Eversource 2009 Annual Report Download - page 71

62
Maintenance
Maintenance expenses decreased $3 million in 2009 due primarily to lower repair and maintenance of distribution lines including lower
storm expenses and lower vegetation management expense.
Depreciation
Depreciation expenses increased $1 million in 2009 due primarily to higher utility plant balances resulting from completed construction
projects placed into service.
Amortization of Regulatory (Liabilities)/Assets, Net
Amortization of regulatory (liabilities)/assets, net expenses decreased $15 million in 2009 due primarily to the deferral of allowed
transition costs that are in excess of transition revenues, resulting from a decrease in the transition cost portion of the rate and lower
IPP revenue than previous years.
Amortization of Rate Reduction Bonds
Amortization of RRBs expenses increased $1 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 $1 million in 2009 due primarily to higher property taxes as a result of higher plant
balances and increased municipal tax rates.
Income Tax Expense
Income tax expense increased $4 million due primarily to higher pre-tax earnings.
Comparison of the Year 2008 to the Year 2007
Operating Revenues
Operating revenues decreased $23 million in 2008 due to lower distribution segment revenues ($26 million), partially offset by higher
transmission segment revenues ($3 million).
The distribution segment revenues decreased $26 million due primarily to a decrease in the portion of distribution revenues that does
not impact earnings ($24 million). These revenues do not impact earnings, primarily as a result of the inclusion of these distribution
revenues in regulatory tracking mechanisms and intracompany revenues that are eliminated in consolidation. The portion of revenues
that impacts earnings decreased $2 million.
The $24 million decrease in distribution segment revenues that does not impact earnings was due primarily to a decrease in the
portions of retail revenues that are included in DPU approved tracking mechanisms that track the recovery of certain incurred costs
through WMECO’s tariffs ($18 million) and transmission segment intracompany billings to the distribution segment that are eliminated in
consolidation ($6 million). The distribution revenue included in DPU approved tracking mechanisms decreased $18 million due primarily
to lower retail transmission revenues ($12 million) and lower pension tracker and default service true-up revenues ($8 million). 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 decreased $2 million due primarily to lower retail sales ($2 million) and a service
quality performance assessment charge ($1 million), partially offset by the rate increase effective January 1, 2008 ($2 million). Retail
sales decreased 4.2 percent in 2008 compared to 2007.
Transmission segment revenues increased $3 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 increased $1 million in 2008 due primarily to higher Basic/Default Service supply
costs, partially offset by an increased deferral of Excess Basic Service expense over Basic Service revenue and lower amortization of
the CT Yankee regulatory asset. The Basic Service Supply costs are the contractual amounts we must pay to various suppliers that
serve basic service load after winning a competitive solicitation process. To the extent these costs do not match the revenues collected
from customers, the DPU allows the difference to be deferred for future collection or refund from customers.
Other Operation
Other operation expenses decreased $22 million in 2008 as a result of lower costs that are recovered through distribution tracking
mechanisms and have no earnings impact ($20 million) such as retail transmission ($11 million) and lower tracked administrative and
general expenses mainly due to pension expense ($9 million). In addition, transmission segment intracompany billings to the
distribution segment that are eliminated in consolidation reduced expenses ($6 million), partially offset by higher distribution segment
expenses ($2 million) due primarily to higher uncollectible expenses and higher transmission segment expenses ($1 million).