Eversource 2009 Annual Report Download - page 153

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7. Commitments and Contingencies
A. Environmental Matters (CL&P, PSNH, WMECO, HWP)
General: NU, CL&P, PSNH, and WMECO are subject to environmental laws and regulations intended to mitigate or remove the effect
of past operations and improve or maintain the quality of the environment. These laws and regulations require the removal or the
remedy of the effect on the environment of the disposal or release of certain specified hazardous substances at current and former
operating sites. As such, NU, CL&P, PSNH, and WMECO have an active environmental auditing and training program and believe that
they are substantially in compliance with all enacted laws and regulations.
Environmental reserves are accrued when assessments indicate that it is probable that a liability has been incurred and an amount can
be reasonably estimated. The approach used estimates the liability based on the most likely action plan from a variety of available
remediation options, including no action required or several different remedies ranging from establishing institutional controls to full site
remediation and monitoring.
These estimates are subjective in nature as they take into consideration several different remediation options at each specific site. The
reliability and precision of these estimates can be affected by several factors, including new information concerning either the level of
contamination at the site, the extent of NU, CL&P, PSNH, and WMECO's responsibility or the extent of remediation required, recently
enacted laws and regulations or a change in cost estimates due to certain economic factors.
The amounts recorded as environmental liabilities included in Deferred credits and other liabilities - other on the accompanying
consolidated balance sheets represent management's best estimate of the liability for environmental costs, if reasonably estimable, and
take into consideration site assessment and remediation costs. A reconciliation of the activity in the environmental reserves as of
December 31, 2009 and 2008 is as follows:
NU CL&P PSNH WMECO
(Millions of Dollars)
Balance as of December 31, 2007 $ 25.8 $2.9 $5.5 $0.3
Additions 4.6 0.2 0.6 0.5
Payments (3.0) (0.3) (0.6) (0.5)
Balance as of December 31, 2008 27.4 2.8 5.5 0.3
Additions 2.3 0.3 0.1 0.4
Payments (3.7) (0.4) (0.3) (0.3)
Balance as of December 31, 2009 $ 26.0 $2.7 $5.3 $0.4
These liabilities are estimated on an undiscounted basis and do not assume that any amounts are recoverable from insurance
companies or other third parties. NU, CL&P, PSNH, and WMECO have not recorded any probable recoveries from third parties. The
environmental reserve includes sites at different stages of discovery and remediation and does not include any unasserted claims.
As of December 31, 2009, the status of environmental sites are as follows:
(Number of Sites) NU CL&P PSNH WMECO
Remediation or long-term monitoring phase 29 5 11 7
Some site assessment completed 22 10 2 2
Preliminary site assessment stage 6 2 4 -
Total environmental sites 57 17 17 9
As of December 31, 2009, in addition to the 57 sites (17 for CL&P, 17 for PSNH, and 9 for WMECO), there were 12 sites (7 for CL&P, 2
for PSNH, and 1 for WMECO) for which there are unasserted claims; however, any related site assessment or remediation costs are
not probable or estimable at this time. NU, CL&P, PSNH, and WMECO's environmental liability also takes into account recurring costs
of managing hazardous substances and pollutants, mandated expenditures to remediate previously contaminated sites and any other
infrequent and non-recurring clean up costs.
HWP remains in the process of evaluating additional potential remediation requirements at a river site in Massachusetts containing tar
deposits associated with a manufactured gas plant (MGP) site, which it sold to Holyoke Gas and Electric (HG&E), a municipal electric
utility, in 1902. HWP is at least partially responsible for this site, and has already conducted substantial investigative and remediation
activities. HWP first established a reserve for this site in 1994. A pre-tax charge of $1.1 million was recorded in 2009 to reflect the
estimated cost of additional tar delineation and site characterization studies that were considered to be probable and estimable. The
cumulative expense recorded to this reserve through December 31, 2009 was approximately $17 million, of which $15.9 million had
been spent, leaving approximately $1.1 million in the reserve as of December 31, 2009.
The Massachusetts Department of Environmental Protection (MA DEP) issued a letter on April 3, 2008 to HWP and HG&E, which share
responsibility for the site, providing conditional authorization for additional investigatory and risk characterization activities and providing
detailed comments on HWP's 2007 reports and proposals for further investigations. The MA DEP also indicated that further removal of
tar in certain areas was necessary prior to commencing many of the additional studies and evaluation. This letter represents guidance
from the MA DEP, rather than mandates. HWP has developed and implemented site characterization studies to further delineate tar
deposits in conformity with MA DEP's guidance letter, including estimated costs and schedules. These matters are subject to ongoing
discussions with the MA DEP and HG&E and may change from time to time.