Eversource 2013 Annual Report Download - page 57

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reconciliation of CPSL program costs through a future DPU proceeding. In February 2013, NSTAR Electric updated the October 2010
filing with final activity through 2011. NSTAR Electric recorded its 2006 through 2011 revenues under the CPSL programs based on
the May 2010 Order.
NSTAR Electric cannot predict the timing of a final DPU order related to its CPSL filings for the period 2006 through 2011. While we do
not believe that any subsequent DPU order would result in revenues that are materially different than the amounts already recognized,
it is reasonably possible that an order could have a material impact on NSTAR Electric’s results of operations, financial position and
cash flows.
The April 4, 2012 DPU-approved comprehensive merger settlement agreement with the Massachusetts Attorney General stipulates that
NSTAR Electric must incur a revenue requirement of at least $15 million per year for 2012 through 2015 related to these programs.
CPSL revenues will end once NSTAR Electric has recovered its 2015-related CPSL costs. Realization of these revenues is subject to
maintaining certain performance metrics over the four-year period and DPU approval. As of December 31, 2013, NSTAR Electric was
in compliance with the performance metrics and has recognized the entire $15 million revenue requirement during 2013 and 2012.
Basic Service Bad Debt Adder: In accordance with a generic DPU order, electric utilities in Massachusetts recover the energy-related
portion of bad debt costs in their Basic Service rates. In 2007, NSTAR Electric filed its 2006 Basic Service reconciliation with the DPU
proposing an adjustment related to the increase of its Basic Service bad debt charge-offs. The DPU issued an order approving the
implementation of a revised Basic Service rate but instructed NSTAR Electric to reduce distribution rates by an amount equal to the
increase in its Basic Service bad debt charge-offs. This adjustment to NSTAR Electric’s distribution rates would eliminate the fully
reconciling nature of the Basic Service bad debt adder.
In 2010, NSTAR Electric filed an appeal of the DPU’s order with the SJC. In 2012, the SJC vacated the DPU order and remanded the
matter to the DPU for further review. The DPU has not taken any action on the remand.
NSTAR Electric deferred approximately $34 million of costs associated with energy-related bad debt as a regulatory asset through 2011
as NSTAR Electric had concluded that it was probable that these costs would ultimately be recovered from customers. Due to delays
and the duration of the proceedings, NSTAR Electric concluded that while an ultimate outcome on the matter in its favor remained
"more likely than not," it could no longer be deemed "probable." As a result, NSTAR Electric recognized a reserve related to the
regulatory asset in 2012. NSTAR Electric will continue to maintain the reserve until the proceeding has been concluded with the DPU.
New Hampshire:
Distribution Rates: In 2013, PSNH filed for a distribution rate step increase in accordance with the 2010 NHPUC approved distribution
rate case settlement. On June 27, 2013, the NHPUC approved an increase to rates of $12.6 million, effective July 1, 2013. The
increase consists primarily of $7.7 million related to net plant additions and a $5 million increase to the current level of funding for the
Major Storm Cost reserve.
ES and SCRC Rates: On December 12, 2013, PSNH filed a request with the NHPUC to adjust its ES and SCRC rates effective
January 1, 2014. PSNH’s request proposed to increase the current ES and SCRC billing rates to reflect projected costs for 2014. On
December 27, 2013, the NHPUC approved the request. The approved energy supply portion of the 2014 rate is 9.23 cents per kWh and
the SCRC rate for 2014 is 0.35 cents per kWh.
Clean Air Project Prudence Proceeding: The Clean Air Project, which involved the installation of wet scrubber technology at PSNH’s
Merrimack coal-fired generation station in Bow, New Hampshire, was placed in service in September 2011. In November 2011, the
NHPUC opened a docket to review the Clean Air Project, including the establishment of temporary rates for near-term recovery of
Clean Air Project costs, a prudence review of PSNH's overall construction program, and establishment of permanent rates for recovery
of prudently incurred Clean Air Project costs. In April 2012, the NHPUC issued an order authorizing temporary rates to recover a
significant portion of the Clean Air Project costs. The docket will remain open to conduct a comprehensive prudence review of the
Clean Air Project and the establishment of permanent rates. The temporary rates will remain in effect until permanent rates allowing full
recovery of all prudently incurred costs are approved. At that time, the NHPUC will reconcile recoveries collected under the temporary
rates with approved permanent rates.
The NHPUC has issued a series of orders ruling on the scope of its Clean Air Project inquiry and discovery issues. On December 23,
2013, the NHPUC Staff and other intervenors filed testimony discussing the prudency of the Clean Air Project, which cost $421 million.
Discovery is currently ongoing with hearings likely in late 2014. We continue to believe that we were prudent in the undertaking and
completion of the Clean Air Project. While we cannot predict with certainty the outcome of the Clean Air Project prudence review, we
believe all costs were incurred appropriately and are probable of recovery.
PSNH Generation: On January 18, 2013, the NHPUC opened a docket to investigate market conditions affecting PSNH’s ES rate, how
PSNH will maintain just and reasonable rates in light of those conditions, and any impact of PSNH’s generation ownership on the New
Hampshire competitive electric market. On July 15, 2013, the NHPUC accepted from the NHPUC Staff a "Report on Investigation into
Market Conditions, Default Service Rate, Generation Ownership and Impact on the Competitive Electricity Market." The report
recommended that the NHPUC examine whether default service rates remain sustainable on a going forward basis, define "just and
reasonable" with respect to default service in the context of competitive retail markets, analyze the current and expected value of
PSNH’s generating units, and identify means to mitigate and address stranded cost recovery.