Eversource 2009 Annual Report Download - page 154

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At this time, management believes that the $1.1 million remaining in the reserve is at the low end of a range of probable and estimable
costs of approximately $1.1 million to $1.8 million and will be sufficient for HWP to evaluate the results of the additional tar delineation
and site characterization studies, evaluate its approach to this matter and conduct certain soft tar remediation.
There are many outcomes that could affect management's estimates and require an increase to the reserve, or range of costs, and a
reserve increase would be reflected as a charge to pre-tax Net income. However, management cannot reasonably estimate the range
of additional investigation and remediation costs because it will depend on, among other things, the level and extent of the remaining
tar, the extent of remediation required by the MA DEP and the related scope and timing, all of which are difficult to estimate because of
a number of uncertainties at this time. Further developments may require a material increase to this reserve.
HWP's share of the remediation costs related to this site is not recoverable from customers.
MGP Sites: MGP sites comprise the largest portion of the Company's environmental liabilities. MGP sites are sites that manufactured
gas from coal producing certain byproducts that may pose a risk to human health and the environment. As of December 31, 2009 and
2008, $24.1 million and $25.4 million ($1.5 million and $1.5 million for CL&P, $4.5 million and $4.8 million for PSNH, and $0.2 million
and $0.1 million for WMECO), respectively, represent amounts for the site assessment and remediation of the Company's MGP sites.
As of December 31, 2009 and 2008, the 5 (1 for PSNH) largest MGP sites comprise approximately 67 percent and 63 percent (80
percent and 76 percent for PSNH), respectively, of the total MGP site environmental liability.
For 7 of the 57 sites (3 of the 17 for CL&P, 2 of the 17 for PSNH, and 1 of the 9 for WMECO) that are included in the Company's liability
for environmental costs, the information known and nature of the remediation options at those sites allow for the Company to estimate
the range of losses for environmental costs. As of December 31, 2009, $4 million ($1.7 million for CL&P, $0.7 million for PSNH, and
$0.1 million for WMECO) had been accrued as a liability for these sites, which represent management's best estimates of the liabilities
for environmental costs. These amounts are the best estimates within estimated ranges of losses from zero to $9.5 million ($1.5 million
to $6 million for CL&P, zero to $4.2 million for PSNH, and zero to $8.7 million for WMECO). For the 50 remaining sites (14 for CL&P,
15 for PSNH, and 8 for WMECO) included in the environmental reserve, determining an estimated range of loss is not possible at this
time.
CERCLA Matters: The federal Comprehensive Environmental Response, Compensation and Liability Act of 1980 (CERCLA) and its
amendments or state equivalents impose joint and several strict liabilities, regardless of fault, upon generators of hazardous substances
resulting in removal and remediation costs and environmental damages. Liabilities under these laws can be material and in some
instances may be imposed without regard to fault or for past acts that may have been lawful at the time they occurred. Of the 57 sites
(17 for CL&P, 17 for PSNH, and 9 for WMECO), 5 (1 for CL&P, 3 for PSNH, and one site having both CL&P and WMECO involved as a
party) are superfund sites under CERCLA for which the Company has been notified that it is a potentially responsible party but for which
the site assessment and remediation are not being managed by the Company. As of December 31, 2009, a liability of $0.7 million ($0.4
million for CL&P, $0.3 million for PSNH, and $31 thousand for WMECO) accrued on these sites represents management's best
estimate of its potential remediation costs with respect to these 5 (1 for CL&P, 3 for PSNH, and one site having both CL&P and
WMECO involved as a party) superfund sites.
It is possible that new information or future developments could require a reassessment of the potential exposure to related
environmental matters. As this information becomes available, management will continue to assess the potential exposure and adjust
the reserves accordingly.
Environmental Rate Recovery: PSNH and Yankee Gas have rate recovery mechanisms for environmental costs. CL&P recovers a
certain level of environmental costs currently in rates but does not have an environmental cost recovery tracking mechanism.
Accordingly, changes in CL&P's environmental reserves impact CL&P's Net income. WMECO does not have a separate regulatory
mechanism to recover environmental costs from its customers, and changes in WMECO's environmental reserves impact WMECO's
Net income.
B. Spent Nuclear Fuel Disposal Costs (CL&P, WMECO)
Under the Nuclear Waste Policy Act of 1982 (the Act), CL&P and WMECO must pay the United States Department of Energy (DOE) for
the costs of disposal of spent nuclear fuel and high-level radioactive waste for the period prior to the sale of their ownership shares in
the Millstone 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 by CL&P and WMECO to the DOE prior to the
first delivery of spent fuel to the DOE. After the sale of Millstone, CL&P and WMECO remained responsible for their share of the
disposal costs associated with the Prior Period Spent Nuclear Fuel. Until such payment to the DOE is made, the outstanding liability will
continue to accrue interest at the 3-month treasury bill yield rate. Fees due to the DOE for the disposal of Prior Period Spent Nuclear
Fuel as of December 31, 2009 and 2008 are included in long-term debt and were $300.6 million and $298.6 million ($243.5 million and
$243 million for CL&P and $57.1 million and $55.6 million for WMECO), respectively, including accumulated interest costs of $218.5
million and $217.9 million ($177 million and $176.5 million for CL&P and $41.5 million and $41.4 million for WMECO), respectively.