Eversource 2013 Annual Report Download - page 25

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A summary of NSTAR Gas’ and Yankee Gas’ retail firm natural gas sales and percentage changes in million cubic feet for 2013, as
compared to 2012, is as follows:
NSTAR Gas(1)
Yankee Gas
2013
2012
Percentage
Change
2013
2012
Percentage
Change
Residential
21,911
18,385
19.2%
14,866
12,488
19.0%
Commercial
21,341
19,095
11.8%
18,874
16,567
13.9%
Industrial
5,773
5,205
10.9%
15,493
15,787
(1.9%)
Total
49,025
42,685
14.9%
49,233
44,842
9.8%
Total, Net of Special Contracts (2)
45,059
39,087
15.3%
(1) NSTAR Gas’ sales data for the full-year ended December 31, 2012 has been provided for comparative purposes only.
(2) Special contracts are unique to the Yankee Gas customers who take service under such an arrangement and generally specify the
amount of distribution revenue to be paid to Yankee Gas regardless of the customers’ usage.
Our 2013 consolidated firm natural gas sales are subject to many of the same influences as our retail electric sales, but have benefitted
from favorable natural gas prices and customer growth across all three customer classes. Our 2013 consolidated firm natural gas sales
were higher, as compared to 2012, due primarily to colder weather in the first and fourth quarters of 2013. The 2013 weather-
normalized NU consolidated total firm natural gas sales increased 0.9 percent, as compared to 2012, due primarily to residential
customer growth, an increase in natural gas conversions, the migration of interruptible customers switching to firm service rates, and
the addition of gas-fired distributed generation, all of which was primarily in the Yankee Gas service territory.
NSTAR GAS
NSTAR Gas distributes natural gas to approximately 274,000 customers in 51 communities in central and eastern Massachusetts
covering 1,067 square miles. Total throughput (sales and transportation) in 2013 was approximately 60.5 Bcf. NSTAR Gas provides
firm natural gas sales service to retail customers who require a continuous natural gas supply throughout the year, such as residential
customers who rely on gas for heating, hot water and cooking needs, and commercial and industrial customers who choose to
purchase natural gas from NSTAR Gas.
Predominantly all residential customers in the NSTAR Gas service territory buy gas supply and delivery from NSTAR Gas while all
customers may choose their gas suppliers. NSTAR Gas offers firm transportation service to all customers who purchase gas from
sources other than NSTAR Gas as well as interruptible transportation and interruptible gas sales service to those commercial and
industrial customers that have the capability to switch from natural gas to an alternative fuel on short notice, for whom NSTAR Gas can
interrupt service during peak demand periods or at any other time to maintain distribution system integrity.
Rates
NSTAR Gas generates revenues primarily through the sale and/or transportation of natural gas. Gas sales and transportation services
are divided into two categories: firm, whereby NSTAR Gas must supply gas and/or transportation services to customers on demand;
and interruptible, whereby NSTAR Gas may, generally during colder months, temporarily discontinue service to high volume
commercial and industrial customers. Sales and transportation of gas to interruptible customers have no impact on NSTAR Gas’
operating income because a substantial portion of the margin for such service is returned to its firm customers as rate reductions.
The Attorney General merger settlement agreement provided for a rate freeze through 2015.
Retail natural gas delivery and supply rates are established by the DPU and are comprised of:
• A distribution charge consisting of a fixed customer charge and a demand and/or energy charge that collects the costs of
building and expanding the natural gas infrastructure to deliver natural gas supply to its customers. This also includes
collection of ongoing operating costs;
• A seasonal cost of gas adjustment clause (CGAC) that collects natural gas supply costs, pipeline and storage capacity costs,
costs related to charge-offs of uncollected energy costs and working capital related costs. The CGAC is reset every six
months. In addition, NSTAR Gas files interim changes to its CGAC factor when the actual costs of natural gas supply vary
from projections by more than 5 percent; and
• A local distribution adjustment clause (LDAC) that collects energy efficiency program costs, environmental costs, PAM related
costs, and costs associated with the residential assistance adjustment clause. The LDAC is reset annually and provides for
the recovery of certain costs applicable to both sales and transportation customers.
NSTAR Gas purchases financial contracts based on NYMEX natural gas futures in order to reduce cash flow variability associated with
the purchase price for approximately one-third of its natural gas purchases. These purchases are made under a program approved by
the Massachusetts Department of Public Utilities in 2006. This practice attempts to minimize the impact of fluctuations in prices to
NSTAR Gas’ firm gas customers. These financial contracts do not procure gas supply. All costs incurred or benefits realized when
these contracts are settled are included in the CGAC.