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HIMCO PowerPoint Presentation

HIMCO

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HIMCO

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  1. HIMCO April 13, 2004

  2. Safe Harbor Provisions This presentation contains statements that may be considered forward looking statements, such as management’s expectations of future earnings, cash position, sources of funds, coverage ratios, market conditions, customer growth, regulatory action, and the anticipated completion of various projects. These statements speak of the Company’s plans, goals, beliefs, or expectations, refer to estimates or use similar terms. Actual results could differ materially. All forward looking statements included in this presentation are based upon information presently available, and the Company assumes no obligation to update any forward looking statements.

  3. What is Northeast Utilities Today? (2003 Revenues) Regulated CompaniesUnregulated Companies An electricity delivery company… The Connecticut Light and Power Company ($2.7 billion) Western Massachusetts Electric Company ($390 million) A natural gas delivery company… Yankee Gas Services Company ($360 million) An integrated electric company… Public Service Company of New Hampshire ($890 million) A competitive energy marketer… Select Energy, Inc. ($2.34 billion) A competitive electricity producer… Northeast Generation Company ($144 million) A supplier of energy services… Northeast Generation Services ($102 million) Select Energy Services ($150 million)

  4. A Closer Look At The Regulated Businesses PSNH Customers: 454K Residential 388K Commercial 63K Industrial 3K Revenues: $890M Employees: 1,240 5,445 Square Miles CL&P Customers: 1,169K Residential 1,058K Commercial 105K Industrial 6K Revenues: $2.7B Employees: 2,300 4,400 Square Miles Yankee Gas Customers: 192K Residential 168K Commercial 22K Industrial 2K Revenues:$360M Employees: 430 1,995 Square Miles WMECO Customers: 205K Residential 185K Commercial 19K Industrial 1K Revenues: $390M Employees: 410 1,490 Square Miles

  5. Overall Strategy - How the Puzzle Fits Together Regulated Businesses Competitive Businesses • Continue to implement best practices among four regulated operating companies • Build needed transmission facilities to remedy critical SW Connecticut supply situation • Expand CT natural gas infrastructure • Timely recovery of purchased energy costs • Maintain strong balance sheet • Achieve targeted returns on investments by maintaining gross margins • Manage risk effectively • Build services businesses

  6. Update on NU’s 2003 Financial Results EPS 2003 2002 2002 2003 EPS Excluding Significant Items Reported EPS

  7. 2003 Driven by Improved Competitive Business Results Earnings in Millions Yankee Gas NUEI Services PSNH/ NAEC WMECO NUEI Merchant Energy* CL&P* * Excluding SMD charge

  8. What Created Recovery of Competitive Businesses? • Improved portfolio management • Resized retail organization • Improved realized retail margins • Refocused trading as a wholesale support function significantly reducing risk • Improved rainfall levels impacting hydroelectric output • Improved results from generation assets

  9. 2003 Year-End Capitalization Ratios Leverage Target 55% NU Consol. CL&P PSNH WMECO Yankee Gas NGC (Excludes RRBs)

  10. NU Forecasting Significant Regulated Capital Investment Program $ Millions - Excluding AFUDC

  11. That Needed Investment Will Result in a Growing Distribution Rate Base $ Millions Distribution Rate Base (Electric and Gas)

  12. For CL&P, 2003 Was Marked By Important Legislation, Regulation • Public Act signed into law June 25, 2003 • Transitional standard offer took effect January 1, 2004 • Rate cap raised 11.1% for 2004 and beyond • Procurement fee of 0.5/mill began January 1 • Additional 0.25 mill incentive can be earned • Could produce $12-$18 million/year of additional revenue • Flow through of all energy related and “federally mandated” costs • Rate decision effective January 1, 2004 • Distribution rates set for four years • Transmission rates increased $28 million • Distribution ROE of 9.85% • Endorsement of $900 distribution capital program

  13. Siting Process Construction CL&P Transmission Business: $1 Billion Investment Forecast 2007 2001 2002 2003 2004 2005 2006 2008 Phase I (Bethel to Norwalk) $200 M Phase II (Middletown to Norwalk) $496 M * Capital Program $15 M $36 M $66 M $225 M $190 M $160 M $160 M $160 M * CL&P’s 80% share

  14. PSNH Update – Current Items • May 2003: PSNH bought out 14 small QF hydro rate orders for $20 million; net savings of $5 million • August 2003: PSNH proposed $70 million conversion of Schiller unit to burn wood (waste) • Settlement now before regulators • December 2003: PSNH closed on Connecticut Valley Electric Co. acquisition • $9 million for assets (11,000 customer accounts); $21 million to buy down power contract • December 2003: PSNH filed rate case requesting 2.6% ($21 million) increase • Hearings in early August • Decision will be retroactive to February 2004 • February 2004: Energy supply rate rose to 5.36 cents/kwh from 4.6 – 4.67 cents • Based on estimated costs of owned generation and market purchases of power

  15. NU Consolidated Summary Earnings Per Share 2003* 2004 Projected Regulated Businesses $1.05 $1.08 - $1.20 Competitive Businesses $0.25 $0.22 - $0.30 Parent Expense ($0.06) ($0.10) Consolidated NU $1.24 $1.20 - $1.40 *Excludes SMD cost, accounting charge

  16. Cash Flows Have Supported Common Dividend Increases Dividends/Share

  17. 2004 Competitive Business Net Income Preview by Business Line Total Projected 2004 Net Income $28-$38 Million $4 - $7 million $24 - $31 million Merchant Energy Energy/Generation Services

  18. Calendar of Bids in Wholesale Market

  19. Summary • 2004 earnings projection consistent within street consensus • Street range of $1.25 to $1.36 per share • Plans for transmission buildout progressing • Recovery of competitive businesses on track • Financial and credit profile strong and remains a priority