Eversource 2013 Annual Report Download - page 56

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Yankee Gas Distribution Rate Case: On June 29, 2011, PURA issued a final decision in the Yankee Gas rate proceeding, which it
subsequently amended on September 28, 2011. The final decision, as amended, approved a regulatory ROE of 8.83 percent, based
on a capital structure of 52.2 percent common equity and 47.8 percent debt, approved Yankee Gas’ WWL Project, and allowed for an
increase for bare steel and cast iron pipe annual replacement funding, as requested by Yankee Gas. The changes were effective
July 20, 2011 and had the effect of decreasing revenues by $0.2 million for the twelve months ended June 30, 2012 and increasing
revenues by $6.9 million for the twelve months ended June 30, 2013.
Yankee Gas Natural Gas Expansion Plan: On June 14, 2013, Yankee Gas and other Connecticut natural gas distribution companies
filed an expansion plan with DEEP and PURA in response to the Connecticut CES and the recently enacted Connecticut Public Act 13-
298, "An Act Concerning Implementation of Connecticut’s Comprehensive Energy Strategy and Various Revisions to the Energy
Statutes." The expansion plan describes how the natural gas distribution companies expect to add approximately 280,000 new natural
gas heating customers over the next 10 years. Yankee Gas will serve approximately 82,000 of those customers.
The expansion plan outlines a set of comprehensive recommendations, several of which are already incorporated into Public Act 13-
298. Key recommendations include providing more flexibility in the process of adding new customers, establishing new regulatory tools
to help fund conversion costs over time, providing for mechanisms for timely recovery of capital investments made by natural gas
distribution companies and allowing utilities to secure additional pipeline capacity into Connecticut.
On July 16, 2013, DEEP issued a determination letter finding the expansion plan was consistent with the CES and requesting certain
modifications to be made. On July 26, 2013, the natural gas distribution companies submitted their responses to DEEP and PURA. On
November 22, 2013, PURA issued a final decision approving the expansion plan consistent with the goals of the CES. For further
information on the Connecticut law, see "Legislative and Policy Matters - Connecticut" in this Management’s Discussion and Analysis.
Massachusetts:
Basic Service Rates: Electric distribution companies in Massachusetts are required to obtain and resell power to retail customers
through Basic Service for those customers who choose not to buy energy from a competitive energy supplier. Basic Service rates are
reset every six months (every three months for large commercial and industrial customers). NSTAR Electric and WMECO fully recover
their energy costs through DPU-approved regulatory rate mechanisms.
2014 Annual Reconciliation Filing: On November 1, 2013, NSTAR Electric and WMECO filed separately their respective 2014 annual
cost recovery mechanisms, including the mechanisms to collect the costs to provide retail transmission, energy supply and energy
efficiency services to its customers as well as the costs related to pension and other post-retirement employee benefit costs. The
reconciliation filings compared the total revenues to revenue requirements related to these services. On December 31, 2013, the DPU
issued a final decision approving the rates as filed, subject to future review and reconciliation. As of December 31, 2013, we had
cumulative deferred net regulatory asset balances related to these services of $142.1 million and $9.9 million for NSTAR Electric and
WMECO, respectively.
Energy Efficiency Plans: In accordance with Massachusetts law passed in 2008 known as the Green Communities Act, natural gas and
electric distribution companies must file three-year energy efficiency plans, which were initially filed by NSTAR Electric, WMECO and
NSTAR Gas, and approved by the DPU, in 2010 covering the period 2010 through 2012. The NSTAR Electric, WMECO and NSTAR
Gas three-year plans covering the period 2013 through 2015 were approved by the DPU in 2013. Distribution companies that do not
yet have rate decoupling mechanisms in place, like NSTAR Electric and NSTAR Gas, include Lost Base Revenue (LBR) rate
adjustment mechanisms in order to offset reduced distribution rate revenues as a result of successful energy efficiency programs. For
the year ended December 31, 2013, NSTAR Electric, WMECO and NSTAR Gas incurred recoverable Energy Efficiency program
expenses of $167.2 million, $38.9 million, and $31 million, respectively.
Long-Term Wind Contracts: NSTAR Electric and WMECO, along with two other Massachusetts utilities, signed a long-term
commitment, as required by regulation, to purchase wind power from six wind farms in Maine and New Hampshire for a combined
estimated generating capacity of approximately 565 MW. On September 20, 2013, these contracts were filed jointly with the DPU. On
November 21, 2013, the utility companies provided a supplemental filing to the DPU to reflect the termination of three of the six wind
farms. Initial briefs were filed on December 23, 2013 and reply briefs were filed on January 8, 2014. Over the 15-year life of the
remaining contracts, the utilities will pay an average price of less than 8 cents per kWh. The projects are in various stages of permitting
or development and are expected to begin operation in 2015 and 2016.
On November 26, 2012, the DPU approved NSTAR Electric’s 15-year renewable energy contract with Cape Wind Associates, LLC.
Under this contract, NSTAR Electric would purchase 129 MW of renewable energy from an offshore wind energy facility, which is
currently expected to achieve commercial operation by May 2016.
DPU Safety and Reliability Programs (CPSL): Since 2006, NSTAR Electric has been recovering incremental costs related to the DPU-
approved Safety and Reliability Programs. From 2006 through 2011, cumulative costs associated with the CPSL program resulted in
an incremental revenue requirement to customers of approximately $83 million. These amounts included incremental operations and
maintenance costs and the related revenue requirement for specific capital investments relative to the CPSL programs.
On May 28, 2010, the DPU issued an order on NSTAR Electric’s 2006 CPSL cost recovery filing (the May 2010 Order). In October
2010, NSTAR Electric filed a reconciliation of the cumulative CPSL program activity for the periods 2006 through 2009 with the DPU in
order to determine a proposed rate adjustment. The DPU allowed the proposed rates to go into effect January 1, 2011, subject to final