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CTA and SBC Reconciliation: On March 31, 2009, CL&P filed with the DPUC its 2008 CTA and Systems Benefits Charge (SBC)
reconciliation, which compared CTA and SBC revenues charged to customers to revenue requirements, which allow for full recovery of
these amounts. For the 12 months ended December 31, 2008, total CTA revenues exceeded CTA revenue requirements by $84.9
million, which was recorded as a decrease to Regulatory assets on the accompanying consolidated balance sheets. For the 12 months
ended December 31, 2008, the SBC revenues exceeded SBC revenue requirements by $2.5 million, which was recorded as a decrease
to Regulatory assets on the accompanying consolidated balance sheets. On September 30, 2009, the DPUC issued a final decision in
this docket that approved the 2008 CTA and SBC reconciliations as filed and provided for a subsequent review that resulted in the
DPUC increasing the CTA rate by approximately 0.1 cent per KWh, effective January 1, 2010.
FMCC Filing: On February 6, 2009, CL&P filed with the DPUC its semi-annual FMCC filing, which reconciled actual FMCC revenues
and charges and GSC revenues and expenses, for the period July 1, 2008 through December 31, 2008, and also included the
previously filed revenues and expenses for the January 1, 2008 through June 30, 2008 period. The filing identified an underrecovery for
the full year totaling approximately $31.9 million. On November 25, 2009, the DPUC issued a final decision accepting CL&P's
calculations as filed. On August 3, 2009, CL&P filed with the DPUC its semi-annual FMCC filing for the period January 1, 2009 through
June 30, 2009, which identified a net underrecovery of $7.1 million for that period. On December 16, 2009, the DPUC issued a final
decision on this filing accepting CL&P’s calculations as filed. On February 5, 2010, CL&P filed with the DPUC its semi-annual filing,
which reconciled actual FMCC revenues and charges and GSC revenues and expenses, for the period July 1, 2009 through
December 31, 2009, and also included the previously filed revenues and expenses for the January 1, 2009 through June 30, 2009
period. The filing identified a total net underrecovery of $6.5 million, which includes the remaining uncollected portions of previous
filings' underrecoveries and has been recorded as a Regulatory asset on the accompanying consolidated balance sheets. We do not
expect the outcome of the DPUC's review of this filing to have a material adverse impact on CL&P's earnings, financial position or cash
flows.
Renewable Energy Contracts: In May 2009, pursuant to Connecticut’s "Act Concerning Energy Independence," the DPUC approved
five renewable energy plant projects with total capacity of 27.3 MW. Contracts for the purchase of energy, capacity and renewable
energy certificates from these projects have been signed by CL&P and were approved by the DPUC on August 4, 2009. Purchases
under the contracts are scheduled to begin from September 2010 through July 2011 and to extend for 15 to 20 years. As directed by
the DPUC, CL&P and The United Illuminating Company (UI) have signed a sharing agreement under which they will share the costs
and benefits of these contracts with 80 percent to CL&P and 20 percent to UI. CL&P’s portion of the costs and benefits of these
contracts will be paid by or refunded to CL&P’s customers.
Procurement Fee Rate Proceedings: In prior years, CL&P submitted to the DPUC its proposed methodology to calculate the variable
incentive portion of its transition service procurement fee, which was effective for the years 2004, 2005 and 2006, and requested
approval of the pre-tax $5.8 million 2004 incentive fee. CL&P has not recorded amounts related to the 2005 or 2006 procurement fee in
earnings. CL&P recovered the $5.8 million pre-tax amount, which was recorded in 2005 earnings, through the CTA reconciliation
process. On January 15, 2009, the DPUC issued a final decision in this docket reversing its December 2005 draft decision and stated
that CL&P was not eligible for the procurement incentive compensation for 2004. A $5.8 million pre-tax charge (approximately $3.5
million net of tax) was recorded in the 2008 earnings of CL&P, and an obligation to refund the $5.8 million to customers was established
as of December 31, 2008. CL&P filed an appeal of this decision on February 26, 2009. On February, 4, 2010, the Connecticut Superior
Court reversed the DPUC decision. The Court remanded the case back to the DPUC for the correction of several specific errors. We
do not yet know if the DPUC will appeal the Court's finding or what the schedule of the remanded case will be.
New Hampshire:
Merrimack Clean Air Project: On July 7, 2009, the New Hampshire Site Evaluation Committee voted that PSNH’s Clean Air Project to
install wet scrubber technology at its Merrimack Station was not subject to the Committee’s review as a "sizeable" addition to a power
plant under state law. That Committee upheld its decision in an order dated January 15, 2010, denying requests for rehearing. This
order was appealed on February 23, 2010; however, we do not believe that the appeal will have a material impact on the timing or costs
of the project. On August 5, 2009, the New Hampshire Supreme Court dismissed an appeal of a prior NHPUC ruling on the project,
holding the appellants were not harmed and thus lacked standing to bring their challenge. PSNH continues to develop this project,
which has a total estimated cost of $457 million and for which construction is approximately 34 percent complete as of December 31,
2009.
Distribution Rates: The NHPUC issued an order on July 31, 2009 approving a temporary increase of $25.6 million in PSNH’s
distribution rates on an annualized basis, effective August 1, 2009. Included in the $25.6 million temporary increase is $6 million to
begin the recovery of PSNH's approximately $49 million deferral of storm costs incurred in December 2008.
On June 30, 2009, PSNH filed an application with the NHPUC requesting a permanent increase in distribution rates of approximately
$51 million on an annualized basis to be effective August 1, 2009, and another $17 million to be effective July 1, 2010. Hearings before
the NHPUC are scheduled for April 2010 and PSNH expects a decision in mid-2010. Any differences between allowed temporary rates
and permanent rates will be reconciled back to August 1, 2009.
ES and SCRC Rates: On July 23, 2009 and July 24, 2009, the NHPUC approved stranded cost recovery charge (SCRC) and ES rates
of 1.14 cents and 9.03 cents per KWh, respectively, which were effective August 1, 2009 through December 31, 2009. On
December 22, 2009 and December 31, 2009, the NHPUC approved SCRC and ES rates of 1.18 cents and 8.96 cents per KWh,
respectively, which are effective January 1, 2010 through December 31, 2010.