Eversource 2006 Annual Report Download - page 86

C. Spent Nuclear Fuel Disposal Costs
Under the Nuclear Waste Policy Act of 1982 (the Act), CL&P, PSNH,
WMECO, and NAEC must pay the DOE for the disposal of spent
nuclear fuel and high-level radioactive waste, prior to the sale of their
ownership in the Millstone and Seabrook nuclear power stations.
The DOE is responsible for the selection and development of repositories
for, and the disposal of, spent nuclear fuel and high-level radioactive
waste. For nuclear fuel used to generate electricity prior to April 7,
1983 (Prior Period Spent Nuclear Fuel) for CL&P and WMECO, an
accrual has been recorded for the full liability, and payment must be
made prior to the first delivery of spent fuel to the DOE. After the sale
of Millstone, CL&P and WMECO remain responsible for their share of
the prior period spent nuclear fuel. Until such payment is made, the
outstanding balance will continue to accrue interest at the 3-month
treasury bill yield rate. At December 31, 2006 and 2005, fees due to the
DOE for the disposal of Prior Period Spent Nuclear Fuel are included
in long-term debt and were $280.8 million and $268 million,
respectively, including interest costs of $198.7 million and $185.7
million, respectively.
During 2004, WMECO established a trust, which holds marketable
securities to fund amounts due to the DOE for the disposal of WMECO’s
Prior Period Spent Nuclear Fuel. For further information on this trust,
see Note 10, “Marketable Securities,” to the consolidated financial
statements.
D. Long-Term Contractual Arrangements
Utility Group:
Vermont Yankee Nuclear Power Corporation (VYNPC): Previously
under the terms of their agreements, NU’s companies paid their
ownership (or entitlement) shares of costs, which included depreciation,
O&M expenses, taxes, the estimated cost of decommissioning, and a
return on invested capital to VYNPC and recorded these costs as
purchased-power expenses. On July 31, 2002, VYNPC consummated
the sale of its nuclear generating unit to a subsidiary of Entergy
Corporation for approximately $180 million. CL&P, PSNH and WMECO
have commitments to buy approximately 16 percent of the VYNPC
plant’s output through March of 2012 at a range of fixed prices. The
total costof purchases under contracts with VYNPC amounted to
$32.2 million in 2006, $25.7 million in 2005 and $26.8 million in 2004.
Electricity Procurement Contracts: CL&P, PSNH and WMECO have
entered intovarious arrangements that extend through 2024 for the
purchase of electricity, including payment obligations resulting from
the buydown of electricity purchase contracts. The total cost of
purchases and obligations under these arrangements amounted to
$331.9 million in 2006, $275.3 million in 2005 and $323.3 million in
2004. These amounts relate to IPP contracts and do not include
contractual commitments related to CL&P’s standard service or
transitional standardoffer service, PSNH’s short-term power supply
management or WMECO’s basic and default service. The majority of
the contracts expire in 2014.
Natural Gas Procurement Contracts: Yankee Gas has entered into
long-term contracts for the purchase of a specified quantity of natural
gas in the normal course of business as part of its portfolio of supplies
tomeet its actual sales commitments. These contracts extend through
2016. The total cost of Yankee Gas’ procurement portfolio, including
these contracts, amounted to $275.1 million in 2006, $321.2 million in
2005 and $250.5 million in 2004.
Wood, Coal and Transportation Contracts: PSNH has entered into
various arrangements for the purchase of wood, coal and the
transportation services for fuel supply to its electric generating assets
in 2007 and 2008. PSNH’s fuel costs, excluding emissions allowances,
amounted to approximately $149.1 million in 2006, $193.4 million in
2005 and $183 million in 2004.
Portland Natural Gas Transmission System (PNGTS) Pipeline
Commitments: PSNH has a contract for capacity on the PNGTS
pipeline which extends through 2018. The total cost under this contract
amounted to $1.4 million in 2006, $1.6 million in 2005 and $2 million in
2004. These costs are not recovered from PSNH’s retail customers.
Hydro-Quebec: Along with other New England utilities, CL&P, PSNH
and WMECO have entered into agreements to support transmission
and terminal facilities to import electricity from the Hydro-Quebec
system in Canada. CL&P, PSNH and WMECO 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 $20.5 million in 2006, $21.2
million in 2005 and $23.7 million in 2004.
Transmission Business Project Commitments: These amounts
represent commitments for various services and materials associated
with CL&P’sMiddletown to Norwalk, Glenbrook Cables and Norwalk to
Northport-Long Island, New York projects and other projects.
Yankee Gas LNG Storage Facility: In 2004, Yankee Gas signed a
contract for the design and building of its LNG facility. Yankee Gas
anticipates that the facility will become operational in time for the
2007/2008 heating season. Certain future estimated construction
expenditures totaling $8 million arenot included in the contract
signed tobuild the LNG facility and are not included in the following
table of estimated future annual Utility Group costs.
Yankee Companies 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. These companies in turn pass these costs on to
their customers through state regulatory commission-approved retail
rates. The following table of estimated future annual Utility Group
costs includes the estimated decommissioning and closure costs for
CYAPC, MYAPC and YAEC.
See Note 8E, “Commitments and Contingencies – Deferred
Contractual Obligations,” to the consolidated financial statements
for information regarding the collection of the Yankee Companies’
decommissioning costs.
84 NU 2006 ANNUAL REPORT