Eversource 2009 Annual Report Download - page 47

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Our share of NEEWS is estimated to cost $1.49 billion, and we received incentives on a portion of the transmission upgrades with a
current estimated cost to NU of $1.41 billion. Several parties have sought rehearing of the FERC order granting incentives for NEEWS,
which has not yet been acted on by the FERC.
Legislative Matters
2009 Federal Legislation: The American Recovery and Reinvestment Act of 2009 provides resources through grants and loans for
several energy-related areas that are relevant to NU, including funding for energy efficiency, smart grid, renewable energy and
transmission projects. This legislation also extended tax rules allowing the accelerated deduction of depreciation, which had a positive
impact to our 2009 operating cash flows of approximately $100 million.
Climate Change and Greenhouse Gas Issues: Global climate change and greenhouse gas emission issues have received an increased
focus from state governments and the federal government, particularly in the last year. The U.S. Environmental Protection Agency
(EPA) has initiated a rulemaking addressing greenhouse gas emissions and, on December 7, 2009, issued a finding that concluded that
greenhouse gas emissions are "air pollution" and endanger public health and welfare and should be regulated. The largest source of
greenhouse gas emissions in the U.S. is the electricity generating sector.
Climate change concerns and greenhouse gas issues could lead to additional rules and regulations that impact how we operate our
business, both in terms of the generating facilities we own and operate as well as general utility operations. These could include federal
“cap and trade” laws, or regulations requiring additional capital expenditures at our generating facilities. Any such regulations or laws
will likely impact PSNH's generating plants and possibly the prices that CL&P and WMECO pay for generation service. In addition, such
legislation could potentially impact the prices we pay for goods and services provided by companies directly affected by such legislation.
We would expect that any costs of these rules and regulations would be recovered from customers, but such costs could impact energy
use by our customers. To date, the regulatory consequences of global climate change have not materially affected us, and it is
uncertain what effects, if any, this issue will have on us in the future. For further information see “Other Regulatory and Environmental
Matters - Climate Change and Greenhouse Gas Issues” in Item 1, Business.
2009 Massachusetts Legislation: In November 2009, in response to a severe winter storm in December 2008, Massachusetts passed
legislation that authorizes the DPU to levy financial penalties if utilities do not follow approved storm plans and puts into law existing
requirements for utility storm restoration plans. The new law provides that under a declared state of emergency, the Governor may
authorize the DPU Chairman to issue extraordinary temporary orders on utilities to expend funds and redeploy resources to restore
service with failure to carry out such an order subject to investigation and a penalty of up to $1 million per violation. The law also
codifies existing requirements for utilities to file storm restoration plans and creates significant new financial penalties for late filing and
for any failure to implement such plans and requires each utility to submit annual emergency response plans for DPU review and
approval. There is no current impact on WMECO’s financial condition from this legislation.
Regulatory Developments and Rate Matters
Connecticut - CL&P:
Distribution Rates: CL&P implemented new distribution rates in 2009 to reflect the DPUC's 2008 decision allowing a $20.1 million
annualized increase in distribution rates, effective February 1, 2009. On January 8, 2010, CL&P filed an application with the DPUC to
raise distribution rates by $133.4 million, or 3.4 percent over current revenues, to be effective July 1, 2010, and by an additional $44.2
million, or 1.1 percent over current revenues, to be effective July 1, 2011. Among other items, CL&P is seeking an increase in its
authorized ROE from the current 9.4 percent to 10.5 percent. CL&P proposed that the first year’s increase be deferred until January 1,
2011 and that approximately $67 million of cash revenue requirement for the second half of 2010 would be deferred and recovered from
CL&P customers between January 1, 2011 and June 30, 2012. If approved by the DPUC, the application would require an annualized
$210 million increase in distribution rates to take effect on January 1, 2011. CL&P expects that as a result of a decline in stranded cost
recoveries due to the final amortization of CL&P’s rate reduction bonds in December 2010, CL&P’s Competitive Transition Assessment
(CTA) will decline by approximately $230 million on an annualized basis on January 1, 2011, more than offsetting the impact of the
distribution rate increase. Hearings before the DPUC are scheduled to begin in March 2010 and a decision is expected in mid-2010.
Standard Service and Last Resort Service Rates: CL&P's residential and small commercial customers who do not choose competitive
suppliers are served under Standard Service (SS) rates, and large commercial and industrial customers who do not choose competitive
suppliers are served under Last Resort Service (LRS) rates. Effective January 1, 2009, the DPUC approved an increase to CL&P’s
total average SS rate of approximately 2.4 percent and a decrease to CL&P’s total average LRS rate of approximately 5.9 percent.
Effective April 1, 2009, the DPUC approved a decrease to CL&P’s total average LRS rate of approximately 22 percent. Effective July 1,
2009, the DPUC approved total average SS rates that did not change from the previous rates, though the energy supply portion of the
rates increased from 12.316 cents per kilowatt-hour (KWh) to 12.516 cents per KWh. The DPUC also approved a decrease to CL&P's
total average LRS rates of approximately 2.3 percent, which was primarily the result of the energy supply portion decreasing to 7.944
cents per KWh. Effective October 1, 2009, the DPUC approved an increase to CL&P's total average LRS rates of approximately 5.8
percent, which was primarily the result of the energy supply portion increasing to 8.657 cents per KWh. Effective January 1, 2010, the
DPUC approved a decrease to CL&P’s total average SS rates of approximately 4.6 percent and an increase in the total average LRS
rate of approximately 10.2 percent. The energy supply portion of the total average SS rate decreased from 12.516 cents per KWh to
11.289 cents per KWh. The energy supply portion of the total average LRS rate increased from 8.657 cents per KWh to 9.662 cents
per KWh. CL&P is fully recovering from customers the costs of its SS and LRS services.