With rising oil costs foreshadowing a summer of electricity sticker shock, Connecticut Light and Power Co. recorded an operating profit of $388 million in 2010, up 18 percent from a year earlier.
CL&P parent Northeast Utilities attributed the improved results to a combination of new rates that became effective last July, cost controls, improved collections from billing and the impact of weather on electricity use. While CL&P customer electricity use rose 1.8 percent in 2010, after adjusting for the impact of weather CL&P calculated electricity demand was down 1.8 percent.
Since early January, Northeast Utilities shares are up 9 percent and entering March were trading at a record level on an adjusted basis at above $34 a share.
Northeast Utilities is acquiring Massachusetts-based NStar, with the companies to maintain dual headquarters in Hartford and Boston. Entering March, Connecticut officials were debating whether to attempt to influence the merger, with the Connecticut Department of Public Utility Control scheduling hearings and the Connecticut General Assembly mulling a bill to cement the state’s jurisdiction.
“We don’t believe that Connecticut in fact has jurisdiction,” said Chuck Shivery, CEO of Northeast Utilities, in a conference call with investment analysts. “So far the DPUC – at least in their draft order – has agreed with that.”
In Massachusetts, approval will center on a “no net harm” standard that requires utilities to prove a merger will not have a deleterious impact on service or jobs there.
NStar CFO Jim Judge told analysts that 16 groups have filed to intervene with the Massachusetts Department of Public Utilities (DPU), including state agencies, consumer advocacy organizations and unions.
“I think everybody has got sort of an interest in this,” Judge said. “It’s a high-profile merger … DPU has a lot on their plate and they’ll do a thorough job in terms of assessing what issues are relevant (and) what aren’t, but we are very confident about the merits of the transaction and confident that it will be approved.”
CL&P is the dominant utility doing business in Fairfield County, with United Illuminating Co. providing service in the Bridgeport area. United Illuminating parent UIL Holdings Corp. is in the midst of its own major deal, spending more than $600 million to acquire the natural gas businesses of Iberdrola USA, and adding more than 750 people to its payroll. Including more than $7 million in merger-related expenses, UIL earned $55 million in 2010 as revenue rose 11 percent to just short of $1 billion.
Against a mid-May deadline, UIL is currently negotiating a new contract with Utility Workers Union of America Local 470-1.
UIL and Northeast Utilities are partnering on a new transmission system running east from Springfield, Mass., through Connecticut to Rhode Island.
And in February, the Federal Energy Regulatory Commission approved a transmission services agreement for Northeast Utilities to import power from Hydro-Quebec, with plans to build a new transmission line in New Hampshire. Northeast Utilities projects the project’s cost at $1.1 billion.
New England is facing the potential loss of two power plants – the Vermont Yankee nuclear power plant and a large coal-fired plant in Salem, Mass., which Dominion wants to shut down. The loss of either plant could impact electricity prices in Northeast Utilities’ and NStar’s combined territories – a study last month by ISO New England Inc. found that the region could sustain the loss of Vermont Yankee, which faces a March 2012 shutdown without a new license or extension.