Financial Mines

News and notes from the business reporters for the Connecticut Media Group.
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NU profits drop on Irene damage

Friday, November 4, 2011 by:Rob Varnon
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Connecticut Light & Power Co.’s parent corporation, Northeast Utilities, said Friday night earnings in the third quarter were down from a year ago because milder weather pushed down electricity sales and because of costs associated with Tropical Storm Irene.

CL&P is still repairing damage from a snow storm that stuck the state last week, which the company says will cost it at least as much as Irene.

Here’s a portion of the press release the company issued at 8 p.m.

NU reports third quarter results

HARTFORD, Connecticut, November 4, 2011 – Northeast Utilities (NYSE: NU) today reported earnings of $90 million, or $0.51 per share, in the third quarter of 2011, down from $100.5 million, or $0.57 per share, earned in the third quarter of 2010. Third quarter results for 2011 reflect after-tax expenses of $0.6 million associated with NU’s pending merger with NSTAR. Excluding those expenses, NU earned $90.6 million, or $0.51 per share1, in the third quarter of 2011.
NU attributed the lower operating results in the third quarter of 2011 to several factors, including a 2.1 percent decline in retail electric sales compared with the third quarter of 2010, which resulted from milder weather in the third quarter of 2011 and the impact of Tropical Storm Irene. Lower results also reflect higher pension and other employee benefit costs in the third quarter of 2011, as well as a higher effective tax rate in the third quarter of 2011, compared with the third quarter of 2010.

Transmission

NU’s transmission segment earned $41.5 million in the third quarter of 2011, compared with $45.2 million in the third quarter of 2010. Lower third quarter 2011 earnings primarily reflect a higher effective tax rate and certain higher employee benefit costs, partially offset by a higher transmission rate base.

Distribution and Generation

NU’s distribution and generation segment earned $55 million in the third quarter of 2011, compared with $55.7 million in the third quarter of 2010. The Connecticut Light and Power Company’s (CL&P) distribution segment earned $34.6 million in the third quarter of 2011, compared with $31.5 million in the third quarter of 2010. Public Service Company of New Hampshire’s (PSNH) distribution and generation segment earned $20.6 million in the third quarter of 2011, compared with $23.4 million in the third quarter of 2010.

Western Massachusetts Electric Company’s (WMECO) distribution and generation segment earned $2.8 million in the third quarter of 2011, compared with $3.7 million in the third quarter of 2010. Lower third quarter 2011 results were due to a $3.2 million non-recurring charge to establish a billing adjustment reserve, as well as higher depreciation expense.

Yankee Gas Services Company lost $3 million in the third quarter of 2011, compared with a loss of $2.9 million in the third quarter of 2010. On a weather-adjusted basis, Yankee Gas’ firm natural gas sales in 2011 were up 5.2 percent in the third quarter, compared with the same period of 2010. The sales increases were due in large part to more conversions by commercial and industrial customers from interruptible to firm service and increased use of distributed generation fueled by natural gas.

Categories: General

Waiting for NU

Friday, November 4, 2011 by:Rob Varnon
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How bad did the storm mess up Northeast Utilities?

The company announced in October it and its bride-to-be, NStar would post third quarter earnings on Friday, Nov. 4 after the close of trading.

NStar posted net income of $97.6 million, or 94 cents per share, for the third quarter, a 29 percent increase over the $75.5 million, or 73 cents per share, the Boston utility earned for the third quarter of 2010.

NU’s subsidiary Connecticut Light & Power Co. is facing investigation over its handling of power restoration after two major storms this year.

The timing for NU couldn’t be worse as it is attempting a $17.5 billion merger with NStar. But NU’s handling of the Connecticut restoration might not play well with regulators in Massachusetts.

NU is expected to post later this evening.

Categories: General

UIL Holdings conference call

Friday, November 4, 2011 by:Rob Varnon
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Jeffrey Butler, CL&P’s constantly pilloried COO, must envy the UI guys.

Butler has become the target of outrage on evening TV as he tries to dance around the questions over the grueling and frustrating pace of power restoration after the late October snow. They had more than 300,000 still out. New Jersey and New York were both well under the 100,000 outage mark on Thursday and UI, was pretty much done by Wednesday.

Jim Torgerson, UIL Holdings president, CEO and CEO of The United Illuminating Co., breezed through hiscall with analysts Monday morning fielding questions from only one Wall Street denizen.

Torgerson made sure to mention his company had more than 99 percent of disrupted customers from the storm back on line within three days. He was also kind to CL&P adding the storm didn’t hit UI’s territory as hard.

As for for storm damage, UI said it was carrying about $4 million in potential rate recovery as an asset for its next rate filing, which could come midway into 2012.

UI shares were down 98 cents to $33.71 after the call.

Categories: General

UIL Holdings net income dips in third quarter

Thursday, November 3, 2011 by:Rob Varnon
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UIL Holdings Corp., the parent company of United Illuminating, Southern Connecticut Gas and Connecticut Natural Gas, said net income from its combined operations was $12.1 million, or 24 cents per share, compared to $17 million, or 52 cents a share a year ago.

The company is under fire for its response to recent storms that pummeled the state and left people without power for days. However, UI did return power to most of its customers before Connecticut Light & Power Co, which is still restoring its system.

The drop in UI income, however, was not expressly blamed on the impact from tropical storm Irene, which pummeled Connecticut and UI’s territory in August. The company said the decrease was due to acquisition costs related to SCG and CNG.

And the company even revised its full-year earnings range upward to $1.90 to $2.05 from the previous range of $1.85 to $2.00.  The company, in a press release, said it expects, however, some narrowing in earnings for its electric distribution, by as much as 5 cents a share for the year.

Its electric distribution arm recorded net income of $13.1 million, or 26 cents per diluted share in the third quarter, compared to $14.9 million, or 46 cents for the same period a year ago. The company said results were pared by increased operating and maintenance costs and a lower

UI Executives will hold a conference call with analysts on Friday morning while CL&P’s parent company, Northeast Utilities will release its earnings in the evening and then face analysts on Monday.

Analysts expect both companies to cover the costs of storm recovery through increased rates.

Categories: General

Kaman reports 3Q results and buys Vermont Composites

Wednesday, November 2, 2011 by:Rob Varnon
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Bloomfield-based Kaman Corp. said Wednesday after the close of trading that net income was $12.4 million,or 47 cents per share for the third quarter of 2011.
The aerospace company also said its Kaman Aerospace Group Inc. has agreed to buy Vermont Composites Inc., a supplier for the Sikorsky MH-60 Black Hawk program.
The value of the deal was not disclosed, but Kaman said Vermont Composites is expected to generate sales of $32 million this year. The Bennington-based composite materials maker has 230 employees. Vermont Composites also makes medical equipment.
The deal is expected to close in November.
Shares in Kaman gained 79 cents to close at $32.94 in Wednesday trading on the Nasdaq Stock Market.
A conference call with analysts is scheduled for Thursday morning.
Categories: General

THIS IS SPARTA! Greeks reach back to roots, scare world

Wednesday, November 2, 2011 by:Rob Varnon
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Image from the movie 300

Greeks preparing for battle

The market plunged yesterday because the Greek’s, after working out a deal regarding their outstanding debt, said they would hold a vote. (Didn’t someone see this coming?)

Well, the bankers and EU leadership might be miffed about the Greek’s decision to take the newest austerity proposal to a vote, but it is the cradle of Democracy. What are you going to tell them, turn your back on thousands of years of history?

Besides, it was only a matter of time before the people got their say in a world where decisions about who gets government backed deals and who loses their homes gets decided in mansions and corporate offices. So why not start in Greece.

As for the vote, well, remember my Greek friends, when the banks and other nations come and foreclose on your country, what the Athenians said while Athens burned.

The city is not its buildings. It is its people.

And for those that say this is a bad move for the finance sector, don’t bet on it. I’m sure a hedge fund has already figured out how to make some dough off this vote. CVO’s (Collateralized Vote Obligation bonds) anyone?

UPDATE:

Well, George Papandreou is no Leonidas.

Backing down might be the better course for his country, maybe. But leadership should be made of sterner stuff.

That’s why Leonidas died and it’s also why he went down in history and legend, while poor George is facing the propsect of becoming a fading footnote.

Still, markets cheered.

Categories: General

Mass.-broker settles Milford Power charges flap

Friday, October 28, 2011 by:Rob Varnon
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The State of Connecticut said it reached a $1.7 million settlement with a Massachusetts insurance broker who “allegedly” overcharged its client, Milford Power Co., for insurance fees and commissions.

The news in Connecticut comes nearly four years after Massachusetts settled similar allegations against William Gallagher Associates Inc.

Here’s the official press release from the state:

HARTFORD — Connecticut Insurance Commissioner Thomas B. Leonardi and Attorney General George Jepsen today announced a $1.7 million settlement with a Massachusetts-based insurance broker over allegations that the company misrepresented and concealed fees and commissions, ultimately overcharging a Connecticut client millions of dollars over several years.

The state alleged that William Gallagher Associates, Inc., (WGA) violated the state’s Unfair Insurance Practices Act and Unfair Trade Practices Act in its dealings with Milford Power Company, LLC. Under the terms of the agreement, the company did not admit wrongdoing but will pay the state $100,000 in civil penalties and forfeit $1.6 million to be deposited in the state’s General Fund.

The Connecticut agreement follows a nearly $4 million settlement in 2007 between the company and Massachusetts authorities over similar allegations. That settlement provided restitution for WGA clients, including Milford Power.

“Deceptive business practices will not be tolerated in Connecticut. Clients deserve honest answers and good faith dealings when they trust others with their money,” Commissioner Leonardi said. “Any company or individual who violates that trust will be held accountable.”

Attorney General Jepsen said, “The conduct in this case was particularly egregious, warranting a separate prosecution and settlement in Connecticut. The company knew that it was violating Connecticut law while engaging in this conduct and took steps not only to hide it from its clients, but also from the state. Under this agreement, WGA will forfeit nearly all of the unlawfully obtained overcharges not already returned.”

The state claimed that WGA concealed certain fees and commissions, issued dummy invoices, altered original policies and kept two sets of books to conceal the practice. State officials said the questionable bookkeeping and billing practices dated back to 2002, resulting in Milford Power allegedly being overcharged more than $2 million.

The state also alleged that when the Insurance Department asked the company in 2004 about inappropriate solicitation activities occurring within the company, WGA “did not respond completely and accurately” to the Department’s inquiry.

The case was investigated by Connecticut Insurance Department Counsel Anthony Caporale and Assistant Attorney General Joseph Nielsen, with direction by Assistant Attorney General Michael Cole, Chief of the Antitrust Department. The Attorney General and Commissioner Leonardi also acknowledged the Department of Consumer Protection for its cooperation and assistance.

Categories: General

WR Berkley earnings slip on higher catastrophes

Wednesday, October 26, 2011 by:Rob Varnon
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Greenwich-based W.R. Berkley Corp. said after the close of the New York trading Wednesday, net income was lower in the third quarter of this year compared to last year due to lower interest rates and higher catastrophe activity.

The property and casualty insurer  said net income was $77 million, or 53 cents a share, for the third quarter of 2011 compared to $94 million, or 61 cents a share for the same year-ago quarter.

WRB shares closed up 66 cents to $33.79 in trading Wednesday.

Executives will hold a conference call with analysts on Thursday at 9:30 a.m. A live webcast will be carried at wrberkley.com.

Categories: General
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