Eversource 2004 Annual Report Download - page 77

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sales commitments. These contracts have expiration dates in 2006 and
2007. The total cost of Yankee Gas’ procurement portfolio, including
these contracts, amounted to $250.5 million in 2004, $218.6 million in
2003 and $158 million in 2002.
Hydro-Quebec: Along with other New England utilities, CL&P, PSNH,
WMECO, and HWP have entered into agreements to support transmission
and terminal facilities to import electricity from the Hydro-Quebec system
in Canada. CL&P, PSNH, WMECO, and HWP are obligated to pay, over a
30-year period ending in 2020, their proportionate shares of the annual
O&M expenses and capital costs of those facilities. The total cost of
these agreements amounted to $23.7 million in 2004, $25.3 million in
2003 and $26 million in 2002.
Yankee Gas Liquefied Natural Gas (LNG) Storage Facility: In 2004, Yankee Gas
signed a contract for the design and building of the LNG facility. Yankee
Gas anticipates that the facility will become operational in late 2007
in time for the 2007/2008 heating season. Certain future estimated
construction expenditures totaling $21.4 million are not included in the
contract signed to build the LNG facility and are not included in the
following table of estimated future annual Utility Group costs. The
remaining $21.4 million does not include $12.9 million that was spent
through 2004.
Northern Wood Power Project: In October 2004, PSNH received the approvals
necessary to begin construction related to the conversion of one of
three 50 megawatt units at the coal-fired Schiller Station to burn wood.
Construction of the $75 million Northern Wood Power Project has
begun and is expected to be completed by late 2006. Certain other
estimated construction expenditures totaling $8.6 million are not
included in the contract signed to perform the Schiller Station conversion
and are not included in the table of estimated future annual Utility
Group costs below.
Yankee Companies FERC-Approved Billings: NU has significant decommissioning
and plant closure cost obligations to the Yankee Companies. Each plant
has been shut down and is undergoing decommissioning. The Yankee
Companies collect decommissioning and closure costs through wholesale,
FERC-approved rates charged under power purchase agreements with
several New England utilities, including NU’s electric utility companies
CL&P, PSNH and WMECO. These companies in turn pass these costs
on to their customers through state regulatory commission-approved
retail rates. YAEC and MYAPC received FERC approval to collect all
presently estimated decommissioning costs. The table of estimated
future annual Utility Group costs below includes the decommissioning
and closure costs for YAEC, MYAPC and CYAPC.
Estimated Future Annual Utility Group Costs: The estimated future annual costs of NU’s significant long-term contractual arrangements are as follows:
(Millions of Dollars) 2005 2006 2007 2008 2009 Thereafter
VYNPC $ 27.1 $ 28.5 $ 27.5 $ 27.9 $ 30.9 $ 66.5
Electricity procurement contracts 319.0 322.0 253.0 218.3 190.0 1,103.1
Natural gas procurement contracts 201.8 180.5 82.7 38.5 38.3 103.2
Hydro-Quebec 24.8 24.4 22.8 20.4 19.6 215.6
Yankee Gas LNG facility 27.9 41.8 4.0 — — —
Northern Wood Power Project 39.3 7.5 — — — —
Yankee Companies FERC-approved billings 89.6 78.2 71.0 60.9 57.2 56.2
Totals $729.5 $682.9 $461.0 $366.0 $336.0 $1,544.6
NU Enterprises Purchase Agreements: Select Energy maintains long-term
agreements to purchase energy in the normal course of business as
part of its portfolio of resources to meet its actual or expected sales
commitments. The aggregate amount of these purchase contracts was
$6.2 billion at December 31, 2004 as follows:
(Millions of Dollars)
Year
2005 $4,940.1
2006 650.8
2007 156.4
2008 99.0
2009 85.6
Thereafter 261.1
Total $6,193.0
Select Energy’s purchase contract amounts can exceed the amount
expected to be reported in fuel, purchased and net interchange power
because energy trading transactions are classified in revenues.
The amounts and timing of Select Energy’s purchase agreements could
be impacted by the NU Enterprises’ strategic review.
E. Deferred Contractual Obligations
CYAPC’s estimated decommissioning and plant closure costs for the
period 2000 through 2023 have increased by approximately $395 million
over the April 2000 estimate of $436 million approved by the FERC in a
2000 rate case settlement. The revised estimate reflects the increases in
the projected costs of spent fuel storage, increased security and liability
and property insurance costs, and the fact that CYAPC is now self-
performing all work to complete the decommissioning of the plant due
to the termination of the decommissioning contract with Bechtel in July
2003. NU’s share of CYAPC’s increase in decommissioning and plant
closure costs is approximately $194 million. On July 1, 2004, CYAPC filed
with the FERC for recovery of these increased costs. In the filing, CYAPC
sought to increase its annual decommissioning collections from
$16.7 million to $93 million for a six-year period beginning on January
1, 2005. On August 30, 2004, the FERC issued an order accepting the
rates, with collection beginning on February 1, 2005, subject to refund,
and scheduled hearings for May 2005. In total, NU’s estimated remaining
decommissioning and plant closure obligation for CYAPC is $308.7 million
at December 31, 2004.