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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 $5.8 billion at
December 31, 2003 as follows:
(Millions of Dollars)
Year
2004 $4,471.0
2005 761.5
2006 142.9
2007 84.3
2008 84.7
Thereafter 275.4
Total $5,819.8
Select Energy’s purchase contract amounts can exceed the amount
expected to be reported in fuel, purchased and net interchange power
because energy trading transactions are classified in revenues.
G. Nuclear Decommissioning and Plant Closure Costs
In conjunction with the Millstone, Seabrook and VYNPC nuclear generation
asset divestitures, the applicable liabilities and nuclear decommissioning
trusts were transferred to the purchasers, and the purchasers agreed to
assume responsibility for decommissioning their respective units.
NU still has significant decommissioning and plant closure cost obligations
to the Yankee Companies that own the Yankee Atomic, Connecticut
Yankee (CY) and Maine Yankee nuclear power plants. Each plant has
been shut down and is undergoing decommissioning. The Yankee
Companies collect decommissioning and closure costs through wholesale
FERC-approved rates charged under power purchase agreements to NU
electric utility companies CL&P, PSNH and WMECO. These companies in
turn pass these costs on to their customers through state regulatory
commission-approved retail rates. A portion of the decommissioning and
closure costs have already been collected, but a substantial portion related
to the decommissioning of CY has not yet been filed at and approved
for collection by the FERC.
During 2002, NU was notified by CYAPC and YAEC that the estimated
cost of decommissioning these units and other closure costs increased
over prior estimates due to higher anticipated costs for spent fuel storage,
security and liability and property insurance. NU’s share of this increase is
$177.1 million. Following FERC rate cases by the Yankee Companies, NU
expects to recover the higher decommissioning costs from the retail
customers of CL&P, PSNH and WMECO.
In June 2003, CYAPC notified NU that it had terminated its contract with
Bechtel Power Corporation (Bechtel) for the decommissioning of the CY
nuclear power plant. CYAPC terminated the contract based on its deter-
mination that Bechtel’s decommissioning work has been incomplete and
untimely and that Bechtel refused to perform the remaining decommis-
sioning work. Bechtel has filed a counterclaim against CYAPC asserting a
number of claims and seeking a variety of remedies, including monetary
and punitive damages and the rescission of the contract. Bechtel has
amended its complaint to add claims for wrongful termination.
plant’s output through March 2012 at a range of fixed prices. The total
cost of purchases under contracts with VYNPC amounted to $29.9 million
in 2003, $27.6 million in 2002 and $25.3 million in 2001.
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 $283.4
million in 2003, $278.3 million in 2002 and $363.9 million in 2001.
These amounts relate to IPP 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 commit-
ments. These contracts extend through 2006. The total cost of Yankee
Gas’ procurement portfolio, including these contracts, amounted to
$218.6 million in 2003, $158 million in 2002 and $195.8 million in 2001.
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 Utility Group Costs: The estimated future annual costs of NU’s significant long-term contractual arrangements are as follows:
(Millions of Dollars) 2004 2005 2006 2007 2008 Thereafter
VYNPC $ 29.5 $ 27.3 $ 28.5 $ 27.5 $ 28.0 $ 97.2
Electricity Procurement Contracts 314.6 318.1 320.9 253.2 217.5 1,302.6
Gas Procurement Contracts 176.8 158.6 150.2 128.7 36.4 122.3
Hydro-Quebec 25.4 24.3 22.8 20.6 19.8 237.6
Total $546.3 $528.3 $522.4 $430.0 $301.7 $1,759.7