Eversource 1999 Annual Report Download - page 42

agency where applicable. Except for major facilities, depreciation
rates are applied to the average plant-in-service during the period.
Major facilities are depreciated from the time they are placed in
service. When plant is retired from service, the original cost of
the plant, including costs of removal less salvage, is charged to
the accumulated provision for depreciation. The costs of closure
and removal of nonnuclear facilities are accrued over the life of
the plant as a component of depreciation. The depreciation
rates for the several classes of electric plant-in-service are equivalent
to a composite rate of 3.3 percent in 1999 and 1998 and 3.8
percent in 1997.
At December 31, 1999 and 1998, the accumulated provision
for depreciation included $91.5 million and $88.4 million,
respectively, accrued for the cost of removal, net of salvage, for
nonnuclear generation property.
As a result of discontinuing the application of SFAS No. 71,
“Accounting for the Effects of Certain Types of Regulation,”
for CL&P’s and WMECO’s generation businesses, including
CL&P’s ownership interest in Seabrook, the company recorded
a charge to accumulated depreciation for the nuclear plant in
excess of fair market value in the amount of $2 billion and a
corresponding regulatory asset was created.
F. REVENUES
Regulated utility revenues are based on authorized rates applied
to each customer’s use of electricity. In general, rates can be changed
only through a formal proceeding before the appropriate regula-
tory commission. Regulatory commissions also have authority
over the terms and conditions of nontraditional rate-making
arrangements. At the end of each accounting period, CL&P, PSNH
and WMECO accrue a revenue estimate for the amount of energy
delivered but unbilled.
Revenues for NU’s unregulated subsidiaries, primarily Select
Energy, are recognized when the energy is delivered.
G. PSNH ACQUISITION COSTS
PSNH acquisition costs represent the aggregate value placed
by the 1989 rate agreement with the state of New Hampshire
(Rate Agreement) on PSNH’s assets in excess of the net book
value of PSNH’s non-Seabrook assets, plus the $700 million
value assigned to Seabrook by the Rate Agreement as part of
the bankruptcy resolution on June 5, 1992. The Rate Agreement
provides for the recovery through rates, with a return, of the
PSNH acquisition costs. The unrecovered balance was $324.4
million and $352.9 million at December 31, 1999 and 1998,
respectively, and is being recovered ratably over a 20-year period
ending May 1, 2011, in accordance with the Rate Agreement.
Through December 31, 1999 and 1998, $668 million and $640
million, respectively, has been collected.
H. REGULATORY ACCOUNTING AND ASSETS
The accounting policies of the NU system operating companies
and the accompanying consolidated financial statements con-
form to generally accepted accounting principles applicable to
rate-regulated enterprises and historically reflect the effects of
the rate-making process in accordance with SFAS No. 71. As a
result of final restructuring orders issued in 1999, CL&P and
WMECO discontinued the application of SFAS No. 71 for the
generation portion of their businesses.
D. INVESTMENTS AND JOINTLY OWNED
ELECTRIC UTILITY PLANT
Regional Nuclear Generating Companies: CL&P, PSNH and
WMECO own common stock in four regional nuclear com-
panies (Yankee Companies). The NU system’s ownership interests
in the Yankee Companies at December 31, 1999 and 1998,
which are accounted for on the equity basis due to the NU system
companies’ ability to exercise significant influence over their
operating and financial policies are 49 percent of the Connecticut
Yankee Atomic Power Company (CYAPC), 38.5 percent of the
Yankee Atomic Electric Company (YAEC), 20 percent of the
Maine Yankee Atomic Power Company (MYAPC), and 16
percent of the Vermont Yankee Nuclear Power Corporation
(VYNPC). The NU system’s total equity investment in the
Yankee Companies at December 31, 1999 and 1998, is $81.5
million and $85.8 million, respectively. Each Yankee Company
owns a single nuclear generating unit. However, VYNPC is the
only unit still in operation at December 31, 1999.
Millstone: CL&P and WMECO together own 100 percent of
both Millstone 1, a 660 megawatt (MW) nuclear unit and
Millstone 2, an 870 MW nuclear generating unit. CL&P, PSNH
and WMECO together have a 68.02 percent joint ownership
interest in Millstone 3, a 1,154 MW nuclear generating unit.
The company expects to auction all three units as a single pack-
age in 2000, with a closing in 2001. Appropriate regulatory
approvals will be required to complete the auction.
Seabrook: CL&P and NAEC together have a 40.04 percent
joint ownership interest in Seabrook, a 1,148 MW nuclear
generating unit. NAEC sells all of its share of the power generated
by Seabrook to PSNH under the Seabrook Power Contracts.
CL&P and NAEC expect to auction their investment in Seabrook
upon the resolution of the restructuring issues in the state of
New Hampshire.
Plant-in-service and the accumulated provision for depre-
ciation for the NU system’s share of Millstone 2 and 3 and
Seabrook are as follows:
At December 31,
(Millions of Dollars) 1999 1998
Plant-in-service
Millstone 2 $ 952.1 $ 936.8
Millstone 3 2,414.9 2,407.4
Seabrook 901.9 895.5
Accumulated provision for depreciation
Millstone 2 $ 910.0 $ 379.6
Millstone 3 2,220.5 765.9
Seabrook 318.8 170.0
Hydro-Quebec: NU has a 22.66 percent equity ownership
interest, totaling $16.5 million, in two companies that transmit
electricity imported from the Hydro-Quebec system in Canada.
E. DEPRECIATION
The provision for depreciation is calculated using the straight-
line method based on the estimated remaining useful lives of
depreciable utility plant-in-service, adjusted for salvage value
and removal costs, as approved by the appropriate regulatory
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