Wait, What?

NU laughs all that way to the bank as power disaster continues…

Nov 03

jonpeltoCL&P, Malloy Energy Assistance, Malloy, NU 4 Comments

Today’s tasks for politicians;

(1)  Look busy

(2)  Look annoyed

(3)  Complain

(4)  Demand progress

(5)  Set up Commissions

(6)  Read materials that were given months ago about the growing crisis of insufficient line crews

(7)  Call for new laws, regulations and fines.

And meanwhile… NU stock is up and NU executives and shareholders are making the big bucks.

Here are the Facts:

CL&P (Northeast Utilities) stock started this year at $31.88.  Since then NU has consistently out-performed the S&P 500, the Russell 2000, the NASDAQ Composite and the NYSE Composite.

When Irene hit, NU’s stock fell to below $31 but it was back to its previous level four days later, long before many residents even got their power back.

Then on Friday October 28, 2011, the day before the “freak storm hit”, NU’s stock was up to $34.58.

On Monday, 10/31 it closed down at $34.57, Tuesday 11/1 it dropped to $33.59.

But yesterday (Wednesday 11/2/11)  NU’s stock was back up to $34.22 and at last check with 424,000 Connecticut residents still out of power, their stock price was up to $34.67 (up 1.32% on the day) and above the level it was before the storm hit.

The all powerful stock market knows two important things; (1) tough talk doesn’t add up to action and (2) the Company, its shareholders and its executives will always win out.

Why….

Take a look at just two sections in NU’s last annual report:

“CL&P’s 2010 distribution segment earnings were $20.1 million higher than 2009 due primarily to the DPUC distribution rate case decision that was effective July 1, 2010.  The decision allowed CL&P to defer operating and maintenance expenses for the last six months of 2010 in lieu of cash rate relief until new rates begin on January 1, 2011.  CL&P’s 2010 earnings also benefitted from lower  depreciation expense as authorized in the distribution rate case decision, lower interest expense as a result of the favorable resolution of state tax audits in the fourth quarter of 2010, and lower uncollectibles expenses. CL&P’s distribution segment regulatory ROE was 7.9 percent in 2010 compared to 7.3 percent in 2009.  We expect CL&P’s distribution segment regulatory ROE will be approximately 9 percent in 2011.”

And if that isn’t clear enough – not only will they come back looking for all the money they are spending to get people back on-line but to Governor Malloy and those who said don’t worry about cutting 70,000 people off winter heating assistance this year, the electric companies will pick up the tab….

And in another section of that NU shareholder report, the company explains;

“Our expense related to uncollectible receivable balances (our uncollectibles expense) is influenced by the economic conditions of our  region.  Fluctuations in our uncollectibles expense are mitigated from an earnings perspective because a portion of the total uncollectibles expense for each of the electric distribution companies is allocated for recovery to the respective company’s energy supply rate and recovered through its tariffs.  Additionally, for CL&P and Yankee Gas, write-offs of uncollectible receivable balances attributable to qualified customers under financial or medical duress (hardship customers) are fully recovered through their respective tariffs.”

So rate payers will end up paying to get power back on line and then rate payers will pay again when state government fails to provide adequate heating assistance to those in need.

Sure Jeff Butler, Connecticut Light & Power’s President and Chief Operating Officer purportedly makes millions and has a generator at his Avon home but he is just a bit player in this much bigger game.

NU’s Chairman and CEO makes $8.3 million, while one NU executive vice president makes $5 million and the other $4.3.  One of their senior vice presidents makes $3.7 million while another makes a paltry $2.3 million.

And we haven’t even gotten to the remainder of the senior management team nor the NU Trustees, a few of whom are well known Connecticut corporate leaders and have worked closely with Governor Malloy.  In fact, Malloy has even appointed one of them to a key state board.

More background can be found in some of my earlier blogs following Tropical Storm Irene.  Start with  http://jonpelto.wordpress.com/tag/nu/ .

So everyone, including our elected officials can complain and threaten all they want but until we have a rate setting system that punishes executives and shareholders for corporate failings we’ll be stuck right where we are – paying for the privilege of getting electricity, losing electricity, getting our electricity back and each and every step in between.

For more reading on the topic also take a look at Lon Seidman’s blog today http://www.lonseidman.com/2011/11/what-clp-needs-to-do-right-now/

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