National Grid 2008 Annual Report Download - page 312

BOWNE INTEGRATED TYPESETTING SYSTEM
CRC: 14955
Name: NATIONAL GRID
Date: 17-JUN-2008 03:10:51.35Operator: BNY99999TPhone: [phone]Site: BOWNE OF NEW YORK
Y59930.SUB, DocName: EX-2.B.6.1, Doc: 6, Page: 106
Description: EXH 2(B).6.1
0/4710.00.00.00Y59930BNY
[E/O] EDGAR 2 *Y59930/710/4*
BOWNE INTEGRATED TYPESETTING SYSTEM
CRC: 14955
Name: NATIONAL GRID
Date: 17-JUN-2008 03:10:51.35Operator: BNY99999TPhone: [phone]Site: BOWNE OF NEW YORK
Y59930.SUB, DocName: EX-2.B.6.1, Doc: 6, Page: 106 Description: EXH 2(B).6.1
0/4710.00.00.00Y59930BNY
[E/O] EDGAR 2 *Y59930/710/4*
condition or results of operations because the Company recovers a majority of these costs under the Company’s rate plans.
The Company is pursuin
g
claims a
g
ainst insurance carriers and potentially responsible parties to recover investi
g
ation and
remediation costs, but mana
g
ement cannot predict the success of such claims. To the extent that prudently incurred costs
cannot be recovered throu
g
h insurance or otherwise, these are recoverable under applicable rate plans. As of March 31, 2007
and 2006, the Company has recorded an obli
g
ation of $583 million and $569 million, respectively, alon
g
with an offsettin
g
re
g
ulatory asset, on its balance sheet. The potential hi
g
h end of the ran
g
e at March 31, 2007 is presently estimated at
approximately $703 million.
Decommissioning Nuclear Units
NEP has minority interests in three nuclear
g
eneratin
g
companies: Yankee Atomic Electric Company (Yankee Atomic),
Connecticut Yankee Atomic Power Company (Connecticut Yankee), and Maine Yankee Atomic Power Company (Maine
Yankee) (to
g
ether, the Yankees). These ownership interests are accounted for on the equity method. The Yankees own
nuclear
g
eneratin
g
units that have been permanently retired and are conductin
g
decommissionin
g
operations. The three units
are as follows:
With respect to each of the units, NEP recorded a liability and a regulatory asset ($117.4 million long-term and $28.5 million
current) reflectin
g
the estimated future decommissionin
g
billin
g
s from the Yankees. In a 1993 decision, the FERC allowed
Yankee Atomic to recover its undepreciated investment in the plant, includin
g
a return on that investment, as well as unfunded
nuclear decommissionin
g
costs and other costs. Maine Yankee and Connecticut Yankee recover their prudently incurred costs,
includin
g
a return, in accordance with settlement a
g
reements approved by the FERC in May 1999 and July 2000, respectively.
The Yankees collect the approved costs from their purchasers, including the Company. NEP’s share of the decommissionin
g
costs is accounted for in “Electricity purchased” on the income statement. Under settlement a
g
reements, NEP is permitted to
recover prudently incurred decommissioning costs through CTCs.
The Yankees are periodically required to file rate cases, presenting the Yankees’ estimated future decommissionin
g
costs for
FERC approval. Yankee Atomic and Maine Yankee are currently collectin
g
decommissionin
g
and other costs under FERC
Orders issued in their respective rate cases. Connecticut Yankee is also collectin
g
costs, subject to refund under a rate case
now pending at the FERC, as described below.
Future estimated billin
g
s from the Yankees are based on decommissionin
g
cost estimates. These estimates include the
projected costs of decontaminatin
g
the units as required by the Nuclear Re
g
ulatory Commission (NRC), dismantlin
g
the units,
security, liability and property insurance and other costs. They also include costs for interim spent fuel stora
g
e facilities, which
the Yankees have constructed during litigation they brought to enforce the U.S. Department of Energy’s (DOE) obli
g
ation to
remove the fuel as required by the Nuclear Waste Policy Act of 1982. Followin
g
a trial at the U.S. Court of Federal Claims to
determine the level of dama
g
es, on October 6, 2006, the Court awarded the three companies approximately $143 million for
spent fuel stora
g
e costs that had been incurred throu
g
h 2001 and 2002. The three companies had requested $176 million. On
December 4, 2006, the DOE filed a notice of appeal. The Yankees have selected an appeals counsel and will be
g
in the
appeals process. If the order is upheld, the dama
g
es received by the Yankees, net of liti
g
ation expenses and taxes, will be
applied to
F-21
Future
Estimated
NEP’s E
q
uit
y
Investment as of Billin
g
s to
Nuclear Unit March 31, 2007 Date Retired NEP
% Ownership $ (millions) $ (millions)
Yankee Atomic 34.5 0.4 Februar
y
1992 32
Connecticut Yankee 19.5 2.7 December 1996 77
Maine Yankee 24.0 2.9 Au
g
ust 1997 37