Eversource 2009 Annual Report Download - page 68

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Station ($2 million) and hydro expenses incurred in 2008 primarily as a result of two major dam resurfacing projects ($1 million), partially
offset by higher vegetation management expenses ($5 million).
Depreciation
Depreciation expense increased $6 million in 2009 due primarily to higher utility plant balances resulting from completed construction
projects placed into service in the distribution segment ($3 million) and the transmission segment ($2 million).
Amortization of Regulatory (Liabilities)/Assets, Net
Amortization of regulatory (liabilities)/assets, net expense decreased $39 million in 2009 due primarily to a decrease in net deferrals
associated with the ES and TCAM tracking mechanisms, partially offset by an increase in net deferrals associated with the SCRC
tracking mechanism.
Amortization of Rate Reduction Bonds
Amortization of RRBs expense increased $2 million in 2009, which corresponded to the reduction in principal of the RRBs.
Taxes Other Than Income Taxes
Taxes other than income taxes expenses increased $6 million in 2009 due primarily to higher property taxes as a result of higher net
plant balances and increased local municipal tax rates ($7 million), partially offset by lower sales taxes as a result of the resolution of
various routine tax issues ($1 million).
Interest Expense, Net
Interest expense, net decreased $4 million in 2009 due primarily to lower RRB interest resulting from lower principal balances
outstanding ($3 million) and lower other interest ($1 million) mostly related to the resolution of various routine tax issues.
Other Income, Net
Other income, net increased $2 million in 2009 due primarily to higher investment income related to improved results from the NU
supplemental benefit trust and the absence of other-than-temporary impairments recorded in 2008, and higher interest income related
to the return on the December 2008 ice storm, partially offset by the absence in 2009 of interest income related to a federal tax
settlement in 2008 and lower AFUDC equity income due to higher short-term debt, which resulted in a lower rate based on borrowing
costs.
Income Tax Expense
Income tax expense increased $10 million in 2009 due primarily to higher pre-tax earnings ($6 million) and less favorable depreciation
deduction adjustments ($2 million).
Comparison of the Year 2008 to the Year 2007
Operating Revenues
Operating revenues increased $58 million in 2008 due to higher distribution segment revenues ($46 million) and higher transmission
segment revenues ($12 million).
The distribution segment revenues increased $46 million due primarily to an increase in the portion of distribution revenues that does
not impact earnings ($37 million). These revenues do not impact earnings, primarily as a result of the inclusion of these distribution
revenues in regulatory tracking mechanisms and consolidation eliminations of transmission segment intracompany billings to the
distribution segment. The portion of revenues that impacts earnings increased $8 million primarily as a result of rate changes ($13
million) from increases effective July 1, 2007 and January 1, 2008, partially offset by a rate decrease effective July 1, 2008. The
combined increase in rates is partially offset by lower retail sales ($4 million). Retail sales decreased 2.5 percent in 2008 compared to
2007.
The $37 million increase in distribution segment revenues that does not impact earnings was due primarily to an increase in the portions
of retail revenues that are included in NHPUC approved tracking mechanisms that track the recovery of certain incurred costs ($55
million) through PSNH’s tariffs, partially offset by transmission segment intracompany billings to the distribution segment that are
eliminated in consolidation ($18 million). The distribution revenue included in NHPUC approved tracking mechanisms increased $55
million due primarily to the pass-through of higher purchased fuel and power costs ($78 million), higher retail transmission revenues
($17 million), higher wholesale revenues ($8 million), and higher Northern Wood Power Plant renewable energy certificate revenues ($3
million), partially offset by a decrease in the SCRC ($55 million) due primarily to a decrease in the SCRC rate effective July 1, 2008.
The tracking mechanisms allow for rates to be changed periodically with overcollections refunded to customers or undercollections
recovered from customers in future periods.
Transmission segment revenues increased $12 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.