Eversource 2009 Annual Report Download - page 65

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million), partially offset by higher retail transmission revenues ($65 million) mainly as a result of higher 2008 rates, higher wholesale
revenues ($59 million), and higher SBC revenues ($36 million). The lower GSC and supply-related FMCC revenue was due primarily
to a reduction in load, caused primarily by customer migration to third-party suppliers, lower congestion costs and lower sales in 2008.
The lower delivery-related FMCC revenue was due primarily to a decrease in this rate component in 2008 as a result of lower reliability
must run (RMR), VAR support and southwest Connecticut energy resource costs in 2008, as well as a larger prior year overrecovery
being refunded to customers in 2008 as compared to 2007. The tracking mechanisms allow for rates to be changed periodically with
overcollections refunded to customers or undercollections recovered from customers in future periods.
The portion of the revenues that impacts earnings increased $62 million due primarily to the rate increase effective February 1, 2008
($75 million), partially offset by lower retail sales ($10 million). Retail sales decreased 3.7 percent in 2008 compared to 2007.
Transmission segment revenues increased $110 million due primarily to a higher transmission investment base, the impact of the
March 24, 2008 FERC ROE decision and higher operating expenses that are passed through to customers under FERC-approved
transmission tariffs.
Fuel, Purchased and Net Interchange Power
Fuel, purchased and net interchange power expenses decreased $432 million in 2008 due primarily to lower GSC supply costs ($231
million), a decrease in deferred fuel costs ($174 million) and lower other purchased power costs ($27 million), all of which are included
in DPUC approved tracking mechanisms. The $231 million decrease in GSC supply costs was due primarily to a reduction in load
caused primarily by customer migration to third party suppliers and lower retail sales. These GSC supply costs are the contractual
amounts CL&P must pay to various suppliers that have been awarded the right to supply standard service (SS) and last resort service
(LRS) load through a competitive solicitation process. The $174 million decrease in deferred fuel costs was due primarily to the
combined effect of CL&P having a supply and delivery-related net FMCC overrecovery in 2007 and a supply and delivery-related net
FMCC underrecovery in 2008.
Other Operation
Other operation expenses increased $22 million in 2008 as a result of higher costs that are recovered through distribution tracking
mechanisms and have no earnings impact ($104 million) such as retail transmission ($59 million), RMR ($17 million), higher
uncollectibles ($12 million), higher tracked administrative and general expenses ($9 million), and higher Energy Independence Act (EIA)
expenses ($6 million). In addition, there were higher transmission segment expenses ($5 million), partially offset by lower transmission
segment intracompany billing to the distribution segment that are eliminated in consolidation ($80 million), and lower distribution
segment expenses ($8 million) due primarily to lower pension, regulatory assessments and workers compensation expenses, partially
offset by a charge to refund the 2004 procurement incentive fee that was recognized in 2005 earnings.
Maintenance
Maintenance expenses increased $22 million in 2008 due primarily to higher distribution overhead lines ($10 million), due primarily to
more storms in 2008 compared to 2007, higher vegetation management expenses ($6 million), higher transmission segment expenses
($4 million), and higher distribution substation equipment expenses ($2 million).
Depreciation
Depreciation expenses increased $11 million in 2008 due primarily to higher utility plant balances resulting from completed construction
programs placed into service.
Amortization of Regulatory Assets, Net
Amortization of regulatory assets, net expenses increased $144 million in 2008 due primarily to higher amortization related to the
recovery of transition charges ($62 million), a higher recovery and lower expenses for SBC ($50 million), and a credit in 2007 pertaining
to the refund of the GSC overrecovery ($29 million).
Amortization of Rate Reduction Bonds
Amortization of RRBs expenses increased $10 million in 2008, which corresponded to the reduction in principle of the RRBs.
Taxes Other Than Income Taxes
Taxes other than income taxes expenses increased $11 million in 2008 due primarily to higher gross earnings taxes recoverable in
rates as a result of higher distribution revenues that are subject to gross earnings tax ($13 million) and higher property taxes as a result
of increased plant balances and increased municipal tax rates ($2 million), partially offset by lower payroll taxes charged to expense ($3
million).
Interest Expense, Net
Interest expense, net increased $8 million in 2008 due primarily to higher long-term debt interest ($21 million) resulting from the $200
million debt issuance in September 2007, the $300 million debt issuance in March 2007 and the $300 million debt issuance in May
2008, partially offset by lower RRB interest resulting from lower principal balances outstanding ($9 million), and lower other interest ($3
million) mostly related to short-term debt.