Eversource 2009 Annual Report Download - page 15

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For further information on WMECO’s rates and regulatory actions affecting WMECO, 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.
WMECO is subject to service quality (SQ) metrics that measure safety, reliability and customer service. Any charges incurred for failure
to meet such metrics are paid by WMECO to customers through a method approved by the DPU. WMECO will likely be required to pay
an assessment charge for its 2009 reliability performance, primarily as a result of a power outage impacting WMECO’s Springfield
underground service territory in 2009. WMECO has performed at target for other non-storm related reliability metrics. WMECO will file
its 2009 SQ results and assessment calculation with the DPU in March 2010.
On October 16, 2009, WMECO filed its proposal for a dynamic pricing smart meter pilot program with the DPU. The program proposes
to involve 1,750 customers in WMECO's service region for a term of six months beginning in April 2011. The total cost of the project is
estimated to be $7 million, which would be recovered through rates WMECO would charge to customers. A decision is expected from
the DPU in the first half of 2010.
On August 12, 2009, the DPU approved a stipulation agreement between WMECO and the AG concerning WMECO's proposal, under
the Massachusetts Green Communities Act (GCA), to install 6 MW of solar energy generation in its service territory at an estimated cost
of $41 million. Under the agreement, no more than 3 MW will be commissioned in any one year between 2010 and 2012, the ROE on
these assets will be a fully-tracking 9 percent, and the benefits of renewable energy and tax credits will be used to reduce the impact on
customer bills. WMECO will need to file an additional application with the DPU if it seeks to develop more than the initial 6 MW under
the GCA, which allows for electric utility ownership of up to 50 MW of solar energy generating facilities.
Sources and Availability of Electric Power Supply
As noted above, WMECO does not own any generation assets and purchases its energy requirements from a variety of competitive
sources through periodic RFPs. For basic service power supply, WMECO issues RFPs periodically, consistent with DPU regulations.
REGULATED GAS DISTRIBUTION – YANKEE GAS SERVICES COMPANY
Yankee Gas operates the largest natural gas distribution system in Connecticut as measured by number of customers (approximately
205,000), and size of service territory (2,187 square miles). Total throughput (sales and transportation) in 2009 was 52.5 billion cubic
feet (Bcf) compared with 49.8 Bcf in 2008. Yankee Gas provides firm gas sales service to customers who require a continuous gas
supply throughout the year, such as residential customers who rely on gas for their heating, hot water and cooking needs, and
commercial and industrial customers who choose to purchase gas from Yankee Gas. Yankee Gas also offers firm transportation
service to its commercial and industrial customers who purchase gas from sources other than Yankee Gas as well as interruptible
transportation and interruptible gas sales service to those certain commercial and industrial customers that have the capability to switch
from natural gas to an alternative fuel on short notice. Yankee Gas can interrupt service to these customers during peak demand
periods or at any other time to maintain distribution system integrity. Yankee Gas also owns a 1.2 Bcf Liquefied Natural Gas (LNG)
facility in Waterbury, Connecticut which enables the company to buy natural gas in periods of low demand, store it and use it during
peak demand periods when prices are typically higher.
The following table shows the sources of 2009 and 2008 total gas operating revenues based on categories of customers:
Yankee Gas
2009 2008
Residential 48% 45%
Commercial 31% 29%
Industrial 18% 23%
Other 3% 3%
Total 100% 100%
Yankee Gas earned $21 million in 2009 compared to $27.1 million in 2008. The 2009 results were lower than 2008 due primarily to
higher operating costs, partially offset by higher revenues attributable to a 6.9 percent increase in firm natural gas sales. For more
information regarding Yankee Gas financial results, see Item 7, Management's Discussion and Analysis of Financial Condition and
Results of Operations, and Item 8, Financial Statements and Supplementary Data, which includes Note 17, "Segment Information,"
contained within this Annual Report on Form 10-K.