Eversource 1999 Annual Report Download - page 28

NUCLEAR DECOMMISSIONING
The staff of the SEC has questioned certain of the current
accounting practices of the electric utility industry regarding
the recognition, measurement and classification of decom-
missioning costs for nuclear units in their financial statements.
Currently, the Financial Accounting Standards Board plans
to review the accounting for obligations associated with the
retirement of long-lived assets, including the decommissioning
of nuclear units. If current accounting practices for nuclear decom-
missioning change, the annual provision for decommissioning
could increase relative to 1999, and the estimated cost for decom-
missioning could be recorded as a liability with recognition of
an increase in the cost of the related nuclear unit. However,
management does not believe that such a change will have a
material impact on the NU system’s financial statements due to
its current and future ability to recover decommissioning costs
through rates.
SPENT NUCLEAR FUEL DISPOSAL COSTS
The United States Department of Energy (DOE) originally was
scheduled to begin accepting delivery of spent fuel in 1998.
However, delays in confirming the suitability of a permanent
storage site continually have postponed plans for the DOE’s
long-term storage and disposal site. Extended delays or a default
by the DOE could lead to consideration of costly alternatives.
NU has the primary responsibility for the interim storage of its
spent nuclear fuel. Adequate storage capacity exists to accom-
modate all spent nuclear fuel at Millstone 1. The facilities for
Millstone 2 are expected to provide adequate storage to
accommodate a full-core discharge from the reactor until 2005
with the implementation of currently planned modifications.
Fuel consolidation, which has been licensed for Millstone 2, could
provide adequate storage capacity for its projected life. The
facilities for Millstone 3 are expected to provide adequate storage
for its projected life with the addition of new storage racks.
Seabrook is expected to have spent fuel storage capacity until at
least 2010. Meeting spent fuel storage requirements beyond
these periods could require new and separate storage facilities.
For further information regarding spent nuclear fuel disposal
cost, see Note 7D, “Commitments and Contingencies – Spent
Nuclear Fuel Disposal Costs,” to the consolidated financial
statements.
An auction of the NU system’s ownership interests in the
Millstone units is expected in 2000 with a closing in 2001.
Based on regulatory decisions received in 1999, management
expects to recover all of its remaining nuclear stranded costs
from retail customers.
SEABROOK
Seabrook achieved an annual capacity factor of 86.4 percent
in 1999. However, since returning to service on May 13, 1999,
after a 48-day refueling and maintenance outage, Seabrook has
achieved a 99 percent capacity factor through December 31, 1999.
CL&P anticipates auctioning its 4.06 percent share of Seabrook,
with the 35.98 percent share owned by its affiliate North Atlantic
Energy Corporation (NAEC) after approval of the Settlement
Agreement. The Settlement Agreement with the state of New
Hampshire requires divestiture prior to December 31, 2003.
YANKEE COMPANIES
On June 1, 1999, the FERC accepted the offer of settlement
which was filed on January 15, 1999, by the Maine Yankee
Atomic Power Company (MYAPC). The significant aspects of
the settlement allowed MYAPC to collect $33.1 million annually
to pay for decommissioning and spent fuel, approved its return
on equity of 6.5 percent, permitted full recovery of MYAPC’s
unamortized investment, including fuel, and set an incentive
budget for decommissioning at $436.3 million.
On October 15, 1999, the Vermont Yankee Nuclear Power
Corporation (VYNPC) agreed to sell its unit for $22 million to
an unaffiliated company. Among other commitments, the
acquiring company agreed to assume the decommissioning
cost of the unit after it is taken out of service, and the VYNPC
owners have agreed to fund the uncollected decommissioning
cost to a negotiated amount at the time of the closing of the
sale. VYNPC’s owners have also agreed either to enter into a
new purchased-power agreement with the acquiring company
or to buy out such future power payment obligations by making
a fixed payment to them. CL&P, WMECO and PSNH have
elected the buyout option. The VYNPC owners’ obligations to
close and pay such amounts are conditioned upon their receipt
of satisfactory regulatory approval of the transaction, includ-
ing provision for adequate recovery of these payments.
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