ML19350C790
| ML19350C790 | |
| Person / Time | |
|---|---|
| Site: | Millstone, Seabrook, 05000496, 05000497  |
| Issue date: | 03/16/1981 |
| From: | Ellis W CONNECTICUT LIGHT & POWER CO. (SUBS. OF NORTHEAST |
| To: | |
| Shared Package | |
| ML19350C763 | List: |
| References | |
| NUDOCS 8104060702 | |
| Download: ML19350C790 (31) | |
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ANNUAL i
REPORT 1980 l
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i NORTHEAST UTILITIES THE CONNECTICUT LIGHT AND POWER COMPANY
- 1 6 4 0 6 o 7 o 'A
DIRECTORS WILLI AM B. ELLIS LEL AN F. SILLIN. JR President and Chief Operating Officer, Chartman of the Board and Chief Executive Off tcer.
Northeast Util.tres Northeast Utihties WALTER F. FEE PETER M STERN Executive Vice President.
Vice Prestdent, Northeast titihties Service Company Northeast Utihties Service Company DON ALD C. SWITZER E. JAMES FERLAND Vice Chair nan.
Vice President and Chief Financial Officer.
Northeast Utihtics Northeast Utihties WALTER F. TORR ANCE.JR LEON E. MAGLATHLIN. JR.
Senior Vice President. General Counsel and Senior Vice President.
Assistant Secretary.
Northeast Utihties Service Company Northeast Utilities Service Company HERBERT W. SEARS ANTHONY E. WALLACE*
Senior Vice President.
Executive Vice President.
Northeast Utihties Service Ccmpenv Northeast Utihties Service Company OFFICERS LEL AN F. SILLIN.JR.
RAYMOND E. DONOVAN Chairman and Chief Executive Officer Vice President FRANCIS L. KINNEY DONALD C. SWITZER ice President Vice Chairman JACK R. McCLENDON WILLI AM B. ELLIS Vice President and General Manager-Gas President and Chief Operating Officer LEONARD A. O'CONNOR WALTER F. FEE Vice President and Treasurer Executive Vice President WALTER T. SCHULTHEIS Vice President E. J AMES FERLAND Executive Vice President and PETER M. STERN Chief FinancialOfficer Vice President ANTHONY E.WALLACE*
CHARLES S. BEACH Executive Vice President Regional Vice President-Western WILLIAM G COUNSIL W. LINDSEY BOOTH Senior Vice President Regional Vice President-Eastern LEON E. MAGLATHLIN.JR.
THWAS E BRENNg Regional Vice President-Central Senior Vice President EMil B. GROSS HERBERT W. SEARS Regional Vice President-Southern Senior Vice President ALBERT E. MAGEE WALTER F. TORRANCE,JR.
Regional Vice President-Northern Senior Vice President. General Counsel and ROBERT W. BISHOP Assistant Secretary Secretary PHILIP T. ASHTON ROY M. SEGER Vice President Assistant Secretary WARREN F, BRECHT ROBERT C. ARONSON Vice President and Controller Assistant Treasurer CARROLL A.CAFFREY MICHAEL K. UPPER
. Vice President Assistant Treasurer
- Retired effective January 1,1981 i:
L.
The Connecticut Light and Power Company March 16,1981 To the Stockholders:
. The Annual Report of Northeast Utilities, which provides coverage of the entire Northeast Utilities system, including The Connecticut Light and Power Company, has been mailed to all CL&P preferred stockholders. This report is brief for that reason.
The financial statements and statistical data included in this report show the results of operations of the Company in 1980.
As you will note, the Company's earnings showed an increase during 1980, but remained significantly below the rate of return found necessary by the Connecticut Department of Public Utility Control (DPUC). Additional revenues generated by a $81.6 million annual rate increase, approved by the DPUC in October of 1980, were partially offset by the effects of rapid inflation, the portion of higher fossil fuel costs not recoverable through the fuel adjustment clause, nuclear operation and maintenance costs
' associated with directives issued by the Nuclear Regulatory Commission as well as continuing high short-term interest rates. The Company expects to file for increased electric and gas rates by mid-1981.
~ Later this year, the Company plans to sell additional First and Refunding Mortgage Bonds and preferred stock.The timing and amounts of these issues will be determined at a later date.
Sincerely,
,k-President
- Chairman y.
The Connecticut Light and Power Company MANAGEMENT DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION Introduction This section is management's assessment of the Company's operating results and their relationship to financial trends. This discussion also assesses the economic condition of the Company by focusing on four particular areas of significance:
- Results of Operations
- Construction Program
- Financing
- Financial Condition Our financial statements should be read with the understanding that, as a utility, our construction program and related financing requirements arise from our responsibility to provide cost-effective, reliable service to our customers. Also, regulatory agencies may create requirements in the application of accounting procedures for a regulated utility which are not applicable to nonregulated companies. Among the differences are requirements affecting when and how certain revenue and expense items are recognized.
- R:sults of Operations The following is a summary of year-to-year changes in the principalitems affecting earnings:
Increase or(Decrease) 1980 vs.1979 1979 vs.1978 Amount Percent Amount Percent (Dotar Amounts m Thousands)
Operating revenues
$145.716 24.6 585,788 17.0 Cost of fuel and purchased power 95,222 43.9 55.417 34.3 Other operation expenses 25.107 20.6 21,187 21.1 Maintenance 2,673 62 6,139 16C Taxes other than income taxes 11.278 22.3 5.560 12.3 A!Iowance for funds used during construction 5.922 28.8 (534)
(2.5)
' Interest and other charges (excluding allowance for funds used during construction) 12,457 19.3 3,302 54 Net income 5.395 93 (3.628)
(5 9) 2
The recovery of fuel costs comprises an ncreasingly large percentage of total revenues. Fuel recovery revenues increased $88 million in 1980 and $36 million in 1979. Fuel cost recovenes have increased because of continued oil and gas price escalation. In 1979, the 4
^
average cost of oil to the NU system was approximately
$18 per barrel. In 1980, average oil costs rose to $27 per barrel and it is anticipated these costs will continue to escalate in the future. The components of the change in revenues in the past two years are as follows:
~
1980 1979 (DoRat Amourts siihousandsi Fuelcost recoveries
$ 88,181 61%
$35.847 42%
Rateincreases 51,421 35 21,567 25 Salesincreases -
9.363 6
18.788 22 Miscellaneous
' (3.249)
(2) 9.586 11 Total Revenue increase
$145.716 100 %
$85.788 100 %
~
Rate relief granted to CL&P in the latter part of 1980 will furt' er increase 1981 revenues by an estimated $84 h
million.
-Sales contributed little to the overall revenue increases, and are not expected to contribute significantly in the near future. Electric sales increased 0.4 percent in 1980 and 3.0 percent in 1979. Gas sales increased 8.5 percent in 1980 and 9.9 percent in 1979.
Higher _ fossil fuel prices are substantially recovered from custo'mers. Other cost increases, caused by high inflation, largely those for labor and materials, have a greater impact on earnings since they are not recovered from customers in a timely manner. Nuclear generating costs have also risen as a result of directives issued by
~ the Nuc! ear Regulatory Commission. Desplite increased operating costs, tN +1ea'r units continue to offer a -
~
substantial savings oyur oil-fired units. For an analysis of
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L the impact of inflation on the Company see Note 13,
" Impact of Changing Prices", of Notes to the Financial Statements.
The Connecticut gross receipts tax on higher revenues Jincreased in 1980 and 1979. In Connecticut,5 percent of -
~
all utility revenues is paid to the state as a gross receipts -
tax. Local property; taxes have also risen in each of these.
two years..
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1 Allowance for funds'used during construction j.(AFUDC),'which. represents the estimated cost of capital a
c
- 3
~
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invested in construction work in progress (CWIP),
increased $5.9 million in 1980. This increase is due to the combined effect of several factors. First, the average i
balance of CWIP increased from $306 million in 1979 to S362 million in 1980, due primarily to the Millstone ill nuclear unit construction project. In addition, during the year 1980, the Company adopted a number of accounting changes for AFUDC, including the net-of-income tax method,the practice of compounding AFUDC semiannually and the use of the rate calculated in accordance with Federal Energy Regulatory Commission guidelines. The net result of these accounting changes was that net :ncome for 1980 was not materially affected.
' The adoption of net-of-income tax accounting for AFUDC produced substantial variations among accounts
- used to report income tax expense. This change was largely responsible for the S11.1 million increase in taxes applicable to operating income. See Note 5, " income Tax
- Expense", of Notes to the Financial Statements for the detail of income tax provisions.
Interest expense increased $12.5 million (19.3 percent) in 1980 and $3.3_million (5.4 percent) in 1979. The 1980 t
increase was.due principally to higher short-term i
borrowings although higher interest rates also contributed
- to the increase. In 1979, higher short-term borrowings L and higher interest ' rates contributed about equally to the increase in interest expense.
e
- danstruction Program Millstone ill continues to be the most significant item in
~ the construction program. Expenditures for this unit -
comprise almost 80 percent of total planned expenditures (for new production facilities. Other generating facilities in
~
the construction program include the Company's 4.1 percent interest in the nuclear generating units under
- co'nstruction in Seabrook, New Hampshire. In addition to
- production f acilities, over $292 million will be spent in the L next five, years on such projects ~as transmission and -
~ distribution lin'es, gas lines'and'other facilities necessary ito maintain reliable service.1
~
Construction expenditures _(including AFUDC but '
7
.# excluding nuclear fuel)in the' peribd 198'1 through 19851 L
1 are es imated as folidws:
e s
'b s
=
z '
[1 E
s
Electric Generating Facihties Other Total i%sa.es e cows) 1981
$150.871
$56.866 S207.737 1982 144.997 59,275 204 272
]
1983 137.432 51,407 188,839 1984 141.526 58.006 199.532 1985 115.753 66.687 182.440 During 1980, a new cost estimate was completed for Millstone Ill. The figures above reflect that revision which
' increased the cost of the Company's ownership share
~
from $713 million to $896 million. These figures also include a construction cost estimate for the Seabrook units as of September 1980 which is presently being reevaluated. Construction expenditure estimates reflect the cancellation in December 1980 of plans for a two-unit
. nuclear project in Montague, Massachusetts, and the Company's sale in January 1981 of a 10-MWinterest (0.4 percent)in Seabrook to a Massachusetts utility.
in January 1981, the NU system offered to sell to other utilities a minimum of an 8.7 percent ownership interest (approximately 100 MWs)in Millstone 111 and invited ex'pressions of. interest in amounts in excess of 100 MWs.
A determination of whether more than 100 MWs will be sold is to be made following receipt of responses to the offer and will be based on the then financial outlook of each of the system companies and the amount of interest expressed by the utilities. All sales are subject to federal and state regulatory approvals _and it is unlikely that any sales could be completed by the end of 1981.
The Company estimates that its expenditures for nuclear fuel (including AFUDC and nuclear fuel for the Seabrook units) will be $55 million for the period 1981-1985; Fuel for Millstone I and llis financed by Northeast Nuclear Energy. Company (NNECO). The investment in nuclear fuellocated in the Millstone I and 11 reactors is
- financed by NNECO through capital contributions or -
.-advances from Northeast Utilities and the issuance of
- secured notes and bank borrowings. Up to $50 million of -
' investment in nuclear fuelin process for Millstone I and li may be financed by NNECO pursuant to a fuel supply
' trust agreement, under which the trust owns and 'inances'
. the nuclear fuel betore it is placed in the reactor, Tlie trust
~
obtains funds by the sale of commercial paper and/or 2
.5.
bank loans. NNECO is obligated to purchase the nuclear fuel from the trust when specific events nccur. The Company, The Hartford Electric Light Company (HELCO) and Western Massachusetts Electric Company (WMECO) presently contemplate entering into a fuel supoly trust agreement to finance their share of the nuclear fuel costs for Millstone Ill. Nuclear fuel costs are expected to be recovered through rates as the fuelis consumed in the reactor.
As part of its program to reduce dependence on oil, the Company proposes to convert up to four oil-fired units to coal. Fullimplementation of this plan is highly dependent upon the receipt of environmental approvals and an improvement in the Company's financial condition, since the cost of converting all four units is estimated at $126 million, assuming no flue gas desulfurization equipment is necessary. Because of uncertainties about implementation of the plan, the construction program does not include any amounts for coal conversion.
1 iThe N'U system is currently planning to convert Holyoke Water Power Company's (HWP) Mt. Tom Power Plant if the Company. HELCO, WMECO and HWP receive
. necessary approval to finance the estimated S35 million r
cost of conversion (of which approximately S22 million will be borne by the' system and the balance will be borne by another utility syster.; which shares the output of Mt.
Tom Power. Plant) through the use of an oil conservation adjustment Such an adjustment would permit the system to retain '
urds of the fuel cost savings resulting from the c a son until the' full cost of the conversion is paid.
Coal burning is expected to begin about one year after necessaryjate and environmental approvals are eceived subject to the system having a satisfactory F
r
' financial condition and the receipt of necessary regulatory approvalsa
! Fin;ncing _
- .in addition to the construction program, the Company's -
1finaricing requirements during the period 1981-t985
= include. $168 million to meet long-term debt maturities :
and sinking-fund requirements of senior securities. Of this:
-: amount, S124 million will have to be refinanced in 1982.
iThd Company finances current construction 1>
f i expenditures and other requirements in excess of y
(
4 Mternally generated funds through short-term borrowings,
- 16
= _
first mortgage bonds, preferred stock. leasing equipment.
and capital contributions from the parent company.
Extemal funds are expected to provide at least natt of the Company's 1981 financing requirements.The sale of 25-to-30-year mortgage bond securities and preferred stock without sinking funds may become increasingly difficult as indicated by recent trends in the capital markets.
In addition to their customary short-term borrowing arrangements, the Company, HELCO and WMECO cntered into a revohring eredit/ term loan agreement with a group of banks in August 1980.This agreement provides additionallines of short term credit and should allow greater flexibility to the financing program. The aggregate credit limit for all three companies under the agreement is $140 million. As of December 31,1980.the Company had borrowed S27.5 million under the terms of the agreement.
The parent company made a capital contribution of $40 million to the Company in 1980 and an adoltianal capital contributiori of $30 million in 1981 is anticipated.These contributions are necessary to support the Company's
- equity ratios. A sale of common shares planned for 1981
- by t e parent company is expected to supply the funds for thes-contributions.
As of December 31,1980, the Company's short-term debt totaled $148 million. This represented 9.6 percent of capitalization, which was above the industry average, The Company's 1981 financing program is aimed at a Lsubstantial reduction of short-term debt by year-end.
1981.
The Company's ability to maintain its construction program is dependent on its obtaining timely and '
adequate rate relief and financing on satisfactory terms.
@nancial Condition.
- The Company sought rate relief in May 1980 of $111 A -
i million~ and,in October, the Department of Public Uti!ity Control (DPUC) authorized relief of.581.6 million;Recent
- rate decisions in Connecticut indicate an improving.
- regulatory awareness of the Company's needs. The ;
positive features of the October decision we're the -
acceptance of net-of-income tax accounting for AFUDC.
f l normalization lof certain book versus tax timing -
0_x L differences and recognition that inflation has an impact
~
^
~ on the Company's ability to earn its allowed rate of return.-
~
s7
Despite these positive developments, the revenues allowed have been inadequate to enable the Company to achieve its financial goals.
The rate increase granted in 1980 is expected te increase earnings coverage ratios enough in 1981 to substantially support the Company's planned financing program. However, these coverage ratios may be adversely affected by several factors over which the Company has little control. Unexpected operation and maintenance expenditures could adversely affect earnings and coverages. Such expenditures may be largely outside of the Company's direct control, since they could be called for to maintain reliable service and meet regulatory requirements.
increased financin.) costs for inventories and working capital requirements nave been adversely impacting the Company's liquidity. Rapidly rising oil prices have significantly increased the funds required to maintain normal fossil fuel inventory levels over the past '=!c years.
'In Connecticut, substantially all of the fossil fual costs which are above those established in base rates and are not recovered through energy adjustment clauses are deferred until recovery is permitted by the DPUC. The amount of fossil fuel costs deferred depends on both the price and the quantity of fuel consumed to meet energy requirements. Oil consumption is affected by the performance of the nuclear units. Low performance of the nuclear generating plants increases oil consumption and the use of replacement power. As a consequence,there iis an increased need for cash to finance these higher costs. In' addition, Connecticut law prohibits inclusion in
- fuel adjustment charpes of the 5 percent gross receipts tax resulting in less than full recovery of the increased cost of fossil f 9el. For the year ended December 31,1980, this'unrecovered sum amounted to $3.2 million.
Since August 1,1979, the Company's' retail rate schedule h as included a generation utilization adjustment clause (GL AC). For the twelve months ended July 31, 1980, because the nuclear units operated at more than a 70 percent capacity factor, customers were entitled to a credit of $2.4 million which is being refunded over the twelve month period commencing September 1980. For
' the period August 1 through December 31,1980, since
- the nuclear units operated at less than a 70 percent v
--8 W
capacity factor, the operation of the clause has resulted in the deferral of $14.9 million. Assuming the nuclear plants achieve no more than a 70 percent capacity factor for the remainder of the twelve month period ending July 31,1981, any deferred balance will be collected from customers over the twelve month period commencing September 1981. While this is the effect of the GUAC,it should be noted that, at current oil costs, the nuclear units are beneficial to consumers who' ;aey operate at a composite capacity factor of only 20 percent.
AFUDC has become a higher percentage of net income throughout the electric utility industry. For the Company, this percentage has increased from 45.1 percent in 1978 to 47.7 percent in 1979 and 1o 54.5 percent in 1980. In 1986, when Millstone 111 is removed from construction work in progress and placed in rate base, the AFUDC as a percentage of net income should be reduced.
The Company's required expenditures for construction, nuclear fuel, and maturities and sinking-fund redemptions of outstanding securities present the Company with unprecedented needs for capital at a time when inadequate rate relief, low earnings coverages and extremely difficult securities markets all limit the ability of
~
the Com'pany to fund its short-term borrowings in an orderly and timely way. Further, constraints on the Company's short-term borrowing capabilities could limit
- access to such funds. Moreover, rapidly rising fuel costs and increased financing costs for working capital requirements could further reduce the Company's internal generation of funds below levels sufficient to support external financing needs. Thus, many f actors, both internal and external to the Company, affect its ability to meet cash requirements. However, the most important variable continues to be adequate and timely
- rate relief. Rate increase applications are expected to be filed ir. Connecticut by the Company and HELCO by mid-1981. Absent adequate rate relief, the companies may be forced to make further deferrals or abandonments of proposed project as well as to further reduce their
. ownership interest in Millstone Ill.
9:
- Tha Connecticut Light and Power Company STATEMENTS OF INCOME
- For the Years Ended Jecember 31, 1980 1979 1978 gwsaws o oocam Oporating Ravenues (Note 2)
$737,342
$591.626
$505.838
. Operating Expenses:
i Operation -
Fuel 221,659 135.515 106,700 Purchase and interchange power, nel 17,054 26.780 7.722 Gas purchased for resale 73,323 54.519 46.975
. Other.
146,830 121,723 100.536 Maintenance 45,836 43.163 17.024 Depreciation 52,284 50.925 49.906 Federal and state income taxes (Note 5) 20,578 9.480 13.305 Taxes other than income taxes 61,947 50.669 45.109 Total operating expenses 639,511 492.774 407.277
. Operating income 97,831 98.852 98.561 Other income:
Allo'wance for equity funds used during construction 14,383 9.542 10,473
' Equity in earnings of regional nuclear generating companies 1,962 2.878 2,097 Other, not 925 (737) 342 income taxes applicable to other income-credit (Note 5) 12.e44 639 424
~ Not other income -
30.114 12.322 13.336
. Income before interest charges 127,945 111.174 111.897
- Interest Charges:. '
- : Interest on long-term debt -
59,541 57,099 56,319 Other interest 17,294 7,279 4.757
' Allowance for borrowed funds used during construction,.
L net of the income tax effect of $12,258.000 in 1980 -
(12,132)
'(11.051)
(19.654)
Total interest charges 64.703 53.327 50.422 1 Net income '
. $ 63,242 S 57.8471 S 61.475 e,
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8
< The accompanying' notes are an integral part of these financial statements.
{
l f
11 0 :
v~
3 f
The Connecticut Light and Power Company STATEMENTS CF SZURCES CF FUNDS FOR CROSS PROPERTY ADDITIONS For the Years Ended December 31.
1980 1979 1978
-(Thousae.cs o' oottarst Funds Generated From Operations Net income -
$ 63,242 5 57,847 5 61.475 Principainoncashitems:
Depreciation 52,284 50,925 49,906 Deferred income taxes, nel 12.310 6,004 9.557 Amortization of deferred charges and other noncashitems 1,199 2,544 3,476 Amortization of energy adjustment clauses 2,866 2.553 1,413 Allowance for equity funds used during construction (14,383)
(9.542)
(10,473)
Total funds from operations 117,518 110,331 115.354 Less - Cash dividends paid on:
Common stock 40,279 33,179 34,630 Preferred stock 14,580 14.645 14.644 Net funds generated from operations 62,659 62.507 66.080 Funds Obtained From Financing Proceeds from issuance of long-term debt 63,565 39,755 Incrnse in short-term debt 60,040 40,045 1,105 C pit;l contribution from Northeast Utilities (parent company) 40,000 Total 163,605 40,045 40,860 Less - Reacquistions and retirements of long-term debt end preferred stock 16.220 31 16.031 Net funds from financing 147,385 40.014 24.829 Other Sources (Uses) Of Funds
- Decr:ase (increase) in net current assets (excludir.g short-1:rm debt, long-tere debt due within one year and pr:f rred stocA to be redeemed within one year):
C:sh ad special deposits (3,287) 3,500 3,573 Receivables and accrued utility revenues (43,516)
(29,834)
(7,071)
Fuel, materials and supplies (i0,865)
(14,579)
(3200)
Accounts payable 39,609 27.655 (3,421)
Accrued taxes (468) 2,374 2,352 R; venues to be refunded to customers 10,022 Other, net -
(946)
(21.218) 6,194 Net change (19,473)
(32,102) 8,449 Sales of utility plant (Note 11) 44.227 11,732 Deferr:;d unusual opo,ating expense (Note 4) _
(2,138)
Energy adjustment clauses, net (36,630)
(7,185) 306 Other, net 3,506 4,437 (1.074)
Net other sources (uses) of funds (54,735) 9.377 19.413 Tot:1 Funds For Construction From Above Sources'-
155.309 111,898 110,322 Allowance For Equity Funds Used During Construction 14,383 9.542 10,473 GROSS PROPERTY ADDITIONS
$169,692 S121,440
$120,795 Composition Of Gross Property Additions:
Electric utility plant
$142,229
$108,540
$114,796 Gas utility plant 16,673 6,480 3,790
- Nucle;r fuel 10,790 6,420 2209 Total
$169,692 -
- $121.440
$120.795 The accompanying notes are an integral part of these financial statements.
11 m.
Tha Connecticut Light and Power Company BALANCE SHEETS At December 31, 1980 1979 gnousanas or oows:
Assets
- Utility Plant, at original cost:
Electric
$1,451,364 $1,412,073 Gas 138,042 125.549 1,589,406 1,537,622 Less: Accumulated provision for depreciation 445,152 403,954 1,144,254 1,133,668 Construction work in progress (Note 11) 403,625 320,938 Nuclear fuelin process, net 21,885 9,195 Total net utility plant 1,569,764 1,463,801
' Other Property and investments:
Investments in regional nuclear generating companies, at equity 24,702 24,743 investments in subsidiary companies, at equity 4.310 4,746 Other, at cost 7,108 5.826 36.120 35,315 Current Assets:
Cash and special deposits (Note 6) 4,848 1.561 Receivables, less accurrulated provision for uncollectible accounts
. of $2,183,000 in 1980 and $2,060,000 in 1979 '
86,365 60,475
- Receivabies from affiliated companies 33,387
- 25,873 Accrued utihty revenues -
39,459 29,347 Fuel. materials and supplies, at average cost.
60,449 49,584 Prepayments and other --
4,508 2,029-229.016 168.869 p..
Deferred Charges:
- Unamortized debt expense 1,814 1,777 Energy adjustment clauses, net -
41,147 9.174 Canceled nuclear project (Note 3)-.
13,735 l-Deferred unusual operating expense (Note 4) 2,138 Other
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6,663 6,882 65,497 17.833 Total Assets
- $,1,900,397 $1,685,818 s
\\, ;.
The accompanying notes are.an integral part of these financial statements.--
- 12'
1 L
I At December 31, 1980 1979 4Tnousancs of Dosars)
I=
Capitalization and Liabilities Capitalization:
Common stock - $10 par value. Authorized 20.000.000
(-
shares; outstanding 8,931,014 shares S
89 310 $ 89.310 f
Capital surplus, paid in 248,684 208.614 Retained earnings -
189,347 180.971 l
Total common stockholder's equity 527,341 478.895 Cumulative preferred stock - $50 par value. Authorized 6,000,000 shares; outstanding 3.874,574 shares.
l~
- Not subject to mandatory redemption - 3,500,000 shares outstanding (Note 7) 175,000 175.000 Subject to mandatory redemption - 374,574 shares outstanding (Note 8) 17,917 19.000 Long-term debt, net (Note 9).
817,922 756.596 Total capitalization.
1,538,180 1,429.491 Current Liabilities:
Notes payable to banks (Note 6) 62,500 23,000 Commercial paper (Note 6)~
.85,785 65.245 Long-term debt due within one year (Note 9) 2,531 15.031 Preferred stock to be redeemed.within one year (Note 8) -
832 1,000 Accounts payable.
44,161 21,531 Accounts payable to affiliated comptnies -
54,413 38.042 Accrued taxes
-25,485 25,953
- Accrued interest '
21,949
.18.848 Other '
10,867 7,385 308.523 216.035 -
- Deferred Credits:
. Accumulated deferred income taxes 24,960 7.864 -
- Accumulated deferred investment tax credits '
22,736 26,914
~
. Oth6r -
5,998' 5.514 53,694 40.292 Commitment' and Contingencies (Note 11)~
s tTotal Capitalization and Liabilities
~. $1.900,397 J S1.685.818..
[.:
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I Th3 Conn:cticut Light and Power Company i
STATEZ.ENTS EF C2MMEN STOCKH2LDER'S ECUlTY Capital Common
- Surplus, Retained Stock Paid in Earnings Total (Thouseds of Dolics)
Bilance at January 1,1978
$89.310
$208.614
$158.747
$456.671 Net income for 1978 61.475 61.475 C sh dividends on preferred stock (14.644)
(14.644)
C:sh dividends on common stock (34.630)
(34.630)
Balance at December 31,1978 89.310 208.614 170.948 468.872 Net income for 1979 57.847 57.847 Cash dividends on preferred stock (14.645)
(14.645)
C:sh dividends on common stock (33.179)
(33.179)
Balince at December 31,1979 89.310 208.614 180.971 478.895 Net income for 1980 63.242 63.242 Cash dividends on preferred stock (14.580)
(14.580)
Cash dividends on common stock (40.279)
(40.279)
Loss on the retirement of preferred stock (7)
(7)
Capital contnbution from Northeast Utilitres (parent company) 40.000 40.000 Reversal of issuance expense associated with the retirement of $5.52 L Series of preferred stock 70 70 Bal:nce at December 31,1980 (a)
$89.310
$248.684
$189.347
$527.341
(;) i,t December 31.1980. retained earnings of 560.802.000 were available for payment of cash dividends on common stock under the provisions of the Company's Indenture of Mortgage and Deed of Trust
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The accompanying notes are an integral part of these financial statements.
14
Th; Conn 9chcut Light and Power Company N STES TO FINANCIAL STATEMENTS 1.
Summary Of Significant Accounting Policies Gener:l: The Connechcut Light and Power Company (the are subject to the regulatory prousions of the aCl Company). The Hartford Electric Light Ccmpany Arrangements among the system companies. Outside (HELCO). Western Massachusetts Electric Company agencies and other ubhtees covenng interconnect cns.
(WMECO) and Holyoke Water Power Company are the interchange cf electnc power and sales of ut:hty property operahng subsidianes compnsing the Northeast Ubblies are subject to regu!ation by the Federal Energy Regulatory systcm (the system) and are wholly owned by Northeast Commission (FERC) and/or the Secunties and Exchange Ut htns (NU).
Commission (SEC) The Company is subject to further Other subsidianes of NU provide substantial support regulation for rates and other matters by the FERC and tne services to the system. Northeast Utihties Service Connecticut Department of Pubhc Ut hty Control (DPUC)
Company (NUSCO) supphes centralized accounting, data and follows the accounhng pohcies presenbed by the processirg, engineering, financial, jegal. operational, respective commissions.
pl:nning, purchasing, administrative and other services to As a pubhc utihty the Company is granted the nght to the system companies. Northeast Nuclear Energy function as a monopoly in a prescobed service temtory Company (NNECO) is responsible f or the construction Accompanying this privilege is the responsibility to End operahon of nuclear generahng facihties, and for provide adequate and rehable service to customers.
financing nuclear f uel for such facilibes. The Ccnnecticut Regulatory agencies have the responsibihty to estabhsh G1s Company (Conn. Gas), a subsidiary of the Company, rates at levels sufficient for the Company to recover costs perfc7s gas supply functions for the Company and of providing service and permit the opportunity to eam a HELCO The system also has two subsidiary realty f air return on investment. In meehng their responstbihties, companies, The Rocky River Realty Company and The the regulatory agencies may create differences in the Quinnehtuk Company.
apphcation of accounting procedures for a regulated All transactions among af filiated companies are on a company compared to those of nonregulated companies.
r covery of cost basis which may include amounts Revenues: Revenues are based on authorized rates r: presenting a return on eouity, and are subject to
- pproval of various federal and state regulatory agencies.
apphed to customer consumption of utihty services. Rates The Company and HELCO have consolidated their raay not be increased without a formal proceeding before the appropriate regulatory commission The Company operations by means of a transfer of all HELCO regional accrues an estimate for energy dehvered but unbilled at personnel (other than production personnel) to the Company. The Company is responsible for meeting the the end of accounting periods.
local s:rvice needs of customers of both companies and bilk HELCO for work performed for HELCO on a recovery Nuclear Fuel: The Company. HELCO and WMECO own of cost basis. The Company and HELCO have been Millstone I and il as tenants in common. NNECO owns the inv:stigating the feasibihty of a corporate merger in which nuclear fuelfor such units. The cost of NNECO's nuclear the Company would be the surviving corporation.
fuelis amortized to operahng expense on a unit-of.
The Company is part of a New England bulk power production method at rates based on estimated kilowatt-syst m providing for purchases and sales of electric hours of energy to be provided and is billed to the incrgy through a regional dispatch control agency. In companies based on their percentage ownership in the addition, the Company is a part owner with other system units. The amount of nuclear fuel expense charged to the companies and New England electric utihties of the Company, based on its 53 percent ownership, aggregated common stock of four regional nuclear generating
$16.283.000. S13.543.000 and $10,404,000 in 1980.1979 companies. These companies, with the Company's and 1978 respectively. This includes since 1979 a own ;rship interest shown parenthetically, are:
Current provision for estimated spent nuclear fuel disposal Connecticut Yankee Atomic Power Company (25 costs on the Millstone units As approved by the DPUC, perc.nt), Yankee Atomic Electric Company (15 percent),
the estimated spent fuel disposal costs pertaining to fuel M ine YEnkee Atomic Power Company (8 percent)and amortized pnor to t 979 are being amortized over a ten-Vermont Yankee Nuclear Power Corporation (6 percent).
year period Storage for spent fuel at the Millstone nuclear The Company's investment in these companies is station. including the facihties currently under E ccounted for on an equity basis. The electncity produced construction at Millstone Ill, are expected to be sufficient from these f acihties is committed to the participants based until at least the mid-1990s.
on their ownership interests and is billed pursuant to Depreciation: The provision for depreciation is computed contr:ctual agreements using the straight-line remaining hfe method at approved Public Utihty Regulation: NU is registered as a holding rates which are based on the estimated service lives of company under the Public Utihty Holding Company Act of depreciable utihty plant in service and estimated removal 1935E nd it and its subsidiaries, including the Company, costs less expected salvage, as approved by the DPUC.
15
F Tha Connecticut Light end Power Company NOTES TO FINANCIAL STATEMENTS Th2 depreciation rates for the several classes of electric Company approval for the use of the net-of-income tax plint are equivalent to a composite rate of 3 5 percent in method. Effective January 1,1980, the method of
.1980 and 1979 and 3.7 percent in 1978. For the several accounting for AFUDC was changed from the gross-rate classes of gas plant, the composite rate is equivalent to method to the net-of-income ta x method, which more 3.1 percent in 1980,2.8 percent in 1979 and 2.7 percent in appropnately reflects the cost of financing the Company's 1978. These rates are applied to the average plant in construction program. Management believed that service during the year, other than for major facilities implementing this change prior to receiving rate which are depreciated from the time such facihties are recognition would reinforce the Company's efforts to placed in service. At the time depreciable property is obtain appropriate ratemaking treatment. The early r: tired from service, the original cost, plus cost of removal adoption of this method for financialreporting purposes less salvage of such property,is charged to the resulted in a reduction of net income of $8.3 milhon for the
. accumulated proviuon for depreciation.
period from January 1,1980 to the approvalin October 1980.
Nuclear Decommissioning: A study completed in 1979 The AFUDC rate in 1978 and 1979 under the gross rate
' indicates that complete removal commencing at the time method was 9 percent. The effectne AFUDC rate for 1980 of retirement is the most viable and economic method of under the net of-income tax method was 7.7 percent decommissioning the Millstone I and 11 nuclear units in (11.3 percent on the gross rate method) which was which the Company has a 53 percent ownership interest.
calculated in accordance with FERC guidehnes and Th3 Company's share of the total estimated cost is $70.8 neluded semiannual compounding on major constrar: tion million in 19791evel dollars. In October 1980, the DPUC projects.
tillwed the Company to increase the amount of The net result of the AFUDC rateincrease,the decommissioning costs recovered through depreciation semiannualcompounding and the early adupion of the
' cxpense. The Company commenced recording the change to net of-income tax method had no material incr:ased depreciation expense on November 1,1980.
effect on net income for the year ended Decerr.ber 31.
Mai'ntenance: The cost of maintenance, repairs and 1980.
r pl: cements of minor items of propertyis charged to Retirement Plan: The Company participates in the maintenance expense. Replacements and renewals of Northeast Utilities Service Company Retirement Plan (the it;ms considered to be units of property are charged to Plan). The Plan, which covers all regular employees, is th3 utility plant accounts.
noncontributory. The system's policy is to annually fund the actuarially determined contribution, which includes
' Federal income Taxes: The tax effect of timing that year's normal cost, the amortization of prior years'
' differences (differences between the periods in which actuariallosses over fifteen years and the amortization of E trinsactions affect income in the financial statements and prior service costs over forty years. The Company's the periods in which they affect the determination of allocated portion of the system's contriNtion, part of 3 income subject to tax), is accounted for as prescribed by,
which was charged to utihty plant, approximated end in accordance with the ratemaking treatment of the
$11,900.000 in 1980,59.600.000 in 1979 and $9,700.000 applicable regulatory commissions. In a 1980 rate order in 1978.
the DPUC approved, for certain timing differences, the The actuanal present value of accumulated plan adoption of the change from flow through to normalization benefits and plan net assets available for benefits for the accounting by the Company. It is expected that for years :
system's plan are presented below:
-~ prior to the adoption of normalization the deferred taxes
. not provided for currently will be collected in customers'
. January 1, 1980 1979 rat;s when such taxes become payable. (See Note 5 for
. mous m or coaam L
.the detail of income tax expense.)
Benefitsn Vested
$219,709
. $182.447
~ rJonvested '
21.537 17293
. Allowance for Funds Used During Construction: The.
allowance for funds used during construction ( AFUDC)
$241.246
$199.740 represents the estimated cost of capital funds used to Net assets available finance the Company's construction program. These
' costs;which are one component of the total, capitalized cost of construction, are not recognized as part of the rate.
The assumed rate of retun used to determine the base for ratemaking purposes until facilities are brought Jactuarial present value of accumulated plan benefits was
' inta service. AFUDC is recovered over the service life of -
6.5 percent for both 1980 and 1979, plant in the form of increased revenue collected as'a result of higher depreciation expense).
. Energy Adjustment Clauses: The Company's retait.
M in October 1980, the DPUC,in its rate order, granted the
' electric and gas rates include adjustment clauses under 4i 16 s
e 1
=
The _ Connecticut Light and Power Company NOTES TO FINANCIAL STATEMENTS
- which certain fossil fuel and purchased power costs and 3.
Canceled Nuclear Project purchIsed gas costs, respt. tively, above or below base in December 1980. NU canceled its Montague Nuclear rtt; bye's are charged or credited to customers. As Project which consisted of two proposed t,150 MW prescribed by the DPUC, substants!!y at! of the costs not nuclear units in Montague. Massachusetts. The decision
- curr;ntly recovered under the adjustment clauses are resulted pnmanly from NU's wish to reduce the financial def;rred until recovery is permitted by the DPUC.
burden of its construction program and because of the Effective August 1,1979,the Company implemented.
prospect that its conservation program would be l 'with DPUC approval, a generation utilization adjustment successfulin accomphshing its oil displacement goals for ctuse (GU AC). This clause levels the effect on f uel costs
!he 1980s and 1990s. The Company has a 39.8 percent caused by variations from a 70 percent nuclear interest in the project, representing an investment of generation factor. At the end of a twelve month period approximately $15.4 million(including AFUDC). The cnded July 31 of each year, any deferred balance Montague site remains viable for an electric generating r;sulting from the actual nuclear generation f actor being unit including coal or nuclear units. Application to recover i befo:r or above 70 percent, for that penod, will be either certain project costs of approximately $13 7 million will be collect d from, or ref unded to, customers over the made to the appropnate regulatory authonties. It is the subsequent twelve-month period The clause does not opinion of management that these costs are properly F
permit tutomatic collection from customers to tne extent recoverable. The remaining costs of approximately $1.7 thIt th3 factor is less than 55 percent in the twelve-month m thon. included in utility plant. are expected to be apphed period. For the twelve-month per.c4 ended July 31,1980, toward a future generating facihty.
~ the nuclear capacity factor was 712 percent which rOsulted in a balance of $2,4 million to be refunded over th3 succeeding twelve months. For the period August 1 4.
DMerred Unusual Operating Expense 1980 to December 31.1980, as a result of nuclear
- outiges.the nuclear capacity factor was 53 6 percent.
In the latter part of 1980 Mi!! stone I was scheduled for a r;sulting in a deferralof $14.9 million.lf the nuclear ten yearinspection and iefueling outage to be pt;nts tchieve less tha_n a 70 percent capacity factor f or accomplished within a ten-week period. The outage was th3 tw:lve-month period ending July 31,1981, any extended because of the stringency of NRC requirements
. 'deferr:d balance would be collected from customers and the resu!! tog length of time necessary for the proper
. und;r the operation of the clause over the twelve-month impementation of their mandates. Certain operation and period commencing September 1981, maintenance expenses incurred, and expected to be Th3 components included in the energy adjustment incurred. in connection with this outage are abnormat. The
. clius s, net, as of December 31,1980 and 1979, are as
- Company requested and received permission from follows:
. appropriate regulatory commissions, to defer the abnormal costs being incurred, pending consideration in 1980 1979 the r ext rate proceedings for recovery over a specified F'm$eos ei oo4am pericd.
- Fuel end Purchased Power ~
$21,605
$10.027 L Purchased Gas :
'4.608 4.339 GUAC-
'14.934
' (5 242_)
. T'ot:1 '
$41.147
$9.174
- 5. Income Tax Expense The detail of federal and state income tax provisions
. 2. l Rite Matters
. charged to operations is set forth below;
- In October 1980, the DPUC grar.ted the Company :
1980 1979-1978
, J cnnuit tetail electric and gas rate increases of $81.6
. g 3 c 03,33 y
1 mi!! ion. The level granted was 732 percent of the $1".t4
. Cuner:t income taxes-P
- million the Company requested.The new rates went Ato :
Federal _-
$ (4.639) $ 656 $ 113 Leffect in October 1980. The Connecticut Division'of.
State 63, 2.181 3211 Consumer Counsel has appealed the DPUC decision,
- Total current.
(4.576) 2.837 3.324 '
" alleging error on the part of the DPUC sofely with respect Deferred income taxes, net -
investment tax credits (4,786) 5.630.-10210 t 3 approval of tax normalization and the net of-income tax at 1
method of accounting for AFUDC The Company also has.
appealed the decision solely with respect.to the c'10wed ' M Totaldeferred
-12.310 6.004
- 9.557-return on common equity. Although the outcorrn or the a
P""'
~ C ppe ls is not yet determinable, management does not.
C 12258 l
[Lon the operations of the Compary.
anticipate that the final.outcoine will have a material effect '
- Totahncome taxes
$19.992. $ 8.841 : $12 881 i
L17 f c-l -
Tha Conn:cticut Light and Power Company NOTES TO FINANCIAL STATEMENTS Such provision (credit) is included in the accompanying At December 31,1980, the Company had unused and statements of income as follows:
unrecorded investment tax credits amounting to approximattJ $24.4 million, which are available to offset
/
1980 1979 1978 federal income tax provisions for the years through 1987.
grasanosof Donarsi Operating expenses
$20.578 $ 9.480 $13.305 Other income (12,844)
(639)
(424)
Taxes on debt portion of AFUDC 12.258 Totalincome taxes
$19,992 $ 8.841
$12.881 Dcforred income taxes are comprised of the tax effects 6.
Short-Term Debt of timingdifferencesasfollows:
The Company utilizes bank loans ard commercial 1980 1979 1978 paper to finance temporarily its continuing construction program. The system companies have joint bank credit Investment tax creoits
$ (4,786) $ 5.630 $10.210 lines with terms calling for interest rates equal to the prime Uberalized depreciation 768 963 849 Unbilled revenues (433)
(1254)
(474) rate or the prime rate plus a fraction thereof, at the time of Settlement credits -
borrowing. The credit lines expire at various times in 1981 nuclear fuel (92)
(2.007) and, although these lines are generally renewable, the Energy adjustment clauses 12,342 2,910 (788) continuing availability of the unused lines of credit is nusua[P subject to review by the banks involved. At December 31, r
1980,the amount of unused available borrowing capacity operating expense -
894
- Oth:r 235 (238)
(240) under the credit lines available to the Company was
! Deferred income taxes, net
$12.310 $ 6.004 $ 9.557
$206.4 million, however, substantially all of these joint credit lines are also available to other system companies.
The Company's maximum amount of short-term borrowings as currently authorized by the SEC is $185 The principal reasons for the difference between total million.
tax cxpense and the amount calculated by applying th9 In addition to their customary short-term borrowings federalincome tax rate to prelax income are as follows:
from banks and from the sale of commercial paper, the Company HELCO and WMECO entered into a Revolving 1980 1979 1978 Credit / Term Loan Agreement (the Agreement)with a group of banks in August 1980. The aggregate credit limit i co e in 1 a d17 fg all three companies under the Agreement is $140 T End 48% in 1978
$38,287 - $30.677 $35,691 million. The maximum borrowing limits of the Company,
. Tex effect of differences:
HELCO and WMECO under the Agreement are $80 Additionaldepreciation for million, $60 million and $45 million, respectively. The
" l tax purposes (6,792) - (7,896)
(8.864) companies are ob'igated to pay a commitment fee of one-Allowance for funds used half of 1 percent per annum on their proportionate shares -
ec n zed as come of the unborrowed portion of the aggregate commitment.
, for tax purposes (6.616)
(9,473) (10,142)
Loans under the Agreement bear interest at rates which
. Overhead costs of.
vary from 100 percent to 106 percent of the higher of the
, construction-expensed..
lead bank's prime rate or one half of 1 percent per annum
. for tax purposes ^
. (2,859). -(2245). (2217) above an average offering rate for three-month fffha
. Certificates of deposit of major United States money n
. companies' losses (1,834) ' (1273)
(1,517) -
market banks.'At December 31,1980, the amount of Cost of removal- -
unused available borrowing capacity under the s
- expensed for tax'
. :0,367)
. (697F Essentially all of the cash of the Company represents Agreement for the Company was $52.5 million.
(9 8)
' St te x net of federal
. benefit.
1,231 1266 1,576 compensating balances in support of the Company's lines
- Other net 2,447
-1.964' 742 of credit. However, tw compensating balances are not
. T6talincomstaxes _
. $19.902 $ 8.841, $12.881 subject to contractual restrictions on withdrawal.
al2naWn M respe@ sMW M &
Effectiveincome tax rate -
'24%
13%
17%
. as follows:
18
m...__ _._
The Connecticut Light end Power Company NOTES TO FINANCIAL STATEMENTS 1980 1979 1978 ioonar Amounisininousanos) i
~ Weight d average interest rate for borrowings outstanding at end of
. period (nxcluding offect of compensating balances)
Notss Payable to Banks 20.6%
134%
90%
Commercial Paper -
19.4 14 4 10 6 Mrximum amount of borrowings outstanding dunng the period
. Notes Payable to Banks
$ 83,500
$48.000
$ 5.500 Commercial Paper 131,490 73,125 69.025 l Averig3 daily borrowings during the period Notes Payable to Banks
$ 20,377
$ 9.461
$ 1.187
- Commercial Paper 93.418 39.087 38,115 E W;ighted average interest rate during the penod (based on tris, daily amounts outstanding and excluding effect of compensating bit:nces)
- Notes Payable to Banks 18.0%
15.1%
2.8%
Commercial Paper 14.5 11.8 7.9 Range of maturities at December 31.(in days)
Notes Payable to Banks 6-89 2-77 2 31 Commercial Paper 5-54 4-91 2 47 7.,. Preferred' Stock' Not Subject To Mandatory Redemption
- Det:ils of preferred stock not subject to mandatory redemption outstanding at December 31,1980,1979 and 1978 are as follows:
Current Shares Decription Redemption Price Outstanding Par Value (Thousands or oonars)
' $2.00 Series of 1947
$54.00.
336.088
$ 16.804
$1.90 Series of 1947.
52.50 :
163.912
-8.196
$220 Series of 1949 52.50 200.000 10.000
$2.04 Series of 1949 -
52.00 100.000 -
.5.000
- $2.06 Series E of 1954 51.00 200,000 '
10.000
' $2.09 Series F of 1955
. ~ 51.00 100.000 5.000
$324 Series G of 1968
_ 52.65*
300,000 1 15,000
$4.48 Series H of 1970.-
53.33*
300.000 15.000
' $4.48 Series i of 1970 53.44*
400.000 20,000
.~$180 Series J of 1971 '
54 00*
400.000 20.000
' ; $4.56, Series K of 1974 54.36'
't 000.000 50.000 Total prIferred stock not subject to mindatory redemption 3.500.000
$175.000
- Redemption prlce reduces en future years.
All or any part of each outstanding series of preferred stock may be redeemed by the Company at any time at
%stablished redemption prices plus accrued dividends to the date of redemption.
.I#
s
[ 3g ;
- ~
-... L-.'
L-
The Connectcut L.ight cnd Power Company NOTES TO FINANCIAL STATEMENTS 8.
Preferred Stock Subject To Mandatory Redemption Detads of preferred stock sub;ect to mandatory redemp!-cn outstandag are as folons Pa' 'la ce Sna'es Dece v e 31 Current Outstano ng Descr.ct on Rede 7 t<cn Pr.ce Dece-ree 31.1980 1980 1979 1976
%:x.~s s ~nn
$5 52 Series L cf 1975 55414*
374 574
$ 18.749
$20C00
$20 MJ L ss preerred stcr:k to te redeemed win:n one year 832 1Cc0 Totd pre' erred stock sut ect to mandatory redempt on
$17.917 519 0C3 520 000 t
'Recempt~.r pece re3xes in future yea s Tho Series L preferred stock (the Senes,(equires a cmdends or ctherwise (other tha 14n shares cf jurver sinking fund sufficient to retare a minimum of 20 000 s cck) so Icng as the cefau:t continues The Company s shcr:s(or a maximum of 40.000 shares)at $50 per share preferred stock provisions acuid proh: bit tne recempt:on cach year commencing September 1,1980. Dunng 1980, or purchase of shares of the Senes if tne Ccmpanyis in the COTpany reaCquered 25.426 shares of which 21.658 arrears w.th respect to payment of civicends en any shar:s were retired The loss on the ret:rement, after outstand;ng shares of preferred stock. A!! or part cf tne rpplying the rt: lated issuance expenses, was charged to Series may be redeemed by the Company at any t me at ret 7ned earnings No shares were reacquired cunng estabhshed red:rmp!;on pnces plus accrued d v: den 0s to 1978 and 1979.
the date of redemption, except that cunng the ntial fue-In caso cf defautt on sinking fund payments..ao year redempnen penod, the Senes is subject to certa n payments may be made on any junior stock by way of sund ng I;mitations 20
r
. The Connecticut Light end Pow:r Company NOTES TO FINANCIAL STATEMENTS i
9.
Long Term Debt -
Details of long term debt outstanding are as follows' December 31 1980 1979 (TPO 5.4MScf oOeFO
. Fir:t Mortgage Bonds 3%
Series K, due 1980
$ 15.000
. 2 3/4% Series L.
due 1984 10.000 10.000 31/4% ~ Senes Mc due 1982 35.000 35.000 31/4%.SenesN. due 1985 20,000 20 000 37/8% Series O.
due 1988 30.000 30.000
' 4 7/8% Series P due 1990 25.000 25.000 41/2% - Series O.
due 1986 9.600 9.600 4 3/8%. Senes R.
due 1993 25.000 25.000 6%.
Senes S.
due 1997 30,000 30.000 61/2% Series T, due 1998 20.000 -
20.000 67/8% Senes U.
due 1998 40.000 40.000 83/4% Senes V, due 2000 40.000 40.000 87/8% Senes've due2000 40,000 40.000 73/8% Senesk. due 2001 50.000 30.000
.7 5/8% Senes Y, due 2002.
50.000 50.000 75/8% SenesZ. due 2003
. 50.000.
50.000 83/4% Senes AA. due2004 65.000 65.000
[
9%
Series BB, due 1982 85.000 35.000
. I 1%.
Series CC..due 2000 50,000 50.000 8 7/8% SenesDD. due2007, 45.000 45.000
. 91/4% Senes EE. due 2008 40,000 40.000 143/8% Senes FF, ' due 2010 65.000 Total First Mortgage Bonds 804.600 754.600 Portution ControlNotes:
- 5 90%; due 1998 -
6,175 6,175 6.50%.due 2007 11.870 11.870 Other
'186 218 14ss due ethin one year 2,531 15.031 Unamortued premium and discount. net (2.378)
(1.236)
Long-termdebt. net.
$817.922
$756 596
~ 'Long'-tirm debt maturities and cash sinking fund
,10,' - Leases requirements on debt outstanding at December 31,1980.
The Company has entered into lease agreements for ara a a f o!!ows: 1981. $2.531.000; 1982, $ 122,531.000.
the use of substation equiprr:ent, data processing and 1983, $2.531.000; 1984, $12,531,000 and 1965,
- st' ice equipment, vehicles and office space. Since lease
$22,531,000. In addition, there are annual 1 percent.
sinking and improvement fund requirements. currently qpts are charged to expense for ratemaking purposes, capaHzadon of theMeases is not requireoMan amounting 1o $6,500,000, $6.475.000, $5.600.000, Cmipany capitalized the leased property at tnt. ceginning
$5.575,000 and $5.550.000 for the years 1981 through oNease terms. N eHect m assets, babihties, 1985, respectively. Such sinking and improvement fund expenses or t'et income would not be material.
requir:ments may be satisfied by the deposit of cash or -
I bonds, or by certification of property additions.
Rental paymerits charged to operations, includ,ng rental payments on capita!izable leases, amounted tr,
< All or any part of each outstanding seres of first.
S8.446 000 for 1980, $6.333.000 for 1979 and $5.329.000
. mortgage bonds may be redeemed by the Company at.
f
} any time ct established redemption prices plus accrued Future minimum rental payments, excluding executory interest to the date of redemption, except certain series.
costs suen as real estate taxes. state use taxes.
which ar] subject to certa:n refunding limitations dunng insurance and maintenance, under long term
. their respectnre iniaal five-year redemption periods. The -
g gg.
- Series CC bonds require a sinking fund suf'icient to retire -
$6.800,000; 1982. $6.100,000; 1983, $5,900 000; 1984
- o minimum of. $2.500.000 in princ; pal amount each year.
$5.500,000; 1985. $4.900.000. and for the years mortgageindenture.
'ntis uthject tothelien.of the -
subsequet to M85.an aggregate of $58.300.000.
a le
' ~ y
+
t 121 c
- Th3 Conn:cticut Light and Power Company
.NLTES TO FINANCIAL STATEMENTS
. 1 1.
Commitments and Contingencies interest in Seabrook. Prior to 1980, the Company sold interests totalling 7.5 percent of Seabrook. On January 30 Construction Program: The Company is engaged in a 1981, the Company sold an additional 0.4 percent interest continuous construction program and currently forecasts ssahsens utihty. The Company is not actively construction expenditures, including nuclear f uel, to be so king offers to purchase its remaining 4.1 percent approximately $215.5 million in 1981 and $1.2 billion for tha years 1981-1986.
jnwrest, although it is still willing to reduce or dispose of its in erest on satisfactory terms.Other owners of Seabrook 1The construction program is subject to periodic review have also indicated a desire to reduce their ownership
) and revision, and actual construction expenditures may shares. which is expected to lessen the Company's ability vary from such estimates due to factors such as revised to reduce its interest.
lord estiraates, inflation, the availability and cost of capital, and the granting of timely and adequate rate relief Coal Conversion: The provisions of the Power Plant and
- by regulatory commissions, as well as actions by other Industrial Fuel Use Act of 1978 could require the
' r gulatory bodies,it is expected that compliance with conversion of up to five of the Company's oil fired units to
- present and developing regulations established by coal at an approximate cost to the Company of $343 vanous authorities in the ar eas of nuclear plant licensing g
, end safety, land use, water and air quality, and other em Qme%s@lM W m
, environmental matters may require additional capital However, the Company proposes to convert up to four of
- cxpenditures and increased operating costs. Substantial ts oil-fired electric generation units to coal at an (capital and operating expenditures have been budgeted estimated cost of $126 million. Because of the Company's by the Company in response to known and anticipated resent financial condition and the need to resolve s r
- quirements of the U.S. Nuclear Regulatory Commission regulatory and environmental uncertainties, pertaining te (NRC) flowing from its analyses of the Three Mile Island coal conversion, the estimated costs for coal conversion accident. However, additional expenditures may be are not inc:uded in the Company's construction program.
1 r.; quired as a result of further Company, industry and NRC
< analyses. In addition, uncertainties related to the Nuclear Insurance: The Price-Anderson Act currently
' r: processing or permanent storage of nuclear fuel may limits public liability from a single accident at a nuclear
- r: quire revisions in future nuclear fuel costs.
power plant to $560 million. If the total damages resulting At December 31,1980, construction work in progress from the accident exceed the private poolinsurance
. (CWIP) included an investment of $341.2 million in jointly -
ccverage of $160 million, then the system companies
- owned n_uclear generating facilities, cor.sisting of a 34.5 '
would be required to pay their share of the excess. That
- percsnt interestin Millstone 111 of $288.4 million and a 4.5 share, for the system companies, would be a maximum of percent. interest in the Seabrook nuclear project of $52.8
$5 million for each of the two operating Millstone units, million. All the companies owning undivided interests in.
plus their pro rata share of a maximum of $5 million for l jointly owned facilities are required to provide financing to
. each of the other operating nuclear units in which they support their own portion of construction costs, have an ownership interest. Therefore, the system
~
- The Millstone ill nuclear unit is being constructed for a companies could be assessed for their portion of
- 1986 in-service date. The anticipated cost of the -
ownership interests in the four regional nuclear Company's 34.5 percent ownership share of the unit will generating companies (described in Note 1 ) in the event
- be $896 million. As part of the effort to reduce required of a nuclearincident.
x fin:ncing for their 65 percent ownership of the remaining The Cort.pany has also purchased from Nuclear construction cost of. Millstone Ill, the Company, HELCO -
Electric insurance Limited (NEIL) replacement power Ynd WMECO have made offers to sell,in aggregate, an insurance with respect to its ownership' interest in 3 ownership interest of at least 100 MWs in the unit to other. =
- Millstone I and 11 and Connecticut Yankee (CY). This
~
- utilities. The companies have reserv'ed trie right to 3 insurance provides for established payments to partially it!!ocate th' total reduction among them, and to reduce ;
- offset the extra expense which would be incurred in e
L their ownership interests further, depending on the extent.
-. obtaining replacement power after a nuclear unit has
. of Ecceptance of the offer and the financial outlook of _
been out of operation for more than six months because Kcach of the companies at the end of,the offering periodi of a direct physicalloss peril, subject to certain '
- Responses to the offer are due on or before July 6,19812 exclusions. The insuring agreement provides that, in the LThere is at present no assurance that the companies" i event NEIL's losses or costs in any policy year exceed the J proposal to reduce their ownership'. interest in Millstone lli
- accumulated funds available to NEIL, insureds are
~ subject m retrospective premium adjustments to cover Lcan.be accomplished;_
such exce a losses and costs to the extent of five times
{The Company, as part of its effort to finance its -
. construction program and to reduc' construction.
the annual premium paid by each insured. The maximum e
Ixpenditures has attem' ted to reduce its ownership i adjustment payable by the Company with respect to all of -
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Th; Conrccticut Light and Power Ccmpany NOTES TC FINANCIAL STATEMENTS its insured units assuming continuation of the present under which each of the owners wou!d purchase its pro annual premium,is approximately $11 milhon for each rata share of up to $40 mdlion of CY'S subordinated notes policy year.
of which the Company's portion would be $10 muiton The Company expects that it may be asked to provide Fin:nci:1 Arrangements for the Regional Nuclear additional equity cap;tal and/or other types of financial Gen : rating Company: The owners of CY. including tne support for one or more of the four reg:onal nuclear Company, agreed to an interim financing arrangement, generating companies.
- 12. Segments of Business The following summarizes information relating to the Company's electric and gas operations.
For the Years Ended December 31, 1980 1979 1978 tincuwes of Dewn Operating information:
Operating Revenues-Electnc S 618,786 S 505.970 S 431.465 Gas 118.556 85.656 74.373 Total S 737.342 S 591.626 S 505 838 Operating expenses excludtng provision for income taxes-Electnc S 514,759 S 404.975 5 325.589 Gas 104 174 78.319 68 383 Total S 618.933 S 483 294 S 393.972 Pretax operating income-Electnc S 104.027 5 100.995 S 105.876 Gas 14.382 7.337 5.990 Total
$ 118.409
$ 108.332 S 111.866 Provision (credit) for income taxes-Electnc S 17,760 S
9.798 S
14.175 Gas 2.818 (318)
(870)
Total S 20.578 S
9.480 S 13 305 Operating income-Electnc S 86.267 S 91.197 5 91.701 Gas 11.564 7.655 6 860 Total
$ 97.831 S_
98.852 S 98.561
- Deprec:ation expense-Electnc S 48.312 5 47.709 S 46.999 Gas 3.972 3.216 2.907 Total
$ 52.284 S 50.925 S 49906 Capitil;xpenditures-Electnc S 153.019 S 114.960 5 117.005 Gis 16.673 6.480 3.790 Tot:I S 169.692 S 121.440
$ 120 795 investment informatron at December 31:
Identift ble assets (a) -
Electnc
$1,467,008 51.365,867 51.347.958 Gas 120,914 106.651 102.135 Nonanccable assets 312.475 213.300 169.498 Tot I Assets
$1.900.397
$1.685 818 S1 619.591 (a) Includes construction work in progress. matenafs and suppi.es and a!!ocated cornmon ut hty piant.
23
n The Connecticut Light and Power Company
. NOTES TO FINANCIAL STATEMENTS 13c impact of Changing Prices (Unaudited) as an estimate of the approximate effect of inflation, rather than as a precise measure. Fixed assets, nuclear fuel and The following supplementary information was prepared related depreciation and amortization expense appearing
. on the basis prescribed by the Financial Accounting in the historical cost financial statements have been
- Standards Board in Statement of Financial Accounting restated to show the effect of both generalinflation
- Standards No. 33," Financial Reporting and Changing (constant dular amounts) and changes in specific prices
'.. Price.., for the purpose of providing certain information (current cost amounts). Restatement of other items would
- about the effects of changing prices. Since inflation not materially affect the restated amount of operating
- accounting is experimentalin nature,it should be viewed income.
I.
1 Statement of Income Adjusted For Changing Prices For The Year Ended December 31,1980 Conventional Constant Dollar Current Cost Historical Average Average Cost 1980 Dollars 1980 Dollars (unons of Donars) 7 Operating revenues
$737
$737
$737 Fuel.
222-222 222
. Purchase and interchange power. nel 17 17 17 LGas purchased for resale; 73 73 73
~
Depreciation 52 105 112
- Other operatbn and maintenance expense 193-193 193
. Federat and state income taxes 20 ~
20 20
' Int: rest expense 65 65 65 iTexes other than income taxes e 62 62 62
~
20 30 3G
' Other income.
N t mcome (excluding adjustment to net recoverabie cost)
$ 63
- $ 10 (b)
$ 3
' increase in specific prices (current cost) of fixed assets and,
_ nuclear fuel held during the year (a) '
$203
)
1 Adjustment to net recoverable cost
$(113) 11
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w Effect of increase in general price tevel (320)
Excsss of increase in general price fevel over increase in
' specific prices after adjustment to net recoverable cost
$(106)
' Gairi from decline in purchasing power of net amounts owed
$123
$123 (a) 'At December 31; 1980. current cost of fixed assets and nuclear fuel, net of..
1 accumulated depreciation; was $2.9 billion, while historical cost or net cost
' recoverable tnrough depreciation was $1.6 billion. :
). _.. ~ (bi including the adjustment to net recoverable cost, the net loss on a constant dollar
. i ^ basis would have been $103 million in 1980..
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- The Connecticut Light and Power Company
' NSTES TO FINANCIAL STATEMENTS Five-Year Comparison Of Selected Supplementary Financial Data Adjusted For Effects Of Changing Prices (in Average 1983 Douars. Encept Rstancal Amounts) i Years Ended December 31, 1980 1979 1978 1977 1976 wrons or Donars) -
Operating revenues:
.Histoncal
-$737
$592 5506 5474 5450 Constant dollar 737 672 639 645 652
- Net income (loss) (excluding adjustment to net recoverable cost):
Historical
~
$ 63
$ 58 Constant dottar -
10
.14
' Current cost :
3 (5)
. Net cas ts 'at year-end:
- Histcrical S527 S479
.504 514 Constant dollar / current cost Exciss of increase in general price 12 vel over increase in specific prices.
- EftIr tdjustment to net recoverable cost:
. Current cost-
$106 S 79
- Glin from decline in purchasing power of net amounts owed.
$123 5145 f
Avertg3 consumer price index 246.8 217.4
- 195.4 181.5 170.5
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Constant dollar amounts represent ' istorical costs The current year's depreciation expense for both h
stated in dollars of equal purchasing power, as measured -
constant dollar and current cost methods was determined
'. by the average level of the Consumer Price Index for all -
by pplying the Company's depreciation rates to indexed Urban Consumers (CPI-U) during the year. With the.
plant amounts..
exception of CWIP,the data for plant was determined by Accumulated depreciation of plant under both methods -
4 applying the appropriate CPI-U to the historical cost of
' _'was estimated by multiplying the respective cost data by a
. plant.
percentage representing the expired life of existing facilities at December 31,1980.
i Constant dollar restatement adjusts transactions Fossil fuelinventories and the cost of fossil fuel used in ioriginally recorded in dollars of varying purchasing power _
airito dollars of equal purchasing power.The restated -
generation have not been restated from their historical amounts do not purport to be appraised value,.
cost as regulation permits the recovery of fuel costs
. rrplacement cost, current value, or the individual prices of -
through the operation of adjustment clauses. For this reason, fuelinventories are considered monetary assets.
particular goods and services in the current market, nor are they indicative of the Company's future capital.
. As prescribedinStatement.of Financial Accounting
^ Standards No. 33, income taxes were not adjusted.
rcquirements.
~
The excess of the increase in general prices 'cver the
-W : Current cost amounts reflect the changes in specific ~.
increases in specific prices of plant indicates that, for the-
/ prices of plant from the date the plant was acquired to the year 1980, generalinflation was greater than the increase
. pr:sentcThey are based on estimates of the costs to '
n specific prices of plant as measured by the Handy.
. acquire or produce today, assets identical to those
.. Whitman index of Public Utihty Construction Costs.
Owned, or as ets having the same service potential as the ~ ~
The results of operations, under both current cost arid :
s y css:ts owned.
L constant dollar restatements, show a decline from the
. The current cost of plant and equipment was :
historica! net income.This is the result of increased idet;rmined by indexing the historical cost of plant by the
.. ~ depreciation expense on inflation-adjusted assets. In M applicible Handy-Wnitman index,of Public Utility
. addition, the Company will eventually have to replace its 1 Construction Costs. Nuclear fuel accounts refk ct the assets at a price many. times greater than the original
- current replacement cost of st.tch fuel based on current -
' cost, without h'aving the opportunity to recover the
! rn:.rk t prices. Both the constant dollar and curren_ cost '
replacement value of its assets through historical cost '
t f amounts of land have been estimated by using the CPI-UJ
' depreciation expense.
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The Connecticut Light and Power Company N3TES TO FINANCIAL STATEMENTS An adjustment to income taxes would also be suffer a loss of purchasing power, while holders of necessary to reflect the true impact of inflation. Present monetary liabilities expenence a gain. The gain from the income tax regulations do not give effect to the decline in decline in purchasing power of net amounts owed is purchasing power of the dollar. Although a declir'e in attributable to the substantial amount of debt used to income would result in lower income tax, this is not taken finance property, plant and equipment. However, this into account in the adjusted income statements.
" gain"is not a revenue item and, therefore, cannot be inflation erodes the value of the dollar, Generally during considered additional funds for reinvestment or dividend periods of increasing inflation, holders of monetary assets distribution.
Auditors' Report To the Board of Directors of The Connecticut Light and Power Company 1 We have examined the balance sheets of The Connecticut Light and Power Company (a Connecticut corporation and a wholly owned subsidiary of Northeast Utilities) as of December 31 1980, and 1979, and the related statements of income, common stockholder's equity and sources of funds for gross property additions for each of the three years in the period ended December 31, 1980.Our examinations were made in accordance with generally accepted auditing standards and, accordingly, included such tests of the accounting records and such other auditing procedures as we considered necessary in the circumstancesJ In our opinion, the financial statements referred to above present f airly the financial position of The Connecticut Light and Power Company as of December 31,1980. and 1979, and the results of its operations and the sources of funds for gross property additions for each of the three years in the period ended December 31,1980,in conformity with generally accepted accounting principles, which, except for the change (with which we concur)in accounting for the allowance for funds used during construction as indicated in Note 1 of Notes to Financial Statements, have been applied on a consistent basis.-
ARTHUR ANDERSEN & CO.
Hartford, Connecticut, February 20.1981, a-26 m
iTha Connecticut Light and Power Company
. STATEMENTS CF QUARTERLY FINANCIAL DATA Quarter Ended
- 1980 March 31 -
June 30 September 30 December 31 i
tTnousanos of ooisars)
LOpcfating Revenues -
$198.679
$154,765
$172.301
$211,597
. Operating income
$ 29.168
$ 18.081
$ 22.689
$ 27.893
- Nrt income
$ 19,117
$ 9.115
$ 13.206
$ 21.804 1979 1 Operating Revenues
$160.081
$125.896
$144.889
$160.760
Operating income '
$ 31.423
$ 15.397
$ 25.667
$ 26.365 5-Ntt income -
$ 21.195
$ 5.819
$ 15.442
$ 15.391 l
-SELECTED FINANCIAL DATA.
4 4 "
< Yssr Ended' December 31c 1980 1979 1978 1977 1976
. (Thousands of Dollars)
} Operating Revenuch 1 $737.342
$591.626
$505.838
$474.066 - ~ $450.261
- Operating Income 1 97,831
' 98.852 98.561 :
91.473 100,312 j Net income -
63.242.
57,847-
_ 61,475 57,559
~ 65.001 i Total Assets 1,900,397
'1.685.818 1,619.591' 1,556,793
~ 1,493.080
} Long-Term Debt '(excluding current maturitjes) =
- 817,922 75$.596 771,541 731.565-690.978
' Preferred Stock Subject to Mandatory 17,917 19.000 J 20,000 20,000 20.000.
- . Redemption (e$cluding current maturities) t 4
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The Connecticut Light and Power Company STATISTICS Utility Piant Operating Revenues December 31.
cmxsa,2s c corsi e
.T % sanos or o saw, Electric Gas Total 1980
$2.014.916
$618,786
$118.556
$737.342 1979 1.867,755 505.970 85.656 591.626 1978 1.804.545 431.465 74.373 505 838 1977 1.710.880 403.500 70.566 474.066 1976 1.605.256 381.614 68.647 450.261 1975 1.482.884 363.210 56,151 419 361 1970 842.402 151.971 28.733 180.704 Average Average Annual Annual Cubic Feet Residential Electnc Gas kWh Sales Residential of Gas Sales Cubic Feet Customers Customers Employees (Mi! Irons) kWh Use (M;itions) of Gas Used (Average)
(Averagel (December 31) 1980 10.931 8.111 22.314 76.884 593.878 117.211 3.822 1979 10.882 8.080 20.572 76.733 585.034 114.723 3 834 1978 10.560 8.077 18.720 79.358 574.438 113 621 3.936(a) 1977 10.221 8.079 18.420 78.458 565.224 113.374 3.540(a) 1976 9.802 8.057 19.246 82.084 555.319 113.187 3.105 1975 9.175 7,694 17.564 75.622 546.407 113.356 3.263 1970 7.748 7.070 18.558 81.860 489.472 114.414 3.325 (a) increases are due to the consolidation of 'he Company's and HELCO's operations 28
Address General Correspondence in Care Of:
Northeast Utilities Service Company Investor Relations Department P.O. Box 270 Hartford, Connecticut 06101 Tel. (203) 666-6911 General Office Selden Street. Berlin, Connecticut First and Refunding Mortgage Bonds Trustee and interest Paying Agent
- Bankers Trust Company, Corporate Trust Operations P.O. Box 318, Church Street Station, New York, New York 10008 Preferred Stock Transfer and Dividend Disbursing Agent The Connecticut Bank and Trust Company, Stock Transfer Department One Constitution Plaza, Hartford, Connecticut 06115 Registrar
- Hartford National Bank and Trust Company, Hartford. Connecticut 06115 Dividend Payment Dates '
$324, $4.48 H and $4.48 i Series-January 1. Apnl 1.
' July 1 and October 11
$1.90, $2.00, $2.04, $2.06, $2.09 and $2.20 Series -
February 1, May 1. August and November 1
- $3.80, $4.56 and $5.52 Seriei - March 1; June 1.-
_ September.t and December _1 4
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LThe' data corhined in this Report is submitted'for the sole purpose of providing lr. formation to -
j' E present stockholders about the Company.'
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