Eversource 2009 Annual Report Download - page 12

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Rates
CL&P is subject to regulation by the Connecticut Department of Public Utility Control (DPUC) which, among other things, has jurisdiction
over rates, accounting procedures, certain dispositions of property and plant, mergers and consolidations, issuances of long-term
securities, standards of service, management efficiency and construction and operation of facilities. CL&P's present general rate
structure consists of various rate and service classifications covering residential, commercial and industrial services.
CL&P's retail rates include a delivery service component, which includes distribution, transmission, conservation, renewables,
competitive transition assessment (CTA), systems benefits charge (SBC) and other charges that are assessed on all customers.
The CTA is a charge assessed to recover stranded costs associated with electric restructuring as well as various IPP contracts. The
SBC recovers costs associated with various hardship and low income programs as well as payments to municipalities to compensate
them for losses in property tax revenue due to decreases in the value of electric generating facilities resulting directly from electric
restructuring. The CTA and SBC are annually reconciled to true up to actual costs.
Under state law, all of CL&P's customers are entitled to choose their energy suppliers while CL&P remains their electric distribution
company. Under "Standard Service" rates for customers with less than 500 kW of demand and "Supplier of Last Resort Service" rates
for customers with 500 kW of demand or greater, CL&P purchases power for those customers who do not choose a competitive energy
supplier and passes the cost to customers through a combined "Generation Service Charge" (GSC) and "Bypassable Federally
Mandated Congestion Charge" (BFMCC) on customers' bills. The combined GSC and BFMCC charges for both types of service
recover all of the costs of procuring energy from CL&P's wholesale suppliers and are adjusted periodically and reconciled semi-annually
in accordance with the directives of the DPUC.
Although more CL&P customers chose competitive energy suppliers in 2009, CL&P continues to supply approximately 50 percent of its
customer load at Standard Service rates or Supplier of Last Resort Service rates while the other 50 percent of its customer load has
migrated to competitive energy suppliers. The majority of this load migration is from large customers. Because this customer migration
is only for energy supply service, there is no impact on the delivery portion of the business or the operating income of CL&P.
Distribution Rates: CL&P implemented new distribution rates in 2009 to reflect the DPUC's 2008 rate decision allowing a $20.1 million
annualized increase in distribution rates, effective February 1, 2009.
On January 8, 2010, CL&P filed an application with the DPUC to raise distribution rates by $133.4 million, effective July 1, 2010, and by
an additional $44.2 million, effective July 1, 2011. Among other items, CL&P is seeking an increase in its authorized return on equity
(ROE) from the current 9.4 percent to 10.5 percent. CL&P proposed that the first year’s increase be deferred until January 1, 2011 and
that the projected $67 million of deferred revenue from the second half of 2010 be recovered from CL&P customers between January 1,
2011 and June 30, 2012. If approved by the DPUC, the application would require an annualized $210 million increase in distribution
rates to take effect on January 1, 2011. However, CL&P believes that as a result of the decline in stranded cost recoveries due to the
final amortization of CL&P’s rate reduction bonds in December 2010, CL&P’s CTA will decline by approximately $230 million on an
annualized basis on January 1, 2011, more than offsetting the impact of the distribution rate increase. A DPUC decision in the case is
expected in mid-2010.
CL&P has a transmission adjustment clause as part of its rates, which reconciles on a semi-annual basis the transmission revenues
billed to customers against the transmission costs of acquiring such services, thereby recovering all of its transmission expenses on a
timely basis. (See "Regulated Electric Transmission" in this Item 1, Business in this Annual Report on Form 10-K).
For further information on CL&P rates and regulatory actions affecting CL&P, see "Regulatory Developments and Rate Matters" in
Item 7, Management's Discussion and Analysis of Financial Condition and Results of Operations, in this Annual Report on Form 10-K.
On December 1, 2009, CL&P filed with the DPUC the results of a three-month dynamic pricing smart meter pilot program that involved
nearly 3,000 customers (1,500 residential and 1,500 commercial and industrial (C&I) customers). CL&P plans to file a smart metering
and dynamic pricing plan with the DPUC by March 31, 2010. The total cost of the pilot program was approximately $13 million and is
being recovered through CL&P FMCC rates.
Sources and Availability of Electric Power Supply
As noted above, CL&P does not own any generation assets and purchases energy to serve its Standard Service and Supplier of Last
Resort Service loads from a variety of competitive sources through periodic requests for proposals (RFPs). CL&P issues RFPs
periodically for periods of up to three years to layer Standard Service full requirements supply contracts in order to mitigate price
volatility for its residential and small and medium load commercial and industrial customers. CL&P issues RFPs for Supplier of Last
Resort service for larger commercial and industrial customers every three months. Currently, CL&P has contracts in place with various
suppliers for all of its Standard Service loads and Supplier of Last Resort Service loads through 2010 and for approximately 60 percent
of expected load for 2011 and 20 percent of expected load in 2012.
PUBLIC SERVICE COMPANY OF NEW HAMPSHIRE - DISTRIBUTION
PSNH’s distribution segment (which includes its regulated generation) is primarily engaged in the generation, purchase, delivery and
sale of electricity to its residential, commercial and industrial customers. As of December 31, 2009, PSNH furnished retail franchise
electric service to approximately 490,000 retail customers in 211 cities and towns in New Hampshire. PSNH also owns and operates