Eversource 2013 Annual Report Download - page 89

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On June 27, 2013, the NHPUC approved an increase to PSNH’s distribution rates effective July 1, 2013, which included a $5 million
increase to the current level of funding for the major storm cost reserve. The major storm cost reserve is used to offset the storm
restoration cost regulatory asset.
On August 30, 2013, WMECO submitted its 2013 Annual Storm Reserve Recovery Cost Adjustment (SRRCA) filing to begin recovering
the restoration costs associated with the October 2011 snowstorm and Storm Sandy. On December 20, 2013, the DPU approved the
2013 Annual SRRCA filing for effect on January 1, 2014, subject to further review and reconciliation.
Income Taxes, Net: The tax effect of temporary book-tax differences (differences between the periods in which transactions affect
income in the financial statements and the periods in which they affect the determination of taxable income, including those differences
relating to uncertain tax positions) is accounted for in accordance with the rate-making treatment of the applicable regulatory
commissions and accounting guidance for income taxes. Differences in income taxes between the accounting guidance and the rate-
making treatment of the applicable regulatory commissions are recorded as regulatory assets. As these assets are offset by deferred
income tax liabilities, no carrying charge is collected. For further information regarding income taxes, see Note 11, "Income Taxes," to
the financial statements.
Securitized Assets: NSTAR Electric's securitized regulatory asset balance primarily included costs related to purchase power contract
divestitures and certain costs related to NSTAR Electric’s former generation business that were recovered with a return through the
transition charge and amounted to $186.1 million as of December 31, 2012. These costs were fully recovered from customers in 2013.
The securitized regulatory asset balance as of December 31, 2012 also included proceeds received from the issuance of RRBs at
NSTAR Electric, PSNH and WMECO that were used to buy out or buy down purchase power contracts. The collateralized amounts
reflected as securitized regulatory assets for NSTAR Electric, PSNH and WMECO as of December 31, 2012 were $14.1 million, $19.7
million and $7.8 million, respectively. As of December 31, 2013, NSTAR Electric's, PSNH's and WMECO's RRBs were fully redeemed
and the related regulatory assets were fully recovered from customers.
Contractual Obligations - Yankee Companies: CL&P, NSTAR Electric, PSNH and WMECO are responsible for their proportionate
share of the remaining costs of the CYAPC, YAEC and MYAPC nuclear facilities, including decommissioning. A portion of these
amounts was recorded as a regulatory asset. Amounts for CL&P are earning a return and are being recovered through the CTA.
Amounts for NSTAR Electric and WMECO are being recovered without a return through the transition charge. Amounts for PSNH were
fully recovered in 2006. As a result of NU's consolidation of CYAPC and YAEC, NU's regulatory asset balance also includes the
regulatory assets of CYAPC and YAEC, which totalled $129.8 million and $214 million as of December 31, 2013 and 2012,
respectively. At the NU consolidated level, intercompany transactions between CL&P, NSTAR Electric, PSNH and WMECO and the
CYAPC and YAEC companies have been eliminated in consolidation.
Buy Out Agreements for Power Contracts: NSTAR Electric's balance represents the contract termination liability related to certain
purchase power contract buy out agreements that were executed in 2004. The contracts’ termination payments occur through
September 2016 and are collected from customers through NSTAR Electric’s transition charge over the same period. Therefore,
NSTAR Electric does not earn a return on this regulatory asset. PSNH's balance represents payments associated with the termination
of various power purchase contracts that were recorded as regulatory assets and are amortized over the remaining life of the contracts.
Regulatory Tracker Mechanisms: The Regulated companies’ approved rates are designed to recover their incurred costs to provide
service to customers. The Regulated companies are permitted to recover certain of their costs on a fully-reconciling basis through
regulatory commission-approved tracking mechanisms. The difference between the costs incurred (or the rate recovery allowed) and
the actual revenues is recorded as regulatory assets (for undercollections) or regulatory liabilities (for overcollections) to be included in
future customer rates each year. Carrying charges are recorded on all material regulatory tracker mechanisms.
CL&P, NSTAR Electric, PSNH and WMECO each recover the costs associated with the procurement of energy, transmission related
costs from FERC-approved transmission tariffs, energy efficiency programs, low income assistance programs, and restructuring and
stranded costs as a result of deregulation, on a fully reconciling basis. Energy procurement costs at PSNH include the costs related to
its generating stations.
WMECO’s distribution revenue is decoupled from its customer sales volume. WMECO reconciles its annual base distribution rate
recovery to a pre-established level of baseline distribution delivery service revenue. Any difference between the allowed level of
distribution revenue and the actual amount incurred in a calendar year is adjusted through rates in the following year.
Other Regulatory Assets: Other Regulatory Assets primarily include asset retirement obligations, environmental remediation costs,
losses associated with the reacquisition or redemption of long-term debt and various other items, partially offset by purchase price
adjustments recorded as Regulatory Assets in connection with the merger with NSTAR. The ARO costs associated with the
depreciation of the Regulated companies' ARO assets and accretion of the ARO liabilities are recorded as regulatory assets. For
CL&P, NSTAR Electric and WMECO, ARO assets, regulatory assets and liabilities offset and are excluded from rate base. PSNH's
ARO assets, regulatory assets and liabilities are included in rate base; these costs are being recovered over the life of the underlying
property, plant and equipment.