Eversource 2013 Annual Report Download - page 58

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On September 18, 2013, the NHPUC issued a Request for Proposal to hire a valuation expert to determine the value of PSNH's
generation assets and entitlements. On October 16, 2013, the State of New Hampshire Legislative Oversight Committee on Electric
Utility Restructuring (Oversight Committee) requested that the NHPUC conduct an analysis to determine whether it is now in the
economic interest of PSNH’s retail customers for PSNH to divest its interest in generation plants. On November 1, 2013, the Oversight
Committee asked for a preliminary report on the findings by April 1, 2014 that would include at a minimum the NHPUC Staff’s position,
the analysis of the valuation expert, and any recommendations for legislation that may be needed concerning divestiture or otherwise
related to this issue. A valuation expert has been hired and the investigation is currently ongoing. At this time, we cannot predict the
outcome of this review. Our current PSNH generation rate base totals approximately $760 million. We continue to believe all costs and
generation investments are probable of recovery.
Federal:
EPA Proposed NPDES Permit: PSNH maintains a NPDES permit consistent with requirements of the Clean Water Act for Merrimack
Station. In 1997, PSNH filed in a timely manner for a renewal of this permit. As a result, the existing permit was administratively
continued. On September 29, 2011, the EPA issued a draft renewal NPDES permit for PSNH's Merrimack Station for public review and
comment. The proposed permit contains many significant conditions to future operation. The proposed permit would require PSNH to
install a closed-cycle cooling system (including cooling towers) at the station. The EPA estimated that the net present value cost to
install this system and operate it over a 20-year period would be approximately $112 million.
On October 27, 2011, the EPA extended the initial 60-day period for public review and comment on the draft permit for an additional 90
days until February 28, 2012. PSNH and other electric utility groups filed thousands of pages of comments contesting EPA’s draft
permit requirements. PSNH stated that the data and studies supplied to the EPA demonstrate the fact that a closed-cycle cooling
system is not warranted. The EPA does not have a set deadline to consider comments and to issue a final permit. Merrimack Station
is permitted to continue to operate under its present permit pending issuance of the final permit and subsequent resolution of matters
appealed by PSNH and other parties. Due to the site specific characteristics of PSNH's other fossil generating stations, we believe that
closed-cycle cooling systems are not warranted.
Legislative and Policy Matters
Federal:
On January 2, 2013, the "American Taxpayer Relief Act of 2012" became law, which extended the accelerated deduction of
depreciation to businesses through 2013. This extended stimulus provided NU with cash flow benefits of approximately $300 million
(approximately $95 million at CL&P, $85 million at NSTAR Electric, $35 million at PSNH, and $50 million at WMECO).
On September 13, 2013, the Internal Revenue Service issued final Tangible Property regulations that are meant to simplify, clarify and
make more administrable previously issued guidance. In the third quarter of 2013, CL&P recorded an after-tax valuation allowance of
$10.5 million against its deferred tax assets as a result of these regulations. NU is in compliance with the new regulations, but
continues to evaluate several new potential elections. Therefore, a change to the valuation allowance at CL&P could result once NU
completes the review of the impact of the final regulations.
Connecticut:
In 2013, Connecticut enacted into law two significant energy bills. The first law, Public Act 13-298, implemented a number of the
recommendations proposed in the CES. Public Act 13-298 authorized the filing of a plan to expand natural gas service to Connecticut
residents that currently do not have access to natural gas. For further information on Yankee Gas’ filing, see "Regulatory
Developments and Rate Matters - Connecticut - Yankee Gas Natural Gas Expansion Plan" in this Management's Discussion and
Analysis. The law also required PURA to implement decoupling for each of Connecticut’s electric and natural gas utilities in their next
respective rate cases. Finally, the law allows electric distribution companies to recover their costs as well as lost revenues from various
state energy policy initiatives, including expanded energy efficiency programs.
The second law, Public Act 13-303, "An Act Concerning Connecticut’s Clean Energy Goals," allows DEEP to conduct a process to
procure from renewable energy generators, under long-term contracts with the electric distribution companies, additional renewable
generation to help Connecticut meet its Renewable Portfolio Standard (RPS). Large scale hydropower facilities located in the New
England Power Pool Generation Information System (NEPOOL GIS) geographic eligibility area or an area abutting the northern
boundary of the NEPOOL GIS geographic eligibility area are eligible to bid into DEEP's process. If Connecticut experiences a material
shortfall in reaching its RPS goals, such hydropower, under certain conditions, can be used to alleviate such shortfall, up to five percent
of RPS requirements in 2020.
The law also requires DEEP to develop a schedule to assign a gradually reducing renewable energy credit value for all Class I biomass
or landfill generation facilities. Such reduced credit values will not apply to biogas or anaerobic digestion facilities, or to facilities that
have a long-term contract in place. The commissioner of DEEP may adjust such changes to the values of renewable energy credits, if
such adjustment is appropriate given the availability of other Class I renewable energy sources.
On September 26, 2013, DEEP issued a final determination that authorized the state’s electric distribution companies to enter into long-
term power purchase agreements for a total of 270 MW of Class I renewable generation from two projects. On October 23, 2013,
PURA issued a final decision accepting the contracts presented by the electric distribution companies. On October 21, 2013, DEEP