ML20082N517

Northeast Utils 1990 Annual Rept

ML20082N517
Person / Time
Site:	Seabrook
Issue date:	12/31/1990
From:	Ellis W, Fox B NORTHEAST UTILITIES
To:
Shared Package
ML20082N499	List: ML20082N494 ML20082N501 ML20082N504 ML20082N517 ML20082N524 ML20082N528 ML20082N532 ML20082N543 ML20082N562
References
NUDOCS 9109090216
Download: ML20082N517 (52)

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AnnualReport 1990 .

The Report The Company De history of NU is one of successful. Northeast Utilities is the parent positive responses to change. Since the - company of the NU system kollectively r, formation of NU in 1966, geopolitical referred to as NUh NU is one of the

.(%^ cvents and ecologkal trends have affected just about esery aspect of the largest utihties in the country, andlhe largest in New England, with 8,2V g -

electric utility industry. Commionent to - empic (cesferving about 1.26 million custonst , in Conn:cticut and western F, nuclear pow er, energy conwrvation, and protection of the environment hre prime Massachusetts.

) ,'

. examples of NU's restenses to the

' changed conditions. In each case, we ' ' HEC inci was added tolNU ddring -

did inore than scact-we took emily. ' 1990 as a nonutility subsidiary company dew ' " ' * * ' decisive actions, and we devehiped . . to provide energy management innovative solutions! As a resuh, NU 1  ; services, primarily in New Englandl 4 didn't merely cdaptiu progressed.  : and New York! 7 Rather than follow, NU became a - , ,

n , r ,i n ,,. .. u. , . nationally neognited pacesetter?  ;*; Electric Operse6ag Subsidiarid p n . a . m, n , , o - o ~ . ~ .. ,

1De Connecticut Light and n3,n . o s in m m ., ,m During the time that NU was making . E Pmwer Company;.. ~ 4.- A y

• M a on v vo,.. u.a .., ' substantial commitments for a reliabled ;Westem Massachusetts J ' ~g u s s o a,. .n . +.i. , + . .

socially responsible;and cost +ffedive c +

s Meetric Conveny . , _  %

so n oa . r ,, m . !t .

' supply of energy services for the reglen? Ikilyoke Waser Power Company on an a,on . tei : .:. ., . ' regulators adopted more natrinivrk ,

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, han n .. . n., u , . , c ;+ polidies that prevented timely, falt 4 ,

"" Stapport Subsisteries f o- A anonto - ,na. .o. w. - -

1 retums on these irevestments. Other ~ < f Northeast Nuclear Eneesy Company % ,

1(nuclearoperations);

, aon, on m ,,m..o.m .:. L policy changes imponed compeshions .

m , , , , . a ,, .,oy.... .k. m ' yet maintained regulatory constraints? 3 MNathest Utilities Service . ,,

gn.hn .a u oq. t i. u.  % combination of cost containment L " i MM Company hyntomwide nervice)) '

nur u . m so . .n., -a - system elficienciesiand capacity sa_les .

as a iraa o,. ,. n , io a to other utilities fonned the core of f h " Neustility Subsidiaries

• m,n o , o u o m , .m - .. - our successful ret ponse to these ? ChanerOak Enetsy,Inc? ' '

f (cogeneration) o,nnoon,rni . o m u vos . > regulator;imiuced fmancial pressmes b 1 Well. considered hmper term expanshin ' (llECinc/(energy manage 1IiEnt)1 o n juis im u - m o ,.ip and diversification strategies have; .

t*

Really Subsidiaries i q

N iN oiny icoon ,a o tny y u .o s ~also been developed and are currently .

om cny.iom s ;a n n e o m o n o,. ' beitig implemented. c %e Quinnehtuk Company.

of seei n c and r,toonani , We Rocky River Realty Company.

c u clicia e h.t. b<cn ow of im his annual report documents the few u,n.aanis osci ih.n omc a heritage of achievement that has

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has benef aca shawholaces mat provided exceptional.value to our cushwncti. .uki has rnr u Nn) lhe . customCr5 and has strongly positioned enure regnin Ihat N ohirt nm . the company to meet the future energy beuimes the haus hu a icnewca needs of the region. It also examines the .

cunmuimcm to mecung armamis ' uncontrollable external pressuresahe.

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net effects of prior regulatory decisions, tas impacts, and a sluggish economy-1 ~ ' . .

that now require rate relief. De successful resolution of this latest challenge will bring into better balance the strong commitment we have to s customers and shareholders alike.

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m.e. . **48-ten 3******'"***?".**Ya****.*P"* " **

~ Y"*$7 '4~.~*~* "f. .

t HIGilL1 gilts 1990 1989 9 increaw Ope ating Revenues * $2.616,319,000 $2,473.571,0(X) 5.8 Net income $211,007.000 5209,08 3.(K K) * * .9 Earnings Per Common Share $1.94 51.92 " 1.0 Common Shares Outstanding ( Average) 109.003.818 108.669,106 .3 Dividends Paid Per Share $1.76 51.76 " * -

Sales of Electricity (LWh-Thousands)* 29.611,000 29,547,(WX) ,2 Electric Customers (Year-endP 1.260.181 1.251,700 .7 Construction Expenditures **** $292,902,000 070,589.(K K1 8.2

• The reported amounts renect the rniawincation of bulk power sales transactions from operating espenses to cperating restnues.

See Note I of Nntes to Consolidated financial htatements.

" Includes gas operations diwontinued in 1989

"* l.uludes 19tl9 special stock distribution related to the diwuntinuance of gas operations.

"" F.uiudes nuclear fuel.

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lie akb lation Ibat resu tel. In Ibe biou[ lt i AIonf n!o sen iie Mk a and co[encIsltlon we rnfolh!ed l fonnahon of Northeast l'tiliues (Nt'). compar atis ely low cost, and we lusunel 3and inurmatn cly, We won i on July 1 l%6, brought with it a obtained regulatory apprm al to tecm er national tempmoon 1or ove : ,eenng heritage oh and a comnutment to, about 90 percent of our irnestment. ef f ont and w e are cm"~ -o l

l senice that can be traced twk to the l'nh\e tuany utilities with simdat mamtanung our pm uv t4i er late righteenth century.1he t hallenges unJenakings, we did not haw to t ut our licy ond that, we Ios iM a.;

i and demands now placed upon Nt' dn idend. I;urthermore, NUi nuclear divenibcanon ellor ><s(, #

i employen h.n c changed dramatically, operations bas e comistently and endcawn, thus as a uc- dr" I but the moumtment to meetmp the significantly execeded national mistake nude by mme a , n, > 3 Heeds of shareholden, ytntomen. and aserages. Ihis cornbination of an espandmp into unrelated busmtsws the entire icpion rem.um umwerrmp, citettis e rarly commitment to nuclear Chartcr Oak I nergy, Inc , w as formed capacity and on going performance m UM to pursue dn clopment .md piint l llc NkI af filiation w ai bawd. in large escellence Mill continue 13 be an auet ownership of cepencrolton and small-l part, upon the benchb of espatnion m terms of competitive regional encrpy pimet producoon opportuman lilf l F,ononues of scale, added stabihi), costs compliance with more stnngent Inu w as alled m FNo to pnw ide an j and preater dnetsity were-and contmoe enuromnental controls, protectioa unregulated mmen atmn scrut es to bewompelknp reasom for further against s olatile oil price % and prouston capab hty.

espamion, Si/c alone howner, of resources into the nest century.

l shouldn't be the goal. The true it casure F.flesin e cost in.inapernent n yet

! of a succeuful strategy n the abihty Second, w hen regulaton urged an anothet area m winsb NU tan take i

to mm ert the potennal benehts of espamion of our efforts in cornen otton jusohable pude Whenner stathny

, greater si/c mio tanpihle, measurable redutoom Sase been netenar3 m ictent at hin emenb. - - -

par % they base been acInned almost

- alw a)s through attnoon. n en as the lhu% the st/c ol Nt' the largest n i MTIN- number of customen and the in el of then needs mnonued to maease Shu, eledric unhty m New England and

_n, ihe w impone ihe memr> + a f +

, we meoeee te nupmm e m 4

sourte of strength and of pnde. but it ( , .

rehabiht), and our cmtomer satniacnon d44 sr[t truly desenbe the compan), tior . (V .

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- levels remam abos e the national does it adequately characterite NUM ., j i

@$['

averaget Over the past socn year % ,

pmition w nhin our industry. Simply? M . even while intbtion wntmued and l _.

stated, w e fmnly behne that NU is -

h N c - major intestments were added to tate l recognized as an oubtanding electric l {jp g * . . hse,the real mst of electnaty f or our sen ico mmpany. 'I hati not a claim - - Q. . . < g - retail customen at tuaH) deueased lipbll) Inade, not one based Opon a ' ,

gh}

j few caref uD) selected tacets of our =

Mrg  ; Finanelal l'erfortnance operanons l(ather. it mnuders all ud .

fie ,; The developmt ni of a more competita e a pech of our bmineu, from generating (} j- - electric services binmeu n a I ethcienn to mst controh f rom eifective , M "~

fundamental eleinent of the stratepin

! resource planmnp to meetuig the <

t hanging needs of our omtomers, and:

Mj '

[  ; we've put in plate to make NU a more

profitable company Substantial g '

j Imm commamt) tegard to incestor' d achiesements m such peas as mst M

s .due. It's an aweument that comiders >

management, system rehabihty, and not only hov uell we're perfonning 'j - cmtomer wrvice continue to strengthen but also how pctcepine we are iri j . the cost.cffectiveness and competitive j

identd3ing thances sutheiendy early to mm crt them into opportunitin -

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Y st'rength of but core bminc% Yet, at a l time % hen we're maling substantial rather than hanny to react to them as - d j' jf ~ progress as an eiemplary supplier of .

constrainh and enses.

( . .  ;- + '

g["L energy senices these successes are not L adequately reflected in our financial hrst,let's consider two aspects of NUV < - perfonnance. There are a numbet of Ley commitment to nuclear power. We -

reasom for our recent earnings inenia, ,

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i the tuosi sigmla ant ul w hit h can be thele o cause 101 optunnnt Ihe drap on upon lopa s sta h as the nicasulable uated to iesunin e tegniaine and cammps resultmp hom dnallow mees ettetis of milanon. tases and reduced i

tegulatoi> des mons during the 1%0s aoosiated with out nutlear t apat ity sales prowth upon Nll eannoys the We're conomung to be unp.nted by the un otments is beconnny lew tale incicases filed by 'I he Connet tu ut daallow ans e of poinons of our sipinta ant. Reputaton m Connetin ut Light and pow ci Company (Cl A pi ar.d im estmenb m Ahlistone 3 and and Massas husetts base responded WMl.CO ate sire,ihle. but tully

'.eahtook. lakewise, sune the cally v.norably to requesh for mote just liable and undchtand.ihle. We hope 1%Ds. weTe hten lionted by rate enhphtened ,uid eqmtable ucannent m to he treated mote tanly and seasonably ,

det nione sumix to those ihtoughout ( i.

the countly that b.ne feduced alhnted '

retunn on a utthly's equit). Moreosti. ' '

gi ~ i g ,

ulnie Nti shaichollers here f ull) - .. ,k - . 3 (ompensated f of the s alue of the kpall) 'I required spm oll of the pas bt'dben m -

ggjMW-1%9. the f act retnJns that the .r i, ,

dn eshtute tan ed utt about 3 pea ent ~

of NUN per.shate c4unings . .s ' r .. ,

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• At the close of the !Wih.ni[ther,.- .

g. ,

ptewure on entnings w an nerted ip thei , M ;f natmnal et onomic shiw dow n, whieh ', j f' , ,

was inost pronounced in the NortheastJ -

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Whde soll positice, the tale of NUi -

I' . retwl suos pow di dunng the last 150 - ,,

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years el tht* 19% was only hhout one. ' * - 1 '

- third that of the preceding five yeart , j

1. v S Ovet the course of the decade. NU's .

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daidend proith perionnancy _ ' ' i' l ,-

L uppioximated the niciage thniugh'out e 4 .

the utllity industry-touthly $ perceni ,

s e

. . per ) e.it. . I NU'(caminp for 1990 were $1.94 per

~

l share, up 2 (enh hom the previotis y earc

~lhe stilblingering etiert of past

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'tutemakmp det nions contmued ta have an im;)at t on ciu nings 1he more pronounted tes.cuionar) trend during : ~ .

l the second half of the yeai took an even <

g preater toll 'lhese faslors. ph.s; f unusually moJe ate v cather, resulted in %s -

essentially llat 1990 sales, While the - g

,1990 rate deetsion an Mawachusettg did '.f -

'~

provide sotne tchef, the amount'ptunted 4 - ,

was consderably less than revuested, s 1 with much of h represented by.the final b phase-in of Western Maunt.husetts

• t-1:lectric Company 's (WMECO) allnwed '

(mestment in Nhilstone 3..That pudon ~ ,-,e i

, of the increaserimproves the ,g. s' uch arcaius recognition'of the l'ull,  ; than has been the case m the past$e H - qualit> Hash venus nonunh-rather = costs of our commitment to enery) - are confident that, over time, Nti will be than the level of earnings. )onserhulonkintluding the impact positwned to achin e well-desened anO of t'educedsalnasyociated With.

• ovetdue improvement in nrniny

_ Perforinunce Outlook' .

'c ionierQtion and load mananmeniJ  ; tiuough tutes, .

i'

.The past metal) cars have indeed been ? 'While further propiess in these and ' '

challenging ones, particularly with- other ratemaking areas is still essential, There are a number of oiher reasons for

' respect to financial performance, but - NU and the segulators can now focus our optimiin concertung the longer

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trim prosputs for stronger earningt of low sales growth projected for 1991 The consolidation et our customer We%e worked hard to achiese and the uncertain outcome of the sen ice and transmiwion and euellence in all spects of our businest pending rate decisiom in both dntnbution f unctions into the new As a result, we're well pasitioned Connecticut and Mawachusetts leads us Customer Senice Operations is an for the tutme and are simply not as to a c onsen atis e carnings projection esample of this thange.

s ulnerable to the problems f scing man) for the year. The company has a high I other uuhues. I or esample, NU's dn idend payout ratio, and there will be With our em ironmental ar.d resource needs are sathfied into the f urther dnidend reqturements on new comen ation programs the key is onc ot nest century, so we don't face the need common share iuues to finante the reallisming long-held commitments for costly new generating unitt Our pSNil acquisition. Ilased upon this rather than redefining them. In these in place nuclear capacity provides m etall auenment, the Board of arcat we%e comistently initiated ,

T rustees s oted, on January 22,1491, not new approashes and base achiesed '"

protection against high oil prices. This protection is particularly valuable to to increase the 1991 disidend but to considerable successet These -t customers as a result of the situation maintain the indicated annual disidend innm atis e etf orts w ill be sustained and will continue to benefit the entire fi

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in the persian Gulf. Yet, we know of rate at the 51.% les el men and women who .erved there- region.

and contique to do sa-who hase A New Persperthe prouded pmtection of another kind. One of the underlying reasons for NUN Fundamental to the w a) we kiok at all' ~

aspects of our busineu is the concept . .i

\

Our thoughts, prayers and beanfeh position as a leadmg suppher ol elet tric prautude go out to all these bras e, seruces is the w a) w e penen e and that quality is an mtegral part of thel patrione people, teat t to thange. Our management senim we prmide. Iraditional approach is to anticipate changmp thinking comiders quahty merely as The Iact that our oil-fired units are conditions to anal)ic rigorously the an added en,t of doing businew 'that already in compliance with stringent opportunities that change presents to hnkage is cssentially negatis e.and the state pollution requirements mean that us and to set an appropriate course et logic behind it h incorrect. A linkage ,

federal air-quaht) standards enacted in athon that a ficObte and amids does esist, but it's a positive one that .

IWO will have a minor impact on unnecessary costs and risks. tecognites the implicit salue of quahty.1 operating costs ,

NUN strategic plan is based upon suc h As the theme f or thh year's annual ,4 The acquisition of Public Service a rigorous analysis of the changing report implies, NU does have a proud ,

Company of New llampshire (pSNiliis business emironment, it is the heritage of eucptional performance, y et another reason for optimhm. The foundation for our long-tenn goah and We are commihed to maintaining our

. resulting NU company will be stronger, for the strategie imtiath es that we are pmition as a preeminent supplier of more staMe. and more diverse. The undenaking, it aho attords us the quahty electric enerry services. More

operational savings that will result will flexibility to adapt as new cpportumties and more, the way w e hiok at our

. be substantial, and they will start almost f emerge.Our challenge lies in the ma:Lets and the t ay we condtict out

- immediately after the process has been number of opportunities and how budness-cur s kion-will allow us to.

completed. In fact, anticipated savhigs ; frequemly they arise.1o be succentul, Lecp this conunitment. ,

s hilowed CL&P to reduce its need for 'our vblon of the future must be shared revenue increases by about 10 percent in ' throughout the NU organization. Also, 4, , Qg i its current rate filing.The acquhition ~the organization itself must be ready to rate agreement and related Seabrook anticipate. react. and adapt as new Wilham it tillis power contract provide the basis for ,

opportunities arke. We%e already rnade Chainnan and

, financing the acquhition and recovery substantial progrew in making thk a ' Chief thecutive OlYicer.

3

of PSNil's investment in Scabicok. Our- part of NU's cuhure. The t hallenge is ,,p g

/ f"'

a

. projectiom indicate NU shareholders . < not to begin but to continue.

will benefit from this a.:quisition in - .

/

terms of increased earnings that will' Tdday, we readtly act ept the need f or Hernard M. I os - ,

rnore than olfset any short-term dilution a more comprehemhe marketing ' President und v- .

as a result of additional NU stock . approach to the distinctly more : Chief Operating Otticer .

offerings over the next three years to ' competitive environment in which we finance the nequhithm. now operate. In fact, we insist upon it.

This reorientation from a mindset that Our long term financial projections .. sees NU primarily as a supplict of include estimates of the impact of the energy services to one that focuses economy on sales growth for the new upon identification and satisfuetion of several years. Iloweser the combination , edstomeri needs is well under way, March 1, lW1

.I k

f r Q s

}e V

[ ,

ye. ,

- t. ,

__m_______________ __ . . _ _ _ _

I ,

i

n. y Thb Mi Aapisitim of PS H ..

I i

Our initial mterest in acquirmy Public compichensisc fuel anJ c.queity of the acquisition are satisfied. At that  :

Seruce Company of New ilampshire clauset A Scabiook juuet contrat t point, cyn ted later this > car, PSNil .

I iPSNih w as based on the strong puarantees reuncry of PSNil's 35h w di becorne a w holly ow ned Nil coiniction that a merger of f ered percent share of Seabrook costs met the sulwidiai), and NU will pay 520 a share i substannal long-tenn benehts to life of that unit. Together, these tuo for the PSNil(onunon st(x k inued m  !

Nonheast UnkneiINU) esisting elements u dl prm ide the res enues Step l. NU wll1 huance its imestment  !

shatcholders and (ustomers, a hile occcuary f or PSNil to support the by inuing sonu $600 rnillion in bnnymg l'SNil out et bankruptcy unJ asquhition andthe sery suong new NU tomn on shares over a three-satnf y mp the ongoing nees of its auurante of f ull reemety of PSNil's > car period.

t ustomert blay, some three ) cars mvestment in Seabrook after launchmy our acquisition ef forts Our awumptions about this, acquisition we're as tominced as eser of the Merger Proccu are sound and reahstic. Our plan benelits of the propo,cd acquisinoa We cyicct Step I of the tuerper protew pun ides the res enues needed :o suppott will be completed in April 1W1 At the m quisaion and prmides significant Nipnificani progrew on this hont w v that tune, PSNil will emcrge f rom control of risL% lhe resuhmp company made durmy IWO. The bankruptcy bankruptcy as a heestamhng company, will be stroaper, larger, und tuote court confirmed our PSNil acquhition inanaged-but not ou ned-by NU. PSNil balanced, with dncisity of earninp tmd plan in Apni, and the New llarnpshite finar";ing of Step I will(onsist of some regulatory oversight. I or all these regulator s appros e i 11 in July, in 51.5 bilhon in Jebt,5125 inillion in seasoin, we're confident that this ,

Decembes, the Securities and thchange preferred stosk,and new P5 Nil acquisition will benefit NU and PSNil  !

Commiwion appnned the aquisition, common stock. Step 2 will occur only and our shareholdtrs, cmtomers, and and an adminktratine law juJpe atter all reputatory and other conditions emplo)ces i recommended tt:at the l'ederal IIncrgy Regulatory Commiuion do the same.

.( i Econornic lienefits The identifiable cost sasinp of a merged s) stem will come from three ;W h " -

q

~

basic sources. There will le sigt ificant .

economics of scale, such as enhanced purchasing juwer and functional 1 consolidatiom. Cenain characteristics of d .

the tw o companies are complementary '

and will pnn ide benefits bevond those ' .' '  : /

attnbutable to site alone. These sange .-

IW  %

f rom of fsetting peak. demand periods g $ -

to a better mis of capxity and f uel , . m y j ty pes I'mally, NU's prm en e -

management capabilities particulady .

, /y , .

more than 20 3cars of suscessf ully e. <

l operating nuclear plants includmp one '.,

t Nhlistone 3) almost identical to n - , ,

Seabniok, v ill contobute substantially g

~

g to the sas inp of the merged system. ..

$ j 'g .

S Nestnue Platt gIk g T he Ley to the merger is a rate pacLace '

th.u addrewes the resenues needed ie,u m m heamukiiion An

>$ g .

3 l Unpf et edenled rate agreement calh ,

. ,., , ,g u e en wnseunis e 3 3 peuem i.s.o.,.,7,.u.......m.~_.~,,._.,....-- - s- - 4.

annual raic ms reases, ahmg w ith 9'W ' * *

• W ' ' ~ ! * #' * " "" * """ ' - S p

i t

t't r.

l f _f ,l _

[

l ll!(llll (' { ! 'I ';

s Northeast l'tihties (NW ii, the largest peitor mant c: lheir userage avadahihty utiht) in New England and is among the  ;

j tot the 19h51%" time f rame en ceded 30 largest m the country. As sut h, out @ hy g'Allg[h,h[ y the national aserage by inoie than sesen concept of what constitutes eucllense g'PM15 wg - percentage pointi,. I oi 19%

of supply mu,t go bewnd such D +7w g- pertornunt e ahm e N1.I'OOl. targets importar$t-but lumteb concerns such as

%hM%j@]p]Q Q agmn translated mio ditect energy c

capacity, effniency, and rehability. Our perf onnance has direct and immediate jQt, y k -'

" Wy;g s.o mgs f or out atepayeti,. Our hydro plaw aho supple mt baseload nutlear impact upon our customert but it also M.j$$ < *k A capadt). I of esan Plc. the 1.tNISlW pumped 4torage laaht) at Northlictd plap a broader and more enduring role [y /

as a key determinant m the quahty of hfe , (Massachusett0 Mountain prm ides and the economic competitiseness of the , cronomical peak kud pow er f or region. Similarlf the sit.c and very ' * ,i j- NU customers and for ules to other nature of our businen mean that we cari s  ! ,

utilities. hi Nov ember 1990, l'hase 11

have-mult have-a very p*ctful[and ' ^ fof the 2fw4t_W 11)dro-Quebee

= paitive influence in areasiuch as q J b -mtNeormection was placed in . o, w i chitrol of pollution and protection of thej commeicial operation. The New l -r m %

, / cnironmert,We have a proud heritage, Ehyland ittihtie4tl. m er the ocal teti A.

njfiuccessful pioneerirQ efforts in thac^ 3 +

l years purchase 7,300 rnillkin toegawarts zu , '

' "~"

areas, un'd we're committed to 6mtinued e ,,

~

, - hhursf finn enerFy fanadian ; . j

.- escellence. Finally, we'll contirme 14 [ hydropow er. NU w ill geceive 22.6 -

W skwk toward the future with the same 7 a percent of the mings cicaied by 3hc purchaseM i p'

• combination of 31sion and pragmatisms that has provhted NU with tangible y a 3 , t.

ly- C f

protection against energy shonages well 1 Nonulillt) Ucnerallon a into the first decade of the next century. During 1990, cJectricily delivered hy!

cogenetuton, ahd sniall powers , 3 Operational liighlights The net > car-end generating capacity of

[(!,MW 3

g .

praiucers, including'22 u'nder long term contracts, represented atout 10 percent j

f the NU system was 5,910 megawatts of the total" energy'needs of the NU - tj (MWh while the 19o0 peak load was .

-hyatem, tip significantly from the 4 ", ,1 4,754 MW. This represents a resene outstanding record for safety and'"w,- percent contributiotilast yes. By 1994, capacity of 24.3 percent, compared to efficiency.The four facilities we we proicct thai 32 nonutihtj the minimum target of 19.3 percent currently operate base a total capayii) sources-equis alent to some 650 established by the New England power of 3.258.5 MW.Oser the pht the years. N1W-will pmide nearly 16 penent pool (NEpOOL). During 1990, NU NU's compnite caplhty factor for

• of metall NU sptem needs.

prm ided its customers 26.9 bilhon these units averaged 74 8 penent, kilowatt hours of electricit><scluding compared to the latest available fis e- l'Hel Mis bulk power sales. We also supplied year national us erage ol 61.4 perceni . It is more apparent than eter that the-other utilities in New Eng'and with an Morcoser, these facilities have NU vision tmd consiction that

- as erage of 1.5 million kilow atts of consistently received very nigh safety- yharcholders and customers. as well tiu '

. capacity under contracN some of which and operational rutings from the ? , the economy of the overall sesion,L #

extend through 1998. Dver the total life -. Nuclear Regulatory Commission;lnD wol.ld benefit from a strong ' M of these contracts. NU will collect " fact, Connecticut Yankee'(CY) has . c'or$mitment to nuclear power were on q j approximately 5600 million in capacity- receised the highest possible score.  ; target. in 1967, the year before the starta charge revenues. up of CY, fouil fuel accounted for 89 ,

Fossil /llydro percent of NU's energy, with the balance Nuclear: NU's fossil; fueled units supplement about evenly split between hydropmeer -

NU has been operating nuclear units for the baseload of the nuclear' plants by and nuclear entitlements, Duridg~ 1990c more than 20 years, during w hich time helping to satisfy intermediate- and . nuclear made~ up 58 percent of our fuel .

we've become one of the country's < peak. load conditiono They, too, have. miqith' oil accounting for only .

premier nuclear utilities with an. an outstanding record for exc.eptional ! 22. percent and coabfired for 4 penentc. .

j y

.p p&p .a.r p- p+ we y Le y% y to'"y h t:cQf $ y w a'

• 1 p y. ";M rp W QR y s;,,

A y.f j < ; y

&1', he+V.!4 V.? j' p , @ A y'y ?"

p--- '6 d %r M. .dkk .@. -y.h

%5 f 'y PV'f hg $ / M- 4  %  % jir. 54 (, 44.k ,.[ .a , * {Q y -

• 4g b j g y f- y _

M d Wp.

• j 4

1 1 - ____ _.__1__ __ ______i____

s

- +

'e l

Nonunht) genetation- not a ine.nutable d.unaped hs ations f rom unaHcited be the smple most cHninc schalyluy  !

f actor unul 14Xs-sontoboted anothet pothoin of m,yol ( ucmts. Capital piornun. not only as a paesenine

10 pert ent. 'I he balance (ame inun espenihtures *pconcahy tarycied foi me.nute, but aho as a means of lenimp ,

h)dropo.s cr al 4 percent inhI natural [as nilptos ed s)slclu IcIlalUlil) anlotinled to up pow cf iestolatlolllo L Lhhnnc!s alte!

l operation on an mterruphble basis at 2 some vi6 milhon m 1950. 'I he 1400 storm induced ti.unare. l l [visent. ihe inost obuous beneht of amouni est culed $19 nullion- os ci  !

j thh wnunitment to nucleat encigy n a twice the 198N les cl. AJ,htional McNe made a major mmnulment to I i substantial redosInin m dependem e datobunon a apital espenJnures of nupim ed s3 sicm schabihi3. and the i upon costl) alid LI!HehJble linforled LUI. bl$ mihion sperli m 19'Nt for plallt lesults bas e beef t f f.illl)lny. (lur At the s urrent ont Nil now uses only moderm/ation and mitage Lc3 rehabihty statntic unpuned 11 nulhon banch of od per 3 car- impan cments aho hc! ped to unpim e by alnnut 7 perteni dunny Pion. ,

compared to 2h nulhon bartcls m in? L 9 stem ichabiht) Noncapital follow my a tiuh unpreune ram of ,

3ct. total requirements prew by some cyvnditutei. hwus upon tree tumining 22 percent m 10k9. As we yet bcuer, L 37 peicent. II) w a) of f urther utvranons. On .n erape, Nt! spent about sus h pmprew w di be rnore ddh(ult to i comparnon, the NU enntlement from 522 nulhon dunng cas h of the last thice a6 hics c. but u e can and a di-

Mdhtone 3 dunnp 19u0 equated to y cars, more than double the les el of the mntmue to sen e all mstomers  ;

nearly N million banek of ml. mid 19 sus. ~ lice-tonuning continues to al stdl hight lesch of rehabiht; '

r 1

l In addition to prosidmf l ower,Inole 'j l stable f uel costs NLPs nudear capadt)

{ . greatly limited our eyjuure to costs =

c

-e awociated with new environmental h legislatiotynacted b3the federal. .

gtn ernment, inen in the c.ne of out" *

[w,I4, N fouil-filed umis, the. impact of th%

< . a p%

e "t j-'C T "", VN s ~e

> ' " lighlation will be telatively nnnor," j ']jjg '

- +

• because allihese units already use p"- l ;gy ~ . , ~

!( F lowwulfur fuch. We estimate that

,.k 9 L M% -

• I cAmpiiance cNsti lor these taniItiMy  ;,

,3

[

the ) car 2000 will be a relati\ ely nuxlest $15 inilhon per year, which h, 8 5! f

(

• leu than i pert eni of knnual revenues !

1. _ _, _i

[T _

• ' ' L Sp} (lem HellaMilty , l

, Since N.U initiated ariin,teinh

. .e oD

. dhtribubon rehamliti program in 140,

h. ,

we %e becolhe Inore *cibilne and a

responsh e to the needs of all customer j clawes for dependable electric enit e.  ;

Much has already been acmmpinhed.

l' but much more can stillle achiesed.

, The esient to which we'll be able to-L , , , sustain the current high level of J financial commitment h-to a great extent-contingent upon dechiong l

~

s in pending rate caset To the entent 4 4

~A a po6ible, w e. will continue our,i  ;

a .

m . .-e ftbrts, building upon the succenes b i

1already achieved

~

+

r -

3 ::f ,

d l

The NU transminion and dhtribution t

- reliability program invohh capital and t ,

f _. inuncapitalspendituret Capital :

Linvestmers are aimed tit strengthening} -

out distribution reliabihty l,y means'-

such'as the installation of mphhticatEd . l switching equipment that holate6 .-

i b h If b 7_ ( 8N -MT' b ' '

4 ( i'. -Y', 'h Mf a w"h t : n w u A&dLE f

E' P w'k'm. : -m RL,%%g'% M Mn s g .

'N

' th + , , x - 6. ~ c . Me

• Y

,,u-

[d E_n l5* ,IH7_d" O Y Tf,4 M% $., J e3:# a, , ' ,.f5 ri @ O

• d $

• j J[ ? D' M p N]4

• y [ W

,' 1 4 j

f% J e 'Q ()!Y. 9/3f . , ) P f ' ' " * - )f , ' k 6} ; f )

i i

Q;

.y ,

Y 0

l. -

o e

1 '

l i *

• .4a,J r , j Nsr y +

4 -p1' L ,*

l6i &; . etf _ . g )) 3 ?}  % fa [ $;e _ l l @* ( n Dur mg Iwo, Mrtheast UtilitieHNU[G; + resentree prede The cunem plan Jp'Y N' 9 p1 -l4 i

cent. Will be pros ided by w n ca an as erage of 1,256/800 retally f identifies s'need fd new resourcesgi Woogeneration ed small pow et

, u 4 nues satistyng their need fof -  ; t<ginningla 2007.yc winter peak +c fy pruducers prescngl3 under tonnati w nh N : wn kilonat hours (LWh)of ;, load demand amoums to slightly meri

• NU, Finn purchase commiimems nom cic, ins ny Wholesale custometR L1 ; [6/0()nkgiwatts OfWJ in thatjear.1 Q illydsdQuelic w di sataty the icquaed an addit.ional 682 million; I {For rssomcc plarming purpmes, a E N 'temahbng rewmse need L wh-c scluding bulk Ivwet Sales y reserve rnatgin has to be udded[Q .~^-

bi the ietad segment, resider.tlal. < W M bringing our toial tesource requirement MDe t omb ned wntnbunom m 2IW r customers accounted for 40 perchnt ofM $to some 7AO MW.This requirementMNiphi our comen ation pmpianm I sales, commercial establishments used ?~ , yoidd haYe tysiimuch h@heriithout 3 "i nununiny capadt> pun bases amt ,

l 37 percem, and the Industrjal sector I Nthe pohhWe lofluence of NUQ yy Canadian hnimpos ei amouni m ovri requned 23 percent < n ;g + (comprehenshuonseration programs. L ;11.700 MW m the wtmer ami nearly , '

W , finMX%these programsireprojected C2. loo Mw during the sunnuerc, .  ;

5 '

Demand 10 recast 4

.( . h to have njapacity savings ofpverl X

The mid.19Mb represented a perhid of) lNO MW in the winter and abost: l ' These remurce planmns wnsiderationii i sutwtantial grow th for Nilyueled by- , s ' s /KO MW durin' g 'thpummeri g *  ;

eulude the NU-pSNil merger l - ,y/ W strength m home and kindst f ' .1 AM 4 @ 4M ,' s j Under a combined 9 stem iapacityi Q t com tructmn; the 1983 1988 piriod s av i . SisiinQaSchy(in' c indirg NU's(gat the iorn of the anturyE [WZ, reqmrements nanicular!) stsong/Ihc annualgrpkth , would macase by some : un MWi1 * $5 rate was an excepponhl 4.3 percent, jedi ;fenbrock

• parkrO.(tsr@ evtitletnnd, projectedsitt s niisfy im [' ca total-includmg men e of - R s 1M by a commercial sector which increased l WD. Artether 650 MW(Wprewnting

'4 8 Mo MW. The Im t in11 icmains. Q "'

demana by 32.2' percent during thi[- ;_

• n , d f E 6 ,M D howeser, that no major nea $dditional l

" " ~

penod, gmd followed clowly by a; ,

rewon es w di he requoed until 3X15 y ; y1 residenual increase 'of R6 percert ,g z w nh the merged 9cen~ e t4 .

pp

~ -

- ;n u - +

cya .

y% b ~qq hbdp, j Demand for eteet$ity It r$atelf;f % f Consers ation and 1.oad-dependent upon regional, riationtiland W N? ' WW ' Manngement programs hM;$ !

international economic cyclet.yor . Qas@?"SQO4 iq ' Nt ' contmoes to be ackndwiedged as +

'q example, our current demand forecasjW] 4 f tJ

^

a nanonal and worlJ leader in'the N projects average annual saleQtow th of f { 'u .

MM deugn and effecth e nnplementatioti' 5^ .

6 aboul 0.9 percent over th$ neil ten t M $ "M , SkN of mnm ative comervation und , 'N g$(73*11: k d yean,. cdmpared to ihat'of the ,19Ms a / V load manapmentJCALM) programs.

W , - of.2.1 perepnt. That's down imm the; ,

~>

4 -

h 4

we're estremely proud of this ,

(Q a, , l1,4 pen: cut growth forecasted a year : 4 4(  :

II m comervation heritap and commitment.- , a?

'.t L ago; til the gap is manageable, Oi. 1

, . NU,its customers, and the region as a;hy @

l N particdlatly 'dnce we had been basing , M l w hole deris e substantial benefits tmnf ' -

.N:

'C

% > our longer range planning on a 3 Q' ?J { '

I our C&l.M expenoiturep partleipaung

'{, indosgrowth scenarlo well befme the . < ratepayers enjoy the direct and -

] l y sudden'ltnpact of the peisian Gulf ,

,d p.

i

W inimediate benefit lof lower utilhy 151llse

@U and allofits customers pain "

Mj

.J^  ! situation. For J991, s tics growth is nown ,

1. ' 1 , ]ong-term frmo theptptmement olin' payected at about 1,7 percent! At dat j ' l  ; ,,

,y lesel, the impact of weather becomes a ~ gp X < /coptly construction of ocW pencrating , , $, f ,

W Les detenuinant of actual resulhdA. u' ?- O

. . 4Wp" m

% tmits; For our targer co.mmer.cial andi + ,

• J<t . .

significam deviation fmm norma!

~

industrial emtomers, the savings and L G.r, ,%t weather condmom throughout the year - '

i energy management expertse asilablei ' ,s M -

could imput the rate by about one half >> i h om NU often are the critical factors .

• W .

of a percentage point.  ! _

m awcwing NU us their best electriq j; i j Q cnergy senise uhernatise.12imdly, lower db

Reumrce Plannitig ,

3 cnero reymrements nupnn e the ' 1

- Our integrated demand and supply-m erall s ompentn encw of the repion, ,M planning pmcesds the mean's by which n icom of low ned long run nwts and ' ,.! ,

NU periodically updates its long range a L ahhe t le. mci cm nonment. '

i' e

1 4 g y

A'

%;L/Eiq/Vs m' y

( / '74 a ;'

<.gp i.

- su,-

i. ,

w.. va,c . %',, p - (e)g k g ~'M;- M M Mq k N,, e[ p w q;,y4 . Y p ,

s e mry h r ~

G N[ ;f,  ;' ' :q w / /h\ t S .3 , l( ? Q y If; ;;;p &ff fqy 77[? $

YDuring IWO. NU sper@ bout $4F

• 4 V ' a T' o milhon for encity con (ervation, an 4  % gg $

mcirase of 115 percept (16m the preslous j f-ycar. While the comlvt:y' continually k ,- k4 '

c.,7 *;

reaweues the lesign o!!is CALM propr.uns and conunittnpt les els, w e Q p -

, N 'if4 espect to sustam meanindul effort' for M *- 1 -

GN; the rctaamder of the decade, The e' y -{,  !

resultmp benctits has e ibeen-anhhostdP,.? f l_ . . _

p , M continue to be- substantial $c h.Nei f- **

NO already mennoned that conser ation . ,y Q measures muluded m the company's

• yn (unent plan are espet ted to reduce $* ,g Q resourse needs early m the nest century ,

. v,6 by some MW) to 1JW10 N1W, depending k *

\

)g/ '

+

on the season.11) the mid.IV%, g~ if/

tustomers and th~ whole tegion will -

fh benent f rom encip) use redus tions that @

will displace the equis alent of os er y b

three nulhon barrels of mi per scar.

%g \ '

d,

.9 Through 2tni. NUN industnal and M conunercial customets are eyw teJ to

• g 4 hase sased some three Nihon LWh of p/ E.

. p- electricity. C&l31 prorrann are Gs j" designed for all customers in these two ,

Md clawes Irotn the smallest to the largest. . . '

p qp

[

These programt focus on four basic aspects of energy consen ation.

- d[g (M t.r. gy

[ More efficient lighting is promoted Via M wy Uf our Enety) 3aser 1 iphting Rebate ,yq;;

Program Itoth the Encryy Action -

" NM Program and the Customer Init 1ed Program are concerned with retrofit * .yN sh astivities that improve energy usage by gg upprading items such at motors. -

iM$

controh, and r.it. handling systems. t

• .. fM P

Nln EnergyCllECK Program n' jakeg ,s +;

i . h- [<

m . . . .. y sv . .

Anergy audits availabli to companleo y g. ., , e .Q , y N y 9 gf1 , l M Q@ Q $ '

~ ;) : with 10,000 to 50.000 square feet oh .1 plud buildingbf standsid desisn; ThoW 'j Ofproven prognit'ns, SPEC

,m

< space 2A dinilat p*ppram forinstomers ikaiingt shbuk@quate 18 more thad} ; ' addres(the malor vuodd%)ectridty kr y ! y A jithless r; pact; includes funding of thel " %200 tdtreh of oil per year, y . M i siingle dnd mula'farhily,dWillip specp$, g%

y>

1 ahdit and re$oltinglnstallation of 4 1M M ;heatitigind coohkg3stetheating'?Q f conserration measures.- NU's tesidential custosiierhavth, ; '$

consistently benefited mptern hom Manachusupatio out lonh%'bethriti; ~ "i(J <lishtins, UQ, a The final area uddresus ui.e of energy- standmg commitment Io encity Ifrdnia $PECIVUM Conservation M & M efficient design elements in new conservation progranu. During 1990h k SetVkes Pmgrant Ni[is parUgularhf y k construction over 10JW square feet. NU designed and re(elved regulatpyD , J , f prmd of those pr'opranidements whiclC% s C ,

NU's new office facility in lieslin, appros al for an extensive ne,w(arr'ny of *

~

niake'consnationpractkesidToMoble N $

~ Connecticut, scheduled for completion programs for Connectic'ut buttomers 4  ; for' lower Incorne cuinoiners. ~; ,, Qld by May 1W2 h an excellent exmnple under the SPECIRUM n, Coni.civsiior(1  % ' i +% e ~h F M f ^ Y!~i ~

y of the conservation menures available Services ProgramJ At tlic icquest of J { , ,

Yr' uf i "

lthrough adsanced energy efficient state regulatorn, SPECTitUMfuogram ;y l,- ' <

y A-

' ; ; design techniques. Energy requhements - . implementation was accelerated in' will be 1.2 million kWh tens per year - respsmse to the }% bin Uull situatiok .

than would be the case for a similarly Combining four new compotients with ;

• j,,

f.

'a; ,

N + x > w s-

- . . _ . . . _ - . - - . _ . _ - _ _ _ ~ . . _ _ _ . . _ _ _ _ _ . _ . _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _

1 1

• i Replation and Public Polin .

5 in loo %i respects, the difficultier, that we - - -

costs arid lost resenues associated with experienc ed with the legislative tmd consen ution programt Tl e DPU aho ,

rqulatoty policin and pratisn of the  %, authotired iinancial incentives for

! 1%0iide now bchind ut We are finding _

programs that ashin e at least 75 percent

) that both legislaton and regulaton af e " ' ' ' '

"y,' of their eneig>-tning goah The

msr eemgh opcn to mnm ame 6ontcpts newpnition of imt % des and some inel

{ f or dealmy w dh the inues of the l*80* of inecntn e f or wnsen atkn1 measures l l hele is if R teelMi ab sticlDs o! lbe o a mahil sicp in Ibe establisbnienl of f need hi sitengthen out s ompehta e enhpht(ned wnsen ahon repu'ahon that

. ptmoon by pennitung more sItcstn c w dl lv of mutual bcucht to Nth its i rnporno to the needs of our larper durcholJest and its customen.

mdustrial customert %'c wdl be better ,

abic to retain load, and ihne customers. W "'

,m All llthne rtite Nee <i m tum. w di becoine more cist somecoin e.  :

' ' q,t w w e cari no longer amid the f act ihai The benefits of the irnprosed regulatory . ,

'ptdfictml costs have not yet been .;

t hnute w di acuoc to those w ho inc i mogm/ed in rates A portnm of these l

andwpa m o m ion. M g. e- msis iuriated to our rn niments ana eu.aca e mo, pn sma a, Esamples of l'rogrew .; l \ldhtone 3. Neabniok, and transmnuon lloth lhe Connesth ot 1 ight and poact 'a lmes to t arry clestnuity troni llysho Compam fl A P) and Conna th us .{ 9 1 Vuchec. Sus h un estmenn ns,t only  ;

j manufacturers should ultimately benefit f'  ; q , aume an adequate supply of power but f rom lephlabon that requirn the , ll aho msulate customera trom the ellects Depanment of Pubhc Utilii) Control g{ of lach. unstable oil prices Other costs

< DPuCno ensid<, manuwimm- tu n~muhunonca,aie rmynmon energy costs w hen setting rain by daw 4

t pgb 7Lf m t.ocs range from NU's significant and aho se consider flexible pricing in ,41 ([ f nun ul wmmitments for operior s

l the internt ot econonne development. If x ,7- sy stem rchabdity to the mmulaine thh legislation results m the redus tion. ,j, <

onpact of snen ycan of innation ,

il noi the f ull ehnunahon. of miescles late sufNJies. Nnnheet I tihan r NI. i -

I of the pet ses ci,d y c.nt N L ' he been and II'; entHe replon u dl bt twht rate b e c As a tesult of w rde-nits ahlc to g onnq-r the siimbmeti clics ts td refktimp the wnstf uslion cost sap t osh eus uted a dh u ac!n grou th In a set und untars e, Cl & p pained ;he unisned by a Connecocut statute an I and unpon cment arul ccnci d support ol' the Connecticut Comenation the las henchk awociated w.th the milationary preuures by a combinanon i

Coll;htain e id its tihng id a sunlurg-; vettlement aen can of. these a s h,m id sales prow th. ro enues hom capaat) ,

on hun in order to rane an odthbonal unpact on !WO canntgt sain to other unhtiet and

' b20 onthon annually to bClp offsCl s d 6tpichCrnhC costTontainment ins rcased unsen ation npenJihnet in hme 1090, the Depanment vi Nhhs m w in I or nample, we redused ihe DpUC appnaa! of the surshance, l'nhths iDptl pumcJ %ccern pciennel loch by moie than suo ahhhhn. unci'lestncJ.m m I, lool. \lau a. huen I .ici tos ( omp.on pmmom, ni 6 pch cnt m er the pet wmhmc.! w dh e pen I hacs t micidh 4 % \ll ( (h an amnui iaic mi r eec of tout y can. du mf w ha h inne the las turco mh. Ialct u di oilset a nup w 0 tnulh m.of6 4 pcn eat h h A wc'rc f unnhet of s ustomch u r sen cd lose by

( pan of 1W1 asin mn, w uh the dhappomted that the 1)pU dhin't some M 6 hi H i et

• peu rnt W e did H renuinder to be defened f or f uture apprme the tuu % O s mdinin icqu ei w hdv soll impon mg the tchabihn of

6 o!!ct t ma u e are pleecd that W Mim s alhm ca sen h c pun iJed to out t mtomen imesunent in Mtlistone 3 is now tuin lie, ause al sus h tiloris lawiable luel in a third case, the DPUC appros ed a phased into ratet pines. and the benefit of strong sales a settlement agreement w hereby $167 gio-uh through mmt of the 19%,

mdlion of CL&PN imestment in in a separate action, the DPI appim c t ( l Al"s m erare LhowaM Aour price

< the $cabmok nuslear ta; dag e of chances thai o di aHow W N1H 11 n, e e only I pcn eni highc mtwo J m ,t to. I mu. ,H he p! : a udo rcud rn m et un e gh r.o boih 16 Jm a hdi - m 14 0 .dhr:blaa l

t i

n- n ,-n , . . - - _ , - _ _ __.n-.-,-.--. . - . - - - - - ~ . . - - - - - - _ - - - - - - -

I e@ijh t,2 3 d

j significant rate increase became and reliability programs. In other - inflation.1;or instance, exhaustion of the effective in 1983 Oser the same period words, we's e been sensitive to the escess federal tases collected from wm alltime, the Consumer 1) ice index needs of customen and regulatorv tilike. - , ratepayers and increased state hales _ , ,,

" r incren' sed more thim 30 percent. and w e fully intend to maintain these tases account for one-quarter of thelotal *

"'- *+- commitments.

• requested increase. WMECO*n financial' hiow,Gurlability tol absorb costs without [ * "sondition is below the indusiry averapet ~

g ,

l [}i Qn. urrent d 'C[jspbst'uqial conditiont most of w hi i rate relief h(icome to an After some seven.plus years of :

outstandjng performance with minimal;

' : and the rate tequest is designed os' lely toi '

recover increased operating costiand to

[

uam beyond our control,must be rate increasesiwe do bellsve that the - L corredt this financial situation, The >

addressed immediately. Sales grow th DPUC will'recognlic that pres.ent' needs are obvious and straightforward, has slowed dramatically. Federal taxes circumstances justify our request for and they are compelling.

collected from ratepayers in escer ot increased revenues.

projected tas liabilities, w hich w cre used to offset rate increases, w ere Our current filing in Mauachusetts is

. depleted on December 31,1990. This made necessary by the same exteJpaL -y -

equates to a 540 million loss of expense f actors that prevail hi Connecticut-

, ,pos erage for CL&P and a $10 million minimal sales growth, g itapacts, and , ' '

j g ~ , - -e 4

~~

? ' +, '

'4 '

9~ loiilor WMECOlThese and the - < <

, ro,merous other cost increases already - -

y ,C j' ' mentioned, which were manageable in ce+ q m V_ ,

"' ' thE pa'stl can no longer be igneed $qgp d

,an .u.,

}f - .

= *

. . '. '. , ~. .

Thus, both CL&P and WMECO hase * -

g .u .

filed for rate increases. The CL&P fihng .

3

, y. .

v as made on January 7.1991 and calls t(;- ,

1 Mg S wm for a reyenue inercase of about $226 , , 7 i million, or 11,5 percent. CL&P also - .y

'x

' p's: g , pg" 3 m asked the DPUC to permit S96 million e ,.

~

M ,' ,

• of thd incredsito become effective'ih@ -

~ 4[ ~^ -

Y 4  %'

[7

^ '

L February or' Marcli 1991, in connectio@ ,

i f, .9 .

' ( with'thaNequest; CL&P has extended]N E s88""" 9. -

'/

,jy liy 45 days, to mieAugust, the date for " g.

m st

- a final decision on the full increase __Q - " .-

request. The WMECO filing on -

0 December 14,1990, requests , -

$43.3 million in increased revemes, . m e

or 11.9 percent. .

%s p y y The Outlook ,, .

-4 I[ -

The need for these rate increase .

.i -

8 requests comes at a rather inopportune  ;,, s

, y., 'y m . . time, given the prevailing economic 9  : - .,

~

-n climate and the prospects in bothi e , .,

" states for tax inmases, llowever, ,

- - despite the tin ; and magnitude of - ', ' '

~ '

these filings, we ue reasonably .

optirnistic that regulators in both states will recognize the very valid bases for 3

~~

-each request. -- , . .

CL&Pl3 kilowatt; hour price continues -

/ e '

. . c to compare favorably with otherE g + -

w

utilities in the region l Which peaks l toke -

' "- = '

4 " the steps we've taken to contain costs, .

,/ ^ ~"

(i4' d '?

/ -

get a time when vie also reponded; V, ,

'j

_ _ effectively to reguiatory requests for - ~ ' ,

added espenditures for conservation CMCZEIGRTEZETEEEUZW ~"iiL '

TWECZ *XT%M2EZME3

l i

,, l l

CHMomer.atld Collmlut1llY SUITin'

~

\

l l

Nort} w ' i ities (Nlb W making a an estensh e study of our customer base. Customer Sersice Operations l lconceA Nrt to understand better the As a result af this uorL, NU has At Nlf, customer service has become )

ley f actos that our customers consider des eloped an innos ath e marketing a drn mg forec tliat cuts across all l

v ben they purchae energy servicet strategy that will be useful in serving all - tuncuons lhis espanded view is l =

This is an essenti'a i part of our response customers. Quite simply,it we are to: perhaps best illustrated by the merging

, to increasing competition in our A remain competitive, our customers m'ust of the two organirgions that were ,

l' marketplace. it assures that we provide ' percebe that our service is of greateri _ responsible for all field operations. The j the senices our ctatomers need, w hen ~ ;value to them than the service prp3ided consolidatioriof the Customer Service s they need them. This concept is at the ~ by our competitors; and, if se are to - and 1ransmission atid Dhtributio- i l~ provide that senice protitably, our price = ' Engineering and Operations groups into heart of our new marketmg approach;' j b the new Custonier Sen we Operanons This marketing aApect of our core a p* m .must 1

~ esceed the cost we incutlWe .s. arp '

busineymission h the identification and e J Very optinusu.e that regulators w all be - (C50) organuation w as an unponant j j, sat. . faction of our customersTelectrif rupporthe of this strategy, Unce it( early step m the overall plan to increase, ,

~

service needs! Cur demonstrated abil_ityi j thnist is to provide custsperslwith ' the scope and elfiti ncy of the dherse 1 - fj '

i to prm ide these services pthe key ltb ai jervjce opiions that are tailored to their services NUprovides to as custcuoerr4 . 'y ,"

I stronger;nore profitable cosipank - ineys and that are properly priced: We - Contacts with NU will be more 2  ;

g, s 43 s ? helleve the;progrdm will significant)y 4 ccwenient and streamlmed. Our ability (

s N

.~# J" dse Jincrease the competitiveness of our~ core : tio reait quickly th customer requestds

CUSTOMER SEllyJCEg 4', " Sneis aiid reinforce our customers 1 Jwill improve, spill the caso d implicit ihSuSukinMdissidd Isk kper66%n that NU provideigreater ' effectiven'ess of serWces required [ ' ' g }

- need to become niore and)nore ..% E "'

vaWthan ahernativienergi soukey# ' Finally, the unificati6n of all customer . : J Tsensitl6and nisponsin to'the'dWerse i . *' f^

• - telated activities lo'tlie new CSO # / -

-and changhig needs oMttr c6stomer'sN ' J organization will masimize thelustUalJ I ~ ^' .~

s h &d Thatein tumi requirei thaWtidMucNYS MWM WQMnU ' ' benefits of the NU marketing strategy., '

N Psenice"bepunesjphiloso%fnf f

• M [ ginpffect, the emergence of the CSO h ^ [ , ,

O business rather than a discrete supporti function. Prompt and efficient responses"

}h$p@IMfM;k; CMg gdy  % h?

~T" j yroup and ' the implementation of the O markethig strategy will take NU to j

to customer inquiries imd service C h% requirementihave always been,and will' Ql MW'$ , {a new les el of custhmer sersice-m ~ d A

J !M ' M[1 ~% fA " ". ' concept and in practice; d'i kNh ME<-

gnntind toheia vital part of the: - , i

0 k;MMMT %Nq

' Iserficekwe provide. We divery,well i'n NY1

• n i-

/thik rehard: Customer satisfaction leveh; g]g%gg 7 'OMMUNMT SEltVICE

]

jg v y Wfj_A conthiusto improve, and we are well-p :;NU has a proud heritagevitality of positise

, above the national average.; Reacting to- contributions to the economic '

customeinitiatro needs, however, b f EM p{w .1 and quality oflife of the region. It-

. not enough.We must become the - .. Q}gh I s () complements our vision of sound, .

initiator, actively communicating pith g1

' y* V [ :' k. ,

$ responsible business practice. We ,

. customers to identify their needs and * ~ 4

'h 4 x

• i knodthat the socioeconomic health of ; " i expectations and working with)him tch 3 i ^{'R j J yhe region is' a' critical factor in oty s

'desejop and implement ' solutions th

]inancial well being. Our coumitment. 7

, . i are mutuallv beneficial f J@ lTwo 1990[Nilt '

fjto community senice is dh erse and 't

%, { jnitiativei(Marketini StNtegy andl j@. f ~ ;far. ranging, and our strategic appmach

- Customer Service Operations) illustrate ? Q ^

Eis to insest financial resources and to

.1 "our philosphy of arid our appr6ach to.h

, 9 , encourage employee s olunteer ,

] 'truly effeciiye custoiner service.

y

. @' irn oh ement in this area. -j 4 .

+. ..

- Marketing Strategy : NU has also consistently demonstrated

.' ~

' For several years now, senior NU i

lg W" J ' g )*

s ,

m e its commimwnt to sound environmental of ficers bas e been in personal contact

• practices. As the ensironmental sciences l with major customen to team how we increased the world's undentandmg of I can best meet their energy needt 1he causes, effects and remedies. NUi knowledge gained was supplemented by initianves became more dn erse and p m , - -

4 1

• I l

, - t

e.- -

~

i l

! complet Practices once considered ,

I benign now require remedial action, and . -

the anticipation of future needs becomes more compelling. As part of our -

response to these tchanging requirementw NU estabhshed. in IWO, an Executis e 3/ -

9* , a Em ironmental Committee. Comprised -

~

of othcer-les el memtwts, the committee y . y~ -

f m ersees and coonhnates activities to #

A; awure that prudent steps are taken and ,/ k that NU follow s the spint as well as the s 4y-letter of all environmenta laws.-

a) m

..ns.If -

/

p-

'Q- In two, NU was 14tnented with the .O .. . .... - -

4 + ,

p' prestigious Natiomil1 and Management *

. .j

[3 Aw ard by .ti t .diwal.lectric T Institute  ;; /

p* for outstanding aphievement at our - -

h l1 .Northfield Mosntalri nsture and 2

~

. . ./

recreationk) facNilfhpestern fk . /- y c E.

h I" ' . Manachhsetts.,ihbiiitWhitest 6f k( . .

I

f. long list ofl iabiieJgidirnment.d, andl ; h k p t,

energy industry cornmendation.s 5 w- rfor NLh ? p@F e T l1( conserv,environmen4ano_ation,initfstives Connecticut Arid weWrQ1machusetts$

fN inLbothl w

p; NI) also opened a new nature trail st ; y l y

[ st ,, . ,

y', , Lecological,'and p

' Mi!! stone Pointin of the comprehensNe retreational.s educational faciljties" 4 gy Wriiveticut ni part i :

~3 .

L '(

' ~

at oid hydroelectric and nuclearA @

4 q J' gener'ating sites,. -

4

'c '

Whilejustifiably pleased with thef N ,' ~..; . -

recognition NU.has achieved for its * -

C pioneering efforts in conservation and i '

environmental w ork, we take even % k Sc i -

greater p'ider in our efforts on beh'alf of 'I~ A the di antaged and special-needs i ir' ad groups m '. ." ang com.- We tohave help a_ .

e mitment *

,. ,; % .l -

s ' te v *Ing needs of our low'er ' contributions to energy fuel funds , ' Orecords for participation and per ca' pita; ince.o astomers. Our new; , , ,

g" ; Connecticut's Operation Fuel and f f donatlons. Even though we have fewer SPECTitV% Consen ation Services Mawachusetts' Good Neighbor Energy

• L employees than last year, they gave' ~ .

l l . Program expands the services designed f fitnd. This joint effort provided more morcia grand total of almost $940,000.

', for these special customers. New !!ome Ltlinn 5400,000 in needed assistante in Together, the NU family is making a Energy Action Team GlEAT) workshops , (1990. Since these programs began m dillerence in the wnununity and will ,

help customets t<, set goals for ._ ' ' 1983, contributions has e amounted to contmue to do so. '

conservation actions they can carry out - some 52.3 million.

l

,. NU supports a broad range of chantable .Our comnntment to commumt> sers ise ,

[ endeavors through a combination of has alwa)s been matched by the l direct financial aid and donation of in- dedication of our employees who hase

( Lind sen ices. Commumt) Service an admirable hentage of wmributmg .

Involvement grants supported employee most generously of their tune and mone). I and reinee participation in 855 projects I or esumple, this year's Employee or actis nies during 1990. The compan) Campaign on behalf of the Umted Ny '

also supports and enconrages customer and Combmed lleahh Appeals set

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lh NORTHEAST UTILITIES AND SUBS! DIARIES

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Manaymettli Divuuitni and Anafnis .

J This scetion corttams manarement's at year.end 1990 was 120 per share stage would be set for Iuture assemnent ofNortheast Unhttes' tihe compared to $22h per share in 1959. improvements that should, in time, com/wny or M1/ financial cmhfion and t/tr Common dhidends paid in 1990 and allow the company to improve its pr#icipalfat tors with an im/vrt on the 1989 wcre $1,76 per share. In January ' dividend pay out ratio, retained resaln ofoperations 7hn dm union 1991, the company % !!oard of Trustees earnmps equity ratio, cash How, and should be trad in conju #ction u eth ilte decided to maintain the current cartungs coverages rom /uny's twisohdated/inancial ynarterly dividend level at $0.44 per statemniti andfootnotes. share. After considering the current in an ellort to meet these financial high dis idend payout ratio (1940 objectis es, CI A P filed an application dnidends were equal 1090 7 percent on January 7,1991 with the Connecticut of earnings), a 1991 projection of Depanment of Public Utility Control

financial Condition continued mulcst earnings, and the (DPUC) requesting an increase in potential disidend requirements on annual resenues of $228 million or Ot ersiew new common share iuucs that will be i 1.5 percent. Cl AP also requested a

'lle company's camings per share needed to finance the acquisition of return on equity (RO10 of 13.7 percent increased to $1.94 in 1990 from $1.92 Public Sersice Company of New n .. pared to the 12.9 percent ROli in 1989. 'lhis increase is primarily llampshire (PSNilt the lloard cunently allowed in rates. In its lihng, attributable to lower interest charges concluded that A jnidend inctease at CI AP requested the DPUC to iwue an and additional cost. containment this time is not appropriate. Projected initial decision appnn ing $96 mdhon of measures w hich mitigated increases 1991 carnings are also subject to the m etall increase as a surcharge w hich in operating expemes in 1990. This continued uncertainty about when the would provide for increases in expenses carmogs increase is partially offset by PSNil acquisition u di occur, a weak resulong from the exhaustion of an the lou of camings resulting from the regional economy, the situation in esceu deterred tax balance arising from 1989 divestiture of gas assets, higher the Persian Gulf, and the outcome of tas law changes and recognition of preferred stock dividends in 1990, nd nendmg CL&P and WMECo retail cenain Seabrook I, Mdistone 3, and the general impact of intlation on most eate increase requests llydrmQuebec costs. The surcharge expensesin 1990. Sales for 1990 were would remain in ef fect until the ellectise at approximately the same level as Despite the slight improsement in the date of the rates appnned in the DPUC's 1989 resulting from a dow nturn in the quality of carnings,other factors final decision in the pmceedmg and region's economy and unusually continue to affect the linancial health of would be subject to refundflhe balance moderate weather throughout 1990. toe company. The rapid decline in New of the proposed request is needed to i;ngland's economy has adsersely reemer escalating operation and The quality el earnings continues to affected the company by contnboling to maintenance costt nuclear and fowil )

improse since the company's principal an end to the strong sales growth that outage expenses, and depreciation and  ;

helped hold electric rates nearly flat for decommissioning espenses. I utility subsidiaries, The Connecticut Light and Power Company (CLAP) the last sesen years. Sales in 1991 are and Westem Massachusetts Electric omjected to grow only about I.7 in response to CIAP's filing, the Company (WMECOL have phased percent mer 1990 sales and more than DPUC developed a hearing schedule ,

into rate base 80 percent and 100 half of that projected growth assumes that would result in a decision on the l percent of their respective allowed that weather conditions will be normal lirst phase of the proposed increase in ]

Millstone 3 investments. The for the year. Also, tax benefits resulting mid March 1991. At the request of the i percentage of cash earnings has from the 1986 reduction in corporate DPUC, CI AP granted a 45 day waiser increased slightly from 66,1 percent income tax rates expired m 1990. and of the normal ISO-day deadline for rate for the year ending December 31,1989 the company continues to encounter case decisions, so the linal decision on to 67.2 percent for the year ending increasing operatmg costs. the balance of ClA P's apphcation is December 31,1990, now expected in nud- Augmt 1991.

. Itecause of the ddfkult economic Although the market price of the climate forecast for 1991, the On Decemixt 14.199n, WMPCO fded company's common shares remained company's financial objectives for an apphcation with the Massachusetts consistently above hool value the year are quite modest. Foremost Department of Pubhc Utihties (DPU) thmughout 1990, the market tmbook among them is to maintain its financial requesting an increase in annual ratio decreased from 1.4 at ratios and earnings at their current resenues of $413 million or i1.9 December 31,1989 to 1.2 at leselt if the current financial percent. State tas increases and the December 31,1990 The closmg perfonnance is mamtained in thn impact of federal tax law changes result price of the coropany's common shares ddticult economic environment, the m one-quaner of the request. The 1 Mil

balance of the request is needed to PSNII certain astions taken by its lioard of recover costs that are increasing b December 1989, Northeast Utihties Directors, includmg acceptance of despita successful cost containment Senice Company (NUSCO) filed another offer to acquite or merge with efforts. As pan of the application, but with the United States llankruptcy Court PSNil, PSNil would be requireJ to pay separate from the resenue increase, for the District of New llampsbire an NU a termination fee of $25 million. If, WMECO is also asking to collect amended Joint Plan of Reorganifation, howeser, the tcrmination is a result of a thmugh base rates about $11.6 million under w hich NUSCO's parent, NU, breach of the merger agreement by NU, of annual resenues that support would acquire PSNil. Elecause it is or its subsidiaries, then NU would be expanding conservation programs and taking longet than expected to obtain required io pay PSNil a termination its im estment in a new high-voltage the necessary regulatory appmvah and fee of $25 mill;on.

transmission line that brings to dispose of appeals of favorable hydroelectric power from the flydro- regulatory decisiom, the reorganization additional information regardmg Quebec system to New England. Tho3e of PSNil has been delayed. NU, i Snit see the " Notes to Consolidated revenues are now primarily collected howeser,is continuing its effons to Financial Statements /

through a separate fuel charge. The reorganite PSNil and complete the change will not affect WMECO's acquisition as espeditiously as pmsible. Seabrook Project total res enue. On June 30,19% the Seabrook The acquisition of PSNil prmides an project released Seabrook 1 to the Management is continuing to kiok opponunity to achieve an metall New England Power Exchange to be aggressively at new ways to control reduction in costs for current and dispatched as pan of the New England expenditures. In late 1940, the company future ratepayers of the NU system, electric bulk power system. Also on in tituted additional measures that w hile pmviding real benefits for its June 30, lu% Cl AP and PSNil each included restrictions on employee shareholders. Specific areas for declared the Seabrook I station to be levels, travel, overtime, outside hiring, expected cost savings include a in commercial ope,ation. Since it began and equipment purchases. Ilowever, reduction in the operation and full power operations, the plant has without the additional requested rate maintenance costs for Seabmok 1, become a reliable source of electricity relief and this aggressive management the improsed availability of PSNll's for New England customers with a action, NU's earnings are pmjected to fossil steam generating facilities, the capacity factor of 82A percent through plummet to their low est level in more joint operation of the combined NU the end of 1990, than a decade. Ily the end of 1991,if no and PSNil systems capacity cost action is taken, earnings could continue benefits resulting fmm the dis ersity in November 19% the DPUC to decline and the ROE could reach the of peak loads between PSNil and approved a September 1990 Settlement single digits. Iloweser,if the necessary the NU system, and a reduction in Agreement filed by CL&P, the rate relief is provided and management PSNil's purchasing, administratis e. Prosceutorial Disisira of the DPUC, succeeds in further reducing costs, the and general costs, fly reducing costs, the Connecticut Office of Consumer company will be in a better position to NU will he better able to maintain Counsel. and the Anomey General of meet its ongoing responsibility of affordable electric sersice and also Connecticut regarding CL&P's providing quality energy services to its reduce the threat that its largest electric imestment in the Seabrook project.

customers while building a base upon customers will lease the system and The principal element of the Settlement which progress can be made toward turn to self-generation Agreement. w hich resols es all issues achieving the company's long tenn with respect to the prudence of CI AP's financial objectise of providing a fair Despite the numerous expected future . imestment in the Seabrook project, is retum to investors and allowing access benefits resulting from the PSNil the esentual inclusion into retail rates

. to capital markets on reasonable terms. acquisition NU has incurred significant of $167 million of CLAP's initial Steps taken to improve financial costs in the past two years in its elfort to imestment in Seabrook L stability willincrease the assurance that acquire PSNil. In accordance with the the company can maintain and imprm e merger agreement, PSNil, with certain For additional infonnation regarding the reliability and competitiveness of its exceptions, will reimburse NU for these the Seabrook project, see the " Notes to core business. costs, up to a masimum of $45 million. Consolidated Financial Statements?'

iloweser, NU would not be entitled to -

For information regarding nuclear such reimbursement if the merger Comtruction Program decommissioning environmental terminates under ccrtain conditions. The system's 1990 electric construction matters, and other contingencies, see expenditures of $292.9 million were the " Notes to Consolidated Financial in addition,if the merger agreement is among the lowest in the past ten years.

S tatement s." tenninated by PSNil as a result of Following the completion of Millstone 3

. J 77 3 2-~q',L;. ;sm pq m S p n .ww7% myygM::gJ; ;7;;: >

t L

!~

'r in 1986, the construction program's focus changed to egenditures for 1 improvements to esisting transmission, ACTUAL ELECTRIC PROJECTED ELECTRIC CONSTRUCTI0le EXPEllDITURES , CONSTRUCTION EltPENDITURES distribution, and generating facilities,

- In a continuing cffort to complement un resensues iresemmense p.sessmen i e.sensess already strong base of generation

~

- sem m amm reliability, the company budgeted more kespeeman than $125 million os er the next sis years to improve the reliability of its transmission and distribution systems. g 'g The company does not foresee the - 40o< .

gg ..

need to build a major new generatmg ~-

.l d

facility until after the year 2000, , J

primarily because of the company 's j comprehensive conservation progtams 3aos oo< l resulting in signilicant energy savmps, s ,

pow er provided by cogeneration and i .

l small power pnxlucers, and firm long- l term purchase commitments for 200< 200<  !

I Canadian hydropower. 3 , g- ..

i g g The charts on this page show the ,

overall level of electric construction 100

• 100' expenditures for the period 1991 , r, through 1995, compared with the period . 9 90 1m l

1986 through 1990, and the change in ~

Im tm the nature of the expenditures. DC , igs7 A ., 'tge2 *  !

" ,'s i- X, tens 1991 l The steam generators for Millstone 2 2

, )

hase experienced corrosion, pitting, ,

l and denting problems similar to those found at other comparable nuclear obhgated to meet maturities and cash $18 million of new common units. The company currently plans sinking-fund requirements for long- shareholders' equity in 1990 from l 3 to replace the Milhtone 2 steam term debt and preferred stock totaling the reimestment of dividends and l

[ generators in 1992. This would invoke $661,6 milhon for the years 1991 s oluntary cash investments. This is

j. a fise-month outage at an estimated through 1995, without gising ef fect to the first issuance of new NU shares

[ total cost of approximately $200 any financings associated with the under the DRP since the third quarter

' million. That amount includes acquisition of PSNH. External of 1986. In 1990, external fundmg allowance for funds used during financing will cononue to be necessary requirements were the lowest since l construction but does not include the to meet total cash requirements, the pre-Milhtone 3 construction period.

cost of replacement power. Ily although not at the lesch of past ~I hese f unds were used to finance the

arrangin'g for the procurement of items years, since projected construction capital program, to refinance high1 cost i with long lead times, and advance expendnures are substantially reduced, securities, and to reduce short tenn debt.

'_ planning, management is attempting to minimite the length of the outage. During 1990. the system compames CL&P and WMECO continue to utilize j issued $35.0 million of first mortgage a nuclear fuel trust to finance their

Financing bonds and $15.3 million of pollution nuclear fuel requirements for Mdistone 1,

Cash requirements in excess of control bonds. Iteginning wi;h the 2 and 3. As of December 31,1990, the j internally generated funds generally are dividends paid in June 1990. NU's trust's investment in nuclear fuelinet of i financed through short , intermediate- Dividend Reim estment Plan (DRP) the fou th quarter 1990 lease payment l and long-term borrowings, nuclear fuel was amended to authori/c the dividemh made on January 31.1991, was $247.0 j- trust financing, leasing agreements, and of participating shareholders to be milhon. Nuclear tact requirements for

! the sale of preferred stock. In addnion reimested either in NU shares purchased Milhtone I,2, and 3 of $%6 0 million

to construction and nuclear fuel directly f rom NU or in the open market. for the years 1991 to 1995 are expected j requirements, the sy stem companies are The company received approximately to be finanted by the trust.

4M1rmtINnHElBMrEDi3MIERT?"JrMRNtfEEiRRIERRIMielELMIIM i

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A A 4 M. .__i.J4--d.b.d=anMA 4 4b MMgW a_ hr % - he.e-.Na#-44r AM--4MM'-M.M_.4JSam_JEigA._.sp_,s. uJs-4 Anne'd.-..+M,a@.iemae.J..Jsm s e h.4.a A 4_f A4_Awhei.,4W e d _.d # hJs 4 &ss.iumiE_A.=,Aan,C4.-464 4' ~ ',-#g* 3 *, ,p ,

.I ,

The chart on this page illustrates the inanagement projects that Nti could

~

relatis e percentages of all major sources experience malest. diort term dduilon of in earnings as a result oIinuing ' SOURCES Of of funds for the fis e-year period 1986 new NU common shares, the company

" "EEI to IWO. '

espech that.mer the long teno, snimei tese tone sei in 1991 the Nll system companies shareholders will esperience greater :apew sine i seier siimmes grow th in carnings and more 88888 L***

espect to finance 5279 million, or , .,

approxunately 49 gwrcent. externally. oppintunity for improsed dividends This amount mcludes 5145 million than would be the case w othm.; PSNil. ,

for nuclear fuel requhements that are 'lhe remaining finaneing w ill be g espected to be financed by the Niamic accomphshed with term borrow mgs ico. "

Ilay Fuel Trust and excimles the trom vmious banks.

(manemps necessary for the PSNil acquisition. 'l he sy stem companies The PSNil fmancing plan has Iren sk continue to pursue opportunities to structured so that NU will rely entirely --

tefinance high-cost securitiet on conunon stock tunes and on PSNil Eliminahon of higher cost debt. or and North Atlantic to meet those ,

replacement with lower cost capital, ohhpations and will not be dependent pnn ides oppirtunities for short tenn on inidends froni any current NtI impnn ement in earnings and a long- operating company enher to pa) 404 tenn reduction in revenue retpurements interest or principal on its term loan -

f acihty or to pay dn idends on NU's NU expects to fmance its proposed new common sharet acquisition of PSNil by initially M Arcounting Standards 'i 1880 making an equity imestment of approximately $5(O million in PSNil 1he Financial Accounting Standards  ; ,

3,,,"

• and a separate new Nt! subsidiary, Iloard (FASill has amended a DN -

isst North Atlantic Energy Corporation previously iwued income tas N ' ises (Nonh Atlantie), which would sell accounting standant The accounting .

SeabnioK's output to the reorgani/ed standard requires, among other things PSNil. NI) projects that it w ould twuc that regulated utilities icflect, on their from 25 to 30 milhon new NU conunon balance sheets, the taxes related to to petition their reputators to recover shares to raise up to $630 million over the cumulatise amount of income these cmts in future rate pn(cethngs.

a three-year peruxl. Approsimately tas timing ddferences for which While Cl AP and WMECO expect to

$500 million would finance the eqmty defened taxes hase not been pnnided. termer these cmts should the timing of imestments in PSNil and North The company expects that w hen the "ecmcry dif fer from the accrual of such Atlantic and the remainder would new standant is adopted in 1992,it cmts, the companies would expect to ,

thrmce mt, rest on acquisition loans will increase awets and liabihnes reco,d a reputatory auct for the

.nd NU dieidends before PSNil and by approsiinately $1.0 bilhon but ddlerrnce.

Etth Atlantic begin paying dividends will not have a material citet on .I to N!!. All other financing would he net income. l{esults of Operations accomph,hed by PSNil through its hsuance of prefened stock, bonds and in December 1990, the i ASil issued The relative magnitude of the variom l unaenned debt, and by North Atlantic Statement of Iinancial Accounting expendnures incurred by the system's l

thmugh its iwuance of bonds and Stand;uds No.106. Employers' continuing operations h illustrated in unsecured debt. Accounting for Pmtretirement Benefits the chart on the next page.

l Other 1han Pensiom (SFAS 10M Thh l At the tune of acqmsition. it is currently new standant, which will become Operating Resenues l contemplated that a portion of the etfcctise in PN3. requires that the O i vrating resenues increased $142]

$500 milhon NU equity investment espected cost of these Irnefits ir milhon from 1989 to 1990 and increased in PSNil and North Atlantic will be charged to expense during the years that 5205 0 million from 1988 to 1989, provided imm the swuance of employees render sen ice. Thk is a lhe wmponents of the change in addnional NU conunon shares to significant chang- f rom the company 's operatmg revenues for the past two reali/c the proceeds of between $150 cunent puhey of recogni/mg these costs years are pnnided in the table on and $230 million. Although as incurred Cl AP and WMFCO expett the next page.

l 3MMMEIEM M EliellNTtH5iiEn

L I

. increased primarily locause of the partially offset by the matchmg of

~

. , etlects of the June 1988 and June 1989 resenues and espenses under the Mm]ImmROFIINB12 : DPU retail rate decisions and a panisions of the companyi energy December 1988 DPUC retail rate adjustment clauses.

decision. The rate maleration fund E~~~'~~~~

decrease in 1989 reflects one aspect of a Other Operation and Maintenance t '  ; February 1988 DPUC decision (the Espenses q February 19S8 Decision) w hich Other operatioo and maintenance

authorized CI A P to recogni/e in eyvnses increased $61.6 milhon in

, . revenues, user the 12 month penod 1990, as compared to 1989, primarily 4 '

beginmng January 1,19SS, a portion of because of higher costs associated resenues resened prior to January 1, w nh consen ation and load.

.- 1988. The res enue resen e represented a management programs, refucimg and

~

lesel of resenues in excess of that maintenance acrisities at nuclear required to cam a specified ROE. Sales electric pnxtuction Iacihties, including 5 .- .

and other resenues increased in 1989 as the amortization of prior period outage Jmargy Caste 425 W . .

compared to 1988. primarily as a resuh costs, legal and regulatory actiutics of an increase in bulk power sales and a

& tier Open ang asmciated with NU's citorts to acquire Maantmance Osionses (23 f%F 3.7 percent increase in electric sales PSNil, and the general impact of

% including sales associated with energy in0ation on most espenses, partially endotherjeosase Nes(if .

deliscred but not billed. This increase of tset by management's cost.

- Wages sna Bensele 03.3%) *"'I*""" esuh the condnued cont.sment dom in N econonne growth [m the region in 1989,

- hPee 01 Dv) '

'. ' partially of fset by the ef fect of more Other operation and maintenance

' rWandheterreg ' ' i malerate weather in 1989 eipenses increased $103.2 million in

' Ol=41 ends @ 1%) 1989, as compared to 198N, primanly

, ( ' .

Electrie Energy Espenses because of higher costs awociated witn

- : Electric energy evenses which include refueling and maintenance actiuties at

~.>1' fuel and purchased and net interchange fossil and nuclear electric pnxtuction

pmer increased $55.4 million in 1990, f acihties, higher transmiwion end as compared to 1989, primarily because distnbution costs associated w uh Fuel cost recow s increased in 1990, of a greater lesel of higher priced storms, and the general impact of as compared to 1989, primarily because cogeneration purchases, partially offset inttation on most espenses.

of higher energy costs, Revenues by a greater utili/ation of lower cost related to regulatory decisions increased nuclear generation. Depreciation Espenses primarily because of the effects of the Depreciation expenses increased June 1989 and June 1990 DPU retail Electric energy expenses mereased 514.6 mdhon in 1990, as compared to rate decisions. Sales and other revenues 590.S million in 1989, as compared to 1989, primanly because of greater plant increased pnmarily as a result of an 198S, primarily because of higher insestment and higher depreciation rates.

increase in bulk pmer sales. kilowatt-hour reymrements and higher cost purchases from cogenerators and Depreciation eyvnses decreased The DPU's 1990 decision granted other utilines inmughout the recion, 59.1 million in 1989, as compared to I

WMECO a $20.1 million increase in annual :es en . .ompared with the 532.5 mdlion WMECO had requested. Change in Operating Resenues in its decision, the DPU permitted _ _

increaseA Decrease) _

WMECO the fifth and final installment 1990 ss.1989 1989vs 1988

~

of its rate base investment in Millstone 3. m _ , ,,, m_

The DPU lowered WMECO's allowed ROE from I3.0 percent to 12.5 percent. Fuel cost recos cries 5 79M $ 95.S Regulatory decisions 39.0 43.S Fuel cost recoveries increased in 1959- Rate nuxleration f und -

(5Sti as compared to 19SS, pnmarily because Sales and other resenues 23.8 124.0 of higher sales and higher energy costs.

Res enues related to regulatory decisions Total resenue change 5142.7 5205.0 MECM%:iwwm?m%3AtM"itMqig%mGTTWMb"gMy wmAWMmm?mtKMMCg

1988, primarily becauw of regulatory compared to 1988, primarily because decisions. These decisions required of low er taxable income. Taxes

. CI A P and WMiiCO to reflect escess other than income taxes increased deretred iases implicit in net-of-tas 58.3 million, primarily because of allow ance for tunowed funds used higher Connecticut press canungs during construction as a reduction to tases resulting fmm a higher level

-depreciation espenses. The excess of res enues in 1989 and additional deferred tases resulted from a decrease Connecticut sales tases.

in the federal statutory tas rate. This decrease was partially offset by greater Deferred Nuclear Plant lielurn plant imestment and higher The deferred nuclear plant return decommissioning lesels in 1989, decreased $3,5 million in 1990, as compared to 1989, primarily treause j Amortitation of Deferred WMl!CO phased into iute base the final

{ Millstone 31(eturn ponion of its recuserable Millstone 3 l 'lhe amortaation of deferred Millstone 3 im estment.

return increased 55A million in 1990, as compared to 1989, primarily The defened nuclear plant return because of the annual recognition of decreased $49.8 million in 1989, as j an additionalincr: ment of the return on compared to 198S, primanly treause l Millstone 3 imestment not phased into Cl AP and WMl!CO had additional .

} rate base, portions of their reemerable Millstone 3 im estments phased into rate base.

l l The amortiration of defened Milhtone 3 return decreased $17.1 million in 1989, Interest Charges

[

! as compared to 1988, primarily because interest charges decreased 513.3 million i the February 1988 Decision allowed in 1900, as compared to 1989, primarily i CL&P to accelerate,in 1988 only, twcause of lower long term debt levels, the amortization of deferred phase-in paniali) offset by higher short-tenu costs, effective January 1,19S8. debt lesels.

Thisdecrease was partially

{ offset by the effect of a June 1989 Interest charges increased $18.9 milhon l DPUC Supplemental Decision in 1989, as compared to 1988, primanly requiring CI A P to increase its treause of higher as crape imerest rates i amortitation of deferred Millstone 3 throughout 1989 and interest accrued on return balance by an amount equal to spent nuclear fuel disposal costs.

f

50 percent of those earnings in escess i of its allowed ROli cf 12.9 percent.

l Tases

( I cderal and state income taxes decreased 56A milton in 1990, as

(

i compared to 1989, primarily because of l tas benefits awociated with the 1990 l' write-off of a portion of CL&P's initial investment in Seabrook I resulting from the Settlement Agreement approved by the DPUC in November 1990. Taxes other than income taxes j increased 57.2 million in 1990, as compared to 1984, pnmarily because of higher property tases.

Federal and state income tases decreased $20.2 milhun in 1989, as

-ansmurammenenwaarw--

Company Report Report ofIndependent Public Accountants The consolidated financial statements To the Board of 7 rustres and of Northeast Utilities and subsidiaries Shareholders of Northeast Utilities:

and other sections of this Annual Repon were prepared by the company, We have audited the consolidated in our opinion, the financial statements These f.aancial statements, which were balance sheets and consolidated referred to abos e present fairly, in all audited by Arthur Andersen & Co, statements of capitalization of material respects, the financial position were prepared in accordance with Nonheast Utilities (a Mawachusetts of Northeast Utilities and subsidiaries generally accepted accounting truso and subsidiaries as of as of December 31,1990 and 1989, and principles using estimates and December 31,1990 and 1989, and the the results of their operations and cash judgment, where required, and gis ing related consolidated statements of flows for each of the three years in the consideration to materiality. income, common shareholders' equity, period ended December 31,1990,in cash now s, and income taxes for each confomiity with generally accepted The company has endeasored to of the three years in the period ended accounting principles.

estabhsh a control environment that December 31,1990. These financial encourages the maintenance of high statements are the responsibility of standards of conduct in all of its the company's management. Our ARTilUR ANDERSEN & CO.

business activities. The company respimsibihty is to express an opinion maintains a system of internal on these financial statements based on liartford, Connecticut accounting controls that is supported by our audits. February 15,1991 an organization of trained management personnel, policies and procedures, and We conducted our audits in accordance a comprely 1sive program of internal with enerally F accepted auditing audits. Through established pmgrams, standards. Those standards require that the company regularly communicates to we plan and perform the audit to obtain its management employees their reasonable assurance about w hether the internal control responsibihties and financial statements are free of material policies prohibiting con 0icts of interest. misstatement, r\n audit includes examining, or, a test basis, evidence The Audit Committee of the Board of supporting the amounts and disclosures Trustees is composed entirely of outside in the linancial statements. An audit trustees. This committee meets also includes assessing the accounting periodically with management, the principles used and significant internal auditors, and the independent estimates made by management, as weli auditors to review the activities of each as evaluating the oserall financial and to discuss audit matters, financial statement presentation. We belies e that reporting, and the adequacy of internal our audits provide a reasonable basis controls, for out opinion.

Because of inherent limitations in any system of internal controls, errors or irregularities may occur and not be detected. The company believes, however, that its system of intemal accounting controls and control environment provide reasonable, assurance that its assets are safeguarded from loss or unauthorized use and that its financial records, which are the basis for the preparation of all financial statements, are reliable.

BRENMdlEiNNNIT RIEFTWJtfMPEENRIDBiltRWRMBMWm

. (Ollwlhltllftl.SilllCt!!Clllh(IflllCO!1\C

. I or the Years Ended Deceniber 31, 1990 1989

- - 1988 a thouuna of Dolian.curg sh.or enrooramni Operallons Including Diwontinued Gas Operations:

Operating 1(esenues(Note 1). $ 2,616,319_ $ 2,473,571 5 2,2684417 Operating thpenses:

Operat'on-Fuel . 370,028 406,075 416,092 Purchased and net interchange power (Note 1), 308,229 216,739 115,919 Other (Note 1) . , 713,671 649,774 595.857 Mabtenance, 238,323 240,587 191,271 Depreciation . 212,212 197,630 206,769 Amortitation of deferred Millstone 3 return. 57,194 51,7hD 68,894 Federal and state income tases (See Consolidated Statements of locome Taxes).. .. 154,412 151,401 176,372 Taxes other thar, income lates . .

_ 181,688 174,480 166.174 Total operating eynses.. .

2,235,757 2,088.466 1,937,348 Operating income. 380,562 385,105 331,259 Other Income:

Allowance for other funds used during construction , 3,444 2.713 2,537 Deferred Millstone 3 return-other funds, 38,992 42,407 75,0(LI Equity in earnings of regional nuclear generating companies . 10.339 9,5'72 10,088 Write-off of plant cous . t 19,388) (9,010) (9,717)

Other, net.. 16,780 10,548 6/>61 Income lates-credit , , 37,790 27.797 39,015 Other income, net.. . 87,957 84,027 123,588 It.come before interest charges., _ 68,519 4 469,132 454,847 Interest Charges:

Interest on long-term debt . 218,858 230,212 219,793 Other interest ,. ,, ,

20,558 22,538 14.078 Allowance for borrowed lunds uwd dunny construction., .-.. (7.191) (5.876) (5,527)

Deferred nuclear plants return-borrowed ,

f unds, net of incon'c taxes , t 19,678) (19,770s (36,923)

Interest charges, net.. ,

212,547 227,1(kl 191,42I income after interest charges , , 255,972 242,028 263,426 l' referred Ditidends of Subsidiaries.. 44,965 38,803 38,582 Income from Continuing Operations.. 211,007 203,225 224.844 Income from Discontinued Gas Operations . 5,858 9,078 Net income , 5 211,007 5 209.083 $ 233,922 Earnings Per Common Share:

Continuing operations., $ l.94 5 1 87 5 2.07 Discontinued gas operations . -

.05 .0S Net income.. $ 1,94 5 1,92 5 2,15 Common Shares Outstanding (aserage) . 109,003,818 108.669,106 108 J*9,106 ,

NORTHEAST UTILITIES AND SUBSIDIARIES i armensmuuransnaarmwwwammmemnrammtwawammrzamwemmenumamme-rmammermerames The suompanyms nun are an tenqeral part ed chew hn4 wial suicinwnts

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^

( 'tHlwlI'(lallCll \ltilClllClll A IlO 'llAll h ltlWA e j .j For the Years Ended December 31, 1990 1989 .

1988 ah t, of Iu.uo Cash I' lows From Operations:

Income before preferred dividends . , $ 255.972 5 2CJI!8 5 263,426 Adjusted for the following:

Depreciation und amortitution of leased pmpett) . 325,354 h4,724 326.0%I Defened income tases and insestment tas credits net.. 33,066 17.506 40.722 Deferted nuclear plants return . 158,6701 0:2,177) (li1,927)

Amortiration of deferred Millsione 3 return.. 57,194 51,780 6x,894 Rate moderation f und.. . , - - (77,694)

Amortiration of defened charges and other noncash items.. 29,501 56.065 37,7M 1 ChanFes in w oiki.ig capital:

Receivables and accrued utility revenue % 24,6l12 14I 898) (61,131)

Fuel, materials, and supplies.. (lM,967) (24,767) (3,183)

Accounts payabic.. . . (24,750) 3 N.467 t. 3,370)

Accrued taxes.. 19,227 10,160 7h,971 Other working capital (escludes cash) . _ 21,rd:81

( (22.727: _ 10/181 Net cash flows from continuing operations. . 620,921 5H4.K61 56M 623 Net c: sh Hows from dhcontinued gas operations. _

15.716 23,79i Net cash nows from operatmnw. _ 620,92l_ $92,417

. _ 605 577_

Cnh Flows From Financing Acthilies:

Common share .. . . . 17,M88 - -

Preferred stock ., , ,, , -

1253kK1 53,500 Long-term debL 50,300 170.121 313.fM K)

Increase in obligations under capital leases.. hM,982 32,515 87,(W Wi Net increase (decrease)in short term debt., 77,959 (25juKh (56.500)

Reacquisitions and retirements of long icrm debt and preferred stock.,, , . (99,523) (340,16x) (247,462)

Premium on reacquishions and financing expenset, . (2,330) (3,538) (12,979)

Repayment of capitalleau obligations.,, (10M,314) (103,283) (108,516)

Cash dividends on preferred stock .. . . (44,965) (39.779) (40,510j Cash dividends on common shares.. (191,851) (191,255) (191,257)

Special dividend-discontmuance of gas operations.. _- (101.012) -

Net cash Onws from finanemg activities.. (21I,854) (526.402) (203,7181 Investment Activities:

Insestment in plant (includmg capital leases):

Electric and other utility plant.. . (292,902) (259.430) (265,560)

Gas utthty plant.. - tiI,159) (26.3791 -

Nuclear fuel .. (M6,375) (22,616) (86,976)

Less: Allowance for other funds used donng construction.. . __(3,444) _ 2.713) ( (2.537)

Net cash flows used for investments in plant.. (375,833) (290,512) (376,378)

Discontinuance of gas operations . N4,9so -.

Other investment acth itics, net.. . _ . (25,466) ( M.987 )_.

_ ___,3

_ ( l N.2_15)

Net cash flows used for investments . (401.299) (84,519) (394.593)

Net increase (Decrease)In Cash For The Period. 7,768 (5,344) (5.M94)

Cash beginning of period.. _ H,534 _ l3.878 _ 19,772_

Cash end of period.. $ 16,302 5 M.534 $ 13.87M Supplemental Cash I low 'information:

l Cash paid durmg the year for:

l Interest, net of amounts capitah/ed dunng construction , $ 214,233 $ 244.239 $ 224.187 income taxes . . . . $ 61,642 $ 90.479  % 30.609 NORTHEAST UTILITIES AND SUBSIDIARIES i MGl!NEIEElKMiEllEl l w o.mmm, mm m .n nun nn a u . nmi o.a mm .

l

. . ~ _ - . - . - . - . -. - _ - - - _ . -. -_,

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- ('ttilwlleltllCll .SilllC!llCllI5 tuflIlCilf!!C lhiiC5 For the Years Ended ikccmber 31, 1990 1989 1988 twnanaud Ih,um. euein perientageu The commments of the federal and state income tas provisiom ,

thatred to continuing operations are:

' Current income ines:

Federal .. , , . , 5 55,5N1 5 60.796 5 70,607 State. . - 27,975 25.302 26.027 Total current.. . 83,556 86J)98 96.631 Deferred income lases, net:

Federal. , 43,776 44.275 50,895 State. . 7,792 8,002- 5.305 Total deferred- _ ___51._.5 6_8 52,2 _77 56.2(W) imestment tas crednt net . ( __

-- 17,41._4) ( 14,3__05 ) ( H.557)

Total income las espense . , , , , 5 117,710 5 124.070 $ 144,277 The components of total income tas eyrme are clawilied m follows:

Income taxes charged to operating espemes.. $ 154,412 5 151,401 5 176,372 Income taxes awociated with the amortuation of deferred Milhtone 3 return-borrowed lunds . . . (13,454) (13.442) (18.805)

Income taxes asswiated with the allowance for f unds used during comtruction ( All!DC) and deterred nuclear plants return-borrowed funds,. . ,, 14,542 14.408 25,725

')ther income lases-credit.; , 0 7,790s (27.797) 0 9.015)

Total income in expeme . 5 117,710 $ 124.070 $ 144,277 Deferred income fases are cornpnsed of the tas effects of timing differences as follow s:

Depreciation, escluding leased nuclear fuel . $ 53,439 5 $ 1,857 5 63,387 Construction overheads.. , , (11,156 (10.473) (l,360)

Ikpreciation on leased nuclear fuel, settlement credits, and disposal costs . . 2,369 7,068 (8,172)

Decomminioning costs.. . (1,245) 942 (2,6MO)

Energy adjustment clauses . 2,398 (4.825) (21,395)

AFUDC and deferred nuclear plants return. net . . 1,0sx 465 6.920 llate moderation fund,. .

- - 32,218 Pension accrual.. . , SAOS 7,587 (5,130) .

Other.. . (733) 044) (7.588)

Deferred income taxes, net ,. 5 51,568 5 52.277 $ 56.200 The effectise income tax rate is computed by dividing total income tas expense by the sum of stich tases and income after interest charges.

The dif ferences, between the effective rate and the federal statutory income tax rate are:

Federal statutory incanv: tax rate. . 34.00 4 341104 341W)9

, Tax ef fect of differences:

Ikpreciation differences . l.26 1.25 3,10 Deterred Mdistone 3 return ~ other fund 3. , . 0.55) (3.94 ) (6.25)

Amorti/ation of deferred Milhtone 3 retum-other f unds.. 3.77 3.50 4.25 Comtruction overheads .. . (3.09) 0 .14) (l 07)

Investment tas credit amortization,. (4.66) (2 62) (2,10)

State income taxes, net of federal benefit . 6.37 6.0S 5.18 Other, nct ,. _ l 2.60) ( 1.24 ) fl 72)

Ef fective income las rate. . . 31.50 % 33.899 35.399 4 NORTHEAST UlluTIES AND SUBSIDIARIES

1. - A m m t9 alm u islHp st m1H T he mnmenpng nun m an uwni put ut thne rouwt namnenn

i

. Cornalidated Halance Sheets " .

i At December 31, 1990 1989 (Thousands of DollarO Assets Utility Plant,at originalcost:

Electric .. . . . . .. . . . . $6,753,512 $6,396.326 Other., , ,, , , , 100,852 89,999 6,854,364 6.486,325 Less: Accumulated provision for depreciation.. 2,033,568 1.855.520 4,820,796 4,630,805 Construction work in progress . 184,551 329,409 Nuclear fuel, net , , . . 259.821 277,591 Total net utility plant.. . . 5.265,168 5.237,805 Other Property and Investments:

Nuclear decommissioning trusts, at cost (Note 3).. - . 100,146 76,413 Investments in regional nuclear generating companier, at equity. 67,489 66,264 investments M transmission companies, at equity. . 28,551 24,738 Other, at cost . ,

32,023 26.071 228,259 193,486 Current Assets:

Cash and special deposits., . 6,302 8,$34 Receivables, less accumulated provision for uncollectible accounts of $10,588,000 in 1990 and $8.452,00()in 1989... 264,939 283,690 Accrued utility revenues.., , 100,154 106.005 Fuel, materials, and rupplies, at average cost . . . 179,944 160,977 Prepayments and other , , 41,559 25.676 602.898 584.882 Deferred Charges:

Unamortized debt expense . 14,461 13,327 Energy adjustment clauses, net . 21,265 25,005 Unrecovered spent nuclear fuel disposal costs.. 29,866 27,879

, Deferred costs-nuclear plants.. 275,267 279,368 Amortizable property investments.. 75,582 88.638 l- Other.. 88,605 72,812 i 505,046 507.029 i

i I

i Total Assets. .

$6.601,371 $6.523.202 NORTHEAST UTILIT!ES AND SUBSIDIARIES

. : ;. . 3 ;,i .y.; :::. %,; ; L:. . . . ,.;.; ; . 2 :( ;.;. ; ; ;;..br ; .. . J

. .% 7 % a% d d:1 The at ompanymg notes are an stegral part tif thew fmana.s! statementt

r At Decemtwr 31, 1990 1989 miiiuun,h or Iwuaro Capitalisation and 1. labilities Capitalisation: (See Consolidated Statements of Capitalization)

Common shareholders' equity:

Common shares,55 par value-authoriicd 2251K10,0t N) shares; outstanding 109.615,926 shares in 1990 and 108,669,106 shares in 1989.. $ 548,080 5 543,346 Capital surplus, paid in .- 469,647 455,174 Retained camings.. 773,031 753.875 Total common shareholders' equity . 1,790,75X 1,752,395 Preferred StotL not subject to mandatory redempnon.. 394.695 394.695 PreferTed sawk subject to mandatory redemption.. 174,392 179,392 Long-term debt.. 2.491,047 2,546,716 Total capitalitation .. 4,M50,x92_ 4,873,198 Obligations l'nder Capital I cases.. _ 22_1,S33_ 225,313 Current I.iabilities:

Notes payable to banks.. I16,344 15,000 Commercial paper.. 82,615 106,(x)0 Long tenn debt and preferred stock-current portion.. 104,123 80,885 Obligations under capital leases-current portion.. 97,715 l15,933 Accounts pay able . 144,394 169,144 Accrued taxes . 166,983 147,756 Accrued interest.. 49,005 51,491 Other.. 55.552 49,96S MI6,731 736,177 Deferred Credits:

Accumulated deferred income taxes . 462,122 409,553 Accumulated deferred investment tax credits . 210,356 228.020 Other.. 39,437 50,941 711,915 688.514 Commitments and Contin *pncies (Note 7)

Total Capitalitation and 1.iabilities.. 56,601,371 $6.523.202 NORTHEAST UTILITIES AND SUBSIE,iARIES IETE 4-313 & fs h'"*EISMd"IfM'?UMNT4ETTY7MNKPJTSEfffCg&MSMd7276 the Compan)itig n,es are an sategisl pat

• til thew linatwi Al miem,W+

. m . __ - . . _ _ _ _ __ _ _ _ _ _ ._._ . . _ --.._. ._ - - . _ _ . _ -

'l 'Ollwlltltlit'tl .\ldit'lllt'lli.\ Of ( 'lll)lltllljdllOll

• At December 31, 1990 1989 rik.uwnht Ibnam Common Shareholders' l'quity (See Consolidated Balance Sheets)., $ 1,790,758 $ I,752,395 -

Cumulathe Preferred Stock of Subsidiaries:

$25 par value-authorized i1#KUK10 shares at December 31,1990 and 1989, outstanding 10,340,000 shares in 1990 and 1989

$50 par value-authorized 9,000fXX) shares at December 31,1990 and 1989; outstanding 5,561,745 shares in 1990 and 5.661.745 shares in 1989

$100 par value-+uthorized 1,000.000 shares at December 31,1940 and 1984; outstanding 350.000 shares in 1990 and 1989 Current Redemption Current Shar:s Dividend Rates Prices (a) Outstanding _

Not Subject to 51andatory Redempthm;

$25 par value-Adjustable Rate $ 25.tX) 4,140,fx 10.. 103,500 103,500

$50 par value-$ 1,90 to $4.80 $ 50.50 to $ 54.00 5,123,K95.. 256,195 256,195

$100 par value-57,72 to $9R) $103.51 to $103.99 350,(XKL . 35,000 3(,0(K)

Total Preferred Stock Not Subject to Mandatory Redemption . 394,695 394.695 Subject to Mandatory Redemptiongb)

$25 par value-51.90 to $2.275 $ 26.82 to $ 27.10 6,2(W),(X K1.. 155,000 155,(MK)

$50 par value-55.24 to $5.76 $ 51.38 to $ 52 A2 437,850.. 21,892 26,892 Total Preferred Stock Subject to Mandatory Redemption , ,, 176,892 181,892 Less: Preferred Stock to be redeemed within one year,. 2,500 2,500 Preferred Stock Subject to Mandatory Redemption, Net.. 174,392 179,392 l 1,4mg-Term Debt:(c)

First Mortgage Bonds-htJgity interest Rates 1990 5% to 13,359 . , ,

- 2,500 1992 4-3/89 . , 8,000 8,000 1993 4-1/4% to 8-l/2% . , 140,000 140,000 1994 4-l/29 to 9-3/4% 107,000 107,0(X) 1995 9-1/4% to 109. , 175,000 140,(MX) 1996-2(XX) 55/891093/8%. ..-.. , 490,000 490,(x10 2001-2(X14 7-3/89 109-1/49. . 385,000 385,(xx) 2006 2008 8-7/84 to 9-3/8% . . . 155,000 155,(XXI 2015 117/84, , ,

15,586 2016-2019 7 3/89 to 10-t/89, 304,650 304,650 Total First Mortgage Bonds., 1,764,650 1,747,736 Other Long-Tenn Debt-Pollution Control Notes-1998-2007 5.909 to 6.509 25,250 26,020 2003-.2020 Adjustable Rate , 430,800 415,500 Notes-1990-1992 8,25% to 9.239 , , 85,000 155,tX10 Fees and interest due for spent fuel disposal costs . 148,281 137,153 Other.. 144.816 150.483 Total Other Long-Term Debt . 834,147 884,156 Unamortized premium and discount, net.. 16,127) (6.791)

Total Long-Term Debt.. 2,592,67/5 2,625,101 Less amounts due within one year.. 101,623 78,385 Long-Term Debt, Net.. 2,546,716-

] ,491,047 Total Capitalization.. $ 4,850,892 $ 4.873,198 NORTHEAST UTILITIES AND SUBSIDIAalES 1E52REEEUliEE19%'!EYRP41ESME*L?RtWWYMENhmupamazeEEMS The accompanying notes are an integul pan of ihne rm.vwul st.uenentt

j Conwlidated Statynents ofCapitali:ation)Noth) 60 Each of these series is subject to cenain refunding I wentially all utihty plant of The Connecticut i.ight and hmitations for each (f the Dht the years after they were l'ow er Company (CI Al9 and Western Niawat husetts inued Redempoon prices reduce in hiture ycars. I lectiic Company (Wh1EC()), w holly ow ned subsidianes of Nonheast thitnics,is subject to the hens of their respectne first mortgage bond indenture % in addition, (b) Changes in Preferred Stos k Subjet t to hiandatory CI A P and Whil C() hase secured 5346,1(KUKul of Redemption: pollution control notes witt second mongage hens on o h~ma, m m- hiillstone 1. junior to the hens of their tespettnc first flalance at January 1,1988.. 5205,832 mortgage bond indentmes Reacquisitions and Retiremenh .. (94JkW4 in connectmn with the July 1.1989 daestaure of us pas

"" " " " ' "'""E" " ' "N " U ""' " " h '" 'I "' '

llalance at December 31,1988.. I i 1.x12 to 525jkMUKXI principal amount of its Senes P l' int and luues, 75,(k Ki Retunshne N1ortgage lionds and $25jukUKkl principal Reacquisitions and amount of its Series R 11rst and Ref.umhng htortgage Retiremenh,.

--(4.9401 Bondt C. I AP cuinguished as obhgations w nh respect to llalance at December 31,1989.. 181,N92 these two sciies by deixwiting funds into inewe: Sic Reacquisitions and trusts on June 29.19S9. Seties P came due, and was Retirementu j5,0001 retired, on Febrt ary 1,1990. The inteiest income and P""N"I I** #"" * ' # " * "" I " " #'

llalance at December 31,1990,, $176.892 I.reasury issues w dl he used to meet the intereo and principal paymenh of the Series R ohhgation as it comes The minimum sinking-tund prousions of the series due. At December 31,1990, $25 A W X U W K) principal subject to mandatory redemption appregate 52,500JKM) ,unoum of the Series R lionds remains oubtanding but is in 1991,54JKKUMX)in 1992,56,5(XMMW)in 1993, tonsidered eitinguished Ior financial reporting poqxwes.

56,392,5(X)in 1994, and 58,750JKX)in 1995. In case of default on sinking-fund payments, no payments may be made on any junior stock by way of daiden is or otherwise tother than m shares of junior stock) so long as the default continues. If a subsidiary is in arrears in the payment of dnidends on any outstandmg shares of prefened stock, the subsidiary would be prohibited from redemption or purchase of less than all of the preferred stock outstandmg, (c) 1.ong-temi debt maturities and enh smking-tund requirements on debt ountandmg at December 31,1990 for the > cars 1991 through 1995 are approximately

$ 101,541 j kXI, 580.380j i10, 5148,726J K k i, 51 16,807 J N K),

and 5185,974JXK), respectis ely. In addnion, there are annual I percent smking and improsement-fund requiremenh of approximately Sl7,3S0jNN) for iW1 and 1992,517.3(KU K K) for 1993,516,05(UKX) for 1994, and Sl5,1(MUKW) tor 1995. Such sinking and imprmement-fund requirements may be satisfied by the deposa of cash or bonds or by certification of property additions.

NORTHEAST UTILITIES AND SUBSIDIARIES l6TETEst e4%US,CIM ELT*t@ MSI11M"TNWCICITC235$ 2 EEE3M

( 't Ill At >lltltllCll .h ttilCllftfllA t >l 1 't IllllHt Ill .\lltill'lltIltlC)) ' l{tl{tl'(Y _

Capital Common Surplus, 1(etained Shares Paid In _ l'arningwi Total (1housand, of IMlarsi llalance at Januar3 1,1988.. . . ,. 5 543,346 $ 458,550 $ 794.397 $ 1,796,293 Net income for 198L 4... . .. . . . . 233,922 233,922 Cash dividends on common shares-51.76 per share. . (191,257) (191,257)

Preferred stock expenses, net . . . . ,

t 1.924) (1,924) llalance at December 31,1988. 543.346 4 % ,626 837.062 1,837.0.44 Net income for 1989.. ,

209.083 209,083 Cash dividends on common shares-51,76 per share.. (191,258) (191.258)

Preferred stock expenses, net . . (1,4521 (1,452)

Special dividend--discontinuance of gas operations.. .. ,

(101.012) (101,012) llalance at December 31,1989,. . 543,346 455,174 753,875 1,752,395 Net income for 1990.. .. . .. . 211,007 211,007 Cash disidends on common shares-51.76 per share.. (191,851) (191,851)

Issuance of 946.820 common shares. 55 par s alue . 4,734 13,154 17,888 Preferred stock expenses, net . . . 1,319 1,319 Italance at Decemher 31, .1990.. $ 548,080 $ 469.647 5 773,031 $ 1,790,758 ta) Cenain consolidated subshtiaries h,*ve dividend restrictions m1pwed by their long term debt agreements, At December 31,1990, these restrictions, w hich also hmit the amount of retained eamings asadablc for NU common daidends, totaled approxirr.ately 5588.4 million.

NORTHEAST UTILITIES AND SUBSIDIARIES The acconipanying n<nes are an integral part of these finamal uatements.

_~ - _. . .._ . _ . . . . . . . . . . . . _ . . . , , . . , . . - - - .

Notes to Gmsolit iatedFinancial Statements [

J*

1.Sutnntary of Significaul Accounting l'olicies As ut December 31,1990, approsunately Silk A milhon had i

been collected ihmugh rates Principles of Cr.nsolidation Northeast thilities (NU or the company ) is the parent I ces for nuclear fuel burned af ter April 7.1983 are paid to the ctunpany of the Northeast l'tihties system Uhe splena, t he IX)E on a quarterly basis consohdated financial statements of the company melude the accounts of all wholly ow ned subsidiaries. Sigmficant intestments und Jnintly Onned lilectrie Utility Plant Rreimul Nwirar Genciatiin: Compamca ~ CI AP and intercompany trans etions base been climinated in WMEC(l ow n conunon stott of tour regional nuclear consohdation.

generatmg companies. These comp,mies, w ch the spiem's Public l tility Regulation ow nership interests. .ue:

NU is registered with the Securines and lischange Comnusuon (SEC) as a holding company under the Pubhe Utdity lloidmg g gg gp Company Act of 1935 (1935 Act , and u and its subsidiaries are g g. , gg subject to the provisions of the 1935 Act. Arrangements among y 3 gg g '

3 3 the sy stem companies outside agenetes, and other utdities gg gg,3 gp ,,

cos ering interconnections, interchange of electne [cw er, and g g. ) gg sales of utility pnyny are subject to regulation by the I ederal g, gg gg g p Energy Regulatory Commission 0 ERCj and/or the SEC The g y,gn g,y, g3 operating subsidianes are subject to further regulation for rates and other matters by the I ERC and/or apphcable state regulatory commiwinns and follow the accounting policie- 'Ihe spiem's msestments m these compames me secoumed piescribed by the respectise comnuwions for on the cymt> basis Ihe elecuicuy produted hom these tacihties is wmnutted to the part cipants based on their Res enues ow nership interests and b billed pursuant to contrat tual Pursuant to a 1990 I ERC order, bulk power sales have been agreements reclawified from operatmg expenses to operatmg rc.cnues for all periods presented. The reclasutication had no ef fect Millo.mc 3: Cl AP and WMECO hase a 6517 percent loint-on net income. ow nership interest in Mdhtone 3, a 1,14h-megaw att (MW) nuclear pencrating unit. As of December 3l,19%). plant-in-Utility resenues are based on authorized rates apphed to each sersice and the accumulaied prosiuon for deprecution customers use of electricity. Rates can be mereased only meluded appmsimately 52.27 bdlion and 5276.5 milhon.

through a formal proceeding bef ore the appmpriate regulatory respectively, for the spiem's share of Milhtone 1 Ihe commimon. At the end of each accountmg period.The sptem's share of Nhlhiene 3 e spenses is included in the Connect cut 1ipht and Power Company (CI A19 and Western conespond ng operanny expenses on the accompany mg Macachusetts Electric Company (WMI CO), wholly ow ned Consohdated Statemend of income.

subsidiaries of NU, accrue an estimate for the amount of encrpy delisered but unbilled. Scal"ool . CI A P has a 4 06 percent joint -ow neiship interest m SeahnmL 1 and 2 (Seatrook pmject). Seabmok i is a Spent Nuclear lYet Di pos2d Costs 1.150-MW nuclear generating unit that was declaica to N in Under the Nuclea Waste Policy Act ut 19X2, CI AP and commercul operanen on June 30.1000. On Nosember 30 WMECO must pay the Umted States Department of Encip) 1990. the Connecucut Department of Pubhc Utihty Control (DOE) for the dnposal of spent nuclear f uel and high lesel t DPUC) approsed a seulement agreement resohing all iwues radioactise waste. I or nuclear fuel used to generate electncity with respect to the prudence o1 CI AI 's insestment in the poor to April 7, t M3 (prior period fuel) payment may be Seabnok project. 'I be settlement agreement, w hich w as made anytime pnm to the tkst deinery of spent luel to the effettise June 30,1990, penmts Cl A P to es entually include DOE. At December 31.1990, lees due to the DOF foi the 5167 nuihon, or appmumately 60 percent, of its ininal dnposal of prior penod f uel were approximatel) Seabrook i investment in retail raic base. /\s a result of 5148.3 milhon,includmg interest costs of 566.2 milhon. presious w nie offs reflecting the construction cost " cap" l

1 NORTHEAST UTILITIES AND SUBSIDIARIES j MMWCZFS&P"?TTFd* 2EEM&73NECE262ER"MT7M"'TMPE l

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I imposed by a Connecticut statute and the tax benefits and removal costs as approved by the appropriate regulatory associated with the settlement agreement, the additional net agency. Except for major facihties, depreciation factors are write-off resulting from the settlement agreement had no applied to the userage plant in-sen ice during the period. Major material effect on net income. lacilities are depreciated from the time they are placed in sen ice. When plant is retired from service, the original cost of As of December 31,19o0, plant in service and the plant, including costs of removal, les3 salvage,i charged to the accumulated provision for depreciation included accumulated prosision for depreciation. For nuclear production approximately $170,0 million and $2.5 million, respectisely, plants, the costs of remos al. less sah age, that has e been funded for CLAP's share of Seabrook L As part of a pending rate through external decommissioning trusts will be charged to case, the DPUC will detennine when CLAP's allowed those trusts. See Note 2," Nuclear Decommissioning " for investment m Seabrook I will te included in electric rates. additional information.

Seabrook 2 has been canceled by the joint ow ners. The settlement agreement also prosides for the continued The depreciation rates for the sescral classes of electric plant-amortization of CL&P's imestment in Seaback 2 until the in-service are equisalent to a composite rate of 3.6 percent in full retail investment is recosered. without a return on the 1990,3A percent in 1989, and 3.5 percent in 1988.

unamortized balance.

Income Taxes Hydnfuchcr/ Along with other New England utihties, The tax effect of timing differences (differences between the CL&P, WMECO, and llolyoke Water Power (llWP), all periods in a hich transactions affect income in the financial wholly owned operating companies of the NU sy stem, entered statements and the periods in w hich they affect the into agreements to finance and construct transmission and detennination of income subject to tax) is accounted for in terminal facilities to import electricity from the flydro-Quebec accordance with the ratemaking treatment of the appheable system in Canada. The pmject w as constructed in two phases. regulatory commissions. See Consolidated Statet tents of Phase L w hien entered into commercial operation in 19S6, Income Taxes, on page 27, for the components of income provides 690 MW of transfer capacity. On Nos ember 1,1990, tax expense.

Phase il entered into commercial operation at a reduced level.

Phase 11 is expected to begin fmal testing in the spring of 1993 The company has not provided deferred income taxes for in anticipation of operation at full-facihties ratiags beginning certain timing differences during periods when appheable in July 1991. When operating at full-tacilities ratings, Phase 11 regulatory authorities did not permit the recosery of such will increase the capabihty of the Hydro-Quebec neome taxes through rates charged to customers. The interconnection from 690 MW to 2.000 MW. CL&P, cumulatise net amount of income tax timing dif ferences for WMECO, and ilWP, in the aggregate, are obliga:ed to pa), which deferred taxes base not been provided was over a 30-year period, their proportionate share of the annual approximately 5645 million at December 31,1990. As operation, maintenance, and capital costs of these facilides, allowed under current regulatory practices, deferred taxes not w hich are currently forecast to be $116A millim for the ye ars previously provided are being collected in customers' rates as 1991-1995, including $23.6 milhon for 1991. such taxes become payable, NU has a 22.66 percent equity ownership interest, In December 19S7. the Financial Accounting Standards lloard appmsimating $2X.6 million,in the two companies that tFASH) hsued Staternent of Financial Accounting Standards constructed and operate the Phase il facilities Under the tenns No. 96, Arronntingfor income Tata (SFAS 96). SFAS 96, as of the Phase il equity agreement, the equity sponsors guarantee amended, supersedes previously i sued income tax accounting the obligations of other participants that hase below- standards and will be effecthe in 1992. The company expects investment grade credit ratings and receise c impensation f or that w hen SFAS 96 is adopted,it will increase assets and such guarantees. liabilities by approximately $1.0 billion but will not have a material effect on net income.

Depreciation The provision for depreciation is calculated using the straight- Allowance fnr Funds Used During Construction ( AFUDCI line method based on estimatea remaining useful lis es of AFUDC, a noncash cost calculated in accordance with FERC depreciable utility plant-in senice, adjusted for sahage value guidelines, represents the estimated cost of capital funds used NORTHEAST UTILITIES AND SUBSIDIARIES ggggggggggfRh au,wiM7/MaRREM'MTMhhWSh9 air 8dMEMEF > WM

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e to fmance the sptem% comtruction pmgram. These The pmgram establishes perfonnance standants for plants costs, w bich are one component of the total capitalized owned and operated by WMECO or plants in which

. cost of construction, are not recognized as part of the rate WMECO has a hfe-of-unit contract. 'lhetetore, revenues base for ratemaking purpows untjl facilities are placed collected under the WMECO retail fuel adjustment clause in sersice. The ef fective AFUDC rates under the grow me subject to refund pendmp resiew by the DPU. To date, of. income tas method for 19% 1980, and 1988 wcre there has e been no significant adjmtments as a result of 19.7 percent,10.1 percent, and 9,1 percent, respectisely, this prognun.

Energy Adjustment Clauses Phase-in Plam Cl.dl'c Retail electric rates include a f net udjustment clauw As disemsed below, both CI AP and WMECO are phasing -

(FAC) under w hich fmsil fuel prices anne or below base, into rates the recmerable parts of their respecthe Mdhtone 3 rate leveh are charged or credited to emtomers. imestments. Thew plam are m comphance with Statement of Adminhtratise pnweedings are required each month to Fmancial Accounting Standaids No. 92, kcxulaird appmvc the FAC charges or credits proposed for lla following laterpmcr &commne for /% amin /Wns.

month. Monthly FAC rates are aho subject to retroacthe resicw and appropriate adjmtment by the DPUC cach quarter CIM As allowed by the DPUC, CL&P is phasing into rate after public hearings. base its allowed im estment in Milhtone 3. 'the DPUC has

pmvided for full delened eamings and carrying charges on the The DPUC contmues to dhallow deferred fossil. fuel portion of CI Al"s allowed investment in Milhtone 3 not  ;

accounting. The DPl'C pennits CI AP to reemer prior included in rate base. 'l hrough December 31,19% CI A P deferred fossil-fuel balances w hich at Decender 31,1990 had placed into rate base 51 A bilhon, or 80l ercent, of its amounted to $46.1 million, m er a remaining period of allowed imestment in Milhtone 3. The remaining five and a half years, without caming a acturn on the 5351.3 million, or 20 percent, of Cl APN allow ed investment outstanding balance. in Mdhtone 3 h to be phawd into rate base in tour 5-percent steps beginning in 1992, The amorttiation and recovery of i Beginning in 1979, the DPUC appnn ed the use of a generation deferrals through rates began January 1,1988 and will end no utilization adjustment clause w hich les ch the ef fect on fuel later than Decemlvr 31,1995. As of December 31,1990, costs camed by sariatiom from a specified composite nuclear $159A million of the deferred retum. indudmg carrying

, pencration capacity factor GO petcent elfectn e January 1, lWO). charges, has been recm cred, At the end of a 12-month period ending July 31 o(each year, these net s ariatiom f rom the amounts included in base. rate Wall:CO: Under the tenm of the onginal Milhtone 3 phaw-in >

cost leveh are retunded to, or collected from, customers m er rate order, WMECO was required to apply to the DPU for the subsequent Il rnonth period beginning in September. resenue increases sufficient to recover the Milktone 3 Should the annual nuclear capacity factor fall below imtalknents as they were to tv phawd in. On June 29,1990,

$$ percent.CL&P would hase to apply to the DPUC for the DPU allowed the fifth of the equal annual imtallments of-permission to recmer the additional f uel expense. During the the "used and usef ul" portion of WMECO% investment in period from August 1,1989 to July 31,1990, the compmite Milhtone 3 to be added to WMECON rate base. At nuclear generation factor for the sesen operatmg New England December 31,19% 5353.2 million of WMECON imestment i nuclear units in w hich CI A P has an ow nership interest w as in Milhtone 3 was in rate base.

74.8 percent, resuhing in an additional net fuel cost sas ings

. of appnuimately $18 4 milhon, which h bemp refunded Hepinning in 19S6, the DPU has pennined WMECO to

- to ratepayers. recover the portion of in Ahlistone 3 mvestment representing 4 the amoum currently detennined to be "unuseful" by the DPU WMl:CO: As pennitted by the Massachusetts Department of (551.8 milhon at December 11,1990, excluding the Pubhe Utikties (DPU). WMECO defers the ddference applicable equity AFUDC, mer a ten year period, without between forecasted a'nd actual fuel cmts until it is recm ered earning a retum On June 30,1957 WMECO aho began or refunded quartedy under a retail fuel adjustment clause. recmering the deterred return, includmg carrying charges on Massachuwits law requires the estabhshment of an annual the recoverable but not yet phawd-m portion of its investment performance pmgram related to fuel procurement and use. in Milhtone 3. Thh recovery h takmg place mer a nme-year NORTHEAST *JTILITIES AND SUBSIDIARIES MBE,WTaGMT0ZRmmmma*mKamrsETEammMemMErmelham

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s ,

perial. As of December 31,1940, $28.9 million of the defened p ;g gggiq return, including carry ing charges, has been reem cred- Year I. cam I.eam flhousands of Dollars) 1991.. $ M,0no 5 24,800 2.I. eases joy) gyg 3933 199L 890 13Ao CL& P and WhiliCO has e entered into a capital lease 1994.. 6 o 8.6 m agreement to finance up to $530 million of nuclear fuel for 1995..- 6Ao 7,l m hiillstone I and 2 and their share of the nuclear fuel for Af ter 199L J.500 49,2 m h1illstone 3. CL&P and Wf.1ECO make quarterly lease Fuiure minimum 1 case pay ments .. 72,500 }l 22.4m payments for the cost of nuclear fuel consumed in the reactors (based on a_ units-of prafuction methat at rates im amount represenung which reflect estimated kilowatt-hours of energy '"l# " '" 27 # 00 provided) plus financing cmts associated with the fuel P#"' ' "I"* "I I"'"'#

["

in the reactois. Up(m permanent discharge from the r s reactors, ownership of the nuclear fuel transfers to CL& P P s ak of f uture nuclear and WMECO- tuel lease payments _ 274.800 Total .. 5319.500 The system companies ha,e aho entered into lease agreemenn, some of which are capital leases, for the use of substation equipment, data processing and office equipment, vehicles, nuclear control room simulators and office space. 3, Nuclear Decommiwioning The provisions of these lease agreements generally provide for renewal options. The following rental pay ments have A 1959 decommioioning study concludes that complete and been charged to operating expense:

immediate dismantlement at retirement continues to be the most viable and economic method of decommioioning the three Millstone units. De estimated cost of decommissioning Cap.tal i Operating . .

the system s ou nership share of these units is $722.7 milhon

i. car I. cases 1. cases in > car end 1990 dollars. A 1987 Seabrook decommissioning 1990.. $ 133,318,000 $ 24,526,000 .

1989,.

study aho coni.mus that complete and immediate 127S02fXK) 29,274,000 1988,, 27,298,(XX) dismantlement at retirement is the most viable and economic 138,065,(XX)

_ methm! of decommissioning Seabnok 1 The estimated cost of decommissioning CL&P's ow nership share of Seabrook I is

$11,3 million in year-end 1990 dollars. Decommioioning Interest included in capital lease rental payments was studies are res iewed and updated perimlically to reflect changes

$25,889,000 in 1940, $31,177,000 in 1989, and $29,5? 00 in decommissioning requirements, technology, and innation.

in 1988.

CL& P and WMECO have established independent Substantially all of the capitai lease rental payments were made decommioioning trusts ior their portion of the costs of pursuant to the nuclear fuel lease agreement. Future minimum commissioning hhlistone 1,2, and 3. CL&P's portion of lease payments under the nuclear fuel capitallease canno' h the cost of decommissioning Seabrook I is paid ta an reasonably estimated on an annual basis due to variations in independent decommissioning fmancing fund managed by the usage of nuclear fuel. the state of New llampshire.

Future minimum rental payments, excluding annual As of December 31,1990, Cl.&P and WMECO have nuclear luel lease payments and executory costs such as collected, through rates. $112A million tow ards the future property taxes, state use taxes, insurance, and ma'mienance, decommissioning costs of the Milhtone units, of whict. ,

under long-term noncancelable leases, as of December 31, 5H5.3 million has been transferred to external decomminioning ,

1990, are approximately; trusts As of December 31,1990.CL&P has paid $96 thousand i

1 NORTHEAST UTILITIES AND SUBSIDIARIES WRT?TWMMFAMD(dG'.h%28@1%w%BM M

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if scabrook I % decomminioning financing fund. 'the The following table represents the plani funded status  !

decommiwioning innts are dnclosed on the Consolidated reconciled to the Consolidated llalance Sheet:

llalance Sheet ut cost, which approximates narket -- - _~_ _ _ _ - . _.-

At Decemimi 31, 1990 1989 Although a substantial portion of the cunent estimated total

. decommiwioning costs has been appros ed by reputators ^"""'"L"#d k"C hi "M dN""4 F agencies and is reflected in the depreciation expense of CIA P "i, ['E aad WMECO, management belies es that decomnuwioninF M39,xnau ti or s esied bencha ai recoveries must be increased in order to colkit the full th ember 31,1989.. 5525.05t> 5471.187 projected costs of deconuniwioning.

Payected benefit obhganon . 5792,MIM $72n.994 1.ew Market value of

4. I'ostrelircluent llenefith plan awen.. Nh5,497 874,792 Market salue m ewcw of pro;ected The company's subsidiaries participate in a uniforin benefn obhranon. 72,679 153,798 noncontributory defined benefit retiiement plan cos ering Unrecognized tranunon amount- <2H Nv7) (30, A 37 all regular b) stem employees. llenefits ute based on scars Unnvogni/ed prior setuce tosto 7,76N -

UnrecognittJ net gam.. (42,57,4 (14nbO71 of service and employees, compensation during the last An rued penuon awei < habmt) i .. 5 M,977 9 17.646i h,ve years of employment 'l.otal pension cost, part of

- -~

which was charged to utility plant, approximated $11,275,(Kio '

in 1990, $14.537,fKK)in 1959, and 517,214JXW)in 1988. The following actuarial awumptions were used in calculating the plan's ycar-end f unded status:

It is the policy of the subsidiaries to fund annually an At thember 31. 1990 1989 amount at least equal to that which will 3atisfy the I h '*""' '"' # ~ 909 "04 requirements of the Employee Retirement income Security Act and the Internal Resenue Code. Pension costs are C"" ' P'"' d"""!P "'F "'""'"

'"'#-- 73 75 determined using market related salues of pension assets.

Pension awets are iinested primarily in equity securities, bonds, and insurance contracts.

I" " ""

• P#"""" "# '"*P"" O '" # d"#'

provide certam health care and hfe inwrance benents to rent emNoyen e cost of pros ng thow Nodh was The components of net pension cost are:

appmumately $1l.133JKK)in 1990. 59,6183NM)in 1989, and for the Years Ended $7,3333NM)in 1988, The company presendy recognizes health December 31, 1990 1959 19k8 care benehts pnmants as incurred and provides for hfe dhousands of Doumi .

msurance benefits through premiums paid to an insurance Service cost e $30,459 U l .02n 0 1.893 comp,n '

Interest mst 64,352 61,415 59.715 Return on plan awets . 10,49N (160.750) (M4.825 )

(94,0.441 82,x52 in December 1990, the FASil iwued Statement of Financial

- Net amortization . 10.431 Net pension cost.. $11,275 514.537 517.214 Acmunhng Standuds No.106, Dnploycri Arromitinefor Pmtretircinem Bemfits Other Than Pensiorn (SUAS 106).

. 'Ihis new standard requires that the expected cost of these I,or calculating pension cost, it.e follow m.g awumpnons beneh.ts must be charged to expense during the years that were used:

etnployees render service. Thn is a significant change trom

' For the Yean Ended the company i current policy of recogni/ing these rosts as December 31, 1990 1989 19xx _

incurred. $FAS 106 w ill become ef fectise in 1993. CL Ap and Dncount rate . 9.09 9.54 9.59 WMECO eysect to petition their regulators for recovery of Expected long tenn rate these cosh in future rate proceedmgv While CL AP and of return.. 9.7 97 9.7 WMECO eyiect to recoser these costs, should the timing of CompensatiotVpnigteuion o d Ar km & xmd M mch m% k mys would expect to record a regulatory awet for the di0erence.

NORTHEAST UTILITIES AND SUBSIDIARIES

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S. Short Term Debt rnenues were approximately $632.8 nuthon. At December 31, 1990. PSNil had total assets of apprmimately 52.5 billion, The system compades has e s arious credit lines totahng most of which k utility plant, including a 35.6 percent 5400 mdlion. Of this amount,5350 million is as ailable to ow nership interest in the Seabrook project.

NU, CLAP, and WMLCO through a res oh mg. credit agreement with a group of 1i banks The maximum bonowing The Plan of Reorganiiation limit of Cl.AP under the apretment is $350 milhon less Af ter an umuccessful edort to restructure its finances in amounts bormwed by WMECO (not to exceed $105 milhon) 1987, on January 28,1988, PSNil filed a voluntary petition and by NU Inot to eseced $100 milliont NU, CLAP, and for reorganization under Chc er 11 of the llankruptcy Code.

WMECO may borrow funds on a short-tenn res oh my bash in late 1989, NU reached agreement with the of hcial using either fixed-rate loans or standby loans. Fised rates committees representing PSNil's unsecured creditors and are set using competithe bidding. Standby loan rates are evuity secunty holders, and the holders of the majority of based upon seseral alternative sanable rates NU, CLAP, PSNil's third mortgage bonds on a jointly spomoted plan and WMECO are obligated to pay a facility fee of (Plan) f or NU to acquire PSNil. On April 20,1990, the l

,1875 percent nct annum on their proportionate share of llankruptcy Court continued the Plan. On April 30,1990, the comnutment At Decesaber 31,1900, there were no the incumbent PSNil directors were replaced and an NU borrowings under this agreement. subsidian, Northeast Utihties Sers ice Company, began merseeing the operatioas of PSNll under the tenm of a The remaining 550 million is as ailable to the NU system management services agreement.

companies through a resolving-credit agreement with a group of sesen banks. Under thh agreement, the NU Under the twontep approach contemplated by the Plan, system companies can borrow in the appregate an amoent PSNil will emerge f rom bankruptcy in Step 1 as a free-not to exceed 550 million. Loans under this agreement are standmg. independent company subject to a contractual on a short term revohing basis in the torm of either onogation to be acquired by NU tthe second step of the Plant Eurodollar Loans based on the London interbank Of fered Step 2 takes place w hen regulatory approvak and all other Rate, plus 3/S of I percent, or as Alternatise Hase Rate conditions are sathfied. In connection with Step 2, PSNil Loam at the greater of the prime rate or 1/2 of I percent will become a wholly owned subsidiary of NU. PSNil's mer the Federal Funds Effecthe Rate. This agreement 35 6 percent ownership in Seabrook I will be tramferred will espire on August 25,1993 unless extended, on an to North Atlanhe Energy Corporation (Nonh Atlantiet a annual bash, for a maximum of four years beyond the newly formed company that will be a wholly owned espiration of the initial three-year term. At December 31. .ubsidiary of NU. -

1990, there were no bormwings under thh agreement, The Rate Agreement ,

The amount of short-term borrowings that may be incurred The rate agreement, which prmides the financial basis for the by the NU system wmpanies are subjct to periadic apprmal Plan, was apprmed by the New ilampshire Public Utihties by the SEC under the 1935 Act. In addition, the charters Commhsion t NilPUC) on July 20,1990. Tw o appeals of the of Cl &P and WMECO contain prm isions restricting the NilPUC's decision base been Gled with the New llampshire amount of short-term borrowings. Under these restnctions, Supreme Court and a decision is espected in March 1991, as of January 1,1991. NU, CLAP, and WMECO were authorized to incur short-tenu borrowings up to a maximum The rate agreement proudes, among other thmps, for seven of $135 million,5300 million, and 593 million, respecthely. successhe annual rate increases of 5.5 percent per year. The first rate increase, w hich wem into effect on January 1,1990, is being held in escrow. Part of the first rate increase will be

6. Punlic Sersice Company released at Step 1, with the remainder being released at Step 2.

of New llampshire (PSNil) As a result of delay s in the reorganization of PSNil, the second 5.5 percent rate increase, triginally scheduled for PSNil, the largest utilny in New flampshire, supplies electricity January 1,1991, will be delayed unul PSNH is reorganized. In to approximately three quarters of the state's population. For addition, the rate agreement contemplates that after the merger the 12 months ended December 31,1990 PSNil operating anJ the transfer of Seabrook I to Nonh Atlantic, PSNH and NORTHEAST UTluTIES AND SUBSIDIARIES hmueGT"ENNEETh;mdgmmmpudirghwmmgamwh e my

Neah Atlant;c will enter mto the Seabrook Power Contrait quartet of 1991. Wele management remams optunktic alout ContractL l'ndet that Contratt >$ Nil will be reymred to llw uitm ate suucu of the acquiution,linanting purt'O' the o pacity and output of Seabnot I for the f ull arrangements base not been temple - anti regulator) tenn of Seabuel IN operatmp license and to pa) North apprmah are not awured AtlanticN wst of senice.

Heimburwment of Umts and 'lermination of ine Merger Regulatory Appresal in auoidante with the metper agreement.1"21, with certam On December 20. i+M. an admmi trathe law juJpe t Al h cuepuuns will teonbutw Nll for its reasonable out of pos Let of the i 1:RC hsved t detidon reu nuncialmp approsal of own. up to a maumum of $45 mdhon. int uned in toimection NtiN aupouhon of I % H. subjet t to ses cial t ondaions with the PSNil bankruptcy and merger. Iloweser NU wouki The pruisipal(onditnin sinohe ttatniniuion swucs ' hie not be entitled to sottiicirntsitw.nent il the riier rer terrinitates transmiwion arrangemenu as outlit >ed in the Alh det nion under certam cornhhont 't hrough Detember 31.19% NU do not diller upmhcant') f rom NU s ongmali1 RC h.o eq cnsed approsimately 5 42 K milhon of costs awociated applicanon. Nll eyvcn a lmal I l l C decidon to be iuued with the atqukition of PSNil.

in the spong of 1091.

In a&huon. it the merper apicement n tenninated by PSNil.

On Desember 20.19% the $1 C appnard NLPs acquiution of PSNil must pay NtI a temunanon lee of $25 nuthon in PSNil. The St C f ound tha, the atquhinon satnlied appheable certain cirt unntanses 11 temunation i a result of Nt Ps brea6 h standards of the 1935 Act and tlut tl e iwucs before the Sir of the merger apteetnent, then NU must pa) PSNil a would imt he !sther des eloped in a hearmy, Auordmply, the tennir anon tcc of $25 nulhon.

St C demed mten enon' tequ wh lor i branny. 'I w o imen enon base peutioned the Si C for a reheanny and the $1 C dethion

'.as been appealed to the (?mit d Stan s Court of Appeah. The

7. Commitments und Contingencies Sir has resen ed junsdwtion m er u no'n hnancingi loi w hhh the rewrd w as ir. compte e. Construction Program The ionstruction program k subject to penahc tesiew On Nm en ber 13.1990 New llamp+hne Yankee (NilYL and ses hion Actual wnsuuttion eysendnures may sary the dn nion of PSNil responuble f or manarmy the Seabnok f rom suth esumates due to f at ton such as res ised load project, filed apphcutions with 0 e Notleur Regulator) estimates,innatian, reused outlear safety regulanom.

Conuniwion (NRC) regarding amenomenh to the planti delay % ddhculues in the htenung protess, the as adabihiy operatmp bcense.These amendm nu will permit Nonh and cost of updal, and the pranony of tunely and adequatt Atlantie to pun ha,e PSNilN mtet 31 m Seabnok i and rate rehet by reputatory mmnuwions as wcil as actiom by authori/c North Atlantic linerp3 S :n :ce Corpor ation, a newi) other regulatory bodict funned wmpany ' hat w til be a ahoh! ouned subdth.uy of NV. to replace NilY as agent for tt e Seabank jomt ow nen in lhe sy stem companies cunently forecast comtruction the management and operanon ot 0 e Seabnok project. In expendoures tinsluding Al i DCl of 51.44 bdlion f or the adJition, the replacement of NilY as manager / operator of y ears 1991-1995, incimhny $322.2 nulhon for 1991. In the Seabnok projett h subject to St C appnu al under the ainnon. the sy sten. wmpanies esumate that nuclear f uel 193% Act. An appheaoon w;n bled wah the SILC during requiiemenh will be 13113 milhon f or the y ears 1991 1995, January 19VI. mcludmp 521 O milhon for 1991.

NU has presented euensn e mfonnat on about the bencha Milhtone 2 of the PSNil acqukinon in in fihnps unh regulators Milhione 2 n an %2-MW nuelcar rencrating un:t completed floweser,a number of paroes melud ip other New I:ngland m 1975 and wholly ow ned by the NU s3 stem utihties and pm ernmental apenues, h n e c hallenged the acquanion. In adthnon other wnditit ns related to the Corrosion, pining, and dentmp e! tubes within steam aiquisition has e yet to be resobed. M mageniciit a projecting. pener.not awetnbhes has e beeri problena tound at numerous for planning purpmes, that PSNil will be reorganized m Apul nuclear undt 'ihese pniblenn were fint identified at 1991 and the acquisition completed by the end of the thod Milhtone 2 in a 1977 outare. Smic then. tne uniti steam NORTHEAST UllLITIES AND SUBStDIARIES C X X 2 M M X L3 M R M is5 EX M Z I1'M M C 2 M M G E M IC2 2 M O SE M Z G M G M M

- - . - _ _ _ - - - - - - - - -. -. . .=.

. s e . {

renerator $ptem has been the subject of regular iropertions Nutleur linurance Contingencieh and extensne repairs in light of the umiinuing trpairs and The Price Anderson Act currently limits public liabaht3 from toncerns about ioture gyrtonnance. the Nti sptem curicntly a smple intident at a nu6 lear gxmcr plant to $7.M bdlion.1he plans to replace Mdhtone 2% steam pencrators in lW2. f ast $200 tmilion of habihty would be punided by

! This uould inuihe a f he month outage at a total uwt of pur6 hasing the maumum amount of commercially asmiable approsituately $200 inillion. That amount m61udes Al 1:DU msurance. Additionali,merage of up to a total of $7.2 bilhon but does not intlude the cost of replatement lumer. would be prosided by an aucumeni of 563 milhon per Conumtments base been made to procure spare steam modent,in ied on eat h of the i15 nude.n unit * (unently i generator subauembbe% and plans are being des clopoi to lh ensed to operate in the Umted Statet subject to a prepare the site for replacement, masimum auessment of 510 rnillion per incident per g notic..r unit in any 3 cat,in addinon. if the sum of all pubhc

finirrmmental $lattern habibly d.nnn and legal unts arising from any nudcar t j The NU spiem n subject to regalation b3 federal. staic. incident euceds the mnimum anmunt of f mancial and local authonoes with respect to air and u ater quaht3 piolet tion. em h reactor operator can be aucued an i and the dnposal of losic substant es and hanodous and addit onal 5 percent, up to $3.2

milion or 5362.3 nullion in solid wastet 1he tumulatne long term economw unt tolal. for all 115 nudcar umit le maumum asscoment is apact of m$recingly stringent ensimnmental requirements to be adjusted at leet ner) fne > cars to retic (1 inflanonary cannot be estimated ilownci, to onnply with such t hanget liased on Cl Al"s and WMITOi owneo hip I

requuement% the splem nwy inc ur urinhcant additional interests in the ihree Milhtone umt% und Cl.A P%

, crats in connet tion with the genetation and transmisuon ow nership interot m Seabrook 1. the Nt! splemi of electricrt) and the stotage. transportanon, and dnposal masunum habiht) would be 517Al nutiion per meident. In

of by products and wastes The sptem n e aho encounter a&htion, through CLAlW, and WMl

U(n pow er purt hase dpnitwantly increased costs to remedy the em nonmental (ontrasis u uh the four Yankee regional nudear generating

} effects of prior dolvsal practact Thew changing companies the Nt! sptem would be tesponuble for up to an

, enuronmental requirements could funder the wmtruction additional 567 N milhon per incident. Pa)ments for the Nt1

, of new fouil f uel pencrating umts and could requue splemN ow nership interest in nudear penerating f acilitin ntensive and (mtly modifications to the sptemi niqing wouhl be knuted to a maimum of 537J million per hy dro, nudear, and louibfuel pencrating umts The mcident per year.

sptem may ahn face upnificantly mcreawd wsts for l work centers and other facihties as a rnnit of Imutance has been punhased hom Nuclear Electric cmironmental reputationt Imurance lanuted (Niilla to cos cr: 4il certain , tra costs incurred in obtaming replacement power durmp a prolonged The cuent of addnional future enuromnent d deanup msts accidental outage with inpect to Cl A Pi and WMI CON h not estimable due to lactors such as the unknow n maganude ou nerslup internts in Mdhtone 1. 2. and 3, and CY, i of powible contammation, the pooible eff et,is of future and tii) the cost of repair, replacement or decontarnination ,

lephlation and regulation, the pomble ef fects of or premature dewmmiumning of utiht) property rnulung technological thanges related to f utme cleanup. and the from imured oaunences at Milhtone 1. 2, and 3, Seabnel 1.

difficuh) of determining f uture liaNhty. if any, f- %c CY, MY, and VY. All mmpamn inced with NEll. are deanup of uto at w his h the sptem he or may be dottnate I subject to retroacth e aweuments il lowes escred the l a potential responuble party by the l'nited States accumulated lunth avadable to Ni IL The maximum l Ernimnmental Protection Apency, the Connecticut potential asscuments agamst CLA P and WMECO with Depanment of Emironmental Protet hon, or the respect to lowes arbing dunny cunent policy years are Mawachusetts Department of Emironmental Protection, apprmimately 5116 nothon under the replacement power in addition, the spiem cannot ntimate the potential habihty polines and 511.7 milhon under the property damage, for future claims that may be brought apaimt it by pin ate decontamination and decommiwioning policies Ahhough

partiet flowner,wmidennp known txts shtmp la % U1 AP and WMECO hee purchased the hmits of coserage j est possible imurance and'or rate treatment, management cunently e adable f rom the con entional nuclear imurance does not behese such matters uill hee a rnatenal ads erse pooit the cmt of a nuclear inaJent wohl exceed mailable cf fect on the sptem's fmanaal 1x sinon insuranc" pros cedt I

I

NORTHEAST UTILITIES AND SUBSIDIARIES l EEiW MM7dMGUJES M M S$8M G M KTffM WEP82R fRIEMM EL% M l

n

t j

i In addllion,insurafice has been purchased froin Arneticati f i Nudear Insurers /hiulual Atomic linergy I iability l tinderw titers, aggregating 52m million on an industry basis, i for roserage of work er claims. All companies insured undet j this coverage are subject to ictrospective aucumenh of

$3.19 rnillion per tractor. 'the masimum lvtential aucuments against CI A P and WhilTO v ith reslwet to ,

lowes arising during the current policy Ivrial are  !

apprusimately 511.M million. l l

t l'inancing Arrangements for the Regional Nudear l Generating Onmpanies  !

1he ou nets of CY, including CI A P and Whilf0, has c l guaranteed their pro rata shares of 514.7 million 17 percent  !

Series A Debentures.1he guarantees of Cl AP and WMITO aggregate 56.N million.

Cl AP and WMl!.CO believe that the regional nuclear generating companies w ill require addnional esternal -

financing in the nest ses eral3cars for construction expenditures, nudcar fuel, and other purposes. Although the w p in whhh each regional nuclear generating company wdl  ;

attempt to finance these expenditures have not been i determined, CIA P and WMI.CO eyrct that they may le b usked to proside direct or indirect financial support for one or more of these companies.

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NORTHEAST UTILITIES AND SUBSIDIARIES [

?

,,..m.~ ,m_,, _-.~,.m _ ~ _ - , . - - ~ _ - , - _ . -

i

r

.\cIn trd Ghuohdated i 1nannaMhaa - g 150 1989 1988 1987 (Wusan.h or I Aillan, e urpi irrieninc's urut stiai, 04:41 llalance sheet Data:

Net Utihty Plant-Continuing Operatio,n . . . . . 55.265,16N 55.237.805 $ 5.267.629 55.229,242 Din, continued Cas Plant. . '54.5K7 237,903 Total Aucts.. .. . 6.601.371 6.523.202 6.764.60N 6.663.794 Total Capitalization (a).. . . . . 4,955.015 4.954.083 5.123.504 4.956.0M0 Obligatiom Under cepital lcases (a) . 319.54N 341.24o 410.352 432.714 income Data:

Continuing Operatiom:

Operating Res enues (b),. . 52,616,319 %2.473.571 52,268,607 52.038.554 Net income . . , . 211.007 203,225 224.844 214.529 Earnings per Common Share.. . . . . $ l 94 5 1.87 5 2.07 5 1.97 Diwontinued Oas Operattom: ,

Operating Reunues. . . 5 - 5 124,229 $ 2(0.243 $ 202.M 16 Net income - . . . . . .. . . - 5.h58 9,07N 14.616 liarnings per Common Share.. 5 - 5 0.05 5 0.0X $ 0.14 Common Sharc Data:

!!.arnings per Share . .

$ 1.94 5 1,92 5 2.15 5 2.11 Dis idenm per Share . . . .. .. 5 1.76 5 1.76 5 l.76 5 1.76 Payout Ratio (91.. . ., . 00.7 91.7 S t .9 83.4 Number of Shares Outstanding-. A g erape. . . , 109,003.NIN 108.66u.106 108,664,1(ki 10X,669,1(Mi Market Price-liigh ... . . . . ,, .

522 % 523 523 % $28 Market Price.l.ow. ... . . . . .. . $ 17% SlHW 518 % 518 Market Price-Clming Price (end of sear), . ,. .. .. . 520 522W $ 19% 520 %

llook Value per Share (end of yeau.. . .. 516.34 516.13 516.90 $ 16.53 Rate of Return llamed on Average Common Equity (9 ).. . 12.0 11.8 13.0 12.8 Disidend Yield (end of year)( t ) . . . H.N 7.8 8.9 8.7 Market.to-Ilook Ratio (end of Scar).. .. 1.2 1.4 1.2 1.2 Priec Earnings Ratio (end of year).., 10. I 1.7 4.2 9.6 Capitalliationt (a)

Common ShareholJers' Equity. .. $ 1,790,75X 51.752.305 51,837,034 51.796.293 Prefened Stock Not Subject to Mandatory Redemption.. .. 394.695 394.695 344.695 291,195 l Preferred Stock Subject to Mandatory Redemption . 176.892 181,892 t i l.K32 205,832 long-Tenn Debt.. ..

2.,.5_92_.670

_2.625.101 2.829,943 2.662 _.76_0 Total Capitahration.. . 54.955.015 54.954.083 5 5.123.5f4 54.956.080 (a) Includes portions due widun one year.

(b)The reported amounts reRect the reclawincanon of bulk puer sales transas tions hom operatmp eywnses to oper aung revenues.

See Note 1 of Notes to Consolidated l'inancial Statemenit t

NORTHEAST UTIUTIES AND SUBSIDIARIES 1.1 '. _ .( W .2

.1 . E.' . ?! *.1 T'-. .T.. . ' %M L

_ _ , ~ . _

. _ . - _ . _ . _ _ . _ . . _ _ _ _ _ _ _ _ _ _ _ _ _ . _ _ _ _ _ _ - ~___. -.

l I-l 1986 1985 1984 1983 1982 198i FNean h of I Aillan. curpt prtientnc, anJ shore daimi j l

l 55,120,812 55,204,687 54,650,42h 54.122,692 53,570,710 13.175,641 224,581 214,I I$ 204,i87 192,N61 183,322 166,959 b,299.7$5 6.147,720 5,507,(40 4,957,927 4,309.36N 3,940,144 i 4,743,914 4,681,995 4,319,4N - 3,954,569 3.465,345 3,189,493

)

441,183 440,5N7 392,593 337,636 286,603 14,563

. ~ .-.

52,006,842 51,969.225 52,030,557 51,746,425 51,641,30N 5 1,554.081 171,234 277,76N 276,615 209.905 143,040 86,503 5 1.58 5 2.62 5 2.73 5 2.24 5 1.67 5 1,17 5 203,814 5 220,010 5224,430 5238,999 5 224,447 5 i H l,268 10,705 10,773 12,323 11,M 3 N,202 8,6l$

$ 0.10 5 0.10 5 0.12 5 0.13 5om 5 0.12 5 1.68 5 2.72 5 2.85 5 2.37 5 1.76 5 1.29 5 1.6N 5 1.58 5 1.4H 5 1.38 5 1.28 5 1.18 100.0 58.1 51.9 SN 2 72.7 91.5 108,352,517 106,221,131 101,398,235 93,497,945 M5,777,230 73,7H3,201 52x% 518 % 5 14 % 5 13 % 512 % 59%

$ 17% 513 % 510 % 511 % 5 x% 5N 524 % $ 17% $ 14% $ 12% 512 % 59%

516.24 5 16.21 515.07 $ 13,84 512.96 512.83 10.4 17,4 19.8 17.8 13.8 9.9 6.4 8,9 10.4 11,3 10.6 12.9 1.5 1.1 0.9 0.9 0.9 0.7 i 4.4 6.5 5.0 5.2 6.9 7,1 3

51,7651N0 $ 1.738,871 51,575,705 51,361,724 51,159,698 5 1,013,205 291,199 291,195 291,195 291,105 291,195 291,200 166J 32 185,833 186,978 ikK.54) 104,461 66,601 2,520,797 2,466.096 2,265,526 2,i 13,I03 I .910 N I l N I 8.,887 54.741,914 54.68.5,995 $ 4,310,40 8 53,954.569 53,465,395 5 3,189,493 NORTHEAST UTILITIES AND SUBSIDIARIES 43 " ' ~ -

: . ~ . ' .- T- ..

_ , . . , - ~ _ . . _ . . _ . - . _ . . . - _ . . _ _ - . _ . _ , _ _ _ . . . _ _ , _ . _ _ _ . - _ _ _ _ _ _ _ . _ _ _ - - . _ _ - _ _ _ _ _ _ . - . _ . _

- - . - _ . _ ~ - - _ _ _ . - . . - _ . _ - . ~ . . --- - . - - . . _-.-

g ( o lll\tilltl<llt <l hitllt'lllClll\ II{ QlltilICIl\ l'Ifitillt inll Utilti ( { IflglHtlIICtl) l l'or thejjuarter l'.nded Mart h 31 Jur$e5 September 30 December 31 Obow.anits or Donars. cu cp per sh,uc datai 19Wh Operatmp Resenun (a).. 5 6N0.522 5 603.N01 5 675,307 5 656,6N9 Operating income.. , 5109,021 5 N6.962 5 105,681 5 7N,M9N Net Income. 5 66.109 5 40,67N 5 65,M96 5 38,324 liarning< Per Common Share.. . 5 0.61 5 0.37 5 0.61 5 0.35 19N9:

Continuing Operations:

0;rrating Rnenues (a).. 5 629.431 5573.797 5 61 M.924 5 651,419 Operating income.. .. . . 5105.0N 3 5 88.199 5 103.646 5 8N.177 Net !ncome.. . . . 5 60.758 5 40,490 5 55,91N 5 46.059 Earnings Per Common Share.. , 5 0.56 5 0.37 5 0.51 5 0.43 Discontinued Gas Operations:

Operating Resenun. . . .. . 5 85.780 $ 3M.449 5 - 5 -

Operating income.. .. . 5 12.72H 5 41 5 -

5 -

Net income (Loss)... . . . .. 5 9.341 5 (3,483i 5 -

5 -

Earnings (less) Per Common Share.. .. 5 0.08 S t0.03) 5- 5-ta)The reported amounn renect the teclau.ification of bulk [wer <. alt. transachons Imm ojrrating npenso to operating rocruet See Note 1 of Notn to Consolidated I mancial Statements t

i Consolidated General Operating Statistin t

1990 1984 1988 _1987 1986 Sptem Capability 41W (a),. . 5,909,6 5.963.7 5.737.7 5.5M.5 5,972.8 System Peak Dernand41W. , ,

4,753.9 4.h58.0 4,883.3 4,590.5 4.241,5 Nuclear Capacity-M W (a) , , ,

2,459.5 2.397.1 2,590.4 2,420.2 2,6H l .4 Nuclear Capa,.ity Factor N )(a).. , 72.2 71.2 79.2 74.4 75.7 Nuclear Contribution to Total Energy Requirements (% )(a). 57.5 56.x 68.5 6M.5 67.1 (aiIncludo company enuticments in regional nuclear generaung companin net of capacity sales and purchases.

NORTHEAST UTILITIES AND SUBSIDIARIES illilllMKYmE 1

t

i

('tellwllltifCal$.lCtIlIt UptTtilllit' .hltill\lh \

l 1990 1989 1988 - 1987 198ti Sourt e of 1:lecirle 1:nt rg3 :

(k% h-millionu in) I Nuclear-Steam.. . . . . 17,724 17,119 19,116 1 N.019 16.624 i Fowil-Steam. ... . 6,M29 8.956 s.hos 7,912 9.04s i lly dro-Com entional.. l.174 956 N2$ bf>6 845 i llydro-Pumped Storage , . 1,250 1,194 1,11i 973 950 Internal Combustion . 1I 77 84 39 33 ,

linergy U4.1 for Pumping. ( 1,6MN ) (l.629: tI.MP4 (l.322) t l.29))  !

Ne: Gcneration.. . 25.300 26.673 2 k.462 26.4s7 26,257 i 1

Purchased and Net interchange (b t. 6,249 5.178 2.456 2.5k$ 3,32x  !

Company Use mid Unaccounted f or. _ fl,93NI (2.304) 42.33.4 (2.0x2) (2,0$0) l Net linergy Soit 29,611 29.547 28.5NS 26.990 27.535  !

- _ . - -_ i Res enuest Ithousandd l

l. Reddential. . . . $ 93N,032 1. H98.471 5 838,011 $ 780,866 5 741.N38  !

! Commercial . . 788,478 734,709 673.819 630.678 602.924 l l Industrial.. . . . 410,125 391,661 366.$ 17 353.394 350.310  !

Other U!ihtics (b) . 346.ON7 301.045 227,653 203/42 234.222 [

Streetlighting and Raihoadi, . . 37,195 35,499 33.151 32,31 M 34,741 42,N82 }

Mix elhmeous.. . . f4.282 82,169 (18.146) ( 2.4td ) .

Total F.lectrie .. . . 2,562,799 2,425,667 2.221.320 1,982.752 1.u61.571  :

Other- __Sh520 _ _43 994 41287 _ $$ A02 45.27J {

Total., .. . . 52,616.319 52.473.5'11 52.26x.f.07 52.03M.554 52.006.H42 i

?

Sales:(kWh-millium) '

Reddential . . . . . P,500 9,594 9.412 8.N25 8.274 f Commercial . . H,981 8,757 M,585 8,151 7,676 [

]ndustrial.. . . 5,44N 5,557 5,535 5,449 5,394  !

Other Utilitics (b) . . 5,394 5.351 4,771 4,284 5,8 M3 l Streetlighting and Railroads . . . 2x8 288 282 2xl 308 l Total . . 29.611 29.347 2x 585 26.900 27.535 i h

Customers:(userage) i Residential. . 1.145,142 1,134,58% 1,117.356 1.091,539 1.063,998 i Commercial, . . . 102,900 101,301 98.095 94,1(>4 90,924 .

Industrial.. . 5,114 5,(P)0 5.063 5.084 5.102

}

l- Other (b) . 3,283 3.277 3,222 3,120 3.096  !

- Total .. . . . 1.236.439 1.244,256 1.223.736 1.193.907 1,163.120 l l

Aserage Annual Use Per Residential I j Customer (kWh).. 8,304 8.460 8.418 8.061 7.746  !

Ascrage Annualllill Por Reddential  :

Customer.. . , $ N19.94 5792.28 $ 749.54 5713.24 5694.51 l

j Ascrage Resenue Per kWh:  ;

Residential- 9.87v 9.36e 8.90e 8.85e 8.97e j Commercial . 8.78 8.39 7.x5 7.74 7.85 L Industrial.. ,

7.53 7,05 6.62 6.49 6.49  !

.- t ta) Generaied in system and regional nut lear generating r'lantt  !

tb)The reputed amounts reflett the reclautticanon of bulk mer I sales transactiom from operatmg es penses to operanny resenues.

See Note 1 of Notes to ('onsohdated l'i.tancial Statementt

[

y i

NORTHEAST UTILITIES AND SUBSIDIARIES 1 1

i

hllti!4'lIldtlt7 ltiftll'tHillltell l Shareholders Transfer Agents and Reghtrars As of January .41,1991, there were 147,6h0 wmmon Northeast Utilities Senite Company shareholders of secord of Northeast Utibties. Shareholders Sen ices P O. Ilos $006 liartleid. Connecticut 06100 5(Nb Comnion Share Inforntation 1he common shares of Northeast Utihties are hited on the State Street Bank and ~lru,1 Company New York Stor.L INhange.1hc tit Let sy mbol is "NU " Corporate Stock Transfer Department although it is tiequently prekented as "Nocst Ut" in s arious p,o,nogg;oo financial publication .1he high and low sales prices and Hoston, Massachuscus 02266-8200 digidends paid for the past two yean by quarters are show n below:

l'orm 10 K Quarterl) Northeast Utilities util proside shareholders a copy ofits Dhidend 1990 Annual Report to the Securities and Euhange Year Quarter liigh 1.uw __

Per Share Commhslon on l'orm 10 K, including the financial stalnnents and schedules thereto, uithout charge, upon 1990 l'irst 522 % $206 50.44 Second 21 % 19 0.44 receipt of a wri0en rnjurst sent tot Third 20 % 17 % 0.44 Theresa 11. Allsop l'ourt h 20 % IN% 0.44 Asshtant Scoretar's-1989 l'irst 521 51M W 50.44 Northeast Utilities Second 22 % 19 W OA4 p,o,gng270 1hird 23 20 W 0 44 Ilartford. Connecticut 061410270 Fourth 22 % 20 % OA4 Dhidenti Heingestment Plan The company has a Dindend Reim estment Plan under w hich all common shareholders may use their disidends to purthase additional common shares. The company absorbs all brokerage fees for purchases under the plan.

Northeast Utilities Service Company, Shareholder Senices.

P.O. Hot 5006, llartford. Connecticut 06102 5006, is the company's dividend paying agent and administers the company's Dividend Reinsestment Plan.

Annual Meeting The annual meeting of shareholders of Northeast Utihties u ill be held on Tuesday, May 21,1991, at to a m., at La Renaissance, Fat Windsor, Connecticut, w hkh is hwated at Esit 44 (East Windsor)of interstate 91.

NORTHEAST UTILITIES AND SUBSIDIARIES 4

+ -

Northeast Utilitin Senice Company 01TIGIM _.

Cliairutan utid Chlof thecuti\c Oflkes Rahard A krtken I owl fluiro I ov< rnne and Op< ranora Wdham H I lin

% ay nr l1 Ruinkry l'rcsident and ( .hlcl Optrulu.n' Oll.ucer  % frar elniatwin I rant l'. Sabatino Hernard M liis 4ta,A,to:e Wahr I = N huhht a lynfl\c Vice l'rcsident - _ _ _ _ Pon rr buppIs Plasmore anilR, sran 6 John l' Optka C I redetak hean i n evn e r un g anJ Upcr anon s ht Ira' a'rd i n'norone ntall nemo r rore l George 1) l'hl Senior Vice l'resitltnh _ _

( 'onn olle r Rnbert i H uss h R"r" C' hk l"L 'C " " '

I ' " '" "" ' b "' '""I U " " A'" " ""

\ Charf i vaaru tal Ul1n er John l'. Cagnetta ggggg yg gs ldmh

/ ( orporate Pfarnivre arul Re culutar v in I,utorn a lrank R.l.otLe Robert G. Aban Chuf AJntinonatisc O!!h cr-Nen llampshar \\ ole !

• fana< hu sein llugh C. M.st Kenne Rahaul R Cairlia customro bers u r opera: win l aster n I?Jw arJ J. Mnuka inicy C. Geround h irar i nev;re nne and Operatwns hoathern l.awrence11 Shay Ro) C J Nonnen Adminntiain r her s u o Nor'hrtn Waher IL lortante Jr Alfred R Rogers 5a orian and Grou ral CmontI ( 'e nto al Rohen W. /unghcin Vice l'rcsidenh li ntrt n C. Thay er lirow ne Ircanoct hidad ConMn I ne A. DeHarha l'atocia R. % laughhn Gcncranon i nevur vine aru lConor ni twn  % Jamn Maincauh TalO.1)non infarrnatwrr Roourn a s Anistant Secretaries Albert J. Itawk Corporatt PCrformaru e hen n n and Ihgarn:atwnal('onnel 1hesesa li Alkop lbrry llhennan U""Fd' I R l "'C llaman Rnours n N"'" U Y *\'"U i rancn l.. Kmoc) A istant Ireasurers Punbr N!aa s Kejth R. Man m Rohen C. Aronson fun hawne un I Marcr uds Macaerrernt Arthur 11. lherl liugene G. Vertelcudic John W. N. oyes Regulatory Relanant

- - - ~ - - . . - . - -- - - - - _ _ - - - . . ..-

1 scrune= t hanges l~ rank R. inir, umor u. c lu t uJna. n as ch + 1s J to the rwuon of s htri aJmmnnarnr olk er \cn ll.mupJ,n r epo n t \poa ta.t w flugin C. Marken?ir, prcuanh u< r tue udent. n as a lo tal u ruar u< r pr t ud< nt notomsa her ur e t rpoa won epn tur ApolJo Iw Roger C. lalluairm sc: mu t ter trJ s u r t'>rudent ir vnmu sn m anJih str ohuw m cl+<.1,s e . lune n Iv'h L I rur .A. lkcIlarlsa n,o rta rnt si< < pro ud, nr Gennatwn s

i nume rumc omlOnnnu. n w etn inc hrpu ch, I. lw and i rarei P. %abanno s.as rio tcJ u, e pe rudos \lArwn:. co n tus t h t,h* I. lwiL Returemenn - Ra ymond i:. lbanosan. s u r pr e udent \l.utenM and t e r uoner ha ut a v re tu rJ oi Iwa'te r M scar s el u s u, r. anJ Rh harJ P n erru r, us e pu r,ident Gencranon i nuncerme ar.J t 'er;uru, tu w reterd m Iw aterr D sean ot se rsur n uhrt T. M hulthen, us r pre uds ra - Pon o hupp!> Planwne and kt +noa k n n!! rrwa m \lan h Iwt ano @ scan vt u, u, r In tlemoriam- n e nost uh ulnru. ibe p,n ww Jov ote the vuu. vil md lL Grou. r etord n ewr.al us s pe r udrnt %ahn n and Robe rt P. l er, n tu nt i 1.t r u, r pr r udera el rullu amt i rnpim re Relanen s MTEffMc1GMffGM*f'"% 9 LQ g y Q(( M Q M RR*W QTElFTAT*Qfy"ff"L'LK R Q]

As of I ebruar> 1, IW1

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• Nortlwast Utilities "

OITICI:lts . _ . . . . _ _ _ .

Tit t NI 1:l'.S William il. l~.llis +# Hithard I Ctesiston Chauman af the .%ed and ChiefI sn utn e Offin e r Reti'<J Chavinan and a lh'r' lo' Al$llCorp and as subudoan banLs Iternard hl. I.os President artJ Chu'f Upr!ahng Offh cr U cUtgt Un\Id Lsn unse Vit r Pinidrnt Robert t. o lluuh p,g,,,J Tn Anolm n i Corporanon trioudo Prodin is.

Senior t n e rrendent and t herfl.onant ial Offh e r ,,, ,,,,,,g,,,, , ,y g,p,,

Walter l'. *l otrant e. J r. e orotrut tion, and autornons e anJusto tesI Senior Vu e PresiJcnt,5cartary. anJ General Counsri ,, g 9ypg C. 'l hay er llrow ne Chauman ofI;m utnr Committer and a llocrtor Yuce Prcsident and 1rrasurcr I hr Starde s Woo Ls t tools. harJn are, and indu strtal George D. Uhl P'"d"' )

Vn r Prendent and Coraruller *+# l>onald J. lsonahur Theresa 11. Allwp Chd"*d" A s sistan! $rt retary Magma Coppt Cornpany Karen G. Valenti '+ WHiam H. lWs A ssurant $cro riary Chaumars of the IIwJ and ChufI sn urn r Offu rr y Robert C. Aronwn '+ liernard hl. l'os A nistant Ir ra sure, President and Chirf Operanne Olin er

\

Arthur 11. literl #' Kathry n S. I uller Assutant lirasurer Y' n id'n' H vild Wildith I und and ihr Canscr:at.on I oundation 1:ugene G. Vertt feuille gg,, f,urt na$ nal e vinetwoon or;ar,imioro hustara ircasurer

• P George 11. liarse)

Chanrnan of the floarJ. Prendent, ChufI sn utn r Offic rr and a Hiset tor Pavey flou rs Inc t:nathnx and octfu r pr vJut ts, bu sines s suff !<s,  ! tPldfinant tal scrsii n)

1. t' I ugene D. Jonts Scruar Yu e Ptrudent Goriner tru . trorou!!m;; rnent ers) t' l.llimbeth T. Kennan PresiJent Alouru llolwie Collegr

• + t Dt nham C.1.unt, Jr.

Chanman and a Dun sur i unt 5th crvnah t

+ #" llus ke Marshall Nis halas Jrli Kat:enM h Profenor of1.an l'a!r Inw 5s hool

'#P William J. l' ape 11 Puhinher Waterbury Republu an Ameris an !nen >pape ri

+#' Norman C. Rasmowen

• laciutne riunnunce p,gg.ng, gj g, fy,y f , ,,,.7, j ,

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1. Audit ( omtmuce %s h m hwe <f 7n b4tes t Comnunce on Orpmranon, '+ #t Al.,crt I;. Steiger, J r.

Compiss.nion and ik.ard Att.un Chairman end a Dirrt for

• Corpwale kespawbanty Comnunce Albert Ste.;ct. inc. (department starr t haml George skuid was iin tal ta the M'Itad of 1ru arts on $rruMwr l5 IW)

Ktuhryos A. Iu!!rr wm riet trJ to the M!Itvard of Truuns on on tofwr : L 1%a As of I'ebruary 1, (WI

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The NU service area stretches from the Connecticut shore to the flerksjilies in Massachus.etts and covers apprmimately 5,890 square miles (4,400 in Connecticut and 1,490 in Massachusetts)in 208 communities (149 in Connecticut and $9 in - si g ,g ,

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142,140 customers, and llWP services 44 large industries and five whoicsale customers.)

• NU is in the process of acquiring the assels and the operating business of Public ' '

) Sen ice Cominny of New llampshire (PSNil). Addition of i SNil to the NU sy stem would siretch the northern reaches of the NU service area to Canada, and aJd 3,445 square miles in 198 communities in New llampshirv, PSNil sen es 386.023 electric customers,

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' Hartiord, Connecbcut 061410270 -

(203)665 5000 - .

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