Eversource 2006 Annual Report Download - page 34

32 NU 2006 ANNUAL REPORT
taking into account actual spending through 2005 and the current
estimate for completing decommissioning and long-term storage of
spent fuel, a gross domestic product escalator of 2.5 percent for costs
incurred after 2006, a 10 percent contingency factor for all decommis-
sioning costs and extension of the collection period by five years.
Annual collections began in January of 2007, and are reduced from the
$93 million originally requested for years 2007 through 2010 to lower
levels ranging from $37 million in 2007 rising to $49 million in 2015.
The reduction to annual collections is achieved by extending the collection
period by 5 years through 2015, reflecting the proceeds from a settlement
agreement with Bechtel Power Corporation (Bechtel), by reducing
collections in 2007, 2008 and 2009 by $5 million per year, and making
other adjustments. Additionally, the settlement agreement includes an
incentive that reduces collections up to $10 million during years 2007
to2010, but allows CYAPC to recoup up to $5 million of these collections,
depending on the date that the Nuclear Regulatory Commission amends
CYAPC’s license permitting fuel storage-only operations. The settlement
agreement also contains various mechanisms for true-ups and
adjustments related to decommissioning and allows CYAPC to resume
reasonable payment of dividends to its shareholders.
The settlement agreement also required CYAPC to forego collection of a
$10 million regulatory asset that was written-off in 2006. NU included in
2006 earnings its 49 percent shareof CYAPC’s after-tax write-off.
YAEC: In November of 2005, YAEC established an updated estimate of
the cost of completing the decommissioning of its plant. On January 31,
2006, the FERC issued an order accepting the rateincrease, effective on
February 1, 2006, subject torefund.
On July31, 2006, the FERC approved a settlement agreement with the
DPUC, the Massachusetts Attorney General and the Vermont Department
of Public Servicepreviouslyfiled by YAEC. This settlement agreement
did not materially affect the level of 2006 charges. Under the settlement
agreement, YAEC agreed to revise its November 2005 decommissioning
costincrease from $85 million to$79 million. The revision includes
adjustments for contingencies and projected escalation and certain
decontamination and dismantlement (D&D) expenses. Other terms of
the settlement agreement include extending the collection period for
charges through December 2014, reconciling and adjusting future
charges based on actual D&D expenses and the decommissioning
trust fund’s actual investment earnings. The company believes that
its $24.9 million share of the increase in decommissioning costs will
ultimately be recovered from the customers of CL&P and WMECO
(approximately $19.4 million and $5.5 million for CL&P and WMECO,
respectively). PSNH has recovered its $5.5 million share of these costs.
MYAPC: MYAPC is collecting amounts in rates that are adequate to
recover the remaining cost of decommissioning its plant, and CL&P
and WMECO expect to recover their respective shares of such costs
from their customers. PSNH has recovered its share of these costs.
Spent Nuclear Fuel Litigation: In 1998, CYAPC, YAEC and MYAPC filed
separate complaints against the DOE in the Court of Federal Claims
seeking monetary damages resulting from the DOE’s failure to begin
accepting spent nuclear fuel for disposal no later than January 31,
1998 pursuant to the terms of the 1983 spent fuel and high level waste
disposal contracts between the Yankee Companies and the DOE. In
2004, a trial was conducted in the Court of Federal Claims in which the
Yankee Companies initially claimed damages for incremental spent
nuclear fuel storage, security, construction and other costs through 2010.
In a ruling released on October 4, 2006, the Court of Federal Claims
held that the DOE was liable for damages to CYAPC for $34.2 million
through 2001, YAEC for $32.9 million through 2001 and MYAPC for
$75.8 million through 2002. The Yankee Companies had claimed actual
damages for the same period as follows: CYAPC: $37.7 million; YAEC:
$60.8 million; and MYAPC: $78.1 million. Most of the reduction in the
claimed actual damages related to disallowed spent nuclear fuel pool
operating expenses. The Court of Federal Claims found that the
Yankee Companies would have incurred the disallowed expenses
notwithstanding the DOE breach given the DOE’s probable rate of
acceptance of spent nuclear fuel had a depository been available.
The Court of Federal Claims, following precedent set in another case,
also did not award the Yankee Companies future damages covering the
period beyond the 2001/2002 damages award dates. The Yankee
Companies believe they will have the opportunity in future lawsuits to
seek recovery of actual damages incurred in the years following 2001
and 2002.
In December of 2006, the DOE appealed the ruling, and the Yankee
Companies filed a cross-appeal. The refund to CL&P, PSNH and
WMECO of any damages that may be recovered from the DOE will
be realized through the Yankee Companies’FERC-approved rate
settlement agreements, subject tofinal determination of the FERC.
CL&P, PSNH and WMECO’saggregateshare of these damages would
be $44.7 million. Their respective shares of these damages would be
as follows: CL&P: $29 million; PSNH: $7.8 million; and WMECO:
$7.9 million. CL&P, PSNH and WMECO cannot at this time determine
the timing or amount of any ultimate recovery or the credit to future
storage costs that may be realized in connection with this matter.
Uranium Enrichment Litigation: In 2001, NU asserted claims against
the DOE in the Court of Federal Claims for overcharges for purchases
of uranium enrichment separative work units (SWUs) for CYAPC’s unit
and the Millstone units between 1986 and 1993 (D&D Claims). The NU
case was stayed by the Court of Federal Claims while other D&D Claims
cases were being litigated. Beginning in 2005, NU joined a number of
other utilities in a consortium in an attempt to negotiate a settlement
agreement with the DOE. In late-2006, a settlement was reached
between the consortium and the DOE. The distribution of proceeds
under the settlement agreement totals approximately $0.8 million for
CYAPC and approximately $1.4 million for Millstone and the Millstone
portion was received on January 30, 2007. This distribution is based on
the total number of SWUs purchased for CYAPC’s unit and the Millstone
units during the applicable period covered by the litigation. The company
believes it is likely that the net proceeds from the settlement agreement
will be credited to ratepayers. Prior to March 31, 2001, CL&P, PSNH
and WMECO collectively owned 100 percent of Millstone 1 and 2 and
68.02 percent of Millstone 3.
NU Enterprises
Merchant Energy Business: At December 31, 2006, the merchant
energy business is comprised of Select Energy’s remaining wholesale
marketing business.