Eversource 2009 Annual Report Download - page 122

FS-37
As of December 31, 2009, WMECO retail transmission costs were in excess of collections and $0.9 million was recorded as a
regulatory asset. As of December 31, 2008, retail transmission collections were in excess of costs and $0.2 million was recorded as a
regulatory liability.
Storm Cost Deferral: The storm cost deferral relates to costs incurred at PSNH and WMECO for restorations that met regulatory
agency specified criteria for deferral to a major storm cost reserve. The deferral as of December 31, 2009 relates primarily to $48.1
million of remaining costs incurred at PSNH for a major storm in December 2008. In July 2009, the NHPUC concluded in a temporary
rate order that PSNH could begin recovery of these storm costs. These assets are included in rate base. WMECO expects to begin
recovery of its deferred storm costs as a result of its next distribution rate proceeding.
Yankee Gas Environmental Costs: The regulatory asset relates to environmental remediation costs at Yankee Gas. The DPUC
approved an allowed level of remediation cost recoveries of approximately $2.2 million annually effective July 1, 2007. The DPUC has
stated that to the extent that environmental remediation expenses are prudently incurred, they should be allowed as proper operating
expenses; therefore, management continues to believe that recording the regulatory asset is appropriate as such costs are probable of
recovery.
Losses on Reacquired Debt: The regulatory asset relates to the losses associated with the reacquisition or redemption of long-term
debt. These deferred losses are amortized over the life of the new long-term debt issuance.
Regulatory Liabilities: The components of regulatory liabilities are as follows:
As of December 31,
2009 2008
(Millions of Dollars) NU NU
Cost of removal $ 209.2 $ 226.0
Regulatory liabilities offsetting derivative assets 109.4 137.8
Regulatory tracker deferrals 62.5 116.2
CL&P AFUDC transmission incentive (Note 1L) 50.4 47.6
Pension and PBOP liabilities -
Yankee Gas acquisition 15.0 17.6
Overrecovered gas costs 7.1 16.9
Other regulatory liabilities 32.1 30.4
Totals $ 485.7 $ 592.5
As of December 31,
2009 2008
(Millions of Dollars) CL&P PSNH WMECO CL&P PSNH WMECO
Cost of removal $ 82.2 $ 60.5 $ 16.6 $ 91.2 $ 64.7 $ 19.2
Regulatory liabilities offsetting derivative assets 109.0 0.4 - 131.3 4.6 -
Regulatory tracker deferrals 56.0 4.4 2.1 69.5 37.6 9.1
CL&P AFUDC transmission incentive (Note 1L) 50.4 - - 47.6 - -
WMECO provision for rate refunds - - 2.0 - - 1.3
Other regulatory liabilities 18.6 4.6 1.0 23.9 4.5 0.2
Totals $ 316.2 $ 69.9 $ 21.7 $ 363.5 $ 111.4 $ 29.8
Cost of Removal: NU's regulated companies currently recover amounts in rates for future costs of removal of plant assets over the lives
of the assets. These amounts are classified as Regulatory liabilities on the accompanying consolidated balance sheets. This liability is
included in rate base.
Regulatory Liabilities Offsetting Derivative Assets: The regulatory liabilities offsetting derivative assets relate to the fair value of
contracts used to purchase power and other related contracts that will benefit ratepayers in the future. See Note 3, "Derivative
Instruments," to the consolidated financial statements for further information. This liability is excluded from rate base and is refunded as
the actual contract costs settle over the duration of the contracts.
Pension and PBOP Liabilities - Yankee Gas Acquisition: When Yankee Gas was acquired by NU, the pension and PBOP liabilities
were adjusted to fair value with offsets to these adjustments recorded as regulatory liabilities, as approved by the DPUC. The pension
and PBOP liabilities were approved for amortization over an approximate 13- and 6-year period, respectively, beginning in 2002 without
a return on the liabilities. The PBOP liability was fully amortized as of February 2009.
Overrecovered Gas Costs: The Purchased Gas Adjustment (PGA) clause allows Yankee Gas to recover the costs of the procurement
of gas for Yankee Gas' firm and seasonal customers. Differences between actual gas costs and collection amounts on August 31st of
each year are deferred and then recovered or returned to customers during the following year. Carrying charges on outstanding
balances are calculated using Yankee Gas' weighted average cost of capital in accordance with the directives of the DPUC.
WMECO Provision for Rate Refunds: The provision for rate refunds was established to reserve a refund to customers as a result of
DPU service quality penalty guidelines.