE and 11.74 percent incentive cap. The reserve consisted of $21.4 million for CL&P, $14.6 million for NSTAR Electric and $3.1 million for PSNH as of March 31, 2021 and December 31, 2020.
On October 16, 2018, FERC issued an order on all four complaints describing how it intends to address the issues that were remanded by the Court. FERC proposed a new framework to determine (1) whether an existing ROE is unjust and unreasonable and, if so, (2) how to calculate a replacement ROE. Initial briefs were filed by the NETOs, Complainants and FERC Trial Staff on January 11, 2019 and reply briefs were filed on March 8, 2019. The NETOs' brief was supportive of the overall ROE methodology determined in the October 16, 2018 order provided the FERC does not change the proposed methodology or alter its implementation in a manner that has a material impact on the results.
The FERC order included illustrative calculations for the first complaint using FERC's proposed frameworks with financial data from that complaint. Those illustrative calculations indicated that for the first complaint period, for the NETOs, which FERC concludes are of average financial risk, the preliminary just and reasonable base ROE is 10.41 percent and the preliminary incentive cap on total ROE is 13.08 percent.
If the results of the illustrative calculations were included in a final FERC order for each of the complaint periods, then a 10.41 percent base ROE and a 13.08 percent incentive cap would not have a significant impact on our financial statements for all of the complaint periods. These preliminary calculations are not binding and do not represent what we believe to be the most likely outcome of a final FERC order.
On November 21, 2019, FERC issued Opinion No. 569 affecting the two pending transmission ROE complaints against the Midcontinent ISO (MISO) transmission owners, in which FERC adopted a new methodology for determining base ROEs. Various parties sought rehearing. On December 23, 2019, the NETOs filed supplementary materials in the NETOs' four pending cases to respond to this new methodology because of the uncertainty of the applicability to the NETOs’ cases.
On May 21, 2020, the FERC issued its order in Opinion No. 569-A on the rehearing of the MISO transmission owners' cases, in which FERC again changed its methodology for determining the MISO transmission owners' base ROEs. Various parties appealed the MISO transmission owners' opinion. On November 19, 2020, the FERC issued Opinion No. 569-B denying rehearing of Opinion No. 569-A and reaffirmed the methodology previously adopted in Opinion No. 569-A. The new methodology differs significantly from the methodology proposed by FERC in its October 16, 2018 order to determine the NETOs' base ROEs in its four pending cases.
Given the significant uncertainty regarding the applicability of the FERC opinions in the MISO transmission owners' two complaint cases to the NETOs' pending four complaint cases, Eversource concluded that there is no reasonable basis for a change to the reserve or recognized ROEs for any of the complaint periods at this time. As well, Eversource cannot reasonably estimate a range of any gain or loss for any of the four complaint proceedings at this time.
Eversource, CL&P, NSTAR Electric and PSNH currently record revenues at the 10.57 percent base ROE and incentive cap at 11.74 percent established in the October 16, 2014 FERC order.
A change of 10 basis points to the base ROE used to establish the reserves would impact Eversource's after-tax earnings by an average of approximately $3 million for each of the four 15-month complaint periods. From the date of a final FERC order, a change of 10 basis points to the base ROE would impact Eversource’s 2021 after-tax earnings by approximately $5 million, or $0.01 per share, per year, and will increase slightly over time as we continue to invest in our transmission infrastructure.
FERC Notice of Inquiry on ROE: On March 21, 2019, FERC issued a Notice of Inquiry (NOI) seeking comments from all stakeholders on FERC's policies for evaluating ROEs for electric public utilities, and interstate natural gas and oil pipelines. On June 26, 2019, the NETOs jointly filed comments supporting the methodology established in the FERC’s October 16, 2018 order with minor enhancements going forward. The NETOs jointly filed reply comments in the FERC ROE NOI on July 26, 2019. On May 12, 2020, the NETOs filed supplemental comments in the NOI ROE docket. At this time, Eversource cannot predict how this proceeding will affect its transmission ROEs.
FERC Notice of Inquiry and Proposed Rulemaking on Transmission Incentives: On March 21, 2019, FERC issued an NOI seeking comments on FERC's policies for implementing electric transmission incentives. On June 26, 2019, Eversource filed comments requesting that FERC retain policies that have been effective in encouraging new transmission investment and remain flexible enough to attract investment in new and emerging transmission technologies. Eversource filed reply comments on August 26, 2019. On March 20, 2020, FERC issued a Notice of Proposed Rulemaking (NOPR) on transmission incentives. The NOPR intends to revise FERC’s electric transmission incentive policies to reflect competing uses of transmission due to generation resource mix, technological innovation and shifts in load patterns. FERC proposes to grant transmission incentives based on measurable project economics and reliability benefits to consumers rather than its current project risks and challenges framework. On July 1, 2020, Eversource filed comments generally supporting the NOPR.
On April 15, 2021, FERC issued a Supplemental NOPR that proposes to eliminate the existing 50 basis point return on equity for utilities that have been participating in a regional transmission organization (RTO ROE incentive) for more than three years. Supplemental NOPR comments are due May 26, 2021 with reply comments due June 10, 2021. If the FERC issues a final order eliminating the RTO ROE incentive as proposed in the Supplemental NOPR, the estimated annual impact (using 2019 actual data) on Eversource’s after-tax earnings is approximately $14 million. The Supplemental NOPR contemplates an effective date 30 days from the final order.
At this time, Eversource cannot predict the ultimate outcome of these proceedings and the resulting impact on its transmission incentives.
Regulatory Developments and Rate Matters
Electric, Natural Gas and Water Utility Base Distribution Rates: The regulated companies’ distribution rates are set by their respective state regulatory commissions, and their tariffs include mechanisms for periodically adjusting their rates for the recovery of specific incurred costs. Other than as described below, for the first quarter of 2021, changes made to the regulated companies’ rates did not have a material impact on their earnings, financial position, or cash flows. For further information, see "Financial Condition and Business Analysis – Regulatory Developments and Rate Matters" included in Item 7, "Management’s Discussion and Analysis of Financial Condition and Results of Operations," of the Eversource 2020 Form 10-K.
Connecticut:
CL&P Tropical Storm Isaias Costs: On August 4, 2020, Tropical Storm Isaias caused catastrophic damage to our electric distribution system, which resulted in significant numbers and durations of customer outages, primarily in Connecticut. In terms of customer outages, this storm was one of the worst in CL&P’s history. PURA will investigate the prudence of costs incurred by CL&P to restore service in response to Tropical Storm Isaias. That investigation is expected to occur either in a separate proceeding not yet initiated or as part of CL&P’s next rate review proceeding. Tropical Storm Isaias resulted in deferred storm restoration costs of approximately $231 million at CL&P and $249 million at Eversource as of March 31, 2021. The estimated cost of restoration will change as additional cost information becomes available and final storm costs are deferred or capitalized. Although PURA found that CL&P’s performance in its preparation for and response to Tropical Storm Isaias fell below applicable performance standards in certain instances, CL&P believes it will be able to present credible evidence in a future proceeding demonstrating there is no reasonably close causal connection between the alleged sub-standard performance and the storm costs incurred. While some amount of storm costs may be disallowed by PURA in a future proceeding, any such amount cannot be estimated at this time. CL&P continues to believe that these storm restoration costs associated with Tropical Storm Isaias were prudently incurred and meet the criteria for cost recovery; and as a result, management does not expect the storm costs to have a material impact on the financial position or results of operations of Eversource or CL&P.
CL&P Tropical Storm Isaias Response Investigation: In August 2020, PURA opened a docket to investigate the preparation for and response to Tropical Storm Isaias by Connecticut utilities, including CL&P. On April 28, 2021, PURA issued a final decision on CL&P’s compliance with its emergency response plan that concluded CL&P failed to comply with certain applicable storm performance standards and was imprudent in certain instances. Specifically, PURA concluded that CL&P did not satisfy the performance standards for managing its municipal liaison program, timely removing electrical hazards from blocked roads, communicating critical information to its customers, or meeting its obligation to secure adequate external contractor and mutual aid resources in a timely manner. Based on its findings, PURA ordered CL&P to adjust its future rates, in a pending or future rate proceeding, to reflect a monetary penalty in the form of a downward adjustment of 90 basis points in its allowed rate of return on equity (ROE). The decision also requires CL&P to enhance and submit updated emergency response programs incorporating the changes noted within the decision for PURA’s approval by June 30, 2021. PURA explained that additional monetary penalties and further enforcement orders pursuant to Connecticut statute would be considered in a separate proceeding that was initiated on May 6, 2021.
On May 6, 2021, as part of the penalty proceeding, PURA issued a notice of violation that included an assessment of $30 million, consisting of a $28.4 million civil penalty for non-compliance with performance standards to be provided as credits on customer bills and a $1.6 million fine for violations of accident reporting requirements to be paid to the State of Connecticut’s general fund. PURA directed the $28.4 million to be returned to customers beginning on August 1, 2021 through July 31, 2022. The $28.4 million is the maximum statutory penalty amount under applicable Connecticut law in effect at the time of Tropical Storm Isaias, which is 2.5 percent of CL&P’s annual distribution revenues. Management has accrued the $30 million as the best estimate of the liability at this time. As of March 31, 2021, the total liability was recorded as a current regulatory liability on CL&P’s balance sheet and as a charge to Operations and Maintenance expense on the income statement. The after-tax earnings impact of this charge was $0.07 per share. We believe we have meritorious defenses and intend to vigorously defend CL&P’s position, but do not have a better estimate of CL&P’s ultimate liability at this time. Hearings will occur in this proceeding with a final decision currently anticipated on July 14, 2021. CL&P also intends to appeal the April 28, 2021 PURA decision.
The estimated annual impact of a 90 basis point ROE reduction at CL&P would be a decrease of approximately $31 million of future annual revenues and approximately $21 million of lower annual earnings. The ROE reduction would impact the income statement prospectively, once new rates are established. We cannot estimate the timing or final impact of any potential ROE change at this time.
CL&P Rate Adjustment Mechanisms (RAM) Filing: On July 31, 2020, PURA temporarily suspended its June 26, 2020 approval of certain delivery rate components effective July 1, 2020, and ordered CL&P to restore rates to those in effect as of June 30, 2020 in order to allow PURA time to reexamine the rates to ensure that CL&P is not over-collecting revenues in the short-term. Rates were adjusted effective August 1, 2020. On December 2, 2020, PURA issued a final decision in which it adjusted the timing of the annual rate adjustments for the Transmission Adjustment Clause (TAC) charge, the Non-Bypassable Federally Mandated Congestion Charge (NBFMCC), and the Electric System Improvements Tracker (ESI) so that these rates take effect on May 1st of each year, as opposed to the current process of adjusting rates each January 1 and July 1. The final decision also adjusted the timing of new rates for the Competitive Transition Assessment (CTA), System Benefits Charge (SBC) and Revenue Decoupling Mechanism (RDM) to May 1st of each year, as opposed to the current process of adjusting rates on January 1st (for the CTA and SBC) and July 1st (for the RDM), modified the calculation of carrying charges and changed the basis of recovery to rely on more actual versus forecasted information. On March 1, 2021, consistent with this new timing, CL&P filed for new rates for these rate components for effect on May 1, 2021. Additionally, CL&P proposed delaying and extending recovery of 2020 under-recoveries associated with these rates over 31 months beginning October 1, 2021. On April 28, 2021, PURA issued its interim decision on CL&P’s proposal that accepted the May 1, 2021 rate proposals for the CTA, TAC, ESI and RDM, with certain modifications. One of the modifications was that these rate changes would go into effect on June 1, 2021, as opposed to May 1, 2021. Further, PURA elected to keep in place the current rates for the NBFMCC and SBC until further review of the costs being recovered in those rates could be performed. Finally, PURA indicated it would further review CL&P’s proposal to begin recovery of 2020 under-recoveries associated with these rates on October 1, 2021, and what the period of recovery would be at a later time.
Massachusetts:
NSTAR Electric Distribution Rates: As part of an inflation-based mechanism, NSTAR Electric submitted its third annual Performance Based
Rate Adjustment filing on September 15, 2020 and the DPU approved a $29.9 million increase to base distribution rates on December 30, 2020 for effect on January 1, 2021.
New Hampshire:
PSNH Distribution Rates: In connection with the October 9, 2020 settlement agreement, PSNH is permitted step increases effective August 1, 2021 and August 1, 2022 to reflect plant additions in the calendar years 2020 and 2021, respectively. On May 3, 2021, PSNH filed the step adjustment for 2020 plant in service to recover a revenue requirement of $11.1 million, subject to reconciliation after completion of an audit, for rates effective August 1, 2021.
Legislative and Policy Matters
Massachusetts: On March 26, 2021, Governor Baker signed into law a climate change bill which permits electric or natural gas distribution companies to assist Massachusetts municipalities in responding to the risks of climate change by owning solar facilities equal to up to 10 percent of the total installed solar generating capacity in Massachusetts as of July 31, 2020. Such facilities may be paired with energy storage where feasible to do so. This law will allow each of Eversource’s Massachusetts operating companies to own up to approximately 280 MWs of solar generating facilities in addition to the 70 MWs previously constructed at NSTAR Electric.
Critical Accounting Policies
The preparation of financial statements in conformity with GAAP requires management to make estimates, assumptions and, at times, difficult, subjective or complex judgments. Changes in these estimates, assumptions and judgments, in and of themselves, could materially impact our financial position, results of operations or cash flows. Our management discusses with the Audit Committee of our Board of Trustees significant matters relating to critical accounting policies. Our critical accounting policies that we believed were the most critical in nature were reported in the Eversource 2020 Form 10-K. There have been no material changes with regard to these critical accounting policies.
Other Matters
Accounting Standards: For information regarding new accounting standards, see Note 1B, "Summary of Significant Accounting Policies – Accounting Standards," to the financial statements.
Contractual Obligations and Commercial Commitments: See Note 9B, "Commitments and Contingencies – Long-Term Contractual Arrangements," for discussion of material changes to contractual obligations since the Eversource 2020 Form 10-K.
Web Site: Additional financial information is available through our website at www.eversource.com. We make available through our website a link to the SEC's EDGAR website (http://www.sec.gov/edgar/searchedgar/companysearch.html), at which site Eversource's, CL&P's, NSTAR Electric's and PSNH's combined Annual Reports on Form 10-K, combined Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and any amendments to those reports may be reviewed. Information contained on the Company's website or that can be accessed through the website is not incorporated into and does not constitute a part of this combined Quarterly Report on Form 10-Q.
RESULTS OF OPERATIONS – EVERSOURCE ENERGY AND SUBSIDIARIES
The following provides the amounts and variances in operating revenues and expense line items in the statements of income for Eversource for the three months ended March 31, 2021 and 2020 included in this combined Quarterly Report on Form 10-Q:
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|
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|
|
|
|
For the Three Months Ended March 31,
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|
|
(Millions of Dollars)
|
2021
|
|
2020
|
|
Increase
|
|
|
|
|
|
|
|
Operating Revenues
|
$
|
2,825.8
|
|
|
$
|
2,373.7
|
|
|
$
|
452.1
|
|
|
|
|
|
|
|
|
Operating Expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
Purchased Power, Fuel and Transmission
|
998.5
|
|
|
876.5
|
|
|
122.0
|
|
|
|
|
|
|
|
|
Operations and Maintenance
|
465.5
|
|
|
342.1
|
|
|
123.4
|
|
|
|
|
|
|
|
|
Depreciation
|
270.7
|
|
|
236.2
|
|
|
34.5
|
|
|
|
|
|
|
|
|
Amortization
|
108.0
|
|
|
49.8
|
|
|
58.2
|
|
|
|
|
|
|
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Energy Efficiency Programs
|
188.1
|
|
|
148.4
|
|
|
39.7
|
|
|
|
|
|
|
|
|
Taxes Other Than Income Taxes
|
209.4
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|
|
181.5
|
|
|
27.9
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|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Operating Expenses
|
2,240.2
|
|
|
1,834.5
|
|
|
405.7
|
|
|
|
|
|
|
|
|
Operating Income
|
585.6
|
|
|
539.2
|
|
|
46.4
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|
|
|
|
|
|
|
|
Interest Expense
|
137.8
|
|
|
134.7
|
|
|
3.1
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|
|
|
|
|
|
|
|
Other Income, Net
|
34.2
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|
|
24.1
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|
|
10.1
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|
|
|
|
|
|
|
|
Income Before Income Tax Expense
|
482.0
|
|
|
428.6
|
|
|
53.4
|
|
|
|
|
|
|
|
|
Income Tax Expense
|
114.0
|
|
|
91.9
|
|
|
22.1
|
|
|
|
|
|
|
|
|
Net Income
|
368.0
|
|
|
336.7
|
|
|
31.3
|
|
|
|
|
|
|
|
|
Net Income Attributable to Noncontrolling Interests
|
1.9
|
|
|
1.9
|
|
|
—
|
|
|
|
|
|
|
|
|
Net Income Attributable to Common Shareholders
|
$
|
366.1
|
|
|
$
|
334.8
|
|
|
$
|
31.3
|
|
|
|
|
|
|
|
Eversource's consolidated financial information includes the results of the acquisition of the assets of Columbia Gas of Massachusetts (CMA) on October 9, 2020. The natural gas distribution assets acquired from CMA on October 9, 2020 were assigned to EGMA.
Operating Revenues
Sales Volumes: A summary of our retail electric GWh sales volumes, our firm natural gas MMcf sales volumes, and our water MG sales volumes, and percentage changes, is as follows:
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|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
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|
|
|
|
|
|
Electric
|
|
Firm Natural Gas
|
|
Water
|
|
|
Sales Volumes (GWh)
|
|
Percentage
Increase
|
|
Sales Volumes (MMcf)
|
|
Percentage
Increase
|
|
Sales Volumes (MG)
|
|
Percentage
(Decrease)/Increase
|
|
Three Months Ended March 31:
|
2021
|
|
2020
|
|
|
2021
|
|
2020
|
|
|
2021
|
|
2020
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
Traditional
|
1,951
|
|
|
1,906
|
|
|
2.4
|
%
|
|
—
|
|
|
—
|
|
|
—
|
%
|
|
258
|
|
|
434
|
|
|
(40.6)
|
%
|
|
Decoupled and Special Contracts (1)(2)
|
10,732
|
|
|
10,465
|
|
|
2.6
|
%
|
|
66,002
|
|
|
60,563
|
|
|
9.0
|
%
|
|
4,478
|
|
|
4,372
|
|
|
2.4
|
%
|
|
Total Sales Volumes
|
12,683
|
|
|
12,371
|
|
|
2.5
|
%
|
|
66,002
|
|
|
60,563
|
|
|
9.0
|
%
|
|
4,736
|
|
|
4,806
|
|
|
(1.5)
|
%
|
(1) Special contracts are unique to Yankee Gas natural gas distribution customers who take service under such an arrangement and generally specify the amount of distribution revenue to be paid to Yankee Gas regardless of the customers' usage.
(2) Eversource acquired CMA's natural gas distribution assets on October 9, 2020. Prior year sales volumes have been presented for comparative purposes.
Weather, fluctuations in energy supply costs, conservation measures (including utility-sponsored energy efficiency programs), and economic conditions affect customer energy usage and water consumption. Industrial sales volumes are less sensitive to temperature variations than residential and commercial sales volumes. In our service territories, weather impacts both electric and water sales volumes during the summer and both electric and natural gas sales volumes during the winter; however, natural gas sales volumes are more sensitive to temperature variations than electric sales volumes. Customer heating or cooling usage may not directly correlate with historical levels or with the level of degree-days that occur.
Fluctuations in retail electric sales volumes at PSNH impact earnings ("Traditional" in the table above). For CL&P, NSTAR Electric, NSTAR Gas, EGMA, Yankee Gas, and our Connecticut water distribution business, fluctuations in retail sales volumes do not materially impact earnings due to their respective regulatory commission-approved distribution revenue decoupling mechanisms ("Decoupled" in the table above). These distribution revenues are decoupled from their customer sales volumes, which breaks the relationship between sales volumes and revenues recognized.
Operating Revenues: Operating Revenues by segment increased/(decreased) for the three months ended March 31, 2021, as compared to the same period in 2020, as follows:
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|
|
|
|
|
|
(Millions of Dollars)
|
|
|
Three Months Ended
|
|
Electric Distribution
|
|
|
$
|
95.0
|
|
|
Natural Gas Distribution
|
|
|
331.9
|
|
|
Electric Transmission
|
|
|
30.9
|
|
|
Water Distribution
|
|
|
(0.5)
|
|
|
Other
|
|
|
48.4
|
|
|
Eliminations
|
|
|
(53.6)
|
|
|
Total Operating Revenues
|
|
|
$
|
452.1
|
|
Electric and Natural Gas (excluding EGMA) Distribution Revenues:
Base Distribution Revenues:
•Base electric distribution revenues increased $23.2 million for the three months ended March 31, 2021, as compared to the same period in 2020, due primarily to the impact of base distribution rate increases at CL&P effective May 1, 2020, at NSTAR Electric effective January 1, 2021, and at PSNH effective January 1, 2021.
•Base natural gas distribution revenues increased $29.0 million for the three months ended March 31, 2021, as compared to the same period in 2020, due primarily to base distribution rate increases at NSTAR Gas effective November 1, 2020, which includes a shift of recovery into base rates of certain GSEP investments, and at Yankee Gas effective January 1, 2021. Although new rates at Yankee Gas were implemented on March 1, 2021 to customers, the provisions of the base distribution rate increase were effective January 1, 2021.
Tracked Distribution Revenues: Tracked distribution revenues consist of certain costs that are recovered from customers in retail rates through regulatory commission-approved cost tracking mechanisms and therefore, recovery of these costs has no impact on earnings. Tracked revenues also include certain incentives earned, return on rate base and on capital tracking mechanisms, and carrying charges that are billed in rates to customers, which do impact earnings. Costs recovered through cost tracking mechanisms include, among others, energy supply and natural gas supply procurement and other energy-related costs, electric retail transmission charges, energy efficiency program costs, electric restructuring and stranded cost recovery revenues (including securitized RRB charges), and additionally for the Massachusetts utilities, pension and PBOP benefits and net metering for distributed generation. Tracked revenues also include wholesale market sales transactions, such as sales of energy and energy-related products into the ISO-NE wholesale electricity market, sales of natural gas to third party marketers, and the sale of RECs to various counterparties.
Tracked distribution revenues increased/(decreased) for the three months ended March 31, 2021, as compared to the same period in 2020, due primarily to the following:
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|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
(Millions of Dollars)
|
|
|
Electric Distribution
|
|
|
|
Natural Gas Distribution
|
|
Retail Tariff Tracked Revenues:
|
|
|
|
|
|
|
|
|
Energy supply procurement
|
|
|
$
|
(29.1)
|
|
|
|
|
$
|
29.1
|
|
|
Other distribution tracking mechanisms
|
|
|
45.4
|
|
|
|
|
16.7
|
|
|
Wholesale Market Sales Revenue
|
|
|
58.1
|
|
|
|
|
4.3
|
|
The decrease in energy supply procurement within electric distribution was driven primarily by lower average prices. The increase in energy supply procurement within natural gas distribution was driven by both higher average supply-related sales volumes and higher average prices.
The increase in the electric distribution wholesale market sales revenue was due primarily to higher average electricity market prices for wholesale sales at CL&P in the first quarter of 2021, as compared to the first quarter of 2020. ISO-NE average wholesale market prices increased approximately 125 percent comparatively, primarily driven by increased demand as a result of colder winter temperatures in 2021. Volumes sold into the market were primarily from the sale of output generated by the Millstone PPA entered into in 2019, as required by regulation.
EGMA Natural Gas Distribution Revenues: The addition of EGMA increased total operating revenues at the natural gas distribution segment by $252.5 million.
Electric Transmission Revenues: Electric transmission revenues increased $30.9 million for the three months ended March 31, 2021, as compared to the same period in 2020, due primarily to a higher transmission rate base as a result of our continued investment in our transmission infrastructure.
Other Revenues and Eliminations: Other revenues primarily include the revenues of Eversource's service company, most of which are eliminated in consolidation. Eliminations are also primarily related to the Eversource electric transmission revenues that are derived from ISO-NE regional transmission charges to the distribution businesses of CL&P, NSTAR Electric and PSNH that recover the costs of the wholesale transmission business.
Purchased Power, Fuel and Transmission expense includes costs associated with purchasing electricity and natural gas on behalf of our customers. These electric and natural gas supply costs are recovered from customers in rates through commission-approved cost tracking mechanisms, which have no impact on earnings (tracked costs). Purchased Power, Fuel and Transmission expense increased for the three months ended March 31, 2021, as compared to the same period in 2020, due primarily to the following:
|
|
|
|
|
|
|
|
|
|
(Millions of Dollars)
|
Three Months Ended
|
|
|
|
Purchased Power Costs
|
$
|
(18.3)
|
|
|
|
|
Natural Gas Costs
|
133.7
|
|
|
|
|
Transmission Costs
|
16.7
|
|
|
|
|
Eliminations
|
(10.1)
|
|
|
|
|
Total Purchased Power, Fuel and Transmission
|
$
|
122.0
|
|
|
|
The decrease in purchased power expense at the electric distribution business was driven primarily by lower average prices associated with the procurement of energy supply, partially offset by higher average supply-related sales volumes. The increase in costs at the natural gas distribution segment was due primarily to the addition of EGMA natural gas supply costs in the first quarter of 2021 as a result of the 2020 CMA asset acquisition of $95.1 million, and higher average supply-related sales volumes and higher average prices.
The increase in transmission costs was primarily the result of an increase in costs billed by ISO-NE that support regional grid investments and an increase in Local Network Service charges, which reflects the cost of transmission service provided by Eversource over our local transmission network. This was partially offset by a decrease in the retail transmission cost deferral, which reflects the actual costs of transmission service compared to estimated amounts billed to customers.
Operations and Maintenance expense includes tracked costs and costs that are part of base electric, natural gas and water distribution rates with changes impacting earnings (non-tracked costs). Operations and Maintenance expense increased for the three months ended March 31, 2021, as compared to the same period in 2020, due primarily to the following:
|
|
|
|
|
|
|
|
|
|
(Millions of Dollars)
|
|
|
Three Months Ended
|
|
Base Electric Distribution (Non-Tracked Costs):
|
|
|
|
|
CL&P estimated assessment by PURA for Tropical Storm Isaias response
|
|
|
$
|
30.0
|
|
|
Employee-related expenses, including labor and benefits
|
|
|
14.9
|
|
|
Storm restoration costs
|
|
|
9.4
|
|
|
Operations-related expenses, including vegetation management, vehicles, and outside services
|
|
|
8.0
|
|
|
Shared corporate costs (including computer software depreciation at Eversource Service)
|
|
|
5.3
|
|
|
Other non-tracked operations and maintenance
|
|
|
1.3
|
|
|
Total Base Electric Distribution (Non-Tracked Costs)
|
|
|
68.9
|
|
|
Tracked Costs (Electric Distribution and Electric Transmission)
|
|
|
8.1
|
|
|
Natural Gas Distribution:
|
|
|
|
|
Base (Non-Tracked) Costs, excluding EGMA
|
|
|
4.6
|
|
|
Tracked Costs, excluding EGMA
|
|
|
1.0
|
|
|
EGMA Operations and Maintenance
|
|
|
45.6
|
|
|
Total Natural Gas Distribution
|
|
|
51.2
|
|
|
Water Distribution
|
|
|
—
|
|
|
Parent and Other Companies and eliminations:
|
|
|
|
|
Eversource Parent and Other Companies - other operations and maintenance
|
|
|
38.9
|
|
|
Transition and Acquisition Costs
|
|
|
3.7
|
|
|
Eliminations
|
|
|
(47.4)
|
|
|
Total Operations and Maintenance
|
|
|
$
|
123.4
|
|
Depreciation expense increased for the three months ended March 31, 2021, as compared to the same period in 2020, due to higher utility plant in service balances, and due to the addition of EGMA utility plant balances as a result of the 2020 CMA asset acquisition of $11.7 million.
Amortization expense includes the deferral of energy supply, energy-related costs and other costs that are included in certain regulatory commission-approved cost tracking mechanisms. This deferral adjusts expense to match the corresponding revenues compared to the actual costs incurred. Energy supply and energy-related costs are recovered from customers in rates and have no impact on earnings. Amortization expense also includes the amortization of certain costs as those costs are collected in rates. Amortization increased for the three months ended March 31, 2021, as compared to the same period in 2020, due primarily to the deferral adjustment of energy supply, energy-related and other costs, which can fluctuate from period to period based on the timing of costs incurred and related rate changes to recover these costs.
Energy Efficiency Programs expense increased for the three months ended March 31, 2021, as compared to the same period in 2020, due primarily to the deferral adjustment at NSTAR Electric, PSNH and NSTAR Gas, which reflects the actual costs of energy efficiency programs compared to the amounts billed to customers, and the timing of the recovery of energy efficiency costs. The increase was also due to the addition of EGMA energy efficiency program costs as a result of the 2020 CMA asset acquisition of $29.7 million. The costs for the majority of the state energy policy initiatives and expanded energy efficiency programs are recovered from customers in rates and have no impact on earnings.
Taxes Other Than Income Taxes expense increased for the three months ended March 31, 2021, as compared to the same period in 2020, due primarily to an increase in property taxes as a result of higher utility plant balances and higher Connecticut gross earnings taxes and due to the addition of EGMA property taxes as a result of the 2020 CMA asset acquisition of $7.5 million.
Interest Expense increased for the three months ended March 31, 2021, as compared to the same period in 2020, due primarily to an increase in interest on long-term debt as a result of new debt issuances ($9.4 million) and a decrease in AFUDC related to debt funds and other capitalized interest ($0.6 million), partially offset by a decrease in interest on notes payable ($4.5 million) and a decrease in interest expense on regulatory deferrals ($2.3 million).
Other Income, Net increased for the three months ended March 31, 2021, as compared to the same period in 2020, due primarily to an increase related to pension, SERP and PBOP non-service income components ($7.4 million) and lower investment losses driven by market volatility ($3.7 million), partially offset by lower AFUDC related to equity funds ($1.4 million).
Income Tax Expense increased for the three months ended March 31, 2021, as compared to the same period in 2020, due primarily to higher pre-tax earnings ($11.2 million), higher state taxes ($7.3 million), lower share-based payment excess tax benefits ($2.3 million), an increase in a valuation allowance ($1.7 million), and an increase in items that impact our tax rate as a result of regulatory treatment (flow-through items) and permanent differences ($1.7 million), partially offset by an increase in amortization of EDIT ($2.1 million).
RESULTS OF OPERATIONS –
THE CONNECTICUT LIGHT AND POWER COMPANY
NSTAR ELECTRIC COMPANY AND SUBSIDIARY
PUBLIC SERVICE COMPANY OF NEW HAMPSHIRE AND SUBSIDIARIES
The following provides the amounts and variances in operating revenues and expense line items in the statements of income for CL&P, NSTAR Electric and PSNH for the three months ended March 31, 2021 and 2020 included in this combined Quarterly Report on Form 10-Q:
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Three Months Ended March 31,
|
|
|
CL&P
|
|
NSTAR Electric
|
|
PSNH
|
|
(Millions of Dollars)
|
2021
|
|
2020
|
|
Increase/
(Decrease)
|
|
2021
|
|
2020
|
|
Increase/
(Decrease)
|
|
2021
|
|
2020
|
|
Increase/
(Decrease)
|
|
Operating Revenues
|
$
|
987.3
|
|
|
$
|
899.7
|
|
|
$
|
87.6
|
|
|
$
|
737.0
|
|
|
$
|
733.8
|
|
|
$
|
3.2
|
|
|
$
|
293.4
|
|
|
$
|
276.4
|
|
|
$
|
17.0
|
|
|
Operating Expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Purchased Power and Transmission
|
373.3
|
|
|
374.7
|
|
|
(1.4)
|
|
|
226.5
|
|
|
242.4
|
|
|
(15.9)
|
|
|
91.6
|
|
|
94.1
|
|
|
(2.5)
|
|
|
Operations and Maintenance
|
175.4
|
|
|
135.6
|
|
|
39.8
|
|
|
143.2
|
|
|
122.3
|
|
|
20.9
|
|
|
54.7
|
|
|
47.1
|
|
|
7.6
|
|
|
Depreciation
|
83.4
|
|
|
78.4
|
|
|
5.0
|
|
|
82.8
|
|
|
78.3
|
|
|
4.5
|
|
|
29.5
|
|
|
24.3
|
|
|
5.2
|
|
|
Amortization of Regulatory Assets, Net
|
62.8
|
|
|
6.6
|
|
|
56.2
|
|
|
18.4
|
|
|
27.0
|
|
|
(8.6)
|
|
|
18.5
|
|
|
20.1
|
|
|
(1.6)
|
|
|
Energy Efficiency Programs
|
35.6
|
|
|
35.5
|
|
|
0.1
|
|
|
75.1
|
|
|
68.7
|
|
|
6.4
|
|
|
10.3
|
|
|
9.4
|
|
|
0.9
|
|
|
Taxes Other Than Income Taxes
|
91.4
|
|
|
83.0
|
|
|
8.4
|
|
|
54.6
|
|
|
48.8
|
|
|
5.8
|
|
|
22.2
|
|
|
19.8
|
|
|
2.4
|
|
|
Total Operating Expenses
|
821.9
|
|
|
713.8
|
|
|
108.1
|
|
|
600.6
|
|
|
587.5
|
|
|
13.1
|
|
|
226.8
|
|
|
214.8
|
|
|
12.0
|
|
|
Operating Income
|
165.4
|
|
|
185.9
|
|
|
(20.5)
|
|
|
136.4
|
|
|
146.3
|
|
|
(9.9)
|
|
|
66.6
|
|
|
61.6
|
|
|
5.0
|
|
|
Interest Expense
|
39.0
|
|
|
37.8
|
|
|
1.2
|
|
|
32.3
|
|
|
30.9
|
|
|
1.4
|
|
|
14.6
|
|
|
14.5
|
|
|
0.1
|
|
|
Other Income, Net
|
4.9
|
|
|
1.9
|
|
|
3.0
|
|
|
16.8
|
|
|
12.2
|
|
|
4.6
|
|
|
4.2
|
|
|
3.2
|
|
|
1.0
|
|
|
Income Before Income Tax Expense
|
131.3
|
|
|
150.0
|
|
|
(18.7)
|
|
|
120.9
|
|
|
127.6
|
|
|
(6.7)
|
|
|
56.2
|
|
|
50.3
|
|
|
5.9
|
|
|
Income Tax Expense
|
32.9
|
|
|
31.3
|
|
|
1.6
|
|
|
27.0
|
|
|
27.2
|
|
|
(0.2)
|
|
|
11.5
|
|
|
10.7
|
|
|
0.8
|
|
|
Net Income
|
$
|
98.4
|
|
|
$
|
118.7
|
|
|
$
|
(20.3)
|
|
|
$
|
93.9
|
|
|
$
|
100.4
|
|
|
$
|
(6.5)
|
|
|
$
|
44.7
|
|
|
$
|
39.6
|
|
|
$
|
5.1
|
|
Operating Revenues
Sales Volumes: A summary of our retail electric GWh sales volumes is as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Three Months Ended March 31,
|
|
|
2021
|
|
2020
|
|
Increase
|
|
Percentage Increase
|
|
CL&P
|
5,154
|
|
|
4,941
|
|
|
213
|
|
|
4.3
|
%
|
|
NSTAR Electric
|
5,578
|
|
|
5,524
|
|
|
54
|
|
|
1.0
|
%
|
|
PSNH
|
1,951
|
|
|
1,906
|
|
|
45
|
|
|
2.4
|
%
|
Fluctuations in retail electric sales volumes at PSNH impact earnings. For CL&P and NSTAR Electric, fluctuations in retail electric sales volumes do not impact earnings due to their respective regulatory commission-approved distribution revenue decoupling mechanisms.
Operating Revenues: Operating Revenues, which consist of base distribution revenues and tracked revenues further described below, increased $87.6 million at CL&P, $3.2 million at NSTAR Electric, and $17.0 million at PSNH, for the three months ended March 31, 2021, as compared to the same period in 2020.
Base Distribution Revenues:
•CL&P's distribution revenues increased $8.6 million due to the impact of its base distribution rate increase effective May 1, 2020.
•NSTAR Electric's distribution revenues increased $6.6 million due to the impact of its base distribution rate increase effective January 1, 2021.
•PSNH's distribution revenues increased $8.0 million due primarily to the impact of its base distribution rate increase effective January 1, 2021.
Tracked Revenues: Tracked distribution revenues consist of certain costs that are recovered from customers in retail rates through regulatory commission-approved cost tracking mechanisms and therefore, recovery of these costs has no impact on earnings. Tracked revenues also include certain incentives earned, return on rate base and on capital tracking mechanisms, and carrying charges that are billed in rates to customers, which do impact earnings. Costs recovered through cost tracking mechanisms include, among others, energy supply procurement and other energy-related costs, retail transmission charges, energy efficiency program costs, electric restructuring and stranded cost recovery revenues (including securitized RRB charges), and additionally for NSTAR Electric, pension and PBOP benefits and net metering for distributed generation. Tracked revenues also include wholesale market sales transactions, such as sales of energy and energy-related products into the ISO-NE wholesale electricity market and the sale of RECs to various counterparties.
Tracked revenues increased/(decreased) for the three months ended March 31, 2021, as compared to the same period in 2020, due primarily to the following:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Millions of Dollars)
|
CL&P
|
|
NSTAR Electric
|
|
PSNH
|
|
Retail Tariff Tracked Revenues:
|
|
|
|
|
|
|
Energy supply procurement
|
$
|
2.4
|
|
|
$
|
(20.0)
|
|
|
$
|
(11.5)
|
|
|
Other distribution tracking mechanisms
|
19.7
|
|
|
8.2
|
|
|
17.5
|
|
|
Wholesale Market Sales Revenue
|
45.0
|
|
|
10.0
|
|
|
3.1
|
|
The decrease in energy supply procurement at NSTAR Electric was driven by both lower average prices and lower average supply-related sales volumes. The decrease in energy supply procurement at PSNH was driven primarily by lower average prices, partially offset by higher average supply-related sales volumes.
The increase in the electric distribution wholesale market sales revenue at CL&P was due primarily to higher average electricity market prices for wholesale sales in the first quarter of 2021, as compared to the first quarter of 2020. ISO-NE average wholesale market prices increased approximately 125 percent comparatively, primarily driven by increased demand as a result of colder winter temperatures in 2021. Volumes sold into the market were primarily from the sale of output generated by the Millstone PPA entered into in 2019, as required by regulation.
Transmission Revenues: Transmission revenues increased $14.4 million at CL&P, $9.8 million at NSTAR Electric, and $6.7 million at PSNH for the three months ended March 31, 2021, as compared to the same period in 2020, due primarily to a higher transmission rate base as a result of our continued investment in our transmission infrastructure.
Eliminations: Eliminations are primarily related to the Eversource electric transmission revenues that are derived from ISO-NE regional transmission charges to the distribution businesses of CL&P, NSTAR Electric and PSNH that recover the costs of the wholesale transmission business. The impact of eliminations decreased revenues by $2.3 million at CL&P, $9.9 million at NSTAR Electric and $5.8 million at PSNH for the three months ended March 31, 2021, as compared to the same period in 2020.
Purchased Power and Transmission expense includes costs associated with purchasing electricity on behalf of CL&P, NSTAR Electric and PSNH's customers. These energy supply costs are recovered from customers in rates through commission-approved cost tracking mechanisms, which have no impact on earnings (tracked costs). Purchased Power and Transmission expense decreased for the three months ended March 31, 2021, as compared to the same period in 2020, due primarily to the following:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Millions of Dollars)
|
CL&P
|
|
NSTAR Electric
|
|
PSNH
|
|
Purchased Power Costs
|
$
|
(1.7)
|
|
|
$
|
(6.3)
|
|
|
$
|
(10.3)
|
|
|
Transmission Costs
|
2.8
|
|
|
0.3
|
|
|
13.6
|
|
|
Eliminations
|
(2.5)
|
|
|
(9.9)
|
|
|
(5.8)
|
|
|
Total Purchased Power and Transmission
|
$
|
(1.4)
|
|
|
$
|
(15.9)
|
|
|
$
|
(2.5)
|
|
Purchased Power Costs: Included in purchased power costs are the costs associated with providing electric generation service supply to all customers who have not migrated to third party suppliers and the cost of energy purchase contracts, as required by regulation.
•The decrease at CL&P and PSNH was due primarily to lower expense related to the procurement of energy supply resulting from lower average prices, partially offset by higher average supply-related sales volumes.
•The decrease at NSTAR Electric was due primarily to lower expense related to the procurement of energy supply resulting from lower average prices and lower average supply-related sales volumes.
Transmission Costs: Included in transmission costs are charges that recover the cost of transporting electricity over high-voltage lines from generation facilities to substations, including costs allocated by ISO-NE to maintain the wholesale electric market.
•The increase in transmission costs at CL&P was due primarily to an increase in Local Network Service charges, which reflects the cost of transmission service provided by Eversource over our local transmission network, and an increase in costs billed by ISO-NE that support regional grid investments. This was partially offset by a decrease in the retail transmission cost deferral, which reflects the actual costs of transmission service compared to estimated amounts billed to customers.
•The increase in transmission costs at NSTAR Electric was primarily the result of an increase in costs billed by ISO-NE, partially offset by a decrease in the retail transmission cost deferral.
•The increase in transmission costs at PSNH was primarily the result of an increase in the retail transmission cost deferral and an increase in costs billed by ISO-NE.
Operations and Maintenance expense includes tracked costs and costs that are part of base distribution rates with changes impacting earnings (non-tracked costs). Operations and Maintenance expense increased for the three months ended March 31, 2021, as compared to the same period in 2020, due primarily to the following:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Millions of Dollars)
|
CL&P
|
|
NSTAR Electric
|
|
PSNH
|
|
Base Electric Distribution (Non-Tracked Costs):
|
|
|
|
|
|
|
CL&P estimated assessment by PURA for Tropical Storm Isaias response
|
$
|
30.0
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
Employee-related expenses, including labor and benefits
|
3.2
|
|
|
4.3
|
|
|
(1.3)
|
|
|
Storm restoration costs
|
2.0
|
|
|
5.8
|
|
|
1.6
|
|
|
Operations-related expenses, including vegetation management, vehicles, and outside services
|
0.8
|
|
|
3.4
|
|
|
3.8
|
|
|
Shared corporate costs (including computer software depreciation at Eversource Service)
|
1.6
|
|
|
3.2
|
|
|
0.5
|
|
|
Other non-tracked operations and maintenance
|
0.2
|
|
|
(0.5)
|
|
|
1.6
|
|
|
Total Base Electric Distribution (Non-Tracked Costs)
|
37.8
|
|
|
16.2
|
|
|
6.2
|
|
|
Tracked Costs:
|
|
|
|
|
|
|
Transmission expenses
|
1.4
|
|
|
—
|
|
|
1.6
|
|
|
Other tracked operations and maintenance
|
0.6
|
|
|
4.7
|
|
|
(0.2)
|
|
|
Total Tracked Costs
|
2.0
|
|
|
4.7
|
|
|
1.4
|
|
|
Total Operations and Maintenance
|
$
|
39.8
|
|
|
$
|
20.9
|
|
|
$
|
7.6
|
|
Depreciation increased for the three months ended March 31, 2021, as compared to the same period in 2020, for CL&P, NSTAR Electric and PSNH due to higher net plant in service balances.
Amortization of Regulatory Assets, Net expense includes the deferral of energy supply, energy-related costs and other costs that are included in certain regulatory-approved cost tracking mechanisms. This deferral adjusts expense to match the corresponding revenues compared to the actual costs incurred. Energy supply and energy-related costs are recovered from customers in rates and have no impact on earnings. Amortization expense also includes the amortization of certain costs as those costs are collected in rates. Amortization of Regulatory Assets, Net increased/decreased for the three months ended March 31, 2021, as compared to the same period in 2020, due primarily to the following:
•The increase at CL&P was due primarily to the deferral adjustment of energy supply, energy-related and other tracked costs, which can fluctuate from period to period based on the timing of costs incurred and related rate changes to recover these costs.
•The decrease at NSTAR Electric was due to the deferral adjustment of energy supply, energy-related costs and other tracked costs, which can fluctuate from period to period based on the timing of costs incurred and related rate changes to recover these costs.
•The decrease at PSNH was due to the impact in 2021 of a new tracker mechanism at PSNH approved as part of the 2020 rate settlement agreement, partially offset by the deferral adjustment of other tracked costs, which can fluctuate from period to period based on the timing of costs incurred and related rate changes to recover these costs.
Energy Efficiency Programs expense includes costs of various state energy policy initiatives and expanded energy efficiency programs that are recovered from customers in rates, most of which have no impact on earnings. Energy Efficiency Programs expense increased for the three months ended March 31, 2021, as compared to the same period in 2020, due primarily to the following:
•The increases at NSTAR Electric and PSNH were due to the deferral adjustment, which reflects actual costs of energy efficiency programs compared to the estimated amounts billed to customers, and the timing of the recovery of energy efficiency costs.
Taxes Other Than Income Taxes increased for the three months ended March 31, 2021, as compared to the same period in 2020, due primarily to the following:
•The increase at CL&P was related to higher property taxes as a result of a higher utility plant balance and higher gross earnings taxes.
•The increases at NSTAR Electric and PSNH were due to higher property taxes as a result of higher utility plant balances.
Interest Expense increased for the three months ended March 31, 2021, as compared to the same period in 2020, due primarily to the following:
•The increase at CL&P was due to a decrease in AFUDC related to debt funds ($1.2 million) and higher interest on long-term debt ($0.8 million), partially offset by a decrease in interest expense on regulatory deferrals ($0.6 million).
•The increase at NSTAR Electric was due to higher interest on long-term debt ($2.9 million), partially offset by a decrease in interest expense on regulatory deferrals ($1.0 million).
•The increase at PSNH was due to a decrease in AFUDC related to debt funds ($0.5 million) and higher interest on long-term debt ($0.5 million), partially offset by a decrease in interest expense on regulatory deferrals ($0.8 million).
Other Income, Net increased for the three months ended March 31, 2021, as compared to the same period in 2020, due primarily to the following:
•The increase at CL&P was due primarily to investment income in 2021 compared to investment losses in 2020 driven by market volatility ($3.8 million) and an increase related to pension, SERP and PBOP non-service income components ($1.6 million), partially offset by a decrease in AFUDC related to equity funds ($2.2 million).
•The increase at NSTAR Electric was due primarily to an increase related to pension, SERP and PBOP non-service income components ($2.2 million), investment income in 2021 compared to investment losses in 2020 driven by market volatility ($1.5 million) and an increase in AFUDC related to equity funds ($1.2 million).
•The increase at PSNH was due primarily to an increase related to pension, SERP and PBOP non-service income components ($0.8 million), investment income in 2021 compared to investment losses in 2020 driven by market volatility ($0.6 million) and higher interest income ($0.4 million), partially offset by a decrease in AFUDC related to equity funds ($0.9 million).
Income Tax Expense increased/decreased for the three months ended March 31, 2021, as compared to the same period in 2020, due primarily to the following:
•The increase at CL&P was due primarily to higher state taxes ($1.8 million), lower share-based payment excess tax benefits ($0.8 million), an increase in a valuation allowance ($1.7 million), and an increase in items that impact our tax rate as a result of regulatory treatment (flow-through items) and permanent differences ($1.2 million), partially offset by lower pre-tax earnings ($3.9 million).
•The decrease at NSTAR Electric was due primarily to lower pre-tax earnings ($1.4 million) and lower state taxes ($0.6 million), partially offset by an increase in items that impact our tax rate as a result of regulatory treatment (flow-through items) and permanent differences ($0.9 million), and lower share-based payment excess tax benefits ($0.9 million).
•The increase at PSNH was due primarily to higher pre-tax earnings ($1.2 million) and lower share-based payment excess tax benefits ($0.2 million), partially offset by lower state taxes ($0.1 million) and a decrease in items that impact our tax rate as a result of regulatory treatment (flow-through items) and permanent differences ($0.5 million).
EARNINGS SUMMARY
CL&P's earnings decreased $20.3 million for the three months ended March 31, 2021, as compared to the same period in 2020, due primarily to an after-tax charge of $0.07 per share for the accrual of a $30 million estimated assessment by PURA as a result of CL&P’s preparation for and response to Tropical Storm Isaias in August 2020. Earnings were also unfavorably impacted by higher operations and maintenance expense, higher depreciation expense, and higher property tax expense. The earnings decrease was partially offset by the base distribution rate increase effective May 1, 2020, higher earnings from its capital tracker mechanism due to increased electric system improvements, and an increase in transmission earnings driven by a higher transmission rate base.
NSTAR Electric's earnings decreased $6.5 million for the three months ended March 31, 2021, as compared to the same period in 2020, due primarily to higher operations and maintenance expense driven by higher storm restoration costs, higher employee-related expenses due to timing of capital work (primarily related to meter installations) delayed as a result of increased storms and the impact of COVID-19, and higher operations-related expenses. Earnings were also unfavorably impacted by higher property tax expense, and higher depreciation expense. The earnings decrease was partially offset by the base distribution rate increase effective January 1, 2021, and an increase in transmission earnings driven by a higher transmission rate base.
PSNH's earnings increased $5.1 million for the three months ended March 31, 2021, as compared to the same period in 2020, due primarily to the base distribution rate increase effective January 1, 2021, the impact in 2021 of a new tracker mechanism at PSNH approved as part of the 2020 rate settlement agreement, and an increase in transmission earnings driven by a higher transmission rate base. The earnings increase was partially offset by higher operations and maintenance expense, higher depreciation expense and higher property tax expense.
LIQUIDITY
Cash Flows: CL&P had cash flows provided by operating activities of $156.2 million for the three months ended March 31, 2021, as compared to $132.2 million in the same period of 2020. The increase in operating cash flows was due primarily to the timing of collections for regulatory tracking mechanisms and the timing of cash payments made on our accounts payable. Partially offsetting these favorable impacts were cash payments made in the first quarter of 2021 for storm restoration costs of approximately $44 million related to Tropical Storm Isaias, the timing of cash collections on our accounts receivable, and pension contributions of $18.9 million made in the first quarter of 2021.
NSTAR Electric had cash flows provided by operating activities of $172.6 million for the three months ended March 31, 2021, as compared to $61.7 million in the same period of 2020. The increase in operating cash flows was due primarily to the timing of cash collections on our accounts receivable, an increase of $46.4 million in income tax refunds received in the first quarter of 2021, as compared to the same period in 2020, the timing of collections for regulatory tracking mechanisms, and the timing of other working capital items, including cash payments on our accounts payable.
PSNH had cash flows provided by operating activities of $74.9 million for the three months ended March 31, 2021, as compared to $58.5 million in the same period of 2020. The increase in operating cash flows was due primarily to income tax refunds received of $8.3 million in the first quarter of 2021, compared to income tax payments of $1.2 million in the same period of 2020, the timing of collections for regulatory tracking mechanisms, and the timing of other working capital items. Partially offsetting these favorable impacts were the timing of cash payments on our accounts payable.
For further information on CL&P's, NSTAR Electric's and PSNH's liquidity and capital resources, see "Liquidity" and "Business Development and Capital Expenditures" included in this Management's Discussion and Analysis of Financial Condition and Results of Operations.