Eversource 2001 Annual Report Download - page 46

ment does not believe, however, that this will have a material
impact on the NU system’s financial statements.
Based upon currently available information for the estimated
remediation costs as of December 31, 2001 and 2000, the liability
recorded by the NU system for its estimated environmental reme-
diation costs amounted to $46.2 million and $58.2 million,
respectively.
C. 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. For nuclear fuel used to generate electricity 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 out-
standing balance will continue to accrue interest at the 3-month
treasury bill yield rate. As of December 31, 2001 and 2000, fees
due to the DOE for the disposal of Prior Period Fuel were $249.3
million and $240.3 million, respectively, including interest costs
of $167.2 million and $158.2 million, respectively.
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. NU remains responsible for fees to be paid for fuel burned
until the divestiture of the Millstone and Seabrook nuclear units.
D. 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 out-
ages 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 $4.3 million, $1.4 million and $6.7
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 incident
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 million. 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 interest in Seabrook, the NU system’s maximum lia-
bility, including any additional assessments, would be $34.9 mil-
lion per incident, of which payments would be limited to $4.8
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 pay-
ments would be limited to $1.6 million per year.
NU expects to terminate its nuclear insurance upon the
divestiture of its remaining nuclear units.
E. Long-Term Contractual Arrangements
Yankee Companies: 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. The total cost of purchases under con-
tracts with VYNPC amounted to $25.3 million in 2001, $24.9
million in 2000, and $29.2 million in 1999. VYNPC is in the
process of selling its nuclear unit. Upon completion of the sale, it
is expected that these long-term contracts will be replaced with
different contracts with the new buyer.
Energy Procurement Contracts: CL&P, PSNH and WMECO
have entered into various arrangements for the purchase of capaci-
ty and energy. The total cost of purchases under these arrange-
ments amounted to $363.9 million in 2001, $482.1 million in
2000 and $461.8 million in 1999.
Gas Procurement Contracts: Yankee Gas has entered into long-
term contracts for the purchase of a specified quantity of gas in
the normal course of business as part of its portfolio to meet its
actual sales commitments. These contracts extend through 2006.
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.
Estimated Annual Costs: The estimated annual costs of the NU
system’s significant long-term contractual arrangements, absent
the effects of any contract terminations, buydowns or buyouts, or
sales of generation assets are as follows:
(Millions of Dollars) 2002 2003 2004 2005 2006 Totals
VYNPC $ 30.9 $ 29.4 $ 33.5 $ 34.0 $ 30.8 $ 158.6
Energy
Procure-
ment
Contracts 331.5 341.1 345.6 350.5 350.1 1,718.8
Gas Procure-
ment
Contracts 52.6 54.2 55.2 53.6 9.3 224.9
Hydro-Quebec 27.1 26.1 25.0 24.1 21.7 124.0
Totals $442.1 $450.8 $459.3 $462.2 $411.9 $2,226.3
Select Energy: Select Energy maintains long-term agreements
to purchase energy in the normal course of business as part of its
portfolio of resources to meet its actual or expected sales commit-
ments. The aggregate amount of these purchase contracts was
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