Eversource 1999 Annual Report Download - page 51

D. SPENT NUCLEAR FUEL DISPOSAL COSTS
Under the Nuclear Waste Policy Act of 1982, CL&P, PSNH,
WMECO, and NAEC must pay the DOE for the disposal of
spent nuclear fuel and high-level radioactive waste. The DOE
is responsible for the selection and development of repositories
for, and the disposal of, spent nuclear fuel and high-level
radioactive waste. Fees for nuclear fuel burned on or after April
7, 1983, are billed currently to customers and paid to the DOE
on a quarterly basis. For nuclear fuel used to generate elec-
tricity prior to April 7, 1983 (Prior Period Fuel), an accrual
has been recorded for the full liability and payment must be
made prior to the first delivery of spent fuel to the DOE. Until
such payment is made, the outstanding balance will continue
to accrue interest at the 3-month treasury bill yield rate. As of
December 31, 1999 and 1998, fees due to the DOE for the
disposal of Prior Period Fuel were $226.5 million and $216.4
million, respectively, including interest costs of $144.3 million
and $134 million, respectively.
E. NUCLEAR INSURANCE CONTINGENCIES
Insurance policies covering the NU system’s nuclear facilities
have been purchased for the primary cost of repair, replacement
or decontamination of utility property, certain extra costs incurred
in obtaining replacement power during prolonged accidental outages
and the excess cost of repair, replacement or decontamination
or premature decommissioning of utility property.
The NU system is subject to retroactive assessments if losses
under those policies exceed the accumulated funds available to
the insurer. The maximum potential assessments with respect
to losses arising during the current policy year for the primary
property insurance program, the replacement power policies
and the excess property damage policies are $11 million, $6.2
million and $15 million, respectively. In addition, insurance
has been purchased in the aggregate amount of $200 million on
an industry basis for coverage of worker claims.
Under certain circumstances, in the event of a nuclear inci-
dent at one of the nuclear facilities covered by the federal
government’s third-party liability indemnification program, the
NU system could be assessed liabilities in proportion to its
ownership interest in each of its nuclear units up to $83.9 mil-
lion. The NU system’s payment of this assessment would be
limited to, in proportion to its ownership interest in each of its
nuclear units, $10 million in any one year per nuclear unit. In
addition, if the sum of all claims and costs from any one nuclear
incident exceeds the maximum amount of financial protection,
the NU system would be subject to an additional 5 percent or
$4.2 million liability, in proportion to its ownership interests
in each of its nuclear units. Based upon its ownership interests
in the Millstone units and in Seabrook, the NU system’s maxi-
mum liability, including any additional assessments, would be
$271 million per incident, of which payments would be limited
to $30.8 million per year. In addition, through purchased-power
contracts with VYNPC, the NU system would be responsible
for up to an additional assessment of $14.1 million per incident,
of which payments would be limited to $1.6 million per year.
F. CONSTRUCTION PROGRAM
The NU system companies currently forecast construction expen-
ditures of $1.8 billion for the years 2000-2004, including
$309.7 million for 2000. The NU system companies estimate
that nuclear fuel requirements, including nuclear fuel financed
through the NBFT, will be $217.8 million for the years 2000-
2003, including $74.2 million for 2000.
G. LONG-TERM CONTRACTUAL ARRANGEMENTS
Yankee Companies: The NU system companies relied on VYNPC
for 1.5 percent of their capacity under long-term contracts.
Under the terms of their agreements, the NU system companies
paid their ownership (or entitlement) shares of costs, which
included depreciation, operation and maintenance (O&M)
expenses, taxes, the estimated cost of decommissioning, and
a return on invested capital. These costs were recorded as pur-
chased-power expenses and recovered through the companies’
rates. The total cost of purchases under contracts with VYNPC
amounted to $29.2 million in 1999, $27.3 million in 1998 and
$24.2 million in 1997. VYNPC has agreed to sell its nuclear
unit. Upon completion of the sale, this long-term contract
will be terminated.
Nonutility Generators (NUGs): CL&P, PSNH and WMECO
have entered into various arrangements for the purchase of
capacity and energy from NUGs. For the years ended December
31, 1999 and 1998, 13 percent and for the year ended
December 31, 1997, 14 percent, of NU system electricity require-
ments were met by NUGs. The total cost of purchases under
these arrangements amounted to $461.8 million in 1999, $459.7
million in 1998 and $447.6 million in 1997. The company is
in the process of renegotiating the terms of these contracts
through either a contract buydown or buyout. The company
expects any payments to the NUGs as result of these renego-
tiations to be recovered from the company’s customers.
Hydro-Quebec: Along with other New England utilities,
CL&P, PSNH, WMECO, and HWP have entered into agree-
ments to support transmission and terminal facilities to import
electricity from the Hydro-Quebec system in Canada. CL&P,
PSNH, WMECO, and HWP are obligated to pay, over a 30-
year period ending in 2020, their proportionate shares of the
annual O&M expenses and capital costs of those facilities.
New Hampshire Electric Cooperative (NHEC): Previously,
PSNH entered into a buy-back agreement to purchase the
capacity and energy of the NHEC’s share of Seabrook and to
pay all of NHEC’s Seabrook costs for a 10-year period, which
began on July 1, 1990. The total cost of purchases under this
agreement was $33 million in 1999, $29.7 million in 1998
and $23.4 million in 1997. These costs are recoverable
through the FPPAC. The estimated annual cost of this
agreement for year 2000 is $14.6 million.
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