Eversource 2009 Annual Report Download - page 38

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were completed in late 2008. Our transmission segment rate base has increased from approximately $1.5 billion as of December 31,
2007 to approximately $2.6 billion as of December 31, 2009.
CL&P’s 2009 distribution segment earnings were $4 million higher than 2008 due primarily to lower operating costs as a result of cost
management efforts, lower storm costs, higher distribution revenues resulting from distribution rate increases effective February 1st in
both 2008 and 2009, gains from the NU supplemental benefit trust, and the absence of a $5.8 million pre-tax charge recorded in 2008
that related to the refund of the 2004 procurement incentive fee. Partially offsetting these favorable variances were higher expenses
related to uncollectible receivable balances, higher pension costs, increased depreciation as a result of greater plant balances in service
and greater income taxes as a result of a higher effective income tax rate. CL&P’s retail electric sales in 2009 were 3.8 percent lower
than 2008. CL&P’s distribution segment regulatory ROE was 7.3 percent in 2009, well below its current authorized level of 9.4 percent,
and 7.5 percent in 2008. We expect CL&P’s regulatory ROE to continue to deteriorate before it improves starting in the second half of
2010 when we anticipate the DPUC will issue a decision on CL&P’s request to raise its distribution rates effective July 1, 2010. CL&P’s
request includes an authorized regulatory ROE of 10.5 percent.
PSNH’s 2009 distribution segment earnings were $6.1 million higher than 2008. The increase in 2009 is due primarily to higher
generation-related earnings, higher revenues attributable to the temporary distribution rate increase effective August 1, 2009, lower
carrying costs as a result of significant decreases in energy service regulatory obligations owed to customers, and gains from the NU
supplemental benefit trust, all of which were partially offset by higher pension costs, increased depreciation as a result of greater plant
balances in service, increased amortization costs, higher property taxes as a result of both a larger taxable base and increased local
municipal tax rates, and greater income taxes as a result of a higher effective income tax rate. PSNH’s retail electric sales in 2009 were
2.2 percent lower than 2008. PSNH’s distribution segment regulatory ROE was 7.2 percent in 2009 (including generation), which
reflects a regulatory ROE for the distribution business of 3.6 percent compared with its current authorized level of 9.67 percent. In
2008, PSNH's distribution segment regulatory ROE was 8.3 percent and the regulatory ROE for the distribution business was 6.3
percent. We expect PSNH’s regulatory ROE to continue to deteriorate before it improves starting in the second half of 2010 when we
anticipate the NHPUC will issue a decision on PSNH’s permanent distribution rate request. PSNH’s request includes an authorized
regulatory ROE of 10.5 percent for its distribution business.
WMECO’s 2009 distribution segment earnings were $4.4 million higher than 2008 due primarily to lower operating costs as a result of
cost management efforts, lower storm costs, gains from the NU supplemental benefit trust, and the absence of a $1.6 million pre-tax
charge recorded in 2008 related to a DPU ruling. These positive factors were partially offset by higher property taxes as a result of both
a greater asset base and increased local municipal tax rates, increased depreciation as a result of greater plant in service balances,
increased amortization, and a 4.8 percent decline in retail electric sales. WMECO’s distribution segment regulatory ROE was 8.4
percent in 2009 and 7.2 percent in 2008. We expect WMECO’s distribution segment regulatory ROE will be approximately 6 percent in
2010.
Yankee Gas’ 2009 earnings were $6.1 million lower than 2008 due primarily to higher operating costs including expenses related to
uncollectible receivable balances, employee benefits, and depreciation, partially offset by higher revenues attributable to a 6.9 percent
increase in firm natural gas sales and the absence of a $5.8 million pre-tax charge recorded in 2008 for refunds of previous gas cost
recoveries. Yankee Gas’ regulatory ROE was 6.6 percent in 2009, due primarily to higher uncollectible expenses, and 8.3 percent in
2008. Yankee Gas' authorized regulatory ROE is 10.1 percent. We expect Yankee Gas’ regulatory ROE will be approximately 9
percent in 2010 due primarily to results from improved collection efforts of customer receivables and higher distribution revenues.
For the distribution segment of our regulated companies, a summary of changes in CL&P, PSNH and WMECO retail electric gigawatt-
hour (GWh) sales and Yankee Gas firm natural gas sales for 2009 as compared to 2008 on an actual and weather normalized basis
(using a 30-year average) is as follows:
Electric Firm Natural Gas
CL&P PSNH WMECO Total Yankee Gas
Percentage
Decrease
Weather
Normalized
Percentage
Increase/
(Decrease)
Percentage
Decrease
Weather
Normalized
Percentage
Increase/
(Decrease)
Percentage
Increase/
(Decrease)
Weather
Normalized
Percentage
Increase/
(Decrease)
Percentage
Decrease
Weather
Normalized
Percentage
Increase/
(Decrease)
Percentage
Increase
Weather
Normalized
Percentage
Increase/
(Decrease)
Residential (0.7)% 1.5 % (0.2)% 0.6 % (1.6)% 0.2 % (0.7)% 1.2 % 0.7% (1.8)%
Commercial (2.9)% (1.4)% (1.5)% (0.7)% (4.8)% (3.4)% (2.8)% (1.5)% 8.7% 6.3 %
Industrial (17.6)% (16.6)% (8.2)% (7.1)% (11.7)% (10.9)% (14.1)% (13.1)% 11.3% 10.7 %
Other (2.5)% (2.5)% (3.2)% (3.2)% 12.7 % 12.7 % (1.6)% (1.6)% - -
Total (3.8)% (2.1)% (2.2)% (1.4)% (4.8)% (3.4)% (3.5)% (2.1)% 6.9% 5.0 %