Eversource 2002 Annual Report Download - page 59

Based upon currently available information for the estimated remediation
costs at December 31, 2002 and 2001, the liability recorded by NU for
its estimated environmental remediation costs amounted to $41.9 million
and $46.2 million, respectively. These amounts include $28.1 million
and $32.2 million at December 31, 2002 and 2001, respectively, for
remediation of former manufactured gas plants.
PSNH and Yankee Gas have regulatory recovery mechanisms for
environmental costs. Accordingly, regulatory assets have been recorded
for certain environmental liabilities.
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 outstanding balance will continue to accrue interest at the 3-month
treasury bill yield rate. At December 31, 2002 and 2001, fees due to the
DOE for the disposal of Prior Period Fuel were $253.6 million and
$249.3 million, respectively, including interest costs of $171.5 million
and $167.2 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. At December 31,
2002, as NU’s ownership shares of Millstone and Seabrook have been
sold, NU is no longer responsible for fees relating to current fuel
burned at these facilities.
D. Nuclear Insurance Contingencies
In conjunction with the divestiture of Millstone in 2001 and Seabrook
in 2002, NU terminated its nuclear insurance related to these plants,
and NU has no further exposure for potential assessments related to
Millstone and Seabrook. However, through its continuing association
with Nuclear Electric Insurance Limited (NEIL) and CYAPC and
VYNPC, NU is subject to potential retrospective assessments totaling
$0.8 million under its respective NEIL insurance policies.
E. Long-Term Contractual Arrangements
VYNPC: Previously, under the terms of their agreements, NU’s 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 to
VYNPC and recorded these costs as purchased-power expenses. On
July 31, 2002, VYNPC consummated the sale of its nuclear generating
unit to a subsidiary of Entergy for approximately $180 million. Under
the terms of the sale, CL&P, PSNH and WMECO will continue to buy
approximately 16 percent of the plant’s output through March 2012 at a
range of fixed prices. The total cost of purchases under contracts with
VYNPC amounted to $27.6 million in 2002, $25.3 million in 2001, and
$24.9 million in 2000.
Electricity Procurement Contracts: CL&P, PSNH and WMECO have
entered into various arrangements for the purchase of electricity. The
total cost of purchases under these arrangements amounted to $278.3
million in 2002, $363.9 million in 2001, and $482.1 million in 2000.
These amounts are for independent power producer contracts and do
not include contractual commitments related to CL&P’s standard offer,
PSNH’s short-term power supply management or WMECO’s standard
offer and default service.
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. The total cost of Yankee Gas’
procurement portfolio, including these contracts, amounted to $158
million in 2002, $195.8 million in 2001, and $148.2 million in 2000.
Hydro-Quebec: Along with other New England utilities, CL&P, PSNH,
WMECO, and HWP have entered into agreements 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 Future Annual Costs: The estimated future annual costs of
NU’s significant long-term contractual arrangements are as follows:
(Millions of Dollars) 2003 2004 2005 2006 2007
VYNPC $ 30.8 $ 29.4 $ 27.1 $ 28.3 $ 27.4
Electricity
Procurement
Contracts 338.5 345.1 350.0 349.9 278.2
Gas Procurement
Contracts 172.2 151.3 130.9 116.2 36.9
Hydro-Quebec 26.3 25.5 25.0 22.7 21.7
Totals $567.8 $551.3 $533.0 $517.1 $364.2
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 commitments. The
aggregate amount of these purchase contracts was $4.3 billion at
December 31, 2002 as follows:
(Millions of Dollars)
Year
2003 $3,302.0
2004 612.6
2005 290.1
2006 68.7
2007 69.2
Total $4,342.6
Select Energy’s purchase contract amounts can exceed the amount
expected to be reported in fuel, purchased and net interchange power
because energy trading purchases are classified net in revenues.
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