Eversource 2006 Annual Report Download - page 63

NU 2006 ANNUAL REPORT 61
Regulatory Assets: The components of regulatory assets are as follows:
At December 31,
(Millions of Dollars) 2006 2005
Recoverable nuclear costs $13.7 $44.1
Securitized assets 1,131.1 1,340.9
Income taxes, net 308.0 332.5
Unrecovered contractual obligations 214.4 327.5
Recoverable energy costs 5.3 193.0
CL&P CTA and SBC 100.5 —
Deferred benefit costs 407.4 —
Other regulatory assets 268.7 245.9
Totals $2,449.1 $2,483.9
Additionally, the Utility Group had $11.2 million of regulatory costs
at both December 31, 2006 and 2005 that are included in deferred
debits and other assets – other on the accompanying consolidated
balance sheets. These amounts represent regulatory costs that have
not yet been approved for recovery by the applicable regulatory agency.
Management believes these costs are recoverable in future
regulated rates.
Recoverable Nuclear Costs: PSNH recorded a regulatory asset in
conjunction with the sale of its shareof Millstone 3 in March of 2001
which had an unamortized balance of $26.1 million at December 31,
2005 and is included in recoverable nuclear costs. On June 30, 2006,
under the terms of the restructuring settlement, PSNH fully recovered
these costs. Included in recoverable nuclear costs at December 31, 2006
and 2005 are $13.7 million and $18 million, respectively, primarily
related to WMECO’s share of Millstone 1 recoverable nuclear costs
for the undepreciated plant and related assets at the time Millstone 1
was shutdown.
Securitized Assets: In March of 2001, CL&P issued $1.4 billion in rate
reduction certificates. CL&P used $1.1 billion of the proceeds from
that issuance to buyout or buydown certain contracts with independent
power producers (IPP). The unamortized CL&P securitized asset
balance is $604.5 million and $731.4 million at December 31, 2006
and 2005, respectively. CL&P used the remaining proceeds from the
issuance of the rate reduction certificates to securitize a portion of
its SFAS No. 109, “Accounting for Income Taxes,” regulatory asset.
The securitized SFAS No. 109 regulatory asset had an unamortized
balance of $102.7 million and $124.2 million at December 31, 2006
and 2005, respectively.
In April of 2001, PSNH issued rate reduction bonds in the amount
of $525 million. PSNH used the majority of the proceeds from that
issuance to buydown its affiliated power contracts with North Atlantic
Energy Corporation (NAEC). The unamortized PSNH securitized asset
balance is $314.7 million and $354.5 million at December 31, 2006
and 2005, respectively. In January of 2002, PSNH issued an additional
$50 million in rate reduction bonds and used the proceeds from that
issuance to repay short-term debt that was incurred to buyout a
purchased-power contract in December of 2001. The unamortized PSNH
securitized asset balance for the January of 2002 issuance is $10.9 million
and $20.5 million at December 31, 2006 and 2005, respectively.
In May of 2001, WMECO issued $155 million in rate reduction
certificates and used the majority of the proceeds from that issuance
tobuyout an IPP contract. The unamortized WMECO securitized asset
balance is $98.3 million and $110.3 million at December 31, 2006 and
2005, respectively.
Securitized regulatory assets, which are not earning an equity return,
are being recovered over the amortization period of their associated
rate reduction certificates and bonds. All outstanding CL&P rate
reduction certificates are scheduled to fully amortize by December 30,
2010, while PSNH rate reduction bonds are scheduled to fully amortize
by May 1, 2013, and WMECO rate reduction certificates are scheduled
to fully amortize by June 1, 2013.
Income Taxes, Net: The tax effect of temporary differences (differences
between the periods in which transactions affect income in the financial
statements and the periods in which they affect the determination of
taxable income) is accounted for in accordance with the rate-making
treatment of the applicable regulatory commissions and SFAS No. 109.
Differences in income taxes between SFAS No. 109 and the rate-making
treatment of the applicable regulatory commissions are recorded as
regulatory assets which totaled $308 million and $332.5 million at
December 31, 2006 and 2005, respectively. For further information
regarding income taxes, see Note 1G, “Summary of Significant
Accounting Policies – Income Taxes,” to the consolidated financial
statements.
Unrecovered Contractual Obligations: Under the terms of contracts
with the Connecticut Yankee Atomic Power Company (CYAPC), Yankee
Atomic Electric Company (YAEC), and Maine Yankee Atomic Power
Company (MYAPC) (Yankee Companies), CL&P, PSNH, and WMECO
are responsible for their proportionate share of the remaining costs
of the units, including decommissioning. A portion of these amounts,
$214.4 million and $327.5 million at December 31, 2006 and 2005,
respectively, are recorded as unrecovered contractual obligations.
Aportion of these obligations for CL&P was securitized in 2001 and is
included in securitized regulatory assets. Amounts for WMECO are
being recovered along with other stranded costs. Amounts for PSNH
werefully recovered by December 31, 2006.
RecoverableEnergy Costs: Under the Energy Policy Act of 1992
(Energy Act), CL&P, PSNH, WMECO, and NAEC were assessed for
their proportionate shares of the costs of decontaminating and
decommissioning uranium enrichment plants owned by the United
States Department of Energy (DOE) (D&D Assessment). The Energy Act
requires that regulators treat D&D Assessments as a reasonable and
necessary cost of fuel to be fully recovered in rates like any other fuel
cost. CL&P, PSNH and WMECO no longer own nuclear generation
assets but continue to recover these costs through rates. At
December 31, 2006 and 2005, NU’s total D&D Assessment deferrals
were $5.3 million and $9.8 million, respectively, and have been
recorded as recoverable energy costs.
In conjunction with the implementation of restructuring under the
restructuring settlement agreement on May 1, 2001, PSNH’s fuel and
purchased power adjustment clause (FPPAC) was discontinued. At
December 31, 2005, PSNH had $127.5 million of recoverable energy
costs deferred under the FPPAC. Also included in PSNH’s recoverable
energy costs were deferred costs totaling $44 million associated with
certain contractual purchases from IPPs. On June 30, 2006, under the
terms of the restructuring settlement agreement, PSNH fully recovered
these costs.
The regulated rates of Yankee Gas include a purchased gas adjustment
(PGA) clause under which gas costs above or below base rate levels
arecharged toor credited to customers. Differences between the actual