Eversource 2006 Annual Report Download - page 32

30 NU 2006 ANNUAL REPORT
July 1, 2006, CL&P raised its transmission rates by an incremental
$6.1 million on an annual basis. Rates effective on January 1, 2007
reflected no increase to the overall average retail transmission rate.
Connecticut – Yankee Gas:
Purchased Gas Adjustment: On September 9, 2005, the DPUC issued
adraft decision regarding Yankee Gas Purchased Gas Adjustment
(PGA) clause charges for the period of September 1, 2003 through
August 31, 2004. The draft decision disallowed approximately $9 million
in previously recovered PGA revenues associated with two separate
Yankee Gas unbilled sales and revenue adjustments. At the request of
Yankee Gas, the DPUC reopened the PGA hearings on September 20,
2005 and requested that Yankee Gas file supplemental information
regarding the two adjustments. Yankee Gas complied with this request.
The DPUC issued a new decision on April 20, 2006 requiring an audit of
Yankee Gas’ previously recovered PGA costs and deferred any conclusion
on the $9 million of previously recovered revenues until the completion
of the audit. In a recent draft decision regarding Yankee Gas PGA
charges for the period September 1, 2004 through August 31, 2005, an
additional $2 million related to previously recovered revenues was also
identified, bringing the total maximum amount at issue with regard to
PGAclause charges under audit to $11 million.
The DPUC has hired a consulting firm which has begun an audit of
Yankee Gas’ previously recovered PGA costs. The company expects that
the audit will be completed in the first half of 2007. Management
believes the unbilled sales and revenue adjustments and resulting
charges to customers through the PGA clause for both periods were
appropriate. Based on the facts of the case and the supplemental
information provided to the DPUC, management believes the appropri-
ateness of the PGA charges to customers for the time period under
reviewwill be approved, and has not reserved for any loss.
Yankee Gas RateRelief: On December 29, 2006, Yankee Gas filed a
request with the DPUC for a rate increase of approximately $67.8 million
effective on July 1, 2007. The request proposes to recover its LNG facility
costs and increased cost of providing distribution delivery service.
Yankee Gas expects that the increase will be offset by projected
commodity and pipeline-related savings, for a net revenue increase of
$37.2 million or 8.4 percent abovecurrent rates.
New Hampshire:
SCRC Reconciliation and SCRC Rates: On an annual basis, PSNH files
with the NHPUC a stranded cost recovery charge (SCRC) reconciliation
filing for the preceding calendar year. The NHPUC reviews the filing,
including a prudence review of the operations within PSNH’s generation
business. On May 1, 2006, PSNH filed its 2005 SCRC reconciliation with
the NHPUC. On October 25, 2006, PSNH, the NHPUC staff and the
OCA filed a settlement agreement with the NHPUC which resolved all
outstanding issues associated with the 2005 reconciliation. After the
NHPUC hearings held in October of 2006, the NHPUC issued its order
affirming the settlement agreement. The terms of the settlement
agreement had virtually no impact on PSNH’s financial statements.
On September 22, 2006, PSNH filed a petition with the NHPUC
requesting a change in its SCRC rate for the period January 1, 2007
through December 31, 2007. PSNH requested that the NHPUC review
and approve the underlying data in this filing. On November 17, 2006,
PSNH filed a revised petition with the NHPUC on the SCRC rate, which
was approved by the NHPUC on December 15, 2006 and resulted in a
decline in the SCRC rate to $0.0130 per KWH effective in 2007.
ES and ES Rates: In accordance with a restructuring settlement and
state law, PSNH files for updated Energy Service (ES) rates periodically
toensure timely recovery of its costs. The ES rate recovers PSNH’s
generation and purchased power costs, including a return on PSNH’s
generation assets. PSNH defers for future recovery or refund any
difference between its ES revenues and the actual costs incurred.
On December 2, 2005, the NHPUC issued a decision lowering PSNH’s
allowed ES ROE from 11 percent to 9.62 percent that was retroactive to
an effective date of August 1, 2005. PSNH’s request for reconsideration
of that decision by the NHPUC was denied. On May 17, 2006, the New
Hampshire Supreme Court declined to consider PSNH’s appeal of the
NHPUC’s decision. This decrease in allowed ES ROE lowers PSNH’s net
income by approximately $1.5 million annually based on the current
level of generation asset investment.
On January 20, 2006, the NHPUC approved new ES rates of $0.0913
per KWH for the eleven-month period of February 1, 2006 through
December 31, 2006. In its order, the NHPUC also allowed PSNH to
implement deferred accounting treatment for the new accounting
associated with asset retirement obligations (AROs). On June 29, 2006,
the NHPUC decreased the ES rate to $0.0818 per KWH based upon
updated costinformation for the period July1, 2006 through December
31, 2006.
On September 8, 2006, PSNH filed a petition with the NHPUC requesting
achange in its ES rate for the period January 1, 2007 through
December 31, 2007. Consistent with previous filings, PSNH requested
that the NHPUC review and approve the underlying operational data in
this filing and not the specific ES rate. The underlying operational data
in this filing included the projected costs and credits associated with
the Northern Wood Power Project, which went into service on
December 1, 2006. On November 17, 2006, PSNH filed a revised petition
with the NHPUC requesting approval of an ES rate of $0.0859 per KWH
based upon current energy market data. On December 15, 2006, the
NHPUC approved the proposed ES rate, increasing the ES rates to
$0.0859 per KWH effective in 2007. As in previous NHPUC ES rate
orders, there is a provision to update the ES rate during the 2007 rate
year based upon updated actual and projected cost information.
Under the terms of the order issued by the NHPUC approving the
Northern Wood Power Project, certain revenue credits are shared
between PSNH and its customers. These credits include renewable
energy certificates (RECs), which are sold to other utilities, and production
tax credits. In any given year, if the combination of REC revenues and
production tax credits fall short of a stipulated revenue level, PSNH and
its customers each share half of any deficiency and if the combination
exceeds the stipulated revenue level, PSNH and its customers each
share half of any subsequent REC sales revenues.
DS Rate Case: On May 30, 2006, PSNH filed a petition with the NHPUC
requesting an increase in its delivery service (DS) rate by approximately
$50 million, the approval of a transmission cost tracking mechanism, a
decrease in its stranded cost charge and energy charge to reflect the
completed recovery of certain stranded costs and changes in PSNH’s
actual costs toprovide energy service. On June 29, 2006, the NHPUC
approved the temporary DS rate increase of $24.5 million effective on