Eversource 2009 Annual Report Download - page 22

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OTHER REGULATORY AND ENVIRONMENTAL MATTERS
General
We are regulated in virtually all aspects of our business by various federal and state agencies, including the FERC, the SEC, and
various state and/or local regulatory authorities with jurisdiction over the industry and the service areas in which each of our companies
operates, including the DPUC, which has jurisdiction over CL&P and Yankee Gas, the NHPUC, which has jurisdiction over PSNH, and
the DPU, which has jurisdiction over WMECO.
Environmental Regulation
We are subject to various federal, state and local requirements with respect to water quality, air quality, toxic substances, hazardous
waste and other environmental matters. Additionally, our major generation and transmission facilities may not be constructed or
significantly modified without a review of the environmental impact of the proposed construction or modification by the applicable federal
or state agencies. PSNH owns approximately 1,200 MW of generation assets in New Hampshire and is spending approximately $457
million to install a wet flue gas desulphurization system at Merrimack Station (Clean Air Project) to reduce its mercury and sulfur dioxide
emissions. Compliance with additional increasingly stringent environmental laws and regulations, particularly air and water pollution
control requirements may limit operations or require further substantial investments in new equipment at existing facilities.
Water Quality Requirements
The federal Clean Water Act requires every "point source" discharger of pollutants into navigable waters to obtain a National Pollutant
Discharge Elimination System (NPDES) permit from the United States Environmental Protection Agency or state environmental agency
specifying the allowable quantity and characteristics of its effluent. States may also require additional permits for discharges into state
waters. We are in the process of obtaining or renewing all required NPDES or state discharge permits in effect for our facilities. The
need to comply with NPDES and state discharge permits has necessitated substantial expenditures and may require further significant
expenditures, which are difficult to estimate because of additional requirements or restrictions that could be imposed in the future.
Air Quality Requirements
The Federal Clean Air Act Amendments of 1990 (CAAA), as well as New Hampshire law, impose stringent requirements on emissions
of sulfur dioxide (SO2) and nitrogen oxides (NOX) for the purpose of controlling acid rain and ground level ozone. In addition, the CAAA
address the control of toxic air pollutants. Installation of continuous emissions monitors and expanded permitting provisions also are
included.
In New Hampshire, the Multiple Pollutant Reduction Program capped NOX, SO2and carbon dioxide (CO2) emissions beginning in 2007.
In addition, a 2006 New Hampshire law requires PSNH to install a wet flue gas desulphurization system, known as "scrubber"
technology, to reduce mercury emissions of its coal fired plants by at least 80 percent (with the co-benefit of reductions in SO2
emissions as well). The Clean Air Project addresses this requirement. PSNH began site work for this project in November 2008, which
is scheduled to be completed by mid-2012.
In addition, Connecticut, New Hampshire and Massachusetts are each members of the RGGI, a cooperative effort by ten northeastern
and mid-Atlantic states, to develop a regional program for stabilizing and reducing CO2 emissions from fossil fuel-fired electric
generating plants. Because CO2 allowances issued by any participating state will be usable across all ten RGGI state programs, the
individual state CO2 trading programs, in the aggregate, will form one regional compliance market for CO2 emissions. A regulated
power plant must hold CO2 allowances equal to its emissions to demonstrate compliance at the end of a three-year compliance period
that began in 2009.
Because neither CL&P nor WMECO own any generating assets, neither is required to acquire CO2 allowances; however, the CO2
allowance costs borne by generators which provide energy supply to CL&P and WMECO will likely be included in wholesale rates
charged to them, which costs will be recoverable from customers.
PSNH anticipates that its generating units will emit between 4 million and 5 million tons of CO2 per year after taking into effect the
operation of PSNH’s Northern Wood Power Project. Under the RGGI formula, this Project decreased PSNH’s responsibility for
reducing fossil-fired CO2 emissions by approximately 425,000 tons per year, or almost ten percent. New Hampshire legislation provides
up to 2.5 million banked CO2 allowances per year for PSNH’s fossil fueled generating plants during the 2009 through 2011 compliance
period. These banked CO2 allowances will initially comprise approximately one-half of the yearly CO2 allowances required for PSNH’s
generating plants to comply with RGGI. Such banked allowances will decrease over time. PSNH expects to satisfy its remaining RGGI
requirements by purchasing CO2 allowances at auction or in the secondary market. The cost of complying with RGGI requirements is
recoverable from PSNH customers.
Each of the states in which we do business also has RPS requirements, which generally require fixed percentages of energy supply to
come from renewable energy sources such as solar, hydropower, landfill gas, fuel cells and other similar sources. New Hampshire’s
RPS provision requires increasing percentages of the electricity PSNH sells to its retail customers to have direct ties to renewable
sources, beginning in 2008 at 4 percent and ultimately reaching 23.8 percent by 2025. We expect that the additional costs incurred to
meet this requirement will be recovered through PSNH’s energy service rates. Connecticut's RPS statutes require that a specific
percentage of the energy provided to Connecticut consumers be produced from renewable energy sources. Beginning with a 4 percent