Eversource 2002 Annual Report Download - page 58

In the third quarter of 2002, CL&P and NAEC received regulatory
approvals for the sale of Seabrook from the DPUC and the NHPUC. As
a result of these approvals, CL&P and NAEC eliminated $0.6 million and
$13.9 million, respectively, on an after-tax basis, of reserves related to
their respective ownership shares of certain Seabrook assets.
On October 10, 2000, NU reached an agreement with Baycorp, a 15
percent joint owner of Seabrook, under which NU guaranteed a minimum
sale price and NU and Baycorp would share the excess proceeds if the
sale of Seabrook resulted in proceeds of more than $87.2 million related
to the sale of this 15 percent ownership interest. The agreement also
limited any top-off amount required to be funded by Baycorp for
decommissioning as part of the sale process. NU received approximately
$17 million in the fourth quarter of 2002 in connection with this agreement.
This amount is included in the $38.7 million of pre-tax Seabrook-related
gains included in other income/(loss), net.
VYNPC: On July 31, 2002,VYNPC consummated the sale of its nuclear
generating plant to a subsidiary of Entergy Corporation (Entergy) for
approximately $180 million. As part of the sale, Entergy assumed
responsibility for decommissioning VYNPC’s nuclear generating unit.
Under the terms of the sale, CL&P, PSNH and WMECO will continue
to buy approximately 16 percent of the plant’s output through March
2012 at a range of fixed prices.
Millstone: On March 31, 2001, CL&P and WMECO consummated the
sale of Millstone 1 and 2 to a subsidiary of Dominion Resources, Inc.
(Dominion). CL&P, PSNH and WMECO sold their ownership interests
in Millstone 3 to Dominion along with all of the unaffiliated joint
ownership interests in Millstone 3. NU received approximately $1.2
billion of cash proceeds from the sale and applied the proceeds to taxes
and reductions of debt and equity at CL&P, PSNH and WMECO.
As part of the sale, Dominion assumed responsibility for decommissioning
the three Millstone units. In connection with the sale, CL&P and
WMECO recorded a gain in the amount of $642 million, which was
used to offset stranded costs. Additionally, NU recorded an after-tax
gain of $115.6 million related to the prior settlement of Millstone 3
joint owner claims.
8. Commitments and Contingencies
A. Restructuring and Rate Matters
Connecticut: On September 27, 2001, CL&P filed its application with the
DPUC for approval of the disposition of the proceeds in the amount of
approximately $1.2 billion from the sale of the Millstone units to a
subsidiary of Dominion. This application described and requested
DPUC approval for CL&P’s treatment of its share of the proceeds from
the sale. In accordance with Connecticut’s electric utility industry
restructuring legislation, CL&P was required to utilize any gains from
the Millstone sale to offset stranded costs. The DPUC’s final decision
regarding this application was received on February 27, 2003, and did
not have a material impact on NU’s 2002 results of operations.
New Hampshire: In July 2001, the NHPUC opened a docket to review
the FPPAC costs incurred between August 2, 1999, and April 30, 2001.
Under the Restructuring Settlement, FPPAC deferrals are recovered as
a Part 3 stranded cost through the stranded cost recovery charge. On
December 31, 2002, the NHPUC issued its final order allowing recovery
of virtually all such costs.
On June 28, 2002, PSNH made its first stranded cost recovery charge
reconciliation filing with the NHPUC for the period May 1, 2001,
through December 31, 2001. This filing reconciles stranded cost revenues
against actual stranded cost charges with any difference being credited
against stranded costs or deferred for future recovery. Included in the
stranded cost charges are the generation costs for the filing period.
The generation costs included in this filing were subject to a prudence
review by the NHPUC. In January 2003, PSNH entered into a settlement
agreement with the Office of Consumer Advocate and the staff of the
NHPUC which resolved all outstanding issues. In conjunction with the
settlement agreement, the NHPUC staff recommended no disallowances
resulting from their review of the outages at PSNH’s generating plants.
A final order approving the settlement agreement was issued by the
NHPUC in February 2003. The NHPUC order approved PSNH’s
reconciliation of stranded costs as outlined within the settlement
agreement and had no impact on PSNH’s earnings.
Massachusetts: On March 30, 2001, WMECO filed its second annual
stranded cost reconciliation with the Massachusetts Department of
Telecommunications and Energy (DTE) for calendar year 2000. On
March 29, 2002, WMECO filed its 2001 annual transition cost reconciliation
with the DTE. This filing reconciled the recovery of stranded generation
costs for calendar year 2001 and includes sales proceeds from WMECO’s
portion of the Millstone units, the impact of securitization and
approximately a $13 million benefit to ratepayers from WMECO’s
nuclear performance-based ratemaking process.
WMECO and the office of the Massachusetts Attorney General reached
a settlement resolving all transition charge issues for the 1998 through
2001 reconciliations. The DTE approved this settlement on December 27,
2002. The settlement had a positive impact of $9 million on WMECO
2002 pre-tax earnings.
B. Environmental Matters
NU is subject to environmental laws and regulations intended to mitigate
or remove the effect of past operations and improve or maintain the
quality of the environment. As such, NU has active environmental
auditing and training programs and believes it is substantially in
compliance with the current laws and regulations.
However, the normal course of operations may involve activities and
substances that expose NU to potential liabilities of which management
cannot determine the outcome. Additionally, management cannot
determine the outcome for liabilities that may be imposed for past acts,
even though such past acts may have been lawful at the time they
occurred. Management does not believe, however, that this will have a
material impact on NU’s consolidated financial statements.
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