ML20034B034
| ML20034B034 | |
| Person / Time | |
|---|---|
| Site: | Millstone, Seabrook  |
| Issue date: | 12/31/1989 |
| From: | Geoffrey Edwards UNITED ILLUMINATING CO. |
| To: | |
| Shared Package | |
| ML20034B023 | List: |
| References | |
| NUDOCS 9004250242 | |
| Download: ML20034B034 (156) | |
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The Unita Dluminadng Company b an oper.
anng electnc public utihty crunpany, incorporated in 3% It is engaged principally in the productkm, pur.
p clase, trammission, dstribution and sale d ekeicity,
for residential, conunercial and industrial purposes
-in a service area of about 335 square miles in the southwestern part of the State of Oxvucncur.The '
popuhtun d this area is approximately 728,om, or~
I 22 percent of cle popuhtion d the State.
UI has three wholly owned subsidiaries. Bndge-port Dttne Cornpany,a single purpose corporanon, owns and leases to Ul o coal-fired generating unit at Bridgepe t Harbor Station, Research Center,Inc.,has -
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, been fornwd to panicipate in the developnwnt of one l
or rnore power pmduction ventures. United Resources, Inc., serves as the parent corporation for UI's nonutihry l
businesses, each d which will complement and enhance Ul's circtric utility busirrss and serve tfw inten:sts of the Company armi its sharrowners and cus-tomers.1hree whoDy owned subsiduries of United l
Resources, Inc. h.nv been incorporated. Souwestcon Propertes,Inc.tThermalEnergies,Inc.;and Pntision 1llll j **
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fourth quarter earning were reduced by notwnxurnng q= rating ef6ciencies, its rigorous contni over opera.
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costs d rept. icing siding at a generating station, costs
? tion and mainterance budgets and its errrgetic pursuit.
i, q incurred in connecuan with the proposal to reorganize of tr6nancing opportunities to reduce interest costs.
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and af61ste with Pubhc Service Companyof New -
- Ihe expected commercialgeration of Seabrook
- llampshire, and a writeeff of the costs da violent Unk t,following the NRC) Mard:1. i990 full-power stonn that struck our terrttory inJuly. An exterxled hcensing decision, coupkd with the resolution of the l
outage at the Connecticut Yankee Atomic itswer Piant unk's rate treatnwnt, should mark the beguining of a j
d' h
aho had an advene effect on earnings for the year. At rrw chapter in Uli 6nancial history. 'Ihe Company
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3, year.erx!, the lxok value of UI's common stock was can now look to the future with mewed optimism and a
$26 :i per share.
- rededicate itself to strengthening its 6nancial corxli-Without the Seabrook write. downs,19 9 earn-tkm through the ef6cient q=ranon o(its core electric A
ings would have amounted to $508 per share, Due to burness arx!a variety of nurketing and subsidary
'the delay in th oe peration of Seabrook, nornash -
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3 Allowance for Funis Used Dunns Construction p
g (AFUDC) centinued to represent a large portion of.
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,,gg reportedcaminesarulreturnsfor19 9.exdusiveof -
8 write offs. AFUIX' will represent a declining pornon of
. Net income (kus)(ooo)
. $ (73,35o)- $ 7s439 -
l Operating Revenues (ooo) ' $ $3t.i88 $ 5:8,938 :
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earnings and returns in 1990, as we twin to recover
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our investment in SeabnxA Urat i through custonrr -
(based on average number of shares outstarrhng)
Cash flow from operanng actmties and after Beforeeffect of SFAS preferred stock dividervis was $4 5 per share. Over the Nago 5'
548 7 22 8
q courseof19 9.cashflowdroppedof'becauseof the Na go
$ (5 87) $
8 8
45 increased cost of carrying the Seabrook investnrnt and Dtvidemis Dedand per Share of Common high fourth quarter costs.
Stock 2 32 $
2 32 We beheve that, with the anticipated commer.
Utihty plant (ooo)
$1,725,936 $1.834 27 cial operation of SeabnxA Umt i arul having obtaired '
Sales of Energy-KWil -
(mo) 5 3o7,m6 5 292.157 a decision on the rate treatment ofour SealmxA TotalCustomers 3o7454 307,237 investernt, the long-tenn financul outkxA for UI b Average Residential Use
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pxxt if we kx4 beyorxl the write offs in i98 due to Peak Load-KW t.og4 4ao I.132,soo 9
SeabnxA arut other extraordinary events, UI earnings reflect the Companyi continuing efforts to imprme Sharrowners 24M6 26 713 ui conwnon stock Price uiPrice per met custommneungusto enwy
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percent for 1991 and 23 percent for 8992. WhDe the M
OnJu%W, Ul reached an agement with the rrw ram tmk e#wt on Febmary n, a9go, UI wiD col-
-g'I Connecticut AttonryGeneral,theOfficedConsumer lect the fuD Grst par's increase over the renuining i,
. Counsel and the Pnnecutorial Division of the Depart-elevenmonthsof theyear.
ment of Pubhc Utihty Control (DPUC) on the rate In in decision, the DPUC atewed a 6ve. par
. treatnwnt of UI) i73 tucent owirnhlp in de Se -
phase in plan for the Seabrook Unit i inwstnrnt, ~-
brook plant. This historic agernent cane after more under which approximately $4 o mDhm, or 75 Pemnt k
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>y than a par of dif6cuh regotiatiom among the parties. -
of the $6io milhan,wiD be phased into rate base dur-It was based on the assumption that Seabrook Unit
- ing the 6nt the years.The decision was based on a wiB attain comtnerckd operation in 1990, and it 19 percent aDowtd rerum on Ul's actual equity capi-'
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included sectlenent of nuny Seabrook.related issues, tahzanon. However, it pemits the Company to earn f
such as the DPUCh prudence review ; voceedmgs.
up to #39 prcent on a higher target equity capi-talization stnature of 0 percent.The DPUC also 5
Undertheagreenrnt,which wasie maDy 4
appromion August 23,the amount of theGnpany) determined that the Company can retain aD camings invesment in Seabrook Unit i that can be recove ed fmm sales of wholesale power and pmirny above pre-,
through custonrr rates was knuted to $6 o miDinn, scribed levels, and can capitalize $35 milhon of the 4
and the DPUC was to determur the Company's base costs of conservation and kud managenent projects, rate increases for each of the next three yean (199r>92).
om the next the pars.The investment in conserva-Since the recoverable investnrnt is less than the Com-tion and kud nunagenrnt projecu wiD be allow <d to k
pany's share ui Connecticut's statutory " cap" on the earn a premium return of up to three percent over the recoverable-=u vi,costsof theurut.thesettle-Company) weightecicar of capital.
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nrnt agreenent required an additional write-down of in addition, the DPUC decision provides for rate the Compny's investment in August i9 9, which design changes that encourage energy comervation and 5
restdted in a net kus for the year. Ilowewr, by resolving -
pmnuwe kud managenrnt arri for a sales adjustment outstandmg issues, including many Seabrook.related clause to compensare for deviations fmm forecast sales uncertainties, and by quantifying future cost rmweries
- lewis. The decision aho appmved seasonal rates for within accqxaNe ranges, the agmnrnt pennits Ul to commercial and industrial customers erective inmedi-pian effectively for the future.
acely, but del,rf implementation of seasonal rates fix d
Subsequently. InJanuary i9go, the DPUC residentialcustomers until 199i.
approved a $55q nulha, or &94 percent, increase in Other i989 nancial results:
6 the Compny's base rate over the next three years. The in 19 9, we incuned a net loss of $3 87 per share 6
breakdown of the inmases is 3 7 percent for 1990,2 7 due to 5eabmok Unit a writalowns in addition, US Rosetety of Service Ut $hareewner Rotwn Un Cash Flow per Shave UIEarnings per Shere -
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'and comprehensive efforts ever crnducted by an electrk
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Five years ap. when ihe curanc esecutive man. utihty at tir rede.alievei. we worked cuneiy with everv-
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asement team cane together, we began a proces of are wno would bsten, convincirs them of New England's -
- k idennfymg corptrate goals which,if achied, would severe need for additional electric capacity and the V
strengthen the Company's nnancial coexhnrei during intrinsicsafetyof theplant -
p the remamder of the decade and beyond and thereby A iong the way we won a host of important
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l irnease the value of our shareowners'investnrnt..
victones and. in May of 19 9, the Nuclear Regulatory 8
n Commuon (NRC) granted Scalwook a low-pwer r
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Deyond de hunedste need to complete arul secure an operating hcense for Seabmok Unit and to bcense...a necessary step in the comnercial hcerning 6'
F teiolve the 6nencial treatnent of our investnrnt in this -
orocess. On F. larch t, i990, over two decades after its f'
plant, our kmger-range strategy centem! on acheving incepnan. SeabnxA fmally obtaired a full-pmver operat.
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high levels of customer satisfaction as the primary nrans ing license decision from the NRC. We expect the pbnt '
of maximizing our sharrownen' investment.To that to be in commercial operation byJune, eixi, we concludist that providmg our custorren with Our custoorn, aiong with eiwtrk customen the highest value was aboluwiy essential Value we throughout New England, owe you, the sharrowsers of de6ned as not only basic electric servtce, but also ckne UI, a deep debt of gratitude. Your con 6dence arri attention to cost. courtesy, reliability and the translatbn unswerving support were key to alkwing Ul manage-of our corporate resources and expertise into service nwnt to push forward aggressively and accomphsh what options that could be achpted to huhviduahzed cusconer had to be done to get Seabrook on-lire.
treds. We then opened the process up to the entire -
M Seabrook's hcensing process was being Company staff for the purpose of designing arri pl.ned out on the federal level, there were equally impor-Implementing programs which would help us nwet tant Scabrook rebted devekipments on the local scene..
these goals.
OnJuly 6, Ul sigtud an historic agreement with Con-This wars Annuai Report is devoted io a dacus-nectkuth Attorrry General, the Consunwr Counsel arul sion of many of :he pmgrams which have allowed us to.
the Prosecutorial Division of the Department of PuNic provide greater value to our custonm We ar extantly Utihty Control (DPJC), which delirrated in broad proud of what we have achiewd for our custonrrs in terms hcw Uli Seabrook investnrnt wouki be treated in 6ve short years. We are Just as proud of our sucass in rates. The agreement, the 6-st in Conrxcticut history, l
strengthening both the present wort! and future poten-cane after more th.m a year of rayotiations arul is irx!k-tial of our sharrowners'investnrnt. '
ative of the excellent rebtionships UI has forged with Nithout question, our involvenrnt in complet, state regulators and elected governnrnt of6cials.
Ing arr! obtaining a hcense for the comnwretal operation The agreement formed the basic franrwork for of the Seabrook nuclear power plant has been our cen-the rate case 61ed with the DPUC last September and tral achievenent. Five years agg the plant's eventual dafdal inJanuary i990. That decision is covered in-operanon was anything but a certaintyt At the time, our depth in the Financial Review and Managenent opporrnts' strategy of placing every conceivable legal Ducussion sectiors of this report.
arul regulatory otstacle in our path had put the 6nancial Ho
. we haa io pay a p,e,in i,8,io (m.
viabihty of the project into question in the e,s of the the Cc npany from the cloud of fuuncial uncertainty puNic armi even sonr withm the 6nancial community.
caused by Seabrcxa.To implement the agreement, UI.
} n fact, that strategy nught have waked had notreduced the recoveraNe cost of Seabrook Unit i to $4o United Illummanng mounted one of the nmst ambitious milhon. This necessitated a non-cash, after tax wnte.off.
which resulted in regative e.unings for the gar.
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3 cah AHowance (nr Funds Used Durmg Construction sais in our territory. We wiu continue to do everything 2
' b (AFUDC) wiu represent a daim ng portion of our we can to stwngthm and enkrpe our rnarket.
8 reported earmnps as the Company begins to recover its Concurrent wah a rhe in sacs, UI was aNe m 1
aDowed Seabronk Unit t investnrnt through rates In o#rr its customers durct savings by decreasing the cast e
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addition, by resolving aD the outstaruling imues rehted per kilowatt-he,ur by 67 percent.nat decrease b in -
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krge part attributable to our diverse fuel rnix, which has '
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rate increase decision by the DPUC permit UI to phn for afforded us flexibihty in using the fuels ofleast cost to the future with a greater degree of certainty.
generate power and has'exparried our abihty to negotiate ;
It b a tribute to the strength of the Company's favorable fue! contracts.
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strategic plan aiul to the talents of the Companys t ooo.
The demasa cost d aatricky to our custonrrs
' dedicated emplowes that, even under the shadow of b aho a testanent to the effick ncy of our system. Each par smce 19 4. our ranking among the nationk most Seabrook uncertainties, UI's record d accomplishnents 8
from 394 through 19 9 is truly impressive.Dese accom.
ef6cient utthries in terms of generadon has risen, to the 8
point where, during i9 9, UI's generating fadlities were phshnents cover the entire spectrum of Company oper.
6 arions and business ventures. ~
the fourth nest enicient anxmg those of tie too krgest Since fang io a k>w d $9 per A.,e during de usom. we am aso consistendy sa new Comemy rec.
third quarter of 194. the nurket value of our stuck has cais for heat rate and system generation. In addition, risen steadily, eixhng the par at $34 23 per share. At the our service reliabihty has been exceptional and, as dis.
same time, the Comp ny has been sumafulin retiring cussed in hst par's Annual Report, we have received much of the high cost debt incurred during the peak h4h public praise from the Connecticut DPUC for our Seabrook constmction phase, and has done so without '
commitnrnt to custoner service.
having to dilute equity through the issuance d common Underits pnt management,UI has made
- stock, significant changes in its phiksophy regardmg energy I n the Financial Review section, there appears asupply and rate design. Through a sophisticated chart comparing the Company's shareowner return with approach to conservation and load management, we that of 19 other electric utihties which are similar to UL have created an environment where both customers and he chart shows that during the four arul a half years Company bene 6t.
ending in 1969, the total retum (dividends plus smck Our erw.iook eirrgv programs have iowered price increase) to Ul's sharrowners was 375 percent, our peak imd by apimimately 4o megawatts. Many of hat ranks Ui as first among aD the peer group compa-our custoners, especiaDy our commercial and industrial nies analyzed and b better than twice the acer group customers, have enjoyed substantial savings - as much average. The inutase in the price of Ul stock during this as is percent - due to Company initiatives. We, toa6 same perxxl was 1095 Percent, which is more than twke Mve benc6ted through selhng some of our " saved' the peer group average of 8j p tent. Ve beheve clut capacity on the wholesaie power market.%cse programs 4
thew numbers represent a clear expression of the grow-ako provide a kmg. term bene 6: to txxh customers arul ing con 6dence in UI's future, as we have progressively the Company, sina by reducing our peak kud we are ovenone obstacles armi captured new opportunities.
delaying the need for addmg expensive new generation.
Our wta nm saies incmasa by n.5 pmem during the 196 49 tine franr. UI's Business Retention 4
and Exiunsion Program, aking with other economic de-
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ti our rate design philosophy away from a strict adherence explore aD possibili1ies that have the potential of enlarg.
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to traditional cou of-servu]e rates toones that permit '
ing our market and strengthening our Cornpany. One 3,
customen expanded freedom in selecting the electric such possibihty arow in 19 9, involving the bankruptcy.
8
~ f the Public Service Company of New Hampshire N
service optons which best nutch their sped 6e circum-o 3
stances.To accomphsh this objective, we have gradually.. (PSNH). After careful study and analysis, we put
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expanded our menu of flexible rates for customers, espe-together a proposal that would have resulted in an
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claHy business customers in the 6nal analpis,our -
af61iation of UI and PSNH. The proposal was an i.
1 optional rates help business customers to be mere com-exceDent one arul would have bene 6ted both UI cus.
I petitiw in their own markets.
tomers and shareowners.
l The deveiognwne of sussiauries, begun under UnfortunaMy,as regotations with PSNH credis
[
present managenrnt in order to take fuD advantage of tor and equity groups devekred,it became clear to us cpportunities enwrging within the energy nurketpbce, dut the price of winning the competition was going to.
ks begun to flourish and now holds signi6 cant potential be too high. We came to the decision that to punue the :
for our future. With major construction projects cur-proposal further would have put our shareowners at -
rently underway in downtown New Haven and contracts sone risk, arri that was totally unacceptable to us.
for energy-rdated products and services tiuoughout our lherefore, we withdrew from the active bidding process ' '
service terntory, our unregulated subsiduries are moving in mid November.
toward tir desired oal of represennng a signi6 cant par.
Nile we regnt not being able to complete this F
tion of total corporate revenues by the year 2000, particular venture utxler our preferred terms, we are
} n the last 6ve years. UI has cone a long way con 6 dent other possibihties wiD artse which wih prmide t
toward estabhshing the kind of positive relationships attractive opportunities. We wiu pursu them aggres-with au our constituencies that will allow us to accom-sively, but always with the urnierstarrhng that they must phsh the things we have set out to da There can be no be related to our core experuse and present very signi6J question that maintaming the goodwill of our regulators, cant opportunities for benc6 ting our investors.
kral elected of6cials, conununity leaders and, of course, The bst 6w yem b.m been good for Unita custone and sharrowrers is central-even critical-IUuminating and its shareowners.The years ahead wiD to our success.
continue to present chaDenges as nu as opportunities. -
L why we han been grati6d by tN pubhc We sincely bdm we haw pmidond tk Company m -
pronouncenrnis of support we have received from the
- meet these challenges, to seize these opportunines and to DPUC, of6cials from the cines and towns we serve, and make the next 6ve years ewn better.
the many groups and organizations with which we have constant interaction. That support reflects the steady rise in custonm percepnons of our service and comnut-
/
g ment. In i98:, the overau impression that customers 19d Gronat W. Eowanos,jit.
of UI as a company was 80 percent favorable. By the end Giannan of the Boardand GigfIrecunw Oficer of 19 9, that 6gure had risen to y percent. We have 8
worked hard to gain this support. We are dedicated to t
maintaining it and making it even better.
l IbowtDJ. Gnossi President and Otef Operating 2.er l
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8 6,547,826,000 KWH o(electricity.
Owthad Lku Supervier,
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impact on customer satufaction was l
generating facilities, tu transmission our reliabibry index d99986o penrnt.
,h and distribution symem and, most Fce many utilmes, thew a
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importandy,the people who keep the numbers are mm goals, For UI they -
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insist on nredng or exceedmg pr-in -
By every neasurement, UI's _
and preut. We tne pride in being I
operations perfarnance over dwlast at the top of ourindustry and we are -
o 6ve years has been a major contribut.
ever conscious of the important rela.
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ing factorin proddmg ourcustomen - tionship between our achievements better quality service and greater and custonrr satisfaction and corpo-O value. While stadsdes do not teD the rate prontabihry.
N entire story afevcan help to give an just as wearejudged by our h
indication of UI's success in serving ability to sustain top notch service
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its customers and its sharrowneis owr extended periods of time, we are
!astpr forexample,inits
-also judged by our ability to resporxl
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irtes,Dearic Ught & lbwer magazine catastrophic natural events. Such was ranked Ul's gerrrating plants as the
_. the case for Ul this past sumnwr
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when an unexpected storm struck kt the ranking was based on the Com-our region.
pany's achieved heat rate, which is OnJuly noth,just as the '
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detmnined by 6guring the number of evening rush hour was at l
p Bridsh ThermalUnits(BTUs)dheat its ebb, tonudo hke wirsis E
needed to produce a kilowatt-hour reaching so ntph.,accomps.
h (KWH)ofelectricity;the kmer the nied by violentlightning and R
?I number,the greates the ef6ciency.
gall-baB sized hail Nasted the
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ii UI's heat rate last year was 9J89 U1 service temtory By 6:30pm.
O BTU /KW11.
4,o00 Ul customers were without 8
., 7 -g UI's success in this area was eiertricity. Homes, apartment
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no aberration, as it marked the houses and businesses in sections of eighth consccuttve pr that UI has Hamden and New Haven wm reduc.
been rankedamong the top :o most ed to rubNe;utihtypoles hitalat43 ef6cient in the country and improves ckyree angles; cars wm smashed.
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upon our previous 6fth place standing. majestic oki trees wm completely There wm other notable uprooted; and large rnetal ob ects were 7
9 actuevements as weD. In 199,the bent at unbelievable angles araf kir l
Company achrved extrenrfy produc.
lying in the middle of streets.
,U tive gerrracon with a ret output of a
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i with rebuikhng an entire distributson hN ( ~
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Working double shifts. U1 hrs aews, W I l
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with help from out-of-state crews,
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following weekend, a remarkable 3
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age that had been done to the systern.
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efforts of personnei from an depart-f,,,
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h A c-ks, respect and appreciation of tens
, f d;..... I mentsof theCompany,canwd the e.
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'.L' D elected officials of dw most hard-hit
,. ; [4( y of thousands of customers and
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communities.
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-- e which we are Judged is our success in
!J f.
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<v s
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Change cwer time. Here, again Ul has wn a conmtent performer.
71 A. 9
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p w
y in % uunished its san-
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ning actmties on two bulk substations
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,. g. t m n,e ne new subsmoons wiii a
sutstannally meruu our transnus-
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alkm us to handle the growing 4
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j@; ; 'T7.% D..9 CM A-i voltages to the lower voltages which are
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'4 these a nemssary to convert high r -
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-- die amount d transmindon bne h h b a naturaDy g piwnommon, wtwre the streryth d ekrtrk power h diminintwd a$
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k b trarumktal over kmg duranca. The aim here, m k k with an i
4, many d our eflorts, b to run as ef6cient an operation as possible.
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' J-UI he lecune a leader in the study d another trarumb M
g; e6an plenamennn knmen as gabopirg? Galkying b the resc.
j L -.f.+...-I tsun d keel conductors to moderate wind vekxkus, and can reedit i
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T in a short circuk or damage to supgxsting structurus or trans-i I
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k does ocrur the result can be the kes d power to a sgni6 cant j
, k 7 / 'I population dcunomers l
l In order to mintrnire the chance d a tnajor outape due to j
pauoping. UI has perfornal enensive studrs on all the devkas used j
to miupate ks effecu and las butated tie apulparnt most appmpri-see for our sprem. Our work in this ares b l
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j for the best gxasible customer servke.
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No matter whether k be planning, meardsing. reacting to l
devastating natural events, or the daily maintenance and ageration d our system, Ul b a leader. At Ul, we take pride in our perumal l
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=y umy d e our sha,cowne,s can be p,oud and on m ou, j
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1 Uissa,wwnm were firsiintr.
I, i duced to the klea of a nudear prmer r
n a_,-
i as ymm agoin de 1968 Annual
)
y Report. During that par.the Com-f 9
pany had depatched a team of l
}
engiwrs to work with other plar.ners l
3 at Puble ServkeCompany of New y
Hampshire (PSNH)in de serfy plan-
{
mng stage dde plant.Two of those u%g l
enginem, current UI President ard j p," d-i i
Chief Operating Offwer Rchard f
(
Grtusiand SeniorVke President
'{fh((
j jams Crowe, haw stayed daic to the
.- l 7.9 f
I.
g project in its many phma ewr since.
.T
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ij From the very lusinning. the I
project was beset by confrontaban
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and dela s. Inns before the first
.,_'2 shovt4fJ of dut was tuned over,
.. a k,
Seabrcx4 project pmannd were
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f enneshed in rnyriad siung. construc-
).g
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t hg* Tii; tion and emirur.nwntal permit battia. At the sanw une,it was clear 1J1 ~'
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to those who were taking an unbiased
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kx4 at the regian s energysituation
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that New England treded this plant, t
that capacity probkmis in the region y
were going to gmw pridpitously over
.~
f
.f the next few decades and that nudcar powte was the best answer. Newrthe-7 i-kus, because of initial confbets, the M amilaam Che (rvM mecco offwial grourdbreaking did not occur amun a mr grea until AuFust 1976,eight pars after the prosectiannouncement.
In oir respect,w.i-doii went smoothly Seabrook is arFuably 4i the hstdesigned and best constructed
(
plant in the worki.De people wM ownau~ dw $nt's consnuctm and py, f
the workm thenuelves wre deds-g i
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'j cated to quabty frtwn the wry
_ which was to becone Seabrook) aos)MW)of desperately needed 83 bepnning.
managenwns arm for the plant's joint elatric power.The plant b a tribute
,l' E
On other fronts, however, owners Urder Feswit ard with the to de experthe aid dahcarkm d the w
there were a host d difficulues.1he -
assutance of Dick Grussi andJim people who desyrred and built it. its i.
NWlaCles Created by MI dien (roWe, ConRructitm we reRarted in ditublc Contaltkrtwrit Rrtdure has k
- s hlopponeno,akmg an orderly fashka heen retala the arongen in the
'e' N
with cournlem.sometimss contre-Conumction 6naby con-wurkt,ahic to withmard a maPv
)
doctory regulatory revalors in
- ciudalon Seabruck in 946 and fuel eardupake or even tlw dirat impact,
j 1
constructkm ad environnentalman-waskudedinOctoberof thatyear.
of a jet aircraft tu intrkate safetyin-
. 7 dards, hd to delays and higher amts.
But,the pla a remaired idle, trapped depth sywems protect againa any Eventually,the crats that prt>
In a seemingly hapdens web of regu-conceevable equspment failure or w
human ermrs sent prtwide multiple tractedispaland reguleury battia latory ard higatkm corutraints. lt entailed levan to take a toll First, the -
was to tw UI's current Chairman and backups. Soingraired we safety in 1,
scope of the protect we cut back ChiefIsecutive Of6cer, George the comckxums of Scabrouki.
f from two un6a to one.Then,on April Edwards,who would guide alw project design engirsers that approximately i8 s9 4.PSNH declared a temporary atsp by arp through thelabyrinth of Ao penrru of tre totalconstructkm 6
s
]
suspetuton of---, on Unit I legaland pohtkalobstrucuans cre.
ants were safety related.
lucause of mounting 6nancialpml*
med einxus entirdy by the rehaalof There haveimen many herra l
nems.PSNH we ewrnually to seek Massachusetu authorities to paracl-in the Senhnx4 saga,ard a gtxxl h
pnxection by fdtng under Chapter ia patein energency planning forthe
' many of them are mill affdiated with M
of tieuslunkruptcyccule.
sin Comnunmehh communitim UL Seabruuk wondd not be a reahty i
h The temporary suspenskm that lie wkhin Seabmokiten mile todayifit were not for the hard work.
y could wdlhave become a permarrnt emerpency planning rone.
vison and unique taleno and creauv-f cancelhtion if U1 had not taken a Under tir stewankhip of ity of UI people. With the tortuous i
leadership pimition at this cntical Edwarth and his team of Senior Vice road to full beensing now behind h
junctursJohn D bwet, wim was at proklent Rotard Comstock ard Vice tlwm, many of ttee peopic can now.
g h
the tine UI) Chairman and Chief Praident Richard Ikinemann UI turn their considerable talents to tir
[
O faecutive Of6cer, tmk pennnal uvulertook a mapr campaign on alw gcui of rnaking Ul a highly cuccessful 9!#
command during the dif6 cult weeks federal level to keep tiw plarni bcens-ard prontable companyin the years h
that folkwed tie annoururnent of ing proces on counc. One-tyone, ahead. We can rever kwget,howewr.
the conuruction suspens6an. lemetti victories were won in the courts,on everything thew pest e dd to wve l
j 6rm contruleflectivdy catnud the the floor of Congren and in regula-SeahnxA and help eae the electrie l
- i fears of the 6nancialconununtry erd tury chambers until,6tially, on March
' supply situation in New I;igland.
j5 kept the pnyctijaint owrwrs unb e, s990,ifw NRC deckled to grant J
6ed. He we also inamnwntalin the SeahnxA a heenw for comnercial r
formaton of New Hampshire hnkee, operanon.
Intheend Ulcustoners l
]
l.
akms with elatrk consumers t
Q thmughour much of New inghnd, g
m the true b,nencune semi-A
}
repracnu t,i3o MW (Uli share is d
I 8
1 wav+ ra m erow e monsm eswo-w=e,s
.,. mw w.new ee eww w me wp w f
. j I
[
EmsmNG Out Cusumtras j
a a.
t so what they ronDy want art tred, by to simus kr any busines k rmwing our gams ad sade
}'
s
, % i'
.T satisfying its custanm. At UL we not contmudy to guarantee that they i
only sw k as the key to our succes, are up to date and helpful, aval treat.
but emssary for achieving allwe ing each customer with the attentkm r'
want for our abarmwerrt and mpect he or she deserva.
f
]i As we have already stated, the in its bmadest sense. value l
fundanentalwayin which UI seeks nearn helping our cunoners rnae
\\>
to sausfyits custamm b by providmg mise their utituarkm of our pm:luct g
rehable electric smice and by prtwid-while sninimizing assocsated costk q
ing rnaximum value for every douar imentiaEy,our goal b toirlp cus-M
.g-spent by our custamm.
toners uw electricky whely,
,M A couple ddecades aga value ef6csently ard petuluctively.
t was narmwly de6 red within the &c.
h servke we renderis an tric industry. lwically, from the important part of the value our cus-utihty perspecstve,prtwid ng value tomm receive from UI.In order to 7
meant getting tir power from yeirr-facihtate their interacuan, UI has ating plants to the consunm' hones expanded its energy related products l
or busmesws. An> further defmition ard semces for both residentialand of value was pretty much left up to comnercial/industrialcusinmers, consuners to de6rr in temu of their h centerpkce of our resi-indwidual abihtus to utilae the eice-dentialeffort isour Good Cents tricity they received.
program. Good Cents b an umbreDa Twenty 3 ears hier,the lard-term for a host of conwivanan pm-scape haschangal dras&d; As pa.,imagyef6cient errgy prices have risen to miere they technakvics and buildmg standards now have a more noticeable impact all targeted toward helping the cm.
on household or busurss budgets, sunergain guter controlover UI.as an erwrgy company, has broad-electricity usage and costs.
ened hs de6nition of value.
In 9 9,themostactivecom-A Nolonger does value end at porrnt of our effort was the Uccxl the nrter box. It has hvone an d-Cents Home. Here, UIis working encornpassing term whichincludes ckmely with contractors, construcuan prtwkhng rehable electric servke; giv-companies and devdopers in its serv-ing customm enoughinformanon in ke area to integrate the very latest in 4
a usab:e form to aDow them tomake energy ef6 cent design,construcuan infonmf evergy daisions;hardimg and technology into rrw hone con-JGe Dwibna had promptly artf Courteously a0 customer structKwt The effort represents the at in,,,,,ni,y questians and pmblems,hstening to most achtious undertaking ofits wh$"C N custonrn, so that we can determirr kind in Conrecticut history.
"TM,,","d marunwn w auderm WGrkmg On td40G140 Cents auples ccourunum in Smden.
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se Our succesin gainiry de The Company also shaped thmugh the pim......of the '
cogeranon ddevekgers ard bulki-les working relatxins with comnercial rued to bulk! additionalgeneration n
I, r ers has substantuDy exceeded our ard bdustrialcustomers.We betrw -
fa:Dities to nwet our kud.
initial expectatxmt last year akur, that value for our businus customers Rate design is another strd 74ocontra:ts were signed for nrw means helping thern to uw electricity dat VIis employing effecdvely to p
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dnihngs which wiu comply with UI) in ways that enahie dem tole more enhance custoner value Hve pars
- j
\\i stringent Good Cents stardards.
onmpeurive in their own markets Ul ages UIinyan a push toward a rate i
Theimportanceof theprw due this by working alongsade as
' design philosophy which would gtve I
e 1
o customers,6rst, to learn the spectfus
. cusioners the freedom to chocne, 8.
gram did not scape tie atwndon d top federald6eials. United Scats d their busines and then analyzing from a" menu
- of different rate SenatorsJoseph bel =rman ard how. by nxxhfying areas of their options, the test match for their spe-Ortstopher thld spoke ai cmmo-cperauons ce udlains enore effstient cine circumstances. Our inruwative nicsinvtiving twoof our Good Cena aquipnent, dry can exercise greater rate packaps have had a signi6 cant modelhomr sits. Each praised UI's contrtd over their errrgy expenditures, positive impact on lowering peak initiative in urulertaking a pmgram importantly,our involvement kuds, reducing our customers' bills that helps custoners save money on does not erd at this point. Instead of and also pmvidmg an effecdve their energy bills while addressing the handmg dem a report and feehng trulucement to business development State d Connecticut) stated pohcy dat we have net our responsibihty, in our territory. Moreover, theJanu.
l d seeking greater cornervation of we walk them through tie whole ary #990 rate decision by the DPUC l
energy rumources pmcess,sonrtinus even helping to sign 16 candy exteixled the scope d j
Ul aho pmmoted the utthra-secure 6nancing for changes that our menu of options.
tion of energy ef6cient applances ard include 6tdmg. Instalhng ard even RnaDy Ul b also enhancirg heating and couhng equipmentin operatmg trw cquipnrot.
both custoner and sharrowter value huma Our ror.n ard centralatr Thre efforts lureimpressive ty broadening its corporate horuons.
corzhtuming turu.up and relate pm.
muhs in 19 9. Sonr business cus.
The more committed we have 8
gram allowedM5 custoners to saw -
tomers were abic to reduce ther ensgy
!= cone to providmg errrgy-related monry thmugh gnator ef6cienty. in bills by as much as 15 percent. In one services to our custoners, tir more addnion 4at customers took advan-case, UI's leadership was crincal to the we have cone to understand that j
tageof theCompany)GoodCents survivalda manufacturing facihty some of these services can futle Heat Pump progrant Heat pumps which had tven taryered for ckisure, enhanced thmugh entitis whose pri are a crut ef6cient alternative to con-thus saving not only 42ojobs, but mary responsibihtia are not the ventxwul heating aruf coc ng, aho the tevenue the plant contributes.
generation, trarwnission ard detri-f k
to UI.
bution of electricity. Therefore, the 5, ~j pow.lhisalknvedustosell UIalsilenc6ted from effons Company has created outsidianes thatled toa 4o MW reducdonin our which, while taking fuD advantage of
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peak load Uli techfucal ard 6nancial expertiw, nxxe er on the wholesale market.
i in the long run. both customers ard I
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Company wiD benr6t from these W Oenaung Nw.
Asswa Carper a lira, reductiots in another way: ramely, confen wsh Ul'sice
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Valhlia !> rector - Sales a?
The Enterprie ti coenmrmal Muhams Drve4opert bunns.5hrkon, one of a number of orfres urikang The Gowrnne suoi morase suchnakgy-Centes. Nr= Hawn, VI =
eperate the bu%ni g
energy centi 5
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have the fremkun to explore energing 4 l
nrw typortunines within the arrrgy I'
rnarketplam.
l in s 989. thrw tutadiarks wm especially active. Souwestcon m,_
misa,_., man
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cal hotel teing conuructed actpcent j
to Urs corporare headquarters in
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downtown New flaven.1herrnal j
-i Errrgus.Inc. b ovenecing the con-I strucnon of two energy centen and will eventuaDy operate tiene facIhties h
to prcmde all the heating and cxxdmg treds d twolarge dface bulkhngs.
New Haven's Gcwernnent Center I
and Century Tower. A third nulmuts
,gy ary. hecision Idwer. hx has turn I
estabushed to help kral bustre addres special electncal rash wuhm dwir premnes. By the par aan,it is d
protectatt that a signifrant puton of total ctyporate revenues mill awrr
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frtwn our subsidiarks.
Becauw in thelasr analysis.
success or failure h determirstl ti custoners, we have teen grattfwd by tie strung kvyalty we have enjoyed itrn cui customer te Our approval raung in terrns of the impressiasi our custcuners have of the Company chmbed steadily thrnugh the i9fkm reachmg a lugh d w per-cent f.worabk last year.1his as a ranng to be envud by ewry crunpany, cslenally thcme in dw electru indus-O try lo us thu neans ttut we are on the right tra:k and that our dedga-tits to Our custonen is being reogntied ad a[grecaM N
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of both pubbc and privateprties.
Hamden himarJahr (arusont and Ub I
orporate cornmitment encom-
' lhis Nst jear. VI tearned up
- nhn Nuteher 4t, mn.en of sans-paus two areas at UL firm, to be a with New Hawnh ABC televhton se*= nuou ionsnuam erarm.
fnend mi partner in the communi-affihate, WINH,in a parlong series en the town) harder g
ha m.
ties we serve and second, to mamtain of prograrts chronichng the nuny f
const.:ctive working relationships different faces d substance abuse. UI
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F w h,e,dm ewed aais a,d Cha-a,d Chiemecutt. os m;;-
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key <l-4=iand a at local, state ard cer George Edwarth personaDy d'"'"""
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lederallevels.
appeared in four UI-produced televi-
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We are dedcated to ful6R;ng sion commernah i
our obhgations in thee areas, on the subjes.
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laause we feela sincere sodal which wiee brcad-
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responsibihty to the people and inni-canrepeatedy -
l tutions in our service territory, ard throughout the jear.
i tuause we are convmced that main-We abo made avail-r tairung positive relationships with our able,through a" hot-l conetuencies b an essentialingredi-kne" number, an l
ent in our overalleffort toprovide informattve txxAlet l
service and vahm We cannot succeed aluut how and where to
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unless they succeed.1he future wei-seek help for fricrds or rela-l fare of Ut binextricably knked to the tives with substance abuse
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wdfare of the communities we serve.
probicms.
On both counts, i9 9 was an
- Ul aho hosted an orga-8
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commitnrnt,Ul duetted a great deal Don't Work,* which b the Con-
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of attention tothe issue of drug ard tuiticut Gowrnorkwn program alcoholabuse ard embarked on a designed to bring bustra ss ard number ofinitiatives durcted at government together to fight the l
g mobihzing community support for problem. In addition, we spon-confronong the problem.
awed" Dribble Against Drugs,"an
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l Sulutance abuse ba cancer
- effort which brought professional y"
eating away at the health of our soci-tasketballplawrs to Bndgeport to
-I ety It threatens nearly everything we sene as pcstuw toic models to d
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hold dear.our famthes, education, boys susceptible toregative peer
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f econornyand the quahtyofourlifein pressures. The Cornpany also par-f f
general. Moreover, k h a problem ticipated in the" Youth At Rak" s
that has grown soin anagnitude that program by sponsoring a young per-l government byitself can nolonger be am at aninterne twc week camp for l
expated to develap ard impienent teenagers with signi6 cant drug ard l
all the solutxms. Any erective behavioral proldems.
resporue must be mulo dmwnsional, I
calhng on the strengths and remurces 1
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' So mmprehensive was UI)
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tion for its superistive eNurts in '
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g annietttre submanor abuse. State I
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ar*e n.nhory wa innrunentalin g
our paining the regnnbn and has l
l isen a wrong partner with the Corn-
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pany on puny andal, energy and l
ax somici u a-g ;'
e It is a credit to the commh-e,%
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ment toandalratuvuibihty dbnth I
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UI) executive nunagenent and hs I
p empkyus that,while substance b
abuse was given spedal attmtlan in 3
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- 9A9, partkipation in oder social C
programs aleo reacfwd tww heights.
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. hw many pers, the Company N
h-has twen at the foreimnt danorts to f
help custoners at ein knver end of 4
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b the emnomk scale cope with their Ulcontinuedlis fuD support d G= wor W l.dwaak. Uh chairnun ame na 34.a d
a erergy bills. In i9 9, Ul cusoners, Unned Way. Both employee and cor -
bad h= Alnuns e dnas alnar A
1-a aanm.:ei.a echaario.
boistered by a matching grant from parate donadans set new highs,with f
the Company,esabbshed a nrw the totald$:42,463 representing g*
record for contributions to Operation r'early a 7 percent hu:reaar over our Q
Fuel, the statewkle einyy usinance i9A8 rard. The Company alsoaus-pergram. The combirud taald dinated a *5 muting for hxd Drtve
,c,. w -a d o no, s_"
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j feCordtd in 1988 wbkh pitMded (Dns dC&nned gooIIs In addman,UI conanued to for arms kxx! banks.
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admhmter the Southan Conraticut Again thh pan pu dw ui m.a ii.
2 Action Team (SCAT)pmgram. SCAT Company worked with groups and.
M*,;,N is a pusic-p,tvace pamw,,s,p wha o,,a,*anons e,mughoui m
- e q
pmykks state funds far the weadwn-temtory on programs to help eenkr g '.;m 4, ys T
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Idtion d qualdying households. Since citizens, duabled pmans and the
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89&.565 urDings have been weath-economkally daadvantaged. UI's 4
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wind thmugh the $ CAT pmgram.
educational ser*a pngram,rary-
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p},; frrg-
.w na. o, e e_g, _k.
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bsus involving de Cottgaanyh Sea-intetings in dw pretedpal cities in the 2) f prten drough tach grade in as achaal tutx4 investment,dw agruernmt Companyifranchhearea theymeet l
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dntricts. in addition tois energy '
dmxdy saved customers atd sture-rtfuierty wtd> elected officiah in all l
earnponents,the CompanyPAdopt.
ownman esumated Sio milhon in 7 munkipahtus; they work te de s.$chnot," bi % tory, Mud.
svoeded regulatory and htgiation costs.
mate level, paying gartkvlarly(kme
't' t
Grant OceanCimstaandoths The poutive reacton dpuk attenuan to legislauwe initiatives that f
- i prtyrans have pamt de rupect of officiak and cunomm throughout pertain to erwrgy, business devely.
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educators throughout the regon.
our arrvke territory so the agreenent tnent and dw economy,ard they Un dedication tomr6al and sulsequera rate can decision ako interact with regulaturs arut puhhc respmsibihryis agualedinintensny evidences theestraordmarily high interest groups to developjoint f
by its conunitment to nurture epardin whkh Un h held.They have efforts in support of state rirrgy pd-
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and nuantain thcme relationships cone to recognize Urs comrnitment icy. In short, Ut is always there atul
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whkh help create anoperating and to this region and,in turn,1wve pub-wilhng to help. Our stul b always to i
repuhtory atmosphere corducive to hdy suppurted our efforts to huure ir part of the solution, ncr: part of the j
pnwimg execlient servke and vales mntinued excepnonal electric power proNem.
l i
Thereis really ordyore way for thh service.even wtwn that nuens
& ulanate beerfwiar6es of onmmitnent tole pbyed out suc-nigtwr rates.
our many inndvenwnts are Urs cus-i cessfully, and that h by working bprenuons of puk support tunwrs and shareowerrs.Taking an I
ekudy with reguhtors, elected and were aho freely given duttng and active positive intemt in tlw affais of povernnrnt offriah, key decision-after dw restoration effort whkh fol-
- many of our Ley constitur ncia serns i
makm and opinionleadm and other kneal latt jutyi violent stum. haver '
to strengthen our busmrss. For cus-I important constituents. Our obscttve outages that pmist for an exterikd comm,a raunger UI nmuns l
h to work tur<norr with thee pro.
period can severely test the panence maximum valueadded service. For pie to lcam more about theirinds -
of txxnmunity offichk respanable for shareowrers,a aronger UI nuans a f
arut agersh, so that we can help pubhc welfare.% imtance had the greater retum on their inement.
develop pnyrann which satisfy both potential of tring partkuhriy volatile, ht's the way it should le arti, their marriates and our goalt twcauw so many propie kat their with United Illuminaung diatithe t
6 While UI has been pursuing hams and most of their pomwssinrs way it will always te.
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this courr actively for the nest fu AB this nuka the overwheltn-m w
3 ears,it was in i9 9 that our hhors ingly positive suppnri UI received au j
A rtuDy began tolear fruit. Cenainly, the more impressive. impressive, tant l
dw trFanated agreemmt rqarding not surprmng. t=cause Ul propk had
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our SeabrcmL investnrnt,dacussed already estabhshed strong relaton-eartwr in this Report, staruh as a ahtps with community officiak and prineexampic UIcould not have standin crmunuous contact with i
reached agreemmt with the state) dwm throughout the diffruit onleal.
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Anomry General, the Consumer Furthermore, after fuB rower was Counsd arut ttw Prtnecutorial Dw6 restceed, we du! not walk away. We l
mon of the DpVCifit had not stayed on to help rehuud de most already staNisheda foundatkm of devamated areas.
j mutual respect and trum. Besides pav.
UI repnsentattwos attend aB i
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ing dle way for the fuul fetoldtion of the aIdermarut and Common (Dunc0
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p Tt+YtAt SuMe Os SincTro hMN(W AND $1ATISTlW DAt A a.
it#9 no88 -
io87 25 OW0mWil440tir Sales (000)
Residential IA8 363 I A793i8 1,78o.333
,\\
!4 j
Comnercial 2.254499 2.374 2m 2.o4 289 3
6 4
1 Industrial 8.809.189 1.186 336 1.2Ar5:
j Other 6o427 61 333 62.246 Total 5007 m8 5 292.157 Si233,ip l
Pinenstelheauens (000) y Sahm of eiectr6ctry-Residenaal 8 205 883
$ 2m.r70
$ 888.740 a
Comnwrual 289.8 2 208.8ot 195 972 5
l t
Irdustrial 92455 6
9 465 sm.354 1.'
8Y Odwr 9 943 9.n2 94 0 8
9 Other operating menues 1 348 1573 3 077 3
Totaloperating revenues
$3i.:8:
58.938 497A23 Operating expernes enduding incone tax expenw 309429-360998 361 586 1
Incone tan experne (credit) 3743 44445 50433 4
Alkmance for funds used during construction 65443-75456 814 9
?
Net e&ct dSFAS No go (152.147)
(324 4)
(86 528)
)
Odwrincome 3344o 24 09) 26.282 3
Interest charges 183 975
- oz.ogi 97,928 4
Net income (kas)
(7305o) 78439 8449
[i a
Preferred aid preference stock drykksds 8.233
- ass 1453 income apphcaNe to comrnon stock (81 583)
$ 67 29s
$ (33as) u
'=r -a-(000) 7 a
t Long-term debt 88.55:
$ 865954 f, 79.t26 7
6 Preferred and preference stock A
Not subjat to nadatoryndempoon 70.mo 70.mo 7oom 4
Subject to mardatory redemptkm Mooo do.om 4
Common stock equity 362 584 4nA74 8
43 564 Total
.320. 3r,
$i 443628
$ia4479o common Stock Number d shares outstanding at year-etd r3A87 748 13A87 748 13A87J48 herage number dshares outstarduig r3A87J48 83A87 748 13.887454 Iarnlngs(kus)pershare(a)
Before erect of SFAS Na 90
$548
$7 22
$599 3
Nier ebet dSFAS Na go
$487)
$4 5
$(.24)
A Divdends dedared pershare
$L32
$L32
$L32 4
Book value per share
$26.8 s
$4is
$3858 Sharnwnwrs-local 24Ac6 26 713
- 28. 57 in connsticut 1:04 824 2 s3 265 8
1 in Company territory 7aoa 7A27 8.3os eenseel Itak kiad - kilowatts 1494 4m 8.832.im I.o3W Gerrratmg capaNhry at year-end - kikwatts (b)
.257 4 80 8.256 780 8.240 5m Numberdcuston' es 307A54 3o7 237 303 794 -
Kdowatt. hours per residential customer 6.8 a4 6.804 6462 Number demplo3ees aA27 842o 1404 c
Total pirytull(om) 65175
$ 62 387
$ 57 M I
Total tanes (mo)
$ (37,n2)
$ e67:4
$ 33 224 Utcuyplant atgared (ooo)
$ 1725936
$1.8%27:
$t,718 3m a
Gross property addmons (ooo)
$ 1424 5
$ 159398 4 854472 8
Total aiwts at ) tar-end (ooo)
$ 1.i&A.239
$2 365063
$2.17&.002
(.
g (a) Earrure per share beeni on the average numter el sharen custand:ng
!b) kepresents swamum drpemieter an k.ad<armns abihry derms the winiet perwalint !*w England Powre Puol purpuses,includmg Uli share of capactry en Connecucut Yankee Aeonuc Nwer Company (55.U0 k'W).
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so86 ses so84 081 to82 so8e soBo -
I s.7m3o2 IA%59:
I A42 564 1A37 584 1693354 14 1.2:2 1 460,353
% ' 4.1 8414A89 IA14192 1 729427 3A574i8 s.578 33 8 551.228 8 568A38 4
1.232.209 3.286 02 3314028 1.255A24 I 23tM2 10 5872 34:5 274 4
a 4
65 533 684 4 7:4 98 71485 4 935 70.299 703:3 49:L933 4A19.249 4][74f7 4
4 22408 4 475164 4347.911 47:5078 f
$ 178.268
$ 19488o
$ 18 2o9
$ ICJ50
$ a6 J37
$ a64495
$ i35763 5
ah888 19958 187. 32 e63458 156.902 157,386 12L9o4
,k 99 939 818437 824. 8 o7,724 106,788 117424 98,3o3 8
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25o8 1094 1367 2.283 2.158 8Aoe L455 478.119 5 4436 50947o 449486 4A7p 45:su 364.i22 2
3395:
368a6o 4a773 35638o 353470 3 % 279 328.253 p
$tdi9 -
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37.746 atAl:.
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(%7 5) 34m (19.88 )
8 9
28.29s 29 755 89483 13 9 :
8595 9A40 710 8
90A.D 77402 5L358 4tJ45 35439 29404 30455 3.765 IOLM5 684iI 4503 65 755 49 538 34466 38469 20 339 16A83 14 o64 s4484
- L35:
9 296
$ 12 796
$ 82A66
$ 5t.528
$ 664 9
$ 5:478 5 37 187
$ 85170
$ 680.2:5
$ 668.3:5
$ 57:4o3
$ 3% 15
$ 3734:5
$ 3o34 2
$ 295588 4
104m 70p*
704m 70pm loam 10.mo 70DD 634m 964m poem 65em 65em osom 45Am 4Alo8 493264 (wo30 4a8331 319 720 262.198 22246
$1.28 023
$1427 576
$:.174 433
$ 937446
$ 827735
$ 7" Y
$ 633 E 9
i 1 9 % 566 r372co5o
- 3429443 2472a44 04934o5 914578 746o,132 i92743 83423493 13 213426' 31 708 570 9 579 382 -
8 775467 7461.24 t
$547
$5A2
$541
$547
$539
$4 24
$> 56
$43
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$348
$292
$2 76
$2.68
$429
$3545
$3132
$3848
$2490
$2844
$29o9 29A88 35426 38A48 44,o67 39 2:3 37A68 36447 14mo8 154o6 16.774 17A62 17.75o 7 765
' 38.372 9.282 10456 1353o i3 742 i3439 li.8:5 2456 j
985 7 o I AI9 98c 998,9t o 969,5m -
951.700 H9,too 97s.noo a.23953o 1.197 150 1.229440 8.235A 0 ^
1435450 848845o n.299,36o 5
88 29 4 4 294420 290 591 287 370 18 586 282Ago 248m 4
6056 6.265 6.293 6 336 6.2 3 6.3:2 6345 8576 s,5ai s.559 3569
, 3 517 8414 34 8 8
$ 52.782
$ 49553
$ 46.9: e
$ 44.ii4 5 4oaio
$ 35 58
$ 3i,653
$ 38.724
$ 86438
$ 62su
$ %3m 63i9
$ 544 :o
$ 34 777 4
Si48i.986
$i.55983 5:48 472 Si.274 477
$io8o.8 o S 922 734 5
$ 8 os34 3
$ 194168
$ 179 528
$ 110378
$ 1974:2
$ 167424
$ 815540
$ 98.4 3
$2.155 51 5:43 59
$1447o4
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[
MANvaMiWs Discusskw AND ANAixsisof -
FINwagt CoNtxtioN AND RrstTs oF OptarrioNs f
F p,y, %,
henr6s of wholesale power sales above prescribed levels, Fmecahna ard dows the Company to capitatue conervation projects.
, *, b hae capitahred conservation investwnts wiu be aHomd L
h Company's nnancialcondman has ten heavDy to earn a Prentium return of up to 3% oier the Company's influenmi by both the size and de cost of 6nancing its
@wd cm dcapital..
accumuhted investnrnt in the construenon of Seabrook Smce de remrable invmmt in Seahaa Unit i Unit s, a nuclear generating unit in Seabnma, New Hamp-is less than the Company's share d Connecticut's sonr.ory I
I shire,in which :he Company has a 7 5% ownership share '
- '"*h3 't
- cap,the settlement agreenwnt required To the extent that this investment has not leen included in an addirmal write doms of the Canpany investet in
]
rate base, cash recovery apphcable to the investrnent has Seabnx4 Urut i in August i989.This write-down was nec.
s teen kmited to the income tax benents of s,s.e.
essary in order to c mply with SFAS Na y,*Reguhted i'
5 However, from an earnings standpoint, the cost d 6nancing Enterpnes-Amnting fw Abandonnents and Dss- -
ww. bahnces has been offset by a non cash credit an wances d Plant W which de Canpany adoped in
[
to aDowance for funds used during w., A (AFUDC) s9, and multed in a net loss fw dw par i94 Hanmr, 68 h Cornpanyi primary 6nancial concerns have been by malving ountandmg issues and quar'tifying future cost the achevenrnt d conmwrcial operation status for Sea-recovenes within acceptable ranges,the agreement permiu brtd Unit i ard, more panicularty, obtaming a Conrrcti, UIto plan eHectivdy fw de futurs cut Departnrnt of Pubhc Utihty Control (DPUC) rate whue construction of Seabrook Unit i is complet decman that will pennit a return on, and rectwry of, Urs and a 4> year conditional operstmg bcense has been investnrnt in this unk.
melved from the Nuclear Reguhtory Commissica : (NRC),
OnJuly 6, 94 the Company reached a sectienent dw moluta dissues sited to tfw off4ite er,ergency agreement with Corurencut of6cials repreentmg the pub.
response phns for the enrrgency response and evacuanon bc reparthng the Company's recoverable investrnent in phnning awr surroundmg the plant continues to pment Seabrook Unit i, amounting to $6p muhon, and the reno-the unit from achiedng comnercial operation status. Pr6-lution d d outstarrhng Seabrtd-reiated issues, assuming mardy as a muk of the dehy in rewdvir:g enwrgency that the unit achieves commercial operation by the end d resp rtw plan issues, Pubhc Service Company d New s 99c6 This agreement, which was appnwd by the DPUC llampshire (PSNH), which holds the largest ownerstup on August 23 194 prtwided for moderate rate increases interest in the Seabrta project, has had to seek praect on over the 3 tars 1990 through 1992 totaling betweer,6% and under Chapter u of the Bankruptcy Code. Although the i t %.
bankruptcy court has approved PSNH's conunums pamci.
On September i, i94 the Company Eled a rate pate in the Seabruok project, and the NRC has issued a appbcation in accordance with the agreement, requesung low-power hcense and low-power tesang has been com-baserateincreaseof %3%and %e6ectivefortheyears pimd. ttw Company cannot predict at this tine what 5
3 i9p, t991 and 1992, respecnvdy. N DPUC convienced impact these bankrtmecy procedngs may have on the hearings on the rate proposal on November so,19 9 and, remainmg NRC licensing pnxredmgs and if or when com-8 in a decision datedJanuary 241990, granted base rate wcial operation of the unit will be pennitted, in any increaws d312% 249% and 2 53% for the three years.
event,pnmardy as a result of the delay in resolving emer-hse increases are desigred to raise menues by $22.1 mD.
gency mponse plan issues, the unit is nct hkely to achieve hon in 1990, Si69 miUxm in 1991 and $i6.7 mGhan in c mnrroal operation prior to the second quaner d 199o.
1992, While the rate increaws granted were twed on a 12 9% return on equity, the Company is authorned to eam up to a 139% return on equity under the terms of the settienrnt agreement. h DPUC decision also provxles, among othet things, for phasing-in the Companys recover-able Seabrook investnrnt into ratc base over a 5-year period comnwncingJanuary s, i9@, for recovery d defened phase-in costs during the subsequent 5-War period consis-tent with Statenrnt of F'mancial Accounting Standards Na 92 (SFAS Na 92)," Regulated Enterpnses - Accounting for Phasein Plans
- for rate design changes designed to encourage errrgy consenation, and for a sales adjustnent chuse designrd to compensate for dedations from forecast sales levels, within prescribed hmits ard subrect to DPUC -
approval. N decisum permits the Company to retain the Tie tuneiuvemimet,camm
-+ n n __
,, ~,..
n.
y 3-1 1
~.
l J
,t' center facilny. On Septembre A s988,ete Company jr j
- *"^*
,%.(,"
entmd into a rmdving crnht agreement with tfw sane Cana Rmas 6nancialinstitution This revuMng cruhr agrenmt ena-m UP W & uMup At the bepnning of s9% the Company had $60 mil,
- 31. W "a
au pup Mh I
s.
hon of cash aruf ternprary cash b.vestnwnts. Dunng #9 9, 8
. operaung acovitws provided na cash of $73 rniBM aggregate $ r65 mmion bmit on at outstaruhng 6nancing obhgations to dw financial institution. The Gnancial institu-Financing actMnes provide:I $70 miDon from short-term.
ti ddmr M rd funds urder dw W cmdit kwrowinp wrl vrw long term debt, but required the use of M
dM MM nuns 6d m a
Se7 miHion principally for dMderd payments, prefemd the tme of a requested borrowing.
}
stock redemptions ard ret lear obhption transactions.
I (i
Cash availabk after the ret addmon of $5 mmon from The Company premendy estimates the its capital 6
e rerrenn@ M h ret caA by opeg operating ard 6nancing activmes for etw pennd was $s i6 milhon. plant investnrns requned $77 milhon of these acdca fa h w@ AD ddw mm@ '
+
resources, leaving a cash balance of $39 miHim at h p@ W k W by M hS her 36 i94 and there is no assurance that such 6nancing can be W Cmnp.my has had a @ cmht agunent eNecial The Company's abaity to incur additional hwiebt.
with a group of tunks since 9 4.On April :$,394 ttw alruus wW be retncted by the earninp coverage provision 6
&h ukMd&p@
Comtuny reducd the borrowing hmit of tlw rmsving crnht agreenent then in erect from $ifio mmon to 4'"
inud d d its long-term Dthenrures. N almence of a miHon.This agreenrnt was replaced by a trw $ rm milbon verum on the daalkwed port 6an of the Cornpanyi Sea-gg,g
,gg gg g
revtiving craht apwnent on Decemte ar, s9 9.1he nm A
agriernent, which currendy exterrh to October 3o,1990, charges apirut incune related to $cabruok Unit a can be -
affords the banks an opportuntry to dechre to lerd funds if expected to cauw the Compnyi earninp lar dw text sev-
,g gg g
g any one of several conditions is not sathfwd at ste date of a alw irust Irvientum as a prerquisite to any increaw in requested kwrowing. W corditons include, among oth.
ers, tiv almence d a detenmnaton by the banks that the dort term or long term irdebtedress (exept for $2 makm donenn winp incu a queraung expeme PSNH hankruptcy proemhnp have increased the risk that the Company will not be able to perform its ohhptions Purina,and esupMrrwing N am exM sulcrdinated to dw Cornpany) LMenture and are hmited
""d'"I* '8"'"""has sale ard Wieback arrangenents
& Compny to an appnate amouni not eiceedmg io% of the Compa.
with a fmancialinsntuaan prtwxhng for nuclear fuel nyidebt hmet uruler thelrust lidanture-624% of the 6nancing up to $70 mdhon for SeatsmA Unit ard up to cost of the Company) propertion km depreciation dwnen
$ so mmon for Millstone Unit 3 Uruler thew arrangements.
(de CmnpanyNN undentw Trust Irdentum was IM*" **'"O 3'l rquimnents wW end 3 NM D"Y *
the Company is paying rent for the Mdhtorr Unit 3 fuel mata that b aggnyate capita lused on tia chnet crna to the ksms of the fuel plus the Imor's 6nancing costs. in ackhtion, a fuel reserve and supply cash prtwided by grrations by $295 mhn during this agnenent with ste sanr 6nancial institution prtwides for patad & Canpany expna m eneer diew aquin'ments non n PMnancing,tulenhnataNew-6nancing fossil fuel purchaus up to an aggregare of $i65 tum.and 6nanctnp diat am not subect e delrust trub I"P nullen,less the outstanding nuckar fuel kane obhpuons s retrictadower, dwm is cunmdy no asurana ard all other outstandmg obhgatons to the 6nancial insutu-ton. The $i65 miHion aggrepte hmit on an outstarxhng 0"h' '*P"*#N" *0' ""
l chhptna to the 6nancial insuturen wiB decreasr to $s33 anpany hadamed semal subud.ay canp.
mhn on March i6,1990 unlim Seahm4 Unit i has, by
" O D"'W 0" W "*"""# ' "
Y then, meived a fun power operating hcense and made satis-related businen ventures dich wlB complenent and nu its usWnas and acw deinnmsa d I
factory prucess towarth achieving comnercial geratm l
h term d the fuel reserw and supply agenent extends t
pany an ishardudden and cusmnuG P'"M ""
to December 31, 99a At Dnember 36 i9 o.approxi-A mately $74 miHen oi nuclear fuel armi $2 milton of fossil d up m 5 a rnmion in er a nanubsichan or aEaud fuelpurchan. inchdt ! coal, were being 6nanced under cmpnrauons M purina these arrangenrnes On April:9. i9 7,dw Company 8
enterw! into a lease with the sant fmancialinstitution pm-vid ng for the 6nancing d $37 milbon. represenung the pu chaw price and capitalaed canytng charges d real prq*
erty on which the Co.npany plans to construct a service tie tamolua.mm can
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bibry due to scheduled outages for overhaul d tte Compa-Rasumor Orum*s nyi two rnos effnent lossil.hred generanng units aho i
contributed to higher energycostsin @9. Fuelandinter-Due to non< ash write. ors in MarchJune and August 19 9,to recogniae reductions in the reaweraMe cost change erwrgy expenw in i@8 inaeased (wr s@y, due 8
s d SeabnxA Unit i, the Company incurred a lom of $587 punardy to higher kikmatt. hour sales and incremed pur-chases of pcwr from ttw regional waste-buming ladhry,.
per share for the par i969, as compared to eartungs per which more than offwt reductions due to the bene 6ts of shared $4 5 or19 8.Thelargestdsuchwrtte offs,$8.06 8f 8
continuing operating ef6crrnes and incnand nudear r'
t per share, was recorded in August #9 to reGect duaBow-generation.
ances due to a reducrson in the recowrable amount of the Other operation and maintenance expenses increarert
)
Company: Investment in Seabmak Unit : and other provi-nons of the Seabrook Settlement Agreenent.
in 39 9 over 988,due prindpaDy to a non recurring A
Earrungs per share for #9, before giving erect to expeue d $15 milhon to replace defective bulkhng sidmg the writeens that resuhed from the adopuan in i@8 of at a generating stadon, storm damage repair expenw d $24 muhan, and higher payroB costs. Orher operadon and SFAS Na 9a were Spa per share. a decreau d $ Liq from spa.1 hts decreme we due principany to higher fuel and naintenance emper se increased in i968 over ig67 due principaRy to higher paymD costs, g
energy costs, higher maintenance expense, lower non< ash Drpreciadon expense increased in 19 9 over 5968, 8
allowance for furds used during construction and notwash charges that were ordered by the DPUC to reduce UI's pro-due primarily to the additional Mdistone Unit 3 eprecia-d tion charpes recorded pursuant to the DPUC's order d Feb-Jeatd 19 9 regulated earntngs to the 164% level authorirsd 8
9 9. Depreciadon expense decnesedin 968 8
ruary 22, in itslau rate decision in i9a4 without aNectmg current from the :@7 level, due primardy to the almence in 19 8 d 6
nvenues or cash Ikw in accordance wtch this DPUC the addmonal deprectauon for Mdistone Unit 3 recorded in order,nn @9theCompanywrtxeona totald$14 mu-
@7 as a muh d sdpulated eamings agreenens approved 8
lion, consisting of bond repurchaw premiums amounting to bythe DPUC
$46 muhen, net dincone taxe, and Sio.2 muhan of addb trone taxes charged to operating expene decreaud tional depreciation charges related to Mdistone Unit >
farnmes per share for i9 8, before gtving erect to in 19 9 compand to @8, pnnctpah as a resuh diower 6
8 change arians from the adoption of SFAS Na go, were taxable incone.h decrease in i@8 incone tax experue from the i9 7 lent was due pnndpany to a lower tax race 8
$7 22 per share, an increme d $i.23 over 987.This increase was due pnnetpally to higher kilowatt-hour ules, W alowance for equity funds used during construe tion decreased in both 39 9 and 1968 below the precedmg 6
higher capadry sales, lower incorne taxes ard ifa absence pers, due primaruy to kwer rats and kwer CWIP hal-d additional depreciation and other non<mh charges recorded in 98.
ances in both years resuhing frorn SEAS Na go write-7 downs.
Kikman hout sales for both 39 9 and 988 increawd A
Other incxmr and deduedons, excludmg the aBow-over prior years, due to improved comnercial actMty and ance for equity funds uwd dunng constructxm, increased in higher residential use; but the effect of substantial decremes 8
19 9 over ig68, mainly as a resch d Seabronk Unit i in industrial actMty in toch yean hmitert the irt tneremes to less than %in 196 aral13% in i@8-investnrnt tai credits d $217 mdban that were recxxded as 9
incone in accordance wtth the terms of the Seabmok Set-Operanns revenues for ig8 and i968 incremed by tiement Agreenent that more than ofher deductions whlch 9
$ sta mlDion and $213 mdhon, respecovely, over the prior years. due to higher sales volume and higher fossd fuel and included primarily the write o# of Seabrook prudence audit energy costs which were pa:wd on to customers through expenus.The increase in 1988 over @7 was due to higher the fonu fuel adjustment clause.The more modest increaw interest income as a resuk of higher average balarns in temporary cashinvestmmts.
fur i989 reflecu relattvely moderate summer weather com-pared to the pnar 3 ears.
Other interest charges tnercased in i988 mer the pre year, due prunar0y to the amortuatum d band Fuel and interchange erwrgy expenw in 19A9 increased over i968, due to higher kuowatt hour sales and redempnon premiunn in i@9 the increase in other inter-est charFes primardy reflects the accelerated amortuanon of an increase in purchases d power generated by a regional bond redempnon premiums pursuant to the DPUCi order waste-burning fadhty at prices considerably higher than the Company) average ecst per kikmart-hour. Reduced availa-d February n, i9r9 Dmdends on prefened stock decreawd in 1989 by
$3.s miDion and in @8 by $6o5,000 as a result of redemp-bors 1hme redempnons were made as part of the Compa-ny) pmgram of re6nancing high cost securities at lower rates.
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Ourura Unit a can be expected to continue to dominate the Com-
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4.i, pany) 6nandng outkuk and plans,such matters are abo In recent 3 ears, de Cornpanya earnings have senstove to rnany other factors,indudmg conditiors in the Indaded a large amount of AFUDC. As a resuk d de secunties marken, economics conrbuons, tte level of the 34nuary 24. 990 rete decision and tesmningJanuary i.
Company's sales, and legidadve and regulatory devsky.
3990, de Company) Seabrook Unit s.rdated AFUDC wa nwnts.The latter indude the cost of comphance with dechre to a levd reflecting a deferred return on the prtion increadngly stringent environnental regulaeons and of the recoverable bbrook Unit i invescrnent that is increewd habihty for post retirement enydayee bene 6u.
endoded from rate tee due to the phase in plan. Concur-1 rendy, the Company earnings we t=stn to reflect the bmmm i
3 3
reawery of the investment in kbrtd Unit a through increawd charges to cunoners reutting frten dw tune rate As a resuh ofinflanon and inctsand environnental trerwas allowed by de DPUC-and regulatcry requirements, the estinated cost of replacing The Companyi 6nancial coexhtson we be heavily dw Company) productiv capacity todiy would subman-influenced by dw timing of commercial oirration of Sea-taally escred dw hirtorical cost of such facihtus reported in brnali Unit 4.The achwvenent of commercial operanon of de 6nancial stateinents. Smee de Compnyi rain for serv.
kbrook Unit i, which wm trigger dw -._,
of ice to its cunomers have teen teed in the past on tie cost signt6 cant addit 6 anal wholesale power sales, is chiefly of providmg such service ord have teen revbsd from tine dependent on events that are largely beyard the Companyl to tine to reflect increased umis of service, the Company control, especially the timely and successful resolutbn of a lebeves that any higher replacement ccmu it may enertence proceedmg in which the NRC is canadering obsecuans to in the future wa be recoared duough ifw turmai regula-c& site emergency response and evacuation plans for etw tory process.
unith emergency respcnne and evacuation planning zone.
%%ie there have been recent positive developments, bidadmg NRC staff recommerdations that the plans le appnwed and a full-pour operating bcense granted, tie '
Compmy b unable to predet if or when the plans wW te 6nally approved and a full power bcense granted, since the NRC proceedmps continue to le contested vigorously by opponenu of the unit. Nor can the Company predet what impact the proceectngs under the Bania uptcy Code by PSNH wm have on the NRC operating kenne prtuedmps for the unit. However, delays in acheving commercial oper-atum may regatively impact 1990 earntngs by defemns the comnencenwnt of whoisale power sales that are condi-tiorud on comnwrdal operation of the unit. Marecwer,in acrt rdance with the Seabrod Setdenent Agranent, a del,ry of comnercial operation beyond s990 wW require that the rate tuw treatnrnt and rate nuking provisions of the agreement le renrgotiated and, in the ewnt ruw terms can not he regociated, wa leave thme bsus for DPUC decisbn.
t kwever, in any event, revemms to wtuch the Company h enuded pnar to Decrmler 3, 990 wW not be refurdable.
The Company) 6nancial condman will ale tr influ-enced by the levd of success of its efforts to satisfy its exter, nal fmancing requirenene for the pern! when it wW te pewiuded by restrictrms in its Trust Indenture from tor-rowing on an unsubordmated tatt While the Company expects to tr able to meet its fumcing requirenena for this pernL there b currendy no assurance that thh expectation wW te met.
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se ts. wn taint twemba p. i,ne, e,as mi i,s; i'
m==* rer e., sh= n-mco ido sp8 ie7 A
(
Oposoling % venues
$33s.ia
$3:6.938
$497 623 Opnettre Lxenues Operam Fueland enterchange ene gy-sut
. a534 9 -
s4s973 s3y7:
Capacity purched-rm 9.8 to 6 92 t4449 4
.j Other so344:
so27s3 96,o45 i
)
^
Maintenance 19426 3o4 92 3:43$
Depreciatkm 8 618 24469 -
- 37. 6o Amartization of canceDed nuclear proects 4 15 soais so.4:3 -
home taxa
- 37. % 3 44.o45 50433 Other taxa 44.ho 454 3 4o.i9:
4 Total
.437.x2 405y3
'4 Lai9 Operellag inseme
,,,,9}181
_ 13 8o5 844N Other inoeme and Do%Dene Alkwance for"Quity funds umf during construction 38.968 8
4.60$
e4433 Other-ret 139%
sons 3.o92 Total
$29y
.J34:6 -
58.o25 Asollection of SFAS No. 90 Dualkmed plant costs
(* 75o3)
(505?$)
(125 228)
Accreton of SeabnxA Unit a daalk=td returr 4.i29 4 4rp 4422 Apphcable hurer taxe 6i.127
,_ 43 262 p778 Net Effect of SFAS Na 90 (r52.i47)
,Qtg)
% 518)
Incone (los) Before Interest CharFe5 (5454) 8M 56.oos into'est Chespas interest on kmg-term debt 9s.t 26 9tw12 88,700 Other interest 124 9 32,069 9 228 4
Alkwance for tonowed funds used during construction (26 475)
(27451)
(26 86) 4 inconr tax benc6:s attributable to the alkmance far tommed furnis
( 9A04)
(19M2,)
(2poo)
Net Intenst Charges 67 806 5499 8
4 252 feet income gaes)
(73 350) 78439 6449 Dhedends on Pretened Steek 8.233 IIMA i t.953 become (Loes) Applicable to Commor. Steth
$ (8i.t81)
$ 67.20s
$ (t.tN)
Average Number of Commor &harse Outetending 63.8A8 33,888 33,888 8mmense (name) per obse of Common Stock
$(587)
$4 85
$(.24)
Cash DMdends 1%ciated per Shore of Common Steek
$2 32
$L32
$L32 CON (sLIMilD STAmWT os RrtAINtu EARNtNGS j
le de iem Emled != ember p. speg, e9as and son; muumhof Duikus) toAo i088 tot'7 l
Balance January 1
$20:4171
$a66303
$2as.947 8est income (Laes)
(73 350) 78439 8A49 Premium opplicable to redemptkm of protoned stock (2,2m) tapenses seescleted with profaned stock sedeemed (4)
(o21) 128.02:
244 918 21o.475 Deduct Cash DMdends Deciered hrferred Stock 7W2 s i.348 s: 4 53 k
l Cummon Stock 32.2 9 32.2 9 32.2i9 Total 4o.23 43567
. 44. 72 j
talence December 31
$ 87.820
$20s.ps
$166.v1
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CONSoumTEDSt4TEMENTOf CASH FLOWS 1
sw ehe wn t-wo u-m+in y..mes.=r m; 4
k f' ffhausarnh d tkaan) 8cho toA8 3087 Caeh Flows From OpereIIng AeIMIise see insome (Lees)
$ (7Mjo)
$ 78439
$ 14 9 s
4 Adjustnents to recondie rrt income so ort cash prtuded by operating actMras:
Depreciation arx!arnartiration 684 77 43 78:
52 588
~j Deferred inconr taxes (6.154)
' 4.35 9 998 s
4 SFAS Na go writcoffs-rwt 152.147 324:4 a6528 Seaber A prudence audit aets (thru s9 8)
- 1.237
~
8 IMc red invesenent tax credits-rrt (22,75 )
(1429) 3 383 8
Alkmasvx for furxh und during construction (65444)-
(754 6)
(8:419) 5 Changm in current aisets arxilaldlt les-Accounts receivate
- (s6.865)
(30 360)
(5 794)
Accrued utthry rtvenus (M32)
. (588)
(1J95)
Fuel, materals and suppius (4463) 2 (6.635)
Accounts payable (io4 7) -
3.i38 17,324 8
Taxes accrued 663 (652)
(t:75)
Interest accrued 6
4o3
- 44 45o9 Other-art 928 6454 f.116 Changs in noncurrent tal.nce sheets itenn 3A 0 6444 9g 4
Total Adjustnwnts 14 603 5A72 74 252 6
Net cash provided by Operaung Activines 8 3is 82.cos 7329 4
Coeh Flows from Fineneeng ActMues Gwnmon stock long-tenn debt 36 25aao ryo,ooo
- 328,5ao laase obhgations (344o) 6 722 3A56 Secunnes retired and raicemrd, including premiums Preferred seid (374%)
(6,mo)
(25 200) lonF4erm del *
(1A67)
(9 467)
(258 727) 8 NCAes luvable 45aao (25A75) b rmes ofissues i
(1443)
(4 o9 )
(3.877) 6 Dividerxh Preferred mk (9 597)
(tI4 5) '
(t 2496) 8 Conutun stock (12.2 9)
_ (12.2:9)
(12.2 9)
Na cash pronted ty (used in) Financing ActMties (17 363) 34 255 (goo 2)
Net cash finwi from Operanng and Financing Aatvines
$5A90 sit.566 73A99 cash inveeted in Plent, inceuding nuclear fuel
. (7744I) ',J8).g)
(73 253)
Ceeh and temporary Caeh anweetmente test ehenge toe the posted (21.151) 34A31 66 4
Balance at try nning of perkul 59.918 25.o87 2444i Bakun at erxlof period
$ 18367
$ so.ois
$ 25.o87 Cash paid during the perkul for:
Interest (net of amount capitalued)
$ 67h46
$ 4o4*1
$ 46.o28 Incone Taim
$ 21.m
$ i4Asi
.$.mm.m.-
it mm Der sah Row purposes the Company connaden aB hq% lupsN! delig instrumenu with a matunty d thew eNWKh8 Or l85 at purthaw date to be coh appvalena Ihr Mtumpanytag $lagemrrat of Accountmg Police aruf Nmes to Consohdaemi Fmannel haements are investal pam of the &nancial matements.
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Decnimp.emeumhe r a
't id Assees m-amb e ram) so8o 1986 so87 4
uusty ment et oswnsicost In servkr
$4%.6o8
$ 658.32 5 844 989 Ims accumuhted poviskm for depredation 323 837 297g 23i.779 '
s, 1"
$70.778 56o,93o 5632 o Cautruction work in pogres 675 838 882 246 737.so9
't Nudear fud 73 729 74 9&s 67 53o Nnt-rehted regulatory assets 81 768 88.3 3 68.603 s
(
Net Utihty Plant
. s.4o2.on9 y}6g i.436 52:
other Peoperty and amasonenes 9 62:
8,86 8ao3 7
cunent Assete Cash and tempirary cash invesurents
- 38.767
= 59938 25087 Accounts recekable Custoners,less allowance for doubtful axounts of $2. 3o. $ s.580 ard
$1.6ao 54039 50.665 43 827 Other 24uo
- .125 7 603 Accrued utlhty revenues 24 9t2 21.880 21.292 i
Fuel, materials ard supphes, at average cost 24 7a9 20.246 2o.258 Prepaynwnts 3 780 2416.
4.m8 i
Total i7o.823 so6.27o i22.o73 Defened DeWes Unfunded deferred income taxes 334 192 383 476 33,708 Unanywtized cancelled nuclear propets 534 1 59 97o 65 7to 6
Unamortized bond redemption costs 31 524 47 996 51 85o t
Deferred inconr taxes 176.82 t 145 77I 848A12 i
Other
- 9. con 16.205 ID.c9 Total 605 696 __ 633 418 6:o,913
$2.i&8.21o
$1.164.o61
$2 I78.m2 l
Tlw aawnpanwng Suwnwne of Accounung tece and Nata to Consolidated imancul 5tawnwnu a intval pam of the Enancial amnwna l
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4 eWa* end i m fNumands at Dohm) c60 to88 i08?
W Common stock equity Common stock
$ 2n.968
$ 2n.968
$ 2n.968 Capitalstock expenw b.2o4)
(5 665)
(5.N7)
Retairud annungs 87A2o aos.37:
Em
.f Prefemx! stock 36A584 473 674 438 564 4
Not subjn:t to rnandatory redempton 7o.mo 70.mo 7o.om j
Sutyct to mardatory redemption 34.om 40.000 long-term debt 86 W4 862.287 767559 Total s.3os.468 8 439 06 i.3 6.t:3 feonsupimtuebeuse l
ONigations urder captalleases so6.8 1 sis.syi 94,8 o 3
7 Other 950 fuo 2m h
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Total no7 78 sis.97:
95.o7o Cunent unhames Cunent partion c(kmp-term debt s8.667 3.667 28.667 Accounts payaNe 60477 4L953 53440 Notts payaNe 45.mo.
Dntierals payaNe 9 243 soA58 so.994 q
Taxes accrued 2A592 21429 22 581 l
lbsions accrued 9 066 7.I94 5 751
~
Interest accrued 27 7:5 27012 38A48 OWigarians under capitalleases 3.o85 8 714 3.293
~
Other accrued habibocs i t. iso s o.277 7.io2 Total 2o645 125 904 145 676 j
Defened Cseets Customm' advances for
.cuv,.
31I4 2,6 o L346 4
Accumulated deferred irre.tment tax crechts 21.n3
' 52.t25
%9M
~
Unfundeddefermiincome taxes 53 902 87 554 86.;79 Defmed inconr taxes 47+593 526 329 4 % I33 Defermigain on sale of utihty plant 10 437 30.23o 2.802 Deferred fossil fuelcosts 8,626 8.i49 8.819 Total 57244$
687,227 628. 33 i
Commitments and Contingenstes
$2.ias.2w
$2a6e o61
- 52. 78.m2 l
ne.aompannn, w mem at Aaounnas pus.c=..nd %.m conet.d.rni nn.no.:w.n no,e inngr.: p.m.# it sn.new s:.wn.na I
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p remauung azumulated deferred retum mD be phaud into
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rate tune in approximately equal annuns onknuary 3.
A8Eo*D5 r993 andJanuary s,1994 The Company wul te abed -
, 4 i, o recover the rieferred retum over a Eve-par perad The accounting mxrds are matntaaW in accordance conunencingJanuary 1, i995 with the unifonn systens of acrouna pracribed by the s.
Iederal Energy Regulatory Gunmaske (FERC) and the
,g Connecticut Departnwn d Pubhc Utihty Control (DPUC).
pseamasce in accordance with the apphcaNe regulatory systems Consouraticw
.i daccounu, the Company capitahm an allowance kr funds used during construction (AFUDC), which repreents
)
The ctruchdated Gnancial statet,rna indude the sie approxirnate cust of debt and equity captal devoted to accounts of the Company and its whnny owned sutende plant under exxutruction. In accordance with FERC pre
?
aries, Brid tepart Doctric Company (MC), United sailed accounting, tie partian of the alkwance apphcable t
Raourca Inc. (URI) and Research Center, Inc. (RCI).
to barmwed funds is presented in the Gmtaldated State Intercompany accounu and transacr6ans have been enent ofincone as a reduction ofintemt charges, whlie the.
i ehnunated in consabdatiort portion of the aDowance apphcable to equity furnis is pre -
sented as other income, Ahhough the eBowance does not -
Urum Puver repreent cunent cah inconr. It has historicaDy been '
recoveraNe uruler the ratomaking pmcess over tlw service The ccst of additions to utihty plant ard the cost of hws of tfw related properties. The Company compoutuis mewals arut tetternents are capitaheed. Gut consues of semi-annuauy the aDowance ap@ cane to major cottstruc-lahur, materials, services erd certain indirect construction tion projecu.
ccats,induchng an alkwance for funds used during con-Prior to spy, the Qvnpany accmmtri for the ptr-struction. The crut of cunent repairs and nunar replace tion of tte allowance apphcaNe to borrow,i furds on a twt-nrnts b charged to appropriate operating expense accounu.
of tax tusa for all construction projects is ause interest The onsinal crut of utihty plant retired or odwrwise dis-charges associated with consuuction prote ts were expenml pc.ed of and the cost of renmalles salvage are charged to cunently for tax purpses. Ilowever, effecnveJanuary s, the accumulated provision kr depreciatm s@7, tfw Tai Rekrm Act of i@6 require the capitahzation for tr,x purpues ofinscrest charges asociated with con-hssNpuw structkm pmjects, except kw protects such as Seabrtd Unit i that were begun prior to March 96& Therefore. in The Company b phasing into rate tu e tu aDowable
@7, t968 arul s9 9, AFUDC for Seabnd Unit i, whkh A
investment in Seabrook Unit i, amoundng to $64o nulixwt acrounted for over 90% of the Company) AFUDC in those The phase in plan allows the Company to record a defermi pars, was computal on a netsf. tax hads, arul AFUDC kr retum on the paruon of shable invesment enduded all other pro,ects was cornputed on a lefore tai kusis.
from rate base during the phase in penud. At December 31 AFUDC rates in effect during i@7 ip9 are shown i@9 the Companyi rate tuse included $48 milhon of its below:
aDowaNe investnent in SeabrtxA Un;t i. In accrudance e.e.Mm nasas no w isae.es with the phasein plan, comnrncingJanuary t, s 990, the 1987 13 4 %
iaa5%
Company legan phasing in the tulance a*lts aBowable 1986 -
17%
104 %
investment over a five par period. ConurrncingJanuary 1, 1989 It.3%
95%
i99i, the deferred return wiu be added to rate tuse at the beginnmg of each gar overo four year period in the sanz Duesornou proportion as the phaw-in instaunwn: kr that year bears to the remairrier of the $6p miukm vet to be phaml-in. This Provisions for depreciation on utihty plant for lxxA phaw-in plan, which was appmved by the DPUC in ajanu-purpescs, exduding costs asariated with the i@4 remnver-ary 14, 8990 rate decision that granted the Company Isse
. sian ofITC) plant to a dual-fired capabihty, are computed rate increaws kr the rext thne years, is in comphance with on a straight-kne tusis, ming estimattd service hva deter.
Statenrnt of Financial Accounting Starulards Na 92 (SFAS mined by irxleperulent engmeert One half pri deprecia.
Na 92),*Regulatal Enterpnse - Acrounnns Ice Phasein tion is taken in the war of ad:htion aruf dispadtion of utihty plans". The rate decision allows the Company to phase.fri plav6t, except in the case of rnajor operating uniu on which
$4 o milhon, or 75% of its allowaNe investment, plus a depreciatum commences in the month they are placed in 8
portion of the defemd return that MD be accumulated dur-service ard ceases in the snonth they are renmed from ing 1990 and ip9i into rate tuse byJanuary a, #992. The service Dunng the years id3-198, depreciation associated 9
rsmaining $ico milhon of aDowaNe investnent plus the with BECh.-.a crzu was computed on an annuity.
T twoimmeurs.o comm
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- basis over the original ten-yearperiod that this plant was.
.! <[,
being leased to the Company by BEC. CommmangJanu-AccmVwn Ravam ary 1, i990, the m,..a-a,n costs wiD be deprecated on a L.
straight-line basis over a period endmgJuh 2000. h The estimated wount of utihty revenus (less related aggregate annual pnwisions for depreciation for the years expanes and appbcable taxe) for service rendaed but not i987,i9 8 and i9 9 m equivalent to appnnimately bided is sanal at the end of en:h accoundng period.
i 8
8 477% 2 99% and.3t%, nspeedveh, of de original cost 4
l of depreciable property,as restated for the effect of SFAS.
berrururs
?*
Nago.neaggngarepnwisionsforige7and19 9 nclude.
8i
]
one time increases of $ u-5 nu'Dum and 5so.2 mDhon, ne Company's investment in the Conim*ut
'a
- i respeedvely,in Millstone Unit Na 3 epncianon charges as.
Yankee Atomic Pown Cornpany pinr venm, a ra' clear d
i prescribed in DPUC-approved stipulated eamings agree.
generating company in which the Company has a 96% ;
nents in 987 and in a :989 DPUC onier. These earnmss stock interest, is accounted for on an equity basis, nduction measuru were initiated in order to lower the -
Company) return on Common Stock equity for rate -
Fossit Fun Com nuking purposes without impacting revenues or cash fkan See Note (C),* Rate.related Regulatory PrMngs".
The amount of fosso fuel costs that can not be <
reflected curreedy in customers' bids pursuant to the fuel INccan TAxr$
adjustment Clause in the Company's rates is defernd at the end of each accounting period. Since adopnon of de in accordance with Statement of Financial Account.
defernd accounting procedure in 974, rate deastons by the ing Standards Na 96, Accounting for income Taxe"
. DPUC and its predecessors have consistendy made specinc (SFAS Na 96), which was adopted in the 6rst quarter of
. provision for amortuation and rate-nuking treatmmt of
- 988, the Company has pnwided deferred taxes for aD tem.
. the Company's exisung deferred fossti fuel cost balances.
parary book tax differences using the liabihty rnethod.he i
habihty method requires that deferred tax balance be R15 MACH MD adjusted to reflect enacted futun tax rates that are antici-.
DEVuomD(T costs pated to be in effect when the temporary thfterences revuse..
t in accordance with generaDy accepted accounting pnnciples Research and developnent costs,includmg environ-for regulated industries, the Company has estaNsshed assets mental studies, are capitahzcd if related to specinc construc and habihties that reflect anticipated future ratemaking tion projects and depreciated over the hves of the niated effects of deferred tax provisions arising from the imple assets. Other research and development costs are charged to mentation of SFAS Na 9.ne Company has restated the
- expense asincurred, 6
deferred tax balances in its 6nancial statenrnts for prior periods to reflect the adopnon of SFAS Na 9A Previously, income taxes were accounted for by the,
deferred method. Under that nethod, deferred taxes were recognized at current tax rates and regulated enterprises dal not record defened taxes for nalized tax bene 6ts when res-ulators used these bene 6cs to nduce current rates.
he Company has elected to take investnrnt tax aedits (TTC) applicable to long-term wme, projects on a progress-ofenstruction basis, which has accounted l
for the major portion of the TTC generated. For accounting purposes, the Company practices fuD nonnabzation for aR TTC related to recoverable plant investments excrpt for the 1
TTC related to the nxxwerable plant investment in Seabrook
(
Unit 1. ITC related to nonrecoverable plant investments, i.e.
l
.those investments written offin amniance with the provi-sions of SFAS Na po, were taken into income when ene l
related SFAS Na 90 write offs were recorded, while TIC, l
amounting to approximately $2s.7 miDion, related to the l:
recoverable Scabrook investment was taken into income in t98 in accordance with the Seabrook Setdement 1
9 l
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NortstoCoNsoumno FawaALStATEMD/1 (DoHer amounts, escept per share amounts, are in thouunds unless.
86% puturing serlaDy as to $l.667 t.
'N-h
'd"*"*'
principal amount on Nmember s5 '
ineachof theyears 990to 997, W capessanssonatM%M
. Indusive($r,667 matured in ips<)
$ 6333 Omnwn Smck Equity (a) ii% maturing serially as to $2.om -
Common stock.se par pdncipalanwunt on Nmember 15 -
e f.
. value
$ 277,968 in each of the 3 ears i990 to 999, industve ($2p nutured in #989) zoam Shares authorized.
87,5m.om Shares outstandmg at 3.
' M "8'8'.
D '
445 833 1,
December 3 :
97 i3.887,748 Company 8
~
.I988 33 887 748 9M b""*'*8 39 9 33 887,748
$io,8m M1anwunt m 8
Capital stock expense (3 204)
February 15 in mch of the years,.
Retained earnings (b) 87.82o 1995 m 1999 1
54m Totalcommon smck Io.32% Series C, nuturing seriaDy as A
8 to $60,000 principal amount on "luiry
-362,5 4 January 15 in each of theyears 993 '
Preferred and Preference Smck (c).
to 995 880.Dm Authorned:
Other.
Cumulative preferredstock:
Pollution Control Revec.ue Bonds-5:ooparvalue s,35o,omshares
.i46% 19 4 eries, due Octol=r I, 8S
$25parvalue,e j-shares 2009
~40 m Cunndatfwpreference stock:.
8S
. s46% 9 4 eries B,dueDecember i,
$25 par value. 5,000,o00 shares 2009_
28 400 -
Outstanding at December 3,1989:
94 % i986 SerieA dueJune I, sot 6
. 7,5m 4
Cumulative prefened stock, $im par
- 94% 39 7 Series,dueJuly1,20 2 25 000 l
8 value-so4% 198 Series,dueNowneer i, 7
+35% Series A. Som shares 5m 2012 -
G5m 4 72% Series B,75.om shares :
7,$m 8% ig89 Series A,due December i, 4A4% Series C,75,om shares 7,5m 2o 4 (issuedin December 198 )
25.om 9
Sn% Series R 75m shares 75m lxactenn bank kuns-74o% Series E, i25m sharis it.5m 2 9% ($2o,mo), and i31% ($20.om) -
1 7A0% Series F,3So,om shares 15 m maturing as to 5:5,omin eggs, '
Cumulative preferred stock, $25 par
$is.ooo in 1993 a.x! $tomin i9g 4o m
={
value,8.8o% 1976 Series,600,000 shares is m 88.233 9
Unamonized debt discount less premium at.
-l Totalpreferred stock not subject to December 38,19 9 0.682)
}
8 nundamry adi.mption pn Totalkmg-term debt 887 55:
Ims-term Debt (d)
Imgenn debenmres:
W mt @ induded in Curn.nt 465%ignoseries,due August 5 1)abihties
- 8.667 I
t990 15 000 Total kmg-tenn debt induded in
[
44 % :99: Series,duejuly r5,199:
so, coo Capitalizatim m
j S
1o4% 1995 eries,due October i, TotalCapitalization 5 aos a6s i
1995 850 m 54% 3996 Series, due August 35
?
996 15 e 6% 1997 Series,dueJune 15, 997 22 500 '
S 7% 1999 eries,dueJanuary 35, ap;9 15 000
)
io4% 2000 Series,dueJune 15, zom 30,om j
74% 2002 Series, due October i,2002 25 000 84% 2m3 Series, due Decemtwr 15 l
2x3 30.om i
12% sory Series,due August i 2o:7 1o0,000 i
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=
. Common stock, no par value, authorized at December 31, agog, induded m mo shares reserved for the 4
iVt,.
Companyt Empio>ee Stock Owrrrshiri Plan (ESOP).
Sharesissued during 98, i9se.ul s98 and increans to the comne stock account fmre the pmceeds of 9
7 theseissues wre as foHowe b
ioso so88
. ros7 -
.i se mm Ameset -
(000)
Ameent (000) amment (000) r n=
ice, January e -
$277#8 3ms-
$277 968 3 888 ~ $277 9p 327.
j
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Addidons resuiting imm; -
DRP' ESOP" 36 Bahnce, December 3
$2no68 nma. $2no68
. gg
$2no68--
'sta88
- Ihe Company purchased on the open market, on OnJuly15 89 9 theCompanyredeemedaBof the 8
behalf of sharehoklers parucipating in the Divulend Rein.
34o.ooo shares outstandmg ofits $100 par value s9% Pre- -
vatment Plan (DRP),358,474 shares in 1987, 92,iS2 sham ferred Smck, aga4 eries, at $sio.w per she, plus accrued S
in 988 and 136,68 sharesin ig8.
dividends to the date of redemption of $+75 per sham-3 9
~
" Shares contributed to ESOP include additional
%cse shares were scheduled for mandatory redemption of purchases for the plan on the open market of 9,4o7 shares 68,000 shares each year, m..-,d,,sJuly 15 199o, at ;
~v in 1987, here were no additions to ESOP in i988 or 9 9,
$ioo.co per share, plus accrued dividends, 2
since income tax credts aEowable for ESOP ended at here are no redempnon requiremena for preferred December 31,19 7 acck outstandmg at December 31, i98.
8 9
Expenses rehted to the new issuances were charged -
Preference stock is a form of stock that is junior to '
to capital stock expense,
. preferred stock but senior to common stock. It is not subject OnJanuary 22,1990, the CompanyWrd of Direc.
to the can%ts coverage requirenwnts or minimum capital -
tors approved a stock option phn for of6cers and key
- ard surplus requimnents goveming the issuance of pre-empk eesof theCompany,hisplanissubjecttoboth ferred stock. There were no shares of preference stock out-3 shartowner and DPUC appnwals. he plan pnwides for the manding at December 3t,1989.-
1 awanhng of opnons to purchase up to 750,000 shares of the
~ard liquidation rights over shares of common stock. Pre- -
Sham of preferred stocL have preferential dmdend Compaay's common stock over periods of from one to ten years foBowing the dates when the options are granted. he femd shareholders are not entided to general voting rights.
exercise price of each option cannot be less than the market '
. However,if any preferred dividends are in arrears for six or value of the common stock on the dare of the grant.
more quarters, or if some other event of defauh occurs, Options to purchase 596,000 shares of common stock at an preferred shareholders are entided to elect a majority of the exercise price of $3o 75 per share have been granted by the Board of Directors, until a!! preferred dividend arrears are -
Board of Directors to date, paid and any event of default is terminated.
In addition, certain execudve of6cers can earn shares of the Company's common stock based upon the dividend id) L*as4'naDett and market performance of the cominon stock compared to On December zo, i9 9, the Company borrowed from 8
a peer group of elatric utilines over four year periods, the Indusolal Development Authority of the State of New urrier the Companyi long-term incentive progrant his Hampshire the proceeds of the Authority's issuance of $25~
plan is subicct to DPUC approval. The total number of million of tax exempt ab Pollution Control Rewnue Bonds, shares of common stock that may be earmi urder the long.
The net pmceeds of approximately $2+5 miBion were used tenn incentive program is limited to s oo. coo. No long-term to reunburse the Company for la share of expenditum, incentiw awards have been earned to date.
includmg 6nancing costs, rehting to certain pollution con-trol facilities constructed and required for the operation of.
m neieinedtemenesnoenesese SM Unit he indemm unler which aH of the Companfs debentures are issued pbces limitations on the payment of he aggregate maturities of long-term debt during cash dwidemis on the comne smck of the Company am!
each & 6ws pp ip $issp99 on the amouns that can be expended to purchase or
- $ i3,667; 1992 - $ 18,667; 1993 - $78,667; 3994 -
$73g' redeem shares of common stock. However, an amount -
equal to the Companyli retained eanungs at December 3 t, (8) Accounting For Abae donments and Noenowances of '
i989 can be used for the payment of cash dividenrls and the PientCoetsandPhone4 Pm purchase or redemption of shares of stock, without exceed-ing these limitations.
ace nnngpe,ameneenment enept.en enseesepientcost.
0 m PmknedandPmenneesee k in 988, the Company adopted Statenrnt of Fman-he par value of each of these issues was created to cial Accounting Standards Na 90 "Reguhted Enterprises the appropriate stock account arx! expenses related to these
- Accounting for Abandonmena arx! Disallowances of ~
issues were charged to capital stak expense.
Plant Costs"(SFAS Na go), and elected to restate prior im Unnspiuwurser,Caevn
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,tj 42 penods. SFAS Na 9o requires that, for completed plant as ense.,pois inrises
,. j facihnes, aD costs disaBowed for rate-making purpons must
,(4 4
be recognized as losses against income as saan as the dital-.
. ' in order to ease the knpact on rates that may resuh lowance becoms probable aruf can be reasonably estimated from the addition to rue base of the cost of major new 1
k'(
4 SFAS Na 9o also requires that a kiss be recorded for any facihties, such additions may be added to rate bee by regu-(
disaBowance of the investment in an abandoned plant facil- :
lacary authonties graduaDy via a phase-in plan. SFAS Na hy, and for the disaEowance of a return on investment,.
92,*Reguhted Enterprises-Accounting for Phase in -
reganBess of the fact that regulators have provided for Plans", establuhes criteria for a phase-in plan and requires.D
, p'.
nnwry of the fuD investment.The loss to be recorded for :
among other things, that caso defened for future ruovery
. the duanowance of a recum is measured by the ddierence under a phme-in plan can be captalized for (mancial report-
'].
of such investment. As this difference decremes over the
, thee deferred casts within a ten year period of time, and between the recoverable investment and the present value,
ing purpcnes only if the rare reguhtors allow recovery of i
3'
. eriodof recoveryof theoriginalinvestment,thelossis.
. that the percentage increme in rates scheduled under tlie s p
rewmed through accretion, which is recogrdzed as income.
plan can be no greater than the percentage increase in rates -
';i
. lames in 1988 for disanowd costs of its investment in MiU-ary 24, 990 decision of the DPUC implementing the Sea.
. Pursuant to SFM Na go,the Company recorded scheduled under the plan for each precedmg 3 ear.1heJanu.
t brook Setdement Agreement includes a phase in phn for '
stone thit 3. for the amount by which the Company).,
teamry of the Company's invatment in Seabrook Unit i 1
investnwne in Seabrook Unit a was then propcted toexceed,
the $8 2 milhon Connecticut statutory
- cap"on the that cornphes with SFAS Na 92.
3 e
recoverable construction costs of the unit, and for the dis-'
'(C) state-steistedReguistoryPicoseengs auowance of a return on the recovery of the Company's investment in the abandoned Seabrook Unit 2.These lasses were reconfer' by restating the fmancial resuhs of prior
- On October i, 986. the DPUC issued a notice that it
=i periods when the writootis would have been recorded if would conduct a general review of financial and operational -'
SFAS Na go had been in effect in those periods in Man:h resuks of the State) major pubbc service companies,indud- -
.z
'I andJune 3989, the Company recorded additional wnte. offs ing UI. UI projected a return on equity, as calcuhted for of $i As miDion and $17 5 milhon, rmectively, net of -
rate making purposes, of over 18% for the 3 ear r987 and rehted income tax e#ects, to recrignize disaBowances due to offered neveral alternative ways of reducing its camings to successive extensions, to at leastJanuary 1,1990, of the or below the albwed levd of r64% without reducing rates estimated comrnescial operation date of Seabrook Unit i, and revenues. The DPUC, recognizing UI's cash-flow needs,
- An additional write off of $121.2 miDion, not of rehted accepted the concept of non-rate actions to reduce the income tax e6ects, was recorded in August 1989 to reflect.
equity retum, am! initiated a proceeding to examine the the write < lown af the Seabrook Unit : Investment from the approp-iateruss of non< ash adjustment actions such as statutory " cap" to the aDowed recoverable amount of $4o a.:celerated depreciation of facilities and shorter amortiza-milhon, as presided in the Seabrook Settlement Agreement, tion periods for premium costs associated with redemption i
arsi to recognize the disaDowance of a retum on the Com-of high-cost securides as a means oflowring UI's projected
.I pany) additional $ t t milhon of costs associated with Sea-equity return. -
I' brook Unit 2 for which recmery has not 3et been approved..
As a resuh of this proceeding,on April.19 7,the 4 8 See Note (C) Race Rehted Reguhtory Proceedmgs. The foi-DPUC approved a stipuhted eamings agreement among l
lowing table illustrates the effect on net income of the SFAS.
the Company, the DPUC's Prosecutorial Division, the Divi-Na 90 wnte offs and accretion trans.v.tions through sion of Consumer Counsel ard the Connecocut Attomey December 31,198 :
General Under the terms of this agreentei,t, the Company
.i 9
br Endaf December p.
3989 19 4 1988' Total l
INusands of doihrs)
DuaDowd Costs:
Mdistone Unit 3
$ (i7472)
$ (r7472)
Disallowed Retum on Seabrook Unit 2 (4 644)
(34451).
(478.268)
Seabrook Unit (2:2.8 9) -
(265 409) 5 (t8.6o5) l 1otaldisaDowances (2i7 50.1)
(316,932).
(534435) l Rehred IncorneTaxes 62,7o5 99 2:3 not.ois Net disaDowances (ita.798)
' (2 7,7i9)
(372.Si7) l L
Accretion of DisaDowed Retum on Seabrook Unit 2
' 4.t 29 2o 549 24,678 RehtedincomeTaxes (i.t78)
(8 54 )
(ro,o24) 6 Net accretion 2.65:
2.003 14 654 Effect of appbcation of SFAS Na So-riet
$(itz.ia7)
$(2o5.7:6)
$(3s7.861)
I
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y was required to continue hs cash conservation pracaxes proceedings and aD of the lawsuks pendmg in the Coruwcti-
.O
%tg nately $ so maion through vareus accounting procedures,
. cut Supenor Court among the partus and the DPUC it
+-
while reducing its norsash earrungs for 49 7 by approxi-8 w
stipulated that the Company would recem here rate
, i Such procedures included the recording of additional depre.
Increases to customers totalhng between 6% and % over clation on ks ownership intens in Mdistone Unit 3 the use -
the three par period 199o through 1992, with the DPUC.
A dkiwer AFUDC rates and the write off agairst income of -
subsequently detennimng the actual rate increase for each 6mue expenses, induding debt discount, associated wkh cer-par, taldng into account the appropriate level of 6nancul tain s9 7 ong-term deix issuances.The intent of the agree-heakh for the Company and the e6ect of the increases on 8l J
j name was to lower the Company's rate of return on the Company's customers and shareholders. Under the common stock equity for i987 to a level comparable with agunent,the amount of the Company \\ Seahnx4 Unit :
I the average of the electric utihty industry, without aHecting -
investrrent that can be recovmd through customer rates 3
. the imi of the Company's cash flow. A corshtion of the will be limited to $6 o million, phand-in to race base over a 4
aguement was that if these nensures proved to beinsuf5-6ve-par perkd begiruung in i99o. The agreement was cient en achieve the rate of return prescribed in the stipu-
- based on the assumption that Seabrook Unit I wW attain laced agreement, further ad umments of this rsure would commerdal operation by the end of i990. lf this assumption.
i be required. Acconhngly,c n Octokr 29, 9 7,the DPUC ;
proves incorrect, the Seabrook Settlement Agreenwnt wa 8
be reopened arri he appropriate racenuking and invest-issued an order requiring the Company to show cause why t
k should not be ordered to decrease norwash earnings by nwne recovery tremtment for Seabrook Units i and 2 for subsequent 3 ears wiD be determined after further negotta-an additional $56 miHion, by recordmg addnional deprecia-tion of $47 million and by writing odagainst income debt.
4 tions among the parties and detem inations by the DPUC, -
. Issue expenses of $a = associated with the $43 5 milhon However, during e. the agmment may be.
borrowing fnr.i the New Harnpshire Industrial Develop-extended up to one year by the DPUC In any case, revenues -
nwnt Authority in November. The Company did not con-
. to which UI has become enotted prior to December 3r, j
test this show cause order and in the fourth quarter of 198;.
i9go will not be refundable The agmment further provides i
recorded these earnings reductions that were prescribed in a that the Companys rate making rate of return on Common l
second stipulated eamings agreement among the paroes to Stock equity (ROE) during the three pars 1990 992 wW be i
the earlier agreement.
lunited to a ceiling of 39% with a floor of 9%. If the 1
On February 22 t989, the DPUC issued a decision in actual ROE exceeds i39% the amount of eamings in.
j e proceeding that it comnwnced on October s i, s 988 to excess of the ceihr., wW be appbed against deferred reve-
,j investigate the operational and 6nancial status d the Com-nue related to the Seabmok i phase-in.1he Company nuy pany.1he decision ordered the Company to seduce hs 1989 request uklitional rate reliefif the ROE falls below 9%.
return on equity for rate making purposes to i6 4, the
. On September 1,1989, the Company Sled a rate j
level authorized in its last rate case in ig8. Accordmgly. in application in acconkmce with the agreement, requetmg i
4 i9 9,the Company wrote ona totalof $14 8 million, con-base rate increases of % 3% arri 3% effective for the pars 8
5 sidng of bond repurchase premiums amountmg to $46 1990,1991 and 1992, respectively.1he DPUC comnwnced milhon, net of related inconw taxes, and $ so.2 milhon of hearings on the race proposal on November zo, i989 and, a
additional depreciation charges related to MWstore Unit 3 In a decision datedJanuary 24, :99o, granted base rate v
In its decision, the DPUC stated that it continues to be increases of.72% 249% and 2 53% for the thm pars. -
3
=ensitive to the need to maintain the Company's 6nancial These increases are designed to raise revenus by $22.i 1
integrity and therefore had appmved earnings reduction
- milhon in i p9o, $ to.9 minion in 199i and $ i67 mWion in nwasures that did not affect menues or cunent cash flows, 992. While the rate increases granted were based on a 98,the DPUC appewed theJuly 6, 129% ROE, the Company is authonzed to earn up to a -
On August 23, 9
19 9 Seabrook Settlement Agreement among the Company 139% ROE in accordance with the settlement agement.
8 and the" Connecticut Pubhc Parties"(consisting of the The decision also provides, among other things, for phasing-Connecticut Of6ce of Consumer Counsel, the Connecticut in the Company's recoverable Seabrook investment into Anomey Generaland the Prosecutorial Division of the rate base over a 5-War period ww.4 january i, igno, DPUC) on the rate treatnwnt of the Company:175%
for recovery of defened phase in costs during the subse.
i ownership in the Seabrook nuclear pbnt.This agreement quent 3-par period consistent with SFAS Na 92 cnteria, settled many pending Seabrook-rehted issues indudmg-for rate design changes designed to encourage energy con-i i
. tennination of the DPUC) prudence audit of the planning servation, and for a wies adsstment clause designed to and ee ne of Seabrook Units I and 2, the Company's :
compensate for deviations from forecast sales laels, wuhin then perriing application to increase its rates by approxb prescnbed hmits and subject to DPUC approval The deci -
mately 93% in 1990 by phasing-in $8 2 miHion o(its sion permits the Company to retain the bene 6ts of whole.
3 Investnwnt in Seabrook Unit i owr four years, the sale power sales above prescribed levels, and aBows the Connecucut statutory issues relative to an appropriate Company to capitalize conservation projects.These capital-phase in period for Seabrook Umt i, the Company's having ized conservation investments wW be allowed to cam a pre.
excess generating capacity, and the exclusion from rates of mium return of up to 3% over the Company's weighted cost revenues equal to Seabrook Unit : C%1P revenues coHected of capital. -
I by the Company since 1983. This agreenwnt also resolved in recent pars, the Company's earnings have i
DPUC accounang and tax issues with respect to Seabrook induded a large amount of AFUDC. As a result of the Unit i and terminated several DPUC direcoves in other january 24 1990 rate decision and beginningJanuary n I
Tus Uumpluuuecem Cmnam
---~.
-m nu m,.n.~ e n + -
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3,-
3
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~
= a r.,,. ~m.m l
t i
w
-*l w
1990, the Companys Seabrook Urdt Helated AFUDC will Accumulated deferredincone tax
- 1" of the recoverable Seabrook Unit a investment that is
87 deduw to a lewi retiscung a defmed return on the portion.
amets at December 3i:
i exduded from rate base due to the phase-in plan. Concur.
Plant disanowances
$t23087 $ 69565 $ 57474
~.i rently. the Company: earnings will begin to renacs the 6
SFAS W 96 e,
remry of the inwsonent in Seabrook Umt t through.
adjustnunts 33.r39 57A43 6 4551 4
increased charges to customers resulung from the base rate -
. Phru "
+o03 54I5 ' 7453 '
{
increases aBond by the DPUC.
Deferred fossil fuelcosa
+520 4 382 '
+292 -
g Fension msa 446o-3419 2.954
(
I""""*P'"
Gain on saleofutihty
.,93,
,9gg
,,gy plant -
-th37 I. I7. 4.s37 Other 6 375 3 900 3497 Operating expenses.
. $17A82: g "$i4iA42.
Cunent
$ 2'.48s ' $224I) $i8 536
.s Defermt income tax habihnes at.
i income tax attributable December 3t:
to theallowance for SFAS Na 96
[
borrowed funds
-19404 i9482 33 190,,
.adjustmenu
$395456 $44t.94 $385.i8;'
Ahernative minimum Accelerated tax
+535 6,9:3 (ro4p),
depreciation 31 95i 26 9 :
al A86 '
8 Accelerated
, 5425 53o8 8.t71 '
Unit 2 28 742 25 537~ 31 722 E
Cancelled Seabrook depreciation Construction overheads (994) 14o9 1378 Unamorced bond Deferred fossilfuelcosa (208)
(20) 546 redemption cosa e5427 23 24o 26 546 Pension casa -
(441)
(665)
(63 )
Construction overheads so417 I2 424 11462 6
Investnwnt tax credits
' Alternadw minimum
-amorazation (1429) (1429) (1491)
Premium on BEC bond tax carryforward 4 757)' (1o470) redemption (7 432) 4 336) 17 532 N74#"' I"*A'** D Cancelled nudear Accumulated defmed pruicca 4 795) (6 359) - 4 795).
investnwnttaxcredia - $ 2s.m $ 52.i25 $ 5444 Gain on sale of utihty plant (52o) '
29.
Other-net (2 493)-
99 (2 557)
As a resuk of the adopoon of SFAS Na 9 and the 6
restatement of the 6nanchl results of prior periods to reflect Totaldefmed i2.282 28 732 32497 such adoption, the Company has adjusted its deferred tax Totaloperating asset and habihty balances as indicated in the table abow.
income tax In accordance with SFAS Na 96. the Company has also expenz 37.o63 44445 &
recorded Unfuruled Deferred inconw Tax regulatory assets 06erinconw and and liabihties as shown in the Consohdated Balance Sheet, deductions.
. "Ihe amouna reported for federal income tax expense Current (17422). (sao8) (1o.521).
for the p ig8, r988 and 1987ddfered from the amounts 9
Defmed computed by applying the federal inconw tax statutory rates investnwnt tax cmhts (21 729) b Other-net (757) 122 6A59 Totalotherincome and deductions (30 o08)
(i.286) 4 662)
SFAS Na 90 write ofis:
~ Nntabandonment i.466 I838 2447 l
?
Cor.struction overheads (14 3)
(647) (14o9)
Investnwnt tax cmhu (7 594)
(1.800)
(4 353)
Nnt disallowances (4.o86) ( 2453) (3o.43) s 6
t TotalSFAS Na 9o l'
writeeffs (6.227) (13 26?) (33 778) l Totalincome tax expense
$(6T.172) $20 407 $11.103 1
l Tm Owrso luAmmeAftal COMW.T
_ n n n_
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A to lxx4 income before federal inmne enes.'!he nasons for The Tax Reform Act of 19 6 provides for a more 8
e
. such ddferences are as foBown
--r J.d4 corporate alternative minimum tax (AMI) u io80 so88
- o87 g g '.
go, years beginning after i9 6.To the extent that the AMT 8
i,
. Net inmme
$(713P) $78439 $ 8.6 9 exceeds the federalincone tax computed at statutory rates,.
4 the excess must be paid in addition to the regukr tax habil-(
Totalincone tax expeme (63.r72) 29 497 13.i 93 ity. For tax purposes, the excess paid in any par can be las state income tax -
carried forward indennitely and onset against any future -
y expense (12.28 )
9 325 18o3
- year's reguhr tax habihry in excess of that year's tentadve 4
I derdinmne tn AMT.in 98, the Company paid additional taxes of c 7
j' espense (3o.888) 2o. 72-0 390
$ soh7o due to the AMT, which amount was carried for.
)
4 i
Bankinmme before ward for tax purposa aruf deferred on the Conschdated.
9,8 I 18.039 Sta. tenent orlocone for book purposa Since the Compa-ir federalincome taxes (i24 23 )
8 8
Federahnwnr tax
.,y@r in habihty exceeded la tentadve AhU habihty =
3 n 1988,the Company's tax payments for that year.
statutory rates 34%
34 %
4o% by $6,9:
i ww reduced accordingly and the AMTcarryforward at -
Federal tncone tax at '
December 31,19 8 was nduced to $3757. During i989, the 8
statutory rate (42 24o) 33 596 7,216 Companyi riguLt tax habihty exceeded la tentative AMT
{
Effect on taxe of-habihty by an anount greater than $3757. As a nsult,
' Deferred investment tax there is no AhR being carried forward at December 3i, credits recorded as 8
i99..
income per Seabnma Settienunt Agreenent (21,729) 5)thertasan Crest Anongements ADowance for equity On April e 5, so89, the Company reduced, from $ ioo funds used during milhon to $ioo milhon, the borrowing hmit of the revolving w.mmwm capital-
. cndit agreenent that the Company has had with a group of ind for book pur-banks since September 19 4 This agnenunt was replaced -
8 poses, not taxable by a new $100 miDion revolving crecht agreement on e
incone -
(i3,249) (16,526).. (21,973)
December 2i,19 91he trw agreenrnt, which cunendy 8
Amorti2ation of extends to Oaober 30, i99o, affords the banks an opportu-defened investnrnt nity to declirr to lend funds if any one of several corrhtions
. taxcredits (io29) (io29)
(i.o9 )
is not satts6ed at the date of a requested lorrowing.These Equityin earnings of
= conditions include, among others, the absence of a determi-subsidiary companics nation by the banks that the Pubhc Service Company of for book purposes, New Hampshire (PSNil) bankruptcy proceedmps have not taxable income (So6)
(56o) - (759) increased the risk that the Company wiD not be able to.
Tax deprecation les perform its obhgations urxler the agreement. As of Decem-than book deprecia-ber3t, i9 9. $25 milhon of borrowings were outstanding 8
tion appbcable to uruler this agreenrnt.
~
~
pre 198 property In Seprember i988, the Company entered into a additioru 5:6 84 505 revoMng cndit agreenrnt with the sane 6nancialinstitu-Amortization of aDow-tion with which its has a sale and leaseback arrangenent for ance for funds used
- nuclear fuel and a fossil fuel reserve arx! supply agreenrnt.
during construcnon Sce Note 0),'Tuel Finandng Obhgations and Other Lease appucable to can-Obhgations". This revolving credit agnenrnt enables the i
ceded nuclear Company to borrow up to a total $ 5 milhon, until August 4
projects 1470 t47o 1,259 31, ig9o, for general corporate purposes and within an
. Appbcationof aggregate $ r65 milhon hmit for au outstaruhng Enancing SFAS Nck 90:
obhgations to the 6nancialinstitution.1he aggregate hmit BookAax lusis is subject to being decreased to $135 milton on March 16.
differentials 32,304 63i8 23 552 r990 unk ss Seahook Unit i has, by that date, received a
(
investnrnt tax fuu-power operating hceme and made satisfactory progress cndits (7 5H)
(I,800)
(4 353) towards achieving comnwrcial operation. The 6nandal Addmanal book depre-institution may dechre to lend funds under the revoMng clatiori apphcable to credit agreement if any one of several conditions is not satw Miustone Unit 3 3447
+995 6ed at the tine of a nquested borrowing. As of December Other items-ret (i.8 8)
(98i) 30 7
3r, 98, $20 million of borrowings were outstarxiing uruler -
9 Federalincome tax this agreenent.
expense
$4o.888) $20r72 $ o.wo Effective federalinconr tax rates 4o.0%
2o4%
42.1 %
Tm Unnetumows.o Cemwn
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3 tH 46 Infonnaton with rapect to short-term hormwings is The plan)irmocaNe trust fund consists prir'dpaDy as foDows:
of equity and 6xed-income securities end real estate invest-ep'k#.
no8o io88 so87 ments in approximately the foDowing percentages:
~
Possessess of
. 4 Maximum aggregate Asest comessey hees pumi principalamount of
. short-termbarmwmss Equity Securines 6o ountanding at any Fixed-income Securtues 30 -
$60,000 Real Estate ;
no '
v' i
month-crd ~
$70,000 f
1he comporunn of net pension cosa were as foDows:
outstanding during
&3 the year
- 2Ao68 27.8 8 Service cost of berw6u earned 4
Weighted average intmst during the period
$ 3644' $ 2,795 rate' 105 %
75%
Interest cost on projected Principalamouna out-bene 6tobhpanon.
94 2
. 8Ag7 8
standingatpard -
$4545 Actual retum on plan assets '
(s8445)
(19 545)
Annualized interest rate Net amortrzation and deferral
' 7 3ii ' 9346 on principalamounu Net pensim ccst
$ i,8o2 g outstanding at pr.end so.4%-
Assumptions ined to determine
- Average short term borrowings represent the sum of pension costs were-dauy bonowings outstanding, weighted for the munber of Ducount rate 7 75 %
8.25 %
' days outstanding and daided by t're number of days in the
-- We wageincrease 6o0%
6,00 %
period.1he weighted average interest rate is determined by -
Expectedlong term raw of dividmg interest expense by the amount of average barm-planassets 8.co%.
8.m%
ings. Ccamimwnt fees of $70o, $83o and $80o paid during
'the funded status and amounts l
19 9, i9ss and i987, respectmly, are excluded from the remgnized in the balance sheet -
8 calculation of the weighted average interest rate-at DecemNr 3: were as foDows:
Actuarialpresent value of W :: - -, inknnesen
. bene 6tobhgations-The amount of maintenance, advertising costs, and Vested benent obligation
$8u75
$7o.272 i
the provisions for depreciation and amortization, other than i
set forth in the Conschdated Statement of income, are not Accumulated bene 6t j
signi6 cant, and there are no royalties oNigation
$8(.424 g Taxes, other than income taxes charged to costs and Reconcibationof Accrued Pension expenses, are set forth belom
. (
4 gi gy.
'080 3088 3087 Projected benear obligation
$i37,432 $t23 w
'#3 State gross earnings
$24 508 $23 950 $2A999 localrealestate and Projected benefe obbgationless personalproperty 15,700 20,226_
16,199 -
than plan assas 4 221) 4mo)
Other, principally paymD 4.83o 6,123 4.o24 Unrecognized prior service cost (4w)
(61) i 8 " N I'""
d
$45.o44 $so.2co $4u22 past expenence Iw (6,357)
Charged to:
Unrecognized ns asset (obaga-Tax expense
$44,800 $45,643 $40,191 tion)at date t(initial Other accounts 244 4.656 343:
appbcation r7 3o9 18,612
$4 %64 $40.2co $4u22 Accrued pensionliability at Decernber 3i '
$ co86 g (G) Pension Plan and Roeroment Benome The Company's pension plan, which is based on 6nal In addition to providing pension bene 6ts, the Com-
- {
average pay, covers substantiaDy aD of its emploms and its pany provides certain health care and life insurance bene 6ts
. j entire cost is bome by the Company. Net pension costs for for retired employees. Substantially aD of the Company's j
1987,19 8and i989were $r,255 5:443 and $1,892.
emplopes become eligible for these bene 6a when they 8
For funding purpcses, the Company uses the Entry reach retirement age while working for the Company.These Age Nonnal Cost rnethodology. Due to the experience of and similar bene 6ts for active emplopes are provided the plan and the furd in recent pars, no furxhng contribu-thmugh insurance companies and Health Maintemnce tion has been required since 1985 Organizations whose premiums and enembership fees are Tus LiumoItuacasmo Ccmaun
._-n_.,-
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_._____..L 3
' 5$
,e 3;
based on the bene 6a prtmded and the daims experienad p) fust Finanoeng otagesons and come tasse ceassems 47 ~
i g,
during the immediately pacedmg rating year. The Com '
- The Compny has a fuel roerve and supply agre...
b 1
pany neognize the cost of provuhng these bene 6a to rrent wkh a nnancialinstitution providmg for the Enancing i
netred and active employees on a pay-as-you-go basis by of up to 5 65 miBion in fossil fuel purchases. Ims the expensing the annualinsurance premiums, which were -
' amount dthe Companya outstandmg obhgadons to the
$5282 $5137and$6 87 ortheyears19%, 988and' sane 6nancial institution for other corporate puryues. W 4 f 1989, repectively. At Decer.ber 31, so89, the Cornpany war douar kmh in the agreenent, which was extended to :
pnmdmg these bene 6s for :423 acave employees and December 3i, i990 in December of i9 9 is subject to a 8
approximatdy 54 ntines or their berr6c! anes The cost
- reduction to $335 miHion on March so,199o unless certain 8
j of providing tinse benr6a ior ndrees k in now readily condmons are met. See Note (E) "Short TermCredit.
s i
separable frurn the cost of provichng bene 6a for acdve -
Arrangenents." At December 3t, 98, approxinwdy $is "
9 employees
_ milhon of oil and $io maan of coal were being 6nanced The FASB is currently deliberadng proposed changes '
under thh agreement.
in the accounting for post-retirement bene 6a other than The Compmy also has sale and leaseback arrange-'
pensians. If these proposed change m appnwed, con >
' ments with the same 6nancialinsdrution pnwidmg for <
mencing in 1992, the Company would be required to accrue -
nudear fuel Gnancmg up to $7o mBon for Seabrook Unit i such post-retirenwnt bene 6a over a period starting with
. and up to $ to million for Matone Unit 3. Under these an employee) employment date undl the date that the arrangemena, the Company is paying ant for the MiDstone Unit 3 uel based on the direct costs to the lessor of the fuel, f
employee becomes eligible for retirement. At this time, the Company is unable to pratict the outcome of these debber-plus the lessor's 6nancing cosas. At December 31, s9 9, 8
a' ions, but it is expected that the Company would be.
approximately $74 milhon of nuclear fuel was twing requurdtoruongnizesubstantialaddstionalannualexpense ~
6nanced under this agreement..
if the proposals were to be accepted.
In addition to the nudear fuel leases den:ribed abow,.
the Company has entend in o other leases (some of which.
r M Joiner owned Ptent are capitalleases), including arrangenwnts for the use of -
1he Company's 9p% ownership shan of the New data procesing and offxx equipnrnt, vehicles, of6ce sp,,ce C
Haven Harbor Station generatmg unit represented $129 and oil tanks. The gross amount c'assect recorded under '
million of utihty plant in service and $45 milhon of accumu-caphalicasa and the related obligations of those leases as of lated provmon for depreciation at December 31, 9 91he December 3t, i989 are recorded on the talanu sheet.
8 Company's 3 68 % ownenhip share of the Millstone Urut 3 Future minimum lease paynrnts under cap tal leases 5
nudear generating unk repreented $i33 miDion in plant in are estimated to be as folkwx service and $36 milhon in ao:umulated provision for depre.
Next 6ve years:
clation at December 3i ig8.lhe accumulated provtsson i990
$ 6,897 9
for depreciation for Mdistone Unit 3 indudes onetine 991 6435 bcreases of $815 miBion and $so.2 milhon recorded in i992 5 510 -
19 7 and s98, repectively, as permded in DPUC-appnwed 3993 506 8
9 stipulated earnings agnenrna in 1987 and a 198 DPUC -
9M 5 685 9
onier. The Company s share of the operating costs is After 19%
72,773 imfuded in tfw appropriate expense captims in the heWW bpa e
Consohdated Statement ofIncoma nunt NPmendng imemt 66,8 3 4
The Compny aho has a i7 5% ownership share in Seabrook Unit i, a nudear generanns unk not yet in serv, Fraent vakte of minimum capitallese payments 35A13 ice. See Nore (K),"Comnutments and Contingencies".
Praent value of future nudear fuel lease paynwns 74,oo3 Totalleme obligations
$ioo46 0)unemoresed canoemed meiner protect 4
Since the Company has not been aHowed a return Capitalizatim of leases has no impact on incone on the Seabrook Unit 2 investment that k is recovering since the sum of the amortization of a lemed asset and the through rates,it recorded, in the 6rst quarter of 19 8, a imemt a tfw lease obugadon equals the mutal expeme 8
non-cash write off of approximately Sio millson, net of aDowed for rate-making purposes.
related inconw tax effects, by restating the Gnancial resula Rental payments charged to operating expenses in 1987,1988 and 9 9 amanted to $so,838,$t2.82e and 8
for the years 198 through :987 4
in August 1989, the Company noorded an ackhtional - 333 78 f'8P'C"vely non-cash wnte off of approximately $2.6 million, net of Operating lemes, which account for the largest part related income tax effects, to recognize the probable disal.
of nmal and lease paymems charged to operating expense, Iowance of an aDowed retum on additional cosa associated consist of e large number of small, reladvely short term, wtth Seabrook Unit a for wEch recovery has not yet been terrwable agreements for a wide variety of equipment, approved. See Note (B)" Accounting for Abandonnrnts aryl DisaDowances of Plant Costs and Phase-in Plans".
Tm tamsolumawresaconeen
,~~w--..%,+-.e.,
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.i :
4 s
t d
j, W
.,y pg comunseinants ang comungencies Hampshire statute that prohibks the indusion d constnx f
The Company has entend into substantial commit.
tion work in progress (CWIP) in a utihty's rate base, thereby >
- <. ' }
nents in annection wkh ks continuire construction pro.
effectively predudmg PSNH from obtaining a 5% ener,
' S - (d f
gram, which h presendy esrinured at approxinutely $350
- 8'"CY f** I"'rwe, wMch PSW had stated was inugral m ;
t mahon,induding AFUDC arif enduding nudear fuelcons, -
a haancial restructudng plan k had proposed in an effort m i
for s9rp through 1994 Wie this program was dominated aved proceedmgs under the Bankruptcy Code.
i
( '
by ccats rehted u de construction d Seabnnk Unit i prior ~
OnJanuary 28, i9 8, PSNH comnenced a pnxeed-8 to 1990, the above estimate indudes only ctsts rehted to..
ing under Chapter i of de Bankruptcy Code. Under this -
p new construccon u..... ig afterJanuary t, r990 for this -
statute, PSNH is continuing hs operations while seeking a unit Since the Seabrook Settlement Agnement and the 6nancial reorganizatim. Several compedng norganization J'-
January 24, i990 rate decision of the DPUC descnbed at plans for PSNH have been 6 led wich the bankruptcy court,7 1
Note (C). " Rate Retared Reguhtory Proceedmps", pnmdes indudmg phns submitted by Ul, PSNH and Northeast U il. -
't '-
for phasing in the Company's $64o miBion investment in kies (NU). As revised through November zo, i9 9, the UI 8
I 8
the unit and ncor:daH on-going costs, the Company's '
. phn provided for the pannent of au dPSNH's debts aral.
L primary concern is ne achievement of commercial opera.
for nerger transactions in which UI and PSNH would :
tion status. Ahhough Seabrook Unit i has successfuly com.
becorre whouy-owned subsidianes of a public utihty hold-piecedlow-powertesting hsfuB-poweroperationisthe ;
ing company owned by the exhting credstors and sharehold subject of conunuing Nuclear Reguhtory e-mm m of PSNH and UI's shareholders Suf5cient cash for the (NRC) proceedmgs and comnercial operation can not be ~
implementation of this plan would be obtamed through a predicted. Howevet due primarily to delays in resolving
$14 biuion saleand-leaseback 6nancing d PSNH's owner.
emergency response phn issues, the unit is not hkely to ship interest in Seabrook Unk t, and PSNH wwld also -
achieve comnen:ial operation before the second quarter of -
hsue approximately $700 miBion of new stnck and rrw debt.
ig90. S#Ucensmg Prasedmss". -
arcurines to existing caditors and shareholders of PSNH in exchange for their existing chims and equity interests. As senemek unst1
- revisedthroughNovember 20 i9 9,thephnproposedby 8
The economic viabihty of Seabrnok Unit s was seri-PSNH would invoke an internaBy recapitabzed PSNH, ouslyjeopardisedmtheSpringof19 4 ysubmantial which wouki retain aD of ks existing assets and distribute to 8b increases in cost esumates and by the attendant 6nancial existing creditors and sharehokiers of PSNH cash, new.
problems ul Pubhc Service Company of New Hampshire PSNH stock and new PSNH debt securities in exchange for (pSNH), which holos the krgest ownmhip share b54%)
their existing claims and equiry interests. NU and the of6 in the Seabrook protect. Since that time substantialprogress cial committees of unsecured creditors and equiry security has been made, due in part to the greater participation of -
holders in the bankgecy proceeding havejoindy proposed
+
otherjoint ownm induding the Company. Construenon of a plan pursuant to which PSNH would become a subsidiary the unit has been completed, lengthy and cosdy proceedings of NU, PSNH's intercst in the Seabrook plant would be o resche contmversies over licensing requirenwnts and..
transferned to a new subsidiary of Nu and the Sebrook inten-nNone,and ageals by opponents of nudear power subsichary would contrxt to seo Seabrook power to PSNH.
hwe been succesiully conduded, arallow-power testmg -
Under this plan, existing creditors and shareholders of '
has been performed. While de ruk of caralhtion of the
' PSNH wouki teceive cash, new PSNH stock,new PSNH -
unit has been reduced by this rccord of progress, both the contingent debt securtues and warrants to purchase NU occurrence and tuning of comprrtialoperation of the unit stock. On November so,1989 Ul announced that it
- continue to be deperxlent on accomphshment of remaining expected to withdraw its reorganization phn for PSNH steps dut are hrgely besmd the Company's control. The when the NU reorganization phn was property docunented nuzt difficuh step is obtaining NRC approval of an off-site and supported by an agrament with the State of New enwrgency response and evacuation phn for six communi-Hampshire relative to future electric rates for PSNH.1here.
ties in Massachusetts, which is being chaDenged by inter-after, NU Eled with the bankruptcy court a revised joint venors, includmg Massachusetts public of6clats. NRC phn of reorganization arxl an agreenent with the State of bcensing proctwhngs in this matter are in progress and are New Hampshire rehtive to future electric rates for PSNH. ~
expected to condude during the 6rst quarter of 199o. See
- Financing Concems"and"Deensing Proceedmas'.How-Akhough the NU reorganization plan for PSNH by reason of ks joint spor.sorship with the two of6cial committees in ever, there is no assurance that Seabrook Unit a wiE be the bankruptcy procerchng,is expected to be con 6rmed by i
placed in service; arxilf the unit were canceDed or aban-the bankruptcy court, UIis unable to predict that the NU doned. UI's 6nancial viabihty and bustrrss operations couki plan wiD be the plan con 6rmed. In the confirmation arx!
be jeopardued. See Tmancial Consequences if Seabrook Unit i were CanccHed".
impienentation process, a plan is subject to obtaining
. approvals from affected shareholders, creditors and reguh-Haa"*8 C"m tory agencies, as meD as the bankruptcy court. UI continues PSNH experienced increasing Enancial suiss begin-to expect that it wiu withdraw ks reorganuation phn for ning in May 19 7. On january 26,1988, the Suprene Court PSNH when NU's plan has been approved, 8
dNew Hampshire upheld the constitunonahty of a New he tmmu humamtmo cower
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affect the NRC1s fuu-power operating licensing procrechng 49 sale Dectric Company (MMWIC), which holds an s i.59%
fw Seabrmk Unit 1,the mtane of bankruptcy proceed.
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ownership share of the Seabrook project, adopted a phn of -
ings is unpredictable and the Company is unable to predict action to withdraw from the project. indudmg cessanon of what impact,if any, that these proceedmgs will have on the,
<l pirynent ofits share, appnnimately $2 miDon,of total NRC bcensing proceeding or on the CompanyMnancial
(
- monthly project ccnts. Subsequent to that date, the shortfaD '
condrdon.
In monthly paynena was met by a combination of MMWTC's preppa, payments by NU in return for -
33*"*her**"8hes wholesale power sales to other participants in the project, Nubar generating todts are subject to the Lcensmg includmg the Company, and withdrawals fmm project cash.
mpurements cf the NRC under the Atornic Energy Act of I
balances and advances by other pardapano in anticipanon 395+ as anerM and a variety of other state and federal 3'
of the imal = rah of a November 4. i988 aercement r7amnen It ias been the apenence of the electric udi--
between PSNH and MMWEC under which MMMIC con.
Ity indust f that de constmeta ard initial operatim of i
tinues to participate in the projat The agreement includes these urats are subject to increasingh strmynt bcensing a provision pursuant to which PSNH advanced funds to.
requirt ments that, with other factors, have tended to reimburse the project cash balance withdrawals and _
increase tlw cosa of and delay completim dates for tfw ~
advances by other partopants, and has pid and wiD pay.
unta,in smr instances precipitating==naamm of pm),
MMWEC's share of monthly project costs untu comrnertial ects after the expneure oflarge anana of nmy.
operation orcanceiknon of Seabrook Unit t,in an aggr,.
. m bcensing of Seabrmk Urdt i has been phgued by t
gate amount nor exceeding $30 milhan. This agreement lengthy dbys and has been repeatedly opposed by a num -
.l received tankruptcy court apprtwal, and it became effeedve.
ber ofintervening groups wim have participated acdvely in '
on August 1, i989. The financing arrangenwnts for the administradve proceedmgs,6ied nunwres lawsuits and agreement required that the present and former Seabrook demmstved at the s m ske On October ty, i986,2 the NRC issued a fuD o9 ear cperating bcensa for Seabrook participants exchange mutual releases of chims arising out 4
j of the constructon of the project.
Unit i, permitting fuelloadmg. Houver, this hanse is sub-i A Vermont participant in the Seabrook project, ject to several conditions that must be satis 6ed to pmnit an j
Vermont Electric Generation ard Transminion Coopera.
admiy pmgressim from fuel loading, which was completed
- j tive, Inc. (Vt Coop), which holds a o.4% ownmhrp share.
on October 29,1986, throu;;h im-power testing, which was j
has failed to make constructon fundmg payments due sine conducted during May andJune of ig8, and 6naDy to fuD-9 january i9 a However, the de6ciency in project construc-Pweroperation. =
'i 8
tion funding on account of Vt Coop's delinquencies has.
The pnncipal remaining issues that have been identi-j been and b being made up by advance payments by the ned to date and must be resolved prior to comnwrcial oper-Company and some of d.e other participants or their af61i-ation rehte to the development of satisfactory o6 site I
ates. He Company's share of advance paprnes on account >
anergency response and evacuation plans for the ten-mile of these delinquencies arnounted to appnnimately $995,000 emergency response and evacuarion planning zone sur-at December 3,i9 9
' munding the plant. in this regard, the State of New Hamp-8 On Decanber si, i988,the NRC decidal aD of the.
shire prepared and fikxl a phn for the seventeen New fnancial qual 6 cation issues that had been admitted for -
Hampshire communities within the ten-mile phnning sorr consideration in connection with low-power testing of Sea-in ig8.ne Atomic Safety and IJcensing Board (ASLB) of 5
l brook Unit i,induding the bankruptcy of PSNH, the effect the NRC held puNic hearings on the phn from October o(New Hampshire's anti-CWIP statute, and the cessation 987 toJune 988, and the ASLB appnmd the plan on '
l of, or arrears in, pmject payments by MMw1C and Vt December 3o, i988, as described belm, althmgh an vpeal Coop.ne NRC conduded that no signincant low-power is pending before the NRC and additional appeals to the tesung safety proNem was presented by these financial courts are anticipated. However, the state governnwnt of quali6 cation concerns. After several minor on-site emer-Max-etwhichisresponsible forthedevelopmentof.
gency planning issues were resolval and the joint owners such a phn for MA-% has not 6ied a phn for the i
had pnwided for a sum of $pt milhon to be available for six Massachusetts communities within the ten-mile phn-demmmissioning Seabrook Unit i in the event that low-ning zone and,in a statement issued September 2o, i986, I
power testing was corriucted but commercial operation Govemnr Michael Dukakis stated that he does not intend j
. never achieved, low power tesdng was corx!ucted in May to do so because he does not believe h is possible to develop ~
s l
andJune of r98. On October 9,198, the NRC ckmied a a phn that would adequately pnxect public health and 9
9 j
petition by intervenors in the pending fuu-pmer bcensing safety if an accident were to occur.
l proceedmg for Seabmok Unit i to consider the 6nancial On October 29. i9 7, the NRC unanimously adopted 8
qualificanon of PSNH to operate the unit safety. However,
~ a hcensing nde change that aDows fuD-power operation of a a court chauenge to this decision of the NRC is perufmg.
nudear phnt to begin where there b a lack of part cipation Ahhough it now appears hkely that PSNH win be in the development and impkmentation of emergency successfuDy reorganized urule' the Bankruptcy Code and resporue and evacuation phnning by state or local govern-that its bankruptcy proceedmps wiu not materiaDy adversely nrnts. This rule change requires the plant's owners to dem-I l
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.i 3e enstrate to the NRC's satisfacton that ( ) dr plannrg abo pnwide for adequaa protection of pubhc heakh and oenciency b whaDy or substantidy the resuk of the non-safety when a vehicuhr alert and non6 cation syuem for.
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i participation of state andjbr local mm..-,, (2) plans that area b operational On December 3a @8, the ASLB i
ir.
' prepared by the owners provide reasonable assurance that 4
i r ubhc heakh and safety are not erdangered by operation of.
~ hsueda Partia' Initial D cision on the New Harnpshire por-tion d the Seabrook Station Enrrgency Response Plan. In -
the phnt, and (3) the owners have nude a sustained, smxl this decision, the ASLB found reasonable assurance that -
faith ehrt to secure anx! retain the parncipation of the
. adequare protective measures can and wiD be taken within perunent state and br local governrrental authortries, the New Hampshire portion of the ten-mile emergency
/
including the furnishing to them of copies of the plans. The planning zone in the event of a radmiopical emerpncy at :
Co.
. JidMassachusetts,the Stateof New York Seabroc& subject to the satisfaction of several speci6ed con- -
j
' and several private parties have challenged this rule change ditions, which have since been GA 4 resolvert How-s in court pnxredings; and, akhough a faleral appeals court
. seer, several intervenors, including the Commonwealth of i
in Boston has upheld the rule chang and the Seabrook Massachusetts, appealed to the Atomic Safety and IJcen-
+
owners have attempted to demonstrate that the utihty-sing Appeal Board (ASLAB) from the ASLBi decision arut, 1
sponsored emerpncy nsponse phn that they have 68ed for on Nowmher 7 989,the ASLAB rmanded fourinues to
[
Mui m sati6es the aquiremencs of the revised rule, the ASLB for further consideration and the correction of..
there can be no assurance that the NRC's rule change wlD de6cencies. On Nowmber 16, s94, the NRC decidal that f survive ackhtional legal challenges or that the owners' plan.
thae issues should be resolved by it, rather than the ASLB, wit satisfy hs requirenrnts.
In conjunction with the proceedmg described in the follow-On AprD 8, :#7, the New Hampshire Yankee Divi-ing sentences.The ASLBli public hearings on the utihty-.
sion of PSNH (NHY) nied an emergency response and evac-sponsored plan for the Massachusetts communities began '
uation plan for the six Massachusetts communities within on March 2e, i98 and were completed onJune 3o, r989 9
the ten mile phnning rone. OnJune i s, s987, the NRC Pubhc hearings on theJune as and 29,1988 graded emer-determined that this phn was inadequate; and on Septem-pency preparedness exercise were conducted concurrendy. >
ber 21, ie7, NHY nied a irw utthry-sponsored plan for the Oa Novembe 9, i98,the ASLB issued a Partiallnitial '
9 Massachusetts-2-On October ao, sp7, the staff Decision in which it found that theJune iW9 graded emer-
- of the NRC concluded that the new phn is a "boru 6de.
getry exercise was adequate in scope ard revealed no fun-utlhty plan" that compensates for the absence of parncipa-darnental flaw in either the New llampshin or the tion by the govemnrntal entities in M "m== In a Massachusetts emergency response and evacuation plan, Nowmber 25,1987 decision,the NRC agreed with this that the Masuchusetts phn is adequate and impienentable, analysis ofits staff, and that a tuD power heense should be issued for Seabtuok OnJune 28 and 29,1988,a fuD-scale, graded emer.
Unit i Akhough intervenors comnrnced appeals to the sencureparedness exercise was corxtucted at Seabrook for ASLAB fmm this decision of the ASLE as stated above.,
both the Massachusens and New Hampshire enrryency the NRC decided on November 16,198 that it, rather than 9
respome and evacuanon phns. Prehminary reviews by the the ASLAB, woukiconuder aD appeals from the ASLB's -
Federal Enwrgency Management Agency (FEMA) arxl November 9, 989 decision. A 6nal decision by the NRC is !
j NRC of6cialsindicated that aD parucipanns eqtanizations
- expected during the 6rst quarter of aggo; but appeals to the had demonstratcd that they could adequately protect the
. courts by intervenors, including the Commonweakh of pubhc health and safety. OnJuly 6, i988, the NRC issual an Massachusetts,are anticiparat inspection report on the exercise that conarmed its prehmi-Reguhtory proceedings with respect to the transfer of nary condusions. A 6aal report from FEMA on Septeinber responsibihty for nunagement of construction and for oper-t 6,1988 stated that it found no de6ciencies in the phns.
ation of Seabrook Unit a to New Hampshire Yankee Electne C5 November is, i988, the Presidect of the Ututed Corporation, an entity that has been created by the Sea-States issued an Executive Onler covering FEMA) assis-brook joint owners for these express purposes, are pendmg i
tance in emergency preparedness planning at commercial before the Masachusetts Department of Pub 6c Unhcies, nuclear power plancs. This onter enables the federal govern-Approval of this transfer by the NRC and the PSNH bank-ment tu evticipate in such phnning and to delegate federal ruptcy court wiD also be required. On September 2,1988, authority to a utihty or owr entity to carry out an enwr--
the bankruptcy court refused to appnwe the transfer,6nd-l gency resporue and evacuation phn.
ing that evidence submitted was insuf6cient to Justify On December i4 19 8, FEMA issued the resuks of approval at that time. hjoint owners will continue to seek 8
its integrated nview and evaluation of aD off site emergency the required regulatory approvals, but the Compmy cannot response and evacuation plans for Seabrook Station. FEMA predict when or if the appnwals will be obtained. W latest determined that the plan for the State of Maine was ade.
reorgaruzation phn 61ed by NU in PSNH's bankruptcy pro.
quate to protect pubhc health and safety,and that the New creding (see " Financing Concerm") proposes the transfer of Hamphire phn would also sneet FEMA approval after pm.
- responsibihty for management and operauon of Seabrook pnsed enhancenents to the alert and non6 cation systems Unit a ta a trw sulsidiary of Ntl are compkte. FEMA further determinal that the utihty-sponsored phn for the Massachusetts communines would I
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.i so onstrate to the NRC: satisfe:non that (i) the planning abo provide for adequate protection of pubhc health al.
de6aency is wholly or substantidy the resuh of the non-safety when a vehicular alert and non6 cation system for
"... J partidpanon of state andAr local
--.a.,(2) phns.
thrt area is operanonal On December 30, r988, the ASLB F
g'b prepared by the owners prtede remonable assurance that -
imued a Partia'inkial Deasion on the New Hampshire par.
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pubhc health ard safety are not endangaed by operation of tion of the Seabrook Station Energency Resporve Phn in i
the plant, ard (3) the owners have made a sustained, guod this dectuan, the ASLB found reasonable assurance that l
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faith enort to wcure and retain the parncipation of the adequate praectiw nuasures can and wal be taken within i
perturnt state andAr local governnental authorines, the New Hampshire portion of the ten-mile emergency l
I indudmg the fumbhing to them of copies of the plans.%e -
phnning sore in the event of a radsological emergency at Commonwealth of MM-ra the State of New York.
Seabrook, subject to the satisfaction of sewral speci6cd con-and several private parties have chasenged this rule change -
ditions, which have since been sansfactorily resolved. How-s ~
in court p.uceedmps; ard, although a faleral appeals crvt
- ever, several intervene includmg the Commonwealth of
{
in Basten has upheld the rule change and de Seabrook Massachusetts, appealed to the Atomic Safety and Licen-
. owners have attempted to demormtrate that the utihty-
- .ing Appeal Board (ASLAB) from the ASLB s dxision ard, ;
[
spontored enwrpency response phn that they haw 6 led for on November 7,19 9, the ASIAB remarded four hsues to -
8
.o M A== sati6es the requiremenn of the revised rule, the ASLB for furder consideration and the cortecnon of there can be no asurance that the NRC's rule change wal de6cencies.OnNovember t6,i9 9,theNRCdecided that l 8
surytve addnionallegalchauenge or that the owners' plan.
these isues should be resolved by k, rather than the ASLB, wm satisfy to requirenrnts.
j On Apre 8, i987, the New Hampshire Yankee Dtvi-
. e conjunction with the proceedmg described in the folkw ing rentences.The ASLBi puNic hearings on the utthry ~
sion of PSNH (NHY) fded an energency respome ard evac-sponsored phn for the Massachusetts communities began uation plan for the six Massachusetts communitie wuhin on March at,19 9 and were completed onJune 3o,198.
8 9
the to.-mile planning zone. OnJune 11, 987, the NRC PuNi,: heartngs on theJune 28 and 29,1988gradalemer -
determined that the phn was inzlequate; and on Septem-
' gency preparedness exercise were conducted concurrendy.
ber ti,19 7,NHY fded a new utibty-sponsonxi phn for the 8
On November 9, 9 9,the ASLBissued a Partialinitial 8
Massachuseta communnies.On October 20, i9 7, the sta Docision in which it found that theJune 1969 giadat emer-8 of the NRC concluded that the new phn is a *bana 6de pency exerase was adequate in scope and revealed no fun-utthry plan" that compemates for the absence of participa-danental Raw in either the New Hampshire or the tion by the govemnrntal entines in Masuchuwits. In a Massachu etts emergency response aid evacuation plan.
November 25,1987 decision, the NRC agreed with this that the Massachusetts phn is adequate and implenrntable, analysis of hs staff.
and that a full-power hcense should be issued for Seabrook On Jurr 28 and 29,1988, a fun-scale, graded emer.
Unit i. Ahhough intervemus commenced appeals to the pency preparedness exacise was conducted at Seabmok for ASLAB from this decision of the ASLB, as stated above, both the Massachusetts and New Hampshire emergency the NRC decided on Nowember t6, i989 that it, rather than response and evacuation phns Preliminary reviews by the the ASLAB, would consuler all appeals from the ASLB's Faleral Energency Manegement Agency (FEMA) and November 9, iga decision. A 6nal decision by the NRCis 9
NRC of5cials irdcated that aD participating organizations expected during the 6rst quarter of i99o; but appeals to the had demonstrated that they cadd adequately protect the courts by intervenors,includmg the Commonweakh of puNm: heahh and safety. OnJuly 6,198, the NRC issued an Massachusetts,m andcipated.
8 inspection report on the exernse that con 6rmed its prehmi-Reguhtory proceedings with respcct to the transfer of nary condusions. A 6nal report from FEMA on September responsibiLty for rnanagenunt of construcnon and for oper.
6, #988 stated that it found no de6ciencies in the phns, ation of Seabrook Unit i to New Hampshire Yankee Dectric On November is, i9% the President of the United Corporation,an amty that has been created by the Sea-Srares issued an Executive C,rder covering FEMA's assis-brookjomt owners for these express purposes, a pendmg tance In emergency preparedrrss planning at commercial -
before the Masachusetts Department of PuNic Utihties.
nuclear pov er plants.This order enaNes the federal govern-Approval of this tramfer by the NRC and the PSNH bank.
nrnt to participate in such planning and to delegate federal ruptcy court win aho be requued. On September 2. 988,.
authoney to a utihty or other enney to carry out an emer-the bankruptcy court refused to appmve the transfer, find-st9cy response and evacuation phn.
- ing that evidence subnutted was insuf6cient to justify On December y, i9. FEMA issued the resuhs of.
approval at that time.The joint owners wiD continue to seek 88 its integrated review ano evaluation of aH off-site enrrgency the required reguhtory approvah, but the Company cannot response and evacuation plans for Seabrook Station. FEMA predict when or if the appnwals will be obtained. The htest determined that the phn for the State of Maine was ade-reorganization phn fded by NU in PSNH's bankruptcy pro-quate to protut pubhc health and safety, and that the New ceeding (see " Financing Concems") proposes the transfer of Hampshire plan would aho moet FEMA approval after pm-
. responsibiLty for management and operauon of Scabrook posed enhancements to the alert and notification systems Unit 1 to a new subsidiary o(NU, are complete. FEMA further determined that the utthry.
spomored phn for the Massachusetts communines would Tue bwno w.serwoCmwn
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nesswer a es y seenesen us t1were cas ease and to seek a waiver of the Trust Indenture borrowing kmit '. 5:
The outcorne of the proceedings described at inxn the hoklers dd outstandmg series ofla Debentures
, '* M.
- " Financing Concerns"and "ucensing Proceedmss" b of bsuedpriormjuly.19 7. Approvalof theholdedtww 8
particular signi6cance in amessing the risk that Seabrook
. thirds of the principal amount of d such Debentures wouk! '
Unk : wiB not be phced in comn=rdal operanon desphe te required to obtain such a waiver.The Company is unable the several favorable developmeno noted alxwe.1he Com/
to pndet whether k woukf be succesfulin either of these
~ pany b unable to pndet ekher the outcone of these pn> -
endeavors ceakngs or the nature or scope of any action that might be nomear
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tahn by the other Seabrook participana if the autocoe b '
The Price Andenan Act, currendy extended through I
unfavorable. -
August i,2002, hmits pubhc liabihty fnxn a single incident
]
If Seabrook Unit a were canceged,it wouki have a at a nuchr power phnt. The 6rst $ roo miDion d this habu-g maternal adverse impact on the Company's fir andal condh ky would be pnwidcd by puntasing tir maximum amount
' tion and hs abihty to pret the long-term needs of its cus-o(comn=rddy avahbieinsurance. Additiorulliabihty mmers, and the Company's 6nancial viah:hry and busms would be provided by an===nent of $63 milhon per -
operaums coukt be Jmpardized. The promans of the Sea-incident, levied on each of the nudear units bcensed to '
brook Settlerrwm Agreenwrr, described at Note (C)," Rat
- operate in the Weed States, subject to a nuximum amess-
- Rehtml Repubcory Proceedmgs," that cover rate base neat.
ment of $ io minion per incident per nuchr unit in any
+
ment and rate increases asinciated with Seabrook Unit.
wear. in addnion,if the sum of d pubhc liabilrry daims and wouk! require the parties to anenyt to regadate this jegal cosa arising from any nuchr incident exceeds the agreement and,in the event rrw terms couki not be negott' nuximum amount of 6nancial protecuan, each reactor ated, wouki leave the Izues for DPUC dedston. At Decem-operator can be assessed an additional 5% of $63 milhon or ber 361989, the Company's inernent in Seabrmk Unit i,
$3 2 mi0 ion.The maximum assessment is adjusted at least after giving erect to SFAS Na go write.ods described at every 6ve years to reflect the impact d inflation. Based on Note (B),"Acmunting for Abandonments and DuaBow-ks ownership Interest in nudear unio, indudmg Seabruck ances of Plant Cats and Phase-in Phns" amounted tc Unit i, the Company estimates in maximum kbihty woukt i
$6 o milhon,induding a non-cash dowance for furris used 4
be $m.3 million per incident. However, amessmena would during construccon (AFUDC) but exduding approximately-be tunited to $3a mulion per incident, per year.
$78 milhon of nudear fuel. This investment exceeds the tre -
With respect to each of the operating nudear gener-txx4 value of the Company's utlhty phnt in se*e;
. ating units in wtdch the Company has an interest, tir Although tir Company wouki seek appnwal to amortize in '
Company wiU be obhgated to pay its ownership share of any i
investment over an arnropriate period of ame and m statutory assessnrnt resulting from a nudear incident at -
i remver the investnent through rates, there woukt be n any nuchr perrracing unit, assurance as to whether or to what extent the DPUC would The NRC requins nudear gerrrating unto to obtain grant such recovery. Consequendy, although the Company property insurance coverage in a minimum amount of b unabinn predict the outcar of rugotiatm d the
$im6 bdlion and to estabbsh a system of prioritized use of i
Seabnx4 Seulenent Agn enent and regulamry pnad' the insurance proceeds in the event of a nuder incident.
l ings in which these matters would be determined if Sea-The system requires that the 6rst $1.06 bubon ofinsurance brook Uiut i were canceGed, adverse decisions in these proceds be phcea in urust W the reach dcredaan i
proceedmgs could jeopanhze the Company's Gruncial via-d the unk's owtwrs and used to stabilar the nuchr reactor buny and business operations. However, the Seabrook Set-tienrnt Agreenrnt provides that sie Company wul be to prevent any significant risk to puNic health and safety entitled to retain revenues, includmg CWIP revenues, to am! then for decontamination and cleanup operanons Only foDowing completion d these taas would the bdance,if -
which it has banene entided prior to December 3t,1993, whether or not Seabrook Unit : is canceHed.
any, of the segregated insurance proceeds become avaihble m de unn's owren.
CanceHatim d Seabrook Unn a mid mnow d of
.the Company's investment in the unit from the calcuhtion For each of the nudear gerrraung units in which the of the hmit on the aggregate amcunt of the Compnyis Company lus an ownenhip interest, the Company b unsubordmated short tenn and long term bonowings pre-requird Qy to odp slure d d'e cost d purchsing suchinsurance, '
l a:nbed by the Trust Indenture under which aB of the Com-panyi Debentures are issued. The Company's borrowing.
onne, commstmenes and centensenesee hmk wouki be reduced thereby to a level substantidy bebw An additional 6nancial pmNem tfut wiD arise if arti hs outstarshng bonewings, predudmg further unsuborde when Seabrook Unk t achieves comnercial operation con-nated bonowings by the Company armt obbgating it to cerns :he Company's ability to incur indebtedrrss under the reduce its outstaruling borrowings to the rrw lower borrow-eanungs coverage provisions of the Trust Irafenture urxler ing hmit prior to May e of the succeeding year. In such an which the Company has issued d of its long-term Deben-event, in order to preserve its financial viabihry and business tures. The absence of a return on the disdowed portion of operations, the Company woukt be compeDed to attempt to the Company's Seabrook Unit i investnrnt and the seE securities that are junior to the Company's Debentures increased deprioation charges against income rehted to
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J 52 Seahnd Unit : can be expected to cause the Company's cutumstances beyond the examination level reveal that an -
i eenungs for the next several years to fab bdow the interest abandonnwntbssdidoccurin %4andAr #5,the g ;J coverage level speci6ed in the Trus: Indenture as a prerequi-claimed lones must be reduced by the salvage value of Sea-site to any increase in short-term or long-term indebtednem brook Unit 2 asets. In a letter datedJuly 7, i#9, the IRS -
- (except for $2 mlDien of short-term lorrowings incurred for Dutnct Director noti 6ed the Company of proposed tax,
(
oprating expense purposes, and excgt for borrowings anessments for the years igi, s%4, and 9 5 arising from 8
which are exprsdy subordinated to the Company's Deben-a disaHowance of the abandonment bis deduction daimed '
tures and are hmited to an aggregate amount nor exceedmg by the Cornpany in 9 4.W Company responded to this.
8 no% of the Company's debt limit under the Trust Indenture
. notice, daagreeing with the proposed amessments and j
-626% of the cost of the Company) propernes less requesting a conference with the IRS appcHate divtsior If L l
d, -
deprecianon thereon (the Companyh debt hmit under the this matter is I,ot resolved at the appeRate drvision level, the
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Trust Indenture was $r.oza biuion at December 31,19 9)).
Company wtB contest the proposed==mena vigoroudy A
The Company estimates that its aggregate capital require-in Tax Court proceechngs.
ments wiD exceed cash prtmded by operations by $295 mil-h Company is a party to a ten-year contract for the bon during this period, h Company expects to meet these purchase of seven biHon kilowatt-hours per year of 6rm requirements by a combination of pre-6nancing. subordi-energy from Hydn> Quebec by the New England partici-naced borrowings and 6nancings that are not subpect to the pants in Phase 11 of a transmisson intertie project knking Trust indenture's restrictions. However, there is currendy no New England and Quebec, Canada. & Comp,my has e asurarwe that this expectation wiD be rnet.
545% share in this phase of the project, which participation The Company has a 9 5% common stock ownership
' was authorized by the Connecucut DPUC in April s9 7 6
share in Connecucut Yankee Atomic Power Company The Phase 11 agreements provide for expanson of the -
(Connecticut Yankee), which owns and operates a nu&ar capacity of this transmission intertie from 69o megawaen to
- electric generating station in Haddam Neck, Connecticut.
2,mo megawatts ir the early 1990s.
J Connecticut Yankee has been engaged in a - mn On May 2, i9'o. a pumping error at the Company's -
program that is essential to maintam its stanon as a depend-Bridgeport Harbor Station caused an over(bw of approxi-aNe soune oflow-cost electric power in New England. As a mardy h = gaDons of fuel oil into the diked contain-conthrion of the debt 6nancing arrangemena for this con-ment area surrounding the station's oil storage tacks.
struction program, the lenders from time to time have Approxima*ely p% of the spiHed oil was reclaimed and the l
required guarantees from the sharemmers of Connecticut remainder was consoldated with approximately n,2co cubic j
Yankee. In this regard, the Company is obligated to furnish
. yards of contaminated soil and removed to a locanon 95% of Connecncut Yankee's capital requirements within approved for disposal by the Connecticut Department of.
' speci6ed hmits Currendy, the Company's liabihty for its Invironnental Protection.The estimated cost of this acci-
)
share of Connecticut Yankee's long-term debt bsues dent is not expected to exceed $7o0,00o, of which approxi-
~
amounts to approximately $1.2 million. During a scheduled :
mately $655000 was charged against current income as of j
refuehng and ear-nana outage that began on September -
December 3t, 9 9 j
8 2989, Connecticut Yankee management completed an.
In comptying with existing environrnental statutes assessment of fuel damage and presently estimates that the -
and regulations and further developments in these and total cost of fuel repairs, including the cost of eight new fuel other areas of environmental concern, including legislation i
asembhes, wiu be approximately $8 million. During the that is receiving serious consideration at federal and state
[
outage, Oxmecticut Yankee's thermal shield is being levels in the 6 elds of water and air quahty (parocularly " acid removed at an estimated cost of $25 minion.The Company rain"
- air toxics"," ozone non-attainment",arxl" global i
may be required to furnish additional guarantees to 6 nance warming"), hazardous waste handling and disposal and les portion of cnsts incurred during this outage. Connecticut toxic substances, the Company may incur substantial capi-j.
Yankee's management presendy estimates that the Connect tal expenditures for equipment adha< and additions, I
icut Yankee umt wiu not be returned to service until April monitoring equipment and recording devices, and it may I
199o,6ve mombs later than the originaHy scheduled date, incur additional operating expenses. The total amount of i
& Company clainwd abarxionment losses for tax these expenditures is not now deternunable.
purposes with respect to Seabrook Unit 2 of approximately -
. $72 7 milhon in 198 and $1o.2 milhon in 19 6. During 4
8 1
i j
1988, the Internal Revenue Service (IRS) commenced an exanunation of the Seabrook project expenditures on Sea-I i
brook Unit a that were clainxd as abandonment losses by i
several of the joint owners of the pnwt. incluchne the I
Company,in the years 19,; andbr 19 5. On March to, 8
8 i989, the IRS case manager issued a notice of proposed adjustment setting forth the IRS position that there was no abandonment of Seabrook Unit 2 in the years under audit.
It is also the IRS position that, & the event new facts and f
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(M) Questosty Finenetel Dem (IJnousted)
. S (L) feucine FuelDisposalandfeuelserPlant Desonantamienleg u
4I Sciectcl quarterly 6nancial data for. 9 9 and 9 8 are set f
8 8
- 1 Under the Nudear Wasr Mcy Act of i9st the fed-forth below
' f eral government b rgunsible for the disposal of spent Eoineen ness) -
- nudcar fuel. Tne Departrnent of Energy (DOE) has estab.
N
P 8""'
Inheri.Lsposal fees which are payable to the federal smern-D
[
nrat on the basis of net generanen by electric utihties r'
s owinns or operating nudear generating units. UI ruxwers so89 i
J' such fees as a part of nudear fuel expe,se charged to cus.
Firu. : $r28,86 : $32,223 $ 9,737 J
$.3o -
4
- }-
tomers through electric service rates..
Second
- 27497 8,366 69o '
f (.s5).
1he Ccmpany is also recovering through dectric ~
1hird
- # 155 26.9:4 (9o 773);
(6As) '
t service rates its share of the esomated h%
Fourth 13o.4 3 e6,28:
- 6,996,
42(3) 6 costs for Seabrook Unit i and Millsrone Unit 3. InJanuary 1988
$27AoS -- $32 478
$2. 3 ~
8 9 9, the New Hampshire Nudear Decomnuzioning Fust.. $r26,7:2 Ftnancing Comnuttee estabbshed the cost of decomnus.
Second - 2o,45 25 476. 24 9t -
i.59 6
sioning Seabrook Unit i upon tes renrement at $242 4 mil-Third ag638 34 3i7 - (2,342)
(.37)
. Bon (in 1987 chars).1his amount is to be increased each Fourth 27 123
.26 497 1 23 592 ~
3 50 1earafter 9 7 ya4% annualinflation factor until Sea-(i) Based on weighted average number of shares outstand 8b brook Unit a begins commercial operation. Upon operanon ing each quarter.
of Seabrook Unit i, the Company will be required to make (2) Earnings for 1989 and 988 include the net effects of.
i monthly payments ofits shareof the estimated decornnus-.
SFAS Na 90 writedfs and accrenan transacuans in the sioning costs into a state-managed trust fund.1he DPUC following amounts for the Erst through fourth quarters, 5
has estabbshed a L.- -- J.g estimate of $i9; miHion nspectively:
for Millstone Unit 3 (in ig87ddlars),and the Company is 19 9:..$(s.32) $(i.2o) $(8 77) $. 3 1
8 cur.ady funding its share d such estimated decommis-1o88: - $ oS $.oS $(2-51) $44; sioning costs monthly. Although such amounts wiu be (3) Earnings for the fourth quarter o( 9 9includeorr-time 8
reviewed and revised from time to time during th6 life of the -
expenses associated with replacing defecuve sidmg at a units, there h no guarantee that such fundmg win be suf6.
generatmg station, costs in connecnon with the effort to cienttocoveractualL -
- :-g cosa upon af611 ate with PSNH through its bankruptcy reorganiza- -
recrement.
tkm proceedings and storm costs. Also induded are costs associated with an extended maintenance outage of the Connecticut Ymkee power plant and substantiaDy kwr AFUDC due to SFAS Na 90 wnte offsin i9 9.The 8
aggregate reductico due to these factors was approxi-mately $.85 Per share.
Merket for the Cen@ Common Equity and neisted stochheMer Meteore.
Ul's Common Stock is traded on the New York Stock Exchange, where the high ard low sale prices during 899 l
and 988wereasfoDows:
i l
1989 Sa6e Pnee 1988 Selo PHee
(
High Low -
High Low l
First Quarter 23 4 24 4
' 27 4 94 l
Secord Quarter 27 4 26n 23 19 4 -
Third Quarter 29 3 28 4 -
24 4 2:4 l
Fourth Quarter 34 4 3o 27 6 23 4 UI has pid quartedy dnidends on its Common Stock l
since 9ao Thequartedydividendsdedaredin 9 8 and 8
l 9 9 were at a rate of A cents per share, 8
3 l
The Trust Irdenture under which all of the Compa-
~
nyi Debentures are issued places hmitations on the pay.
l mw <4 cash dividends on the Common Stock of the '
(
Company and on the amounts that can be expended to purchase or retkvm shares of Common stock. However, aD the Company's retaired earnings at December 3, 9 9 8
were free of such linutations.
As ofJarnstry 3, 990, there were 24.728 Common Stock shareowners of record.
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$4 ' ToTHE SHAAlOWNtas ANb DiRIC10ksof THE DNnTD hENUMnNo COMWrn
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We har audad the accompanytng consohdated bal..
ance shero of The United luuminaung Company a d -
88and 9 7,andrelatedconsoladated December 3t, t989, t9 8
statenwna ofincome, retairwd eanungs and cash flows for the years then ended. These 6nancial staterm.ts are the responsib&eyof theCompanyWmt Ourrespon-1 sibihty b to expre s an opinion on these nnancial statements d
based on our audits.
. We conducted our audits in acconiance with gener.
aDy accepted audidng standarus.1how starmfards require that we plan and perform the audit to obtain reasonable amurance about whether the financial statenwnts are free of material mhstatenwnt. An audit induda examinms, on a test basis, evidera suppomns the amounts and riurinsure.
In the 6nancial statements. An audit also includes amasang the accounting pnnaples used and signi6 cant meimates.
made by management, as weU as evaluating the overaH financial statement presentatiort We beleve that our audits provide a reasonable basis for our opinion.
~ In our opinion, the 6nancial statements refernd to above present faidy,in aD material respects, the consoli-dated 6nancial position of The United IHuminadng Com-
- pany as of December 3, r9 9, ig68 and i9 7, and the 8
8 conschdated resuhs ofits operations and its cash flows for
. the years then ended in conformity with generaDy accepted accounting pnnciples.
Tk Company b a 17 5% partx:ipant in the Scabrook Unit i Nuclear Project (the Unit). As rnare fury desotbed in Note (K) in the " Notes to Consolidated Financial State-nwnts", there are uncertainties relanng to those events nec-essary for the Unit to achieve comrnercial operations and, -
therefore, the abihty of the Company to uhimately recover, in races,their investnwn in the Unit.The outcome of the e uncertainties could have a material effect on the financial position and resuks of operations of the Company,and it is uncertain whether such material e& cts wouki permit the reali2ation of aswts and hquidation of habihties in the ordi-nary course of business operationi l
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