NU reports second quarter results

BOSTON, Massachusetts and HARTFORD, Connecticut, July 30, 2012 – Northeast Utilities (NYSE: NU) today reported earnings of $44.3 million, or $0.15 per share, in the second quarter of 2012, compared with earnings of $77.3 million, or $0.44 per share, in the second quarter of 2011.

Second quarter 2012 results included approximately $91.5 million, or $0.30 per share, of after-tax charges related to the April 10, 2012 closing of the merger between NU and NSTAR and various related regulatory settlements. Excluding those charges, NU earned $135.8 million, or $0.45 per share1, in the second quarter of 2012.

NSTAR’s results are included in NU’s second quarter 2012 results, but not in NU’s first quarter 2012 results.

In the first six months of 2012, NU earned $143.6 million, or $0.60 per share, compared with earnings of $191.4 million, or $1.08 per share, in the first half of 2011. Excluding merger and related settlement costs of $92.6 million, or $0.38 per share, NU earned $236.2 million, or $0.98 per share, in the first half of 2012.

Thomas J. May, NU president and chief executive officer, said he was extremely pleased with the integration work NU has undertaken since the merger was completed in April. “We continue to be highly confident that our merger will provide significant benefits to both the customers and communities we serve throughout Connecticut, Massachusetts and New Hampshire, as well as to investors. In fact, customers in Massachusetts and Connecticut have already realized $46 million of benefits from the merger in the form of rate credits in their bills in the second quarter,” May said.

May noted that NU’s second-quarter 2012 results before merger and related settlement costs were in line with the company’s expectations. He added that NU’s ongoing investment in needed transmission infrastructure will continue to bring significant benefits to customers of the region.

Electric Transmission

NU’s transmission segment earned $63.7 million in the second quarter of 2012 and $110 million in the first half of 2012, compared with $42.2 million in the second quarter of 2011 and $86.9 million in the first half of 2011. The increase in year-to-date earnings primarily reflects continued investment in NU’s transmission system, as well as the addition of NSTAR Electric Company transmission results in the second quarter of 2012.

Electric Distribution and Generation

NU’s electric distribution and generation segment earned $70.5 million in the second quarter of 2012 and $112.5 million in the first half of 2012, compared with $39.1 million in the second quarter of 2011 and $94.8 million in the first half of 2011. Those 2012 results exclude $50.8 million of second-quarter after-tax charges relating to the merger and related settlement agreements. Those charges include a total of $43 million of rate credits provided to customers of The Connecticut Light and Power Company (CL&P), NSTAR Electric, and Western Massachusetts Electric Company (WMECO), as well as $40 million of reduced storm cost recovery from CL&P customers as a result of the Connecticut settlement agreement.

The distribution and generation segment benefited in the second quarter and first half of 2012 from control of operating expenses which was offset by higher costs related to pension and health care benefits and higher depreciation and property taxes.

Excluding $38.4 million of after-tax merger settlement-related charges, which reflect $25 million of customer rate credits and the $40 million write-down of 2011 storm costs, CL&P’s distribution segment earned $10.5 million in the second quarter of 2012 and $31.3 million in the first half of 2012, compared with $19.1 million in the second quarter of 2011 and $47.6 million in the first half of 2011. Lower second quarter and first half 2012 results were due primarily to a weather-driven 3.8 percent reduction in retail electric sales in the first half of 2012 and higher pension, tree trimming and system maintenance costs.

Excluding $15 million of customer rate credits, which contributed to a $10.6 million after-tax charge, NSTAR Electric’s distribution segment earned $42 million in the second quarter of 2012.

Public Service Company of New Hampshire’s (PSNH) distribution and generation segment earned $14.8 million in the second quarter of 2012 and $29.9 million in the first half of 2012, compared with $16 million in the second quarter of 2011 and $37.5 million in the first half of 2011. Lower 2012 results were due in part to a 1.9 percent reduction in electric sales in the first half of 2012, compared with the first half of 2011, as well as higher depreciation, property tax, pension and health care costs.

Excluding $3 million of merger settlement-related customer rate credits, which resulted in a $1.8 million after-tax charge, WMECO’s distribution segment earned $3.2 million in the second quarter of 2012 and $9.3 million in the first half of 2012, compared with $4 million in the second quarter of 2011 and $9.7 million in the first half of 2011. Lower second quarter and first half 2012 results were due in part to higher depreciation, interest and tree trimming expense.

Natural Gas Distribution

Excluding $3 million of merger-related customer rate credits, which contributed to a $2 million after-tax charge, NSTAR Gas Company earned $0.1 million in the second quarter of 2012.

Yankee Gas Services Company lost $0.1 million in the second quarter of 2012 and earned $14.6 million in the first half of 2012, compared with earnings of $1.2 million in the second quarter of 2011 and $23.7 million in the first half of 2011. Yankee Gas’ second quarter 2012 results reflect a 5 percent decline in second-quarter firm natural gas sales due primarily to warmer weather in April and May of 2012, compared with the same period of 2011, which reduced customer space heating demand.

NU Parent and Other Businesses

Excluding $38.6 million of after-tax merger-related expenses, NU parent and unregulated businesses had net earnings of $1.6 million in the second quarter of 2012, an improvement of $5.6 million compared with after-tax expenses of $4 million in the second quarter of 2011. The improvement was driven by a number of factors, including the addition of earnings from NSTAR Communications and lower interest expense.