Eversource 2006 Annual Report Download - page 87

NU 2006 ANNUAL REPORT 85
Estimated Future Annual Utility Group Costs: The estimated future annual costs of the Utility Group’s significant long-term contractual
arrangements at December 31, 2006 are as follows:
(Millions of Dollars) 2007 2008 2009 2010 2011 Thereafter Totals
VYNPC $ 27.6 $ 27.9 $ 30.3 $ 29.2 $ 29.9 $ 7.2 $ 152.1
Electricity procurement contracts 283.6 241.2 207.1 184.7 180.5 807.8 1,904.9
Natural gas procurement contracts 50.8 38.0 37.5 37.1 34.8 38.3 236.5
Wood, coal and transportation contracts 107.0 66.2 — — — — 173.2
PNGTS pipeline commitments 1.5 2.0 2.0 2.0 2.0 13.9 23.4
Hydro-Quebec 21.0 21.2 21.0 21.0 20.8 188.0 293.0
Transmission business project commitments 474.7 278.2 40.6 0.1 — — 793.6
Yankee Gas LNG storage facility 5.0 — — — — — 5.0
Yankee Companies billings 44.0 35.1 28.4 31.7 27.2 105.2 271.6
Totals $1,015.2 $709.8 $366.9 $305.8 $295.2 $1,160.4 $3,853.3
NU Enterprises:
Select Energy Purchase Agreements: Select Energy maintains
long-term agreements to purchase energy as part of its portfolio of
resources to meet its actual or expected sales commitments. Most
purchase commitments are recorded at their mark-to-market value
with the exception of one non-derivative contract which is accounted
for on the accrual basis.
Contract Assignment Agreement: During the fourth quarter of 2005,
Select Energy settled a wholesale contract for $55.9 million with
payments commencing in January of 2006 and ending in December
of 2008. If certain contractual conditions are met, these payments
could be accelerated.
Hess Commitments: On June 1, 2006, Select Energy sold its competitive
retail marketing business to Hess. Under the terms of the agreement,
Select Energy paid Hess approximately $11.5 million at closing, $12.9
million in December of 2006, and will pay $14.8 million by the end of 2007.
Estimated Future Annual NU Enterprises Costs: The estimated future
annual costs of NU Enterprises’ significant contractual arrangements
are as follows:
(Millions of Dollars) 2007 2008 2009 2010 2011 Thereafter Totals
Select Energy purchase agreements $656.7 $193.2 $29.7 $32.1 $31.3 $20.6 $ 963.6
Contract assignment agreement 18.3 19.1 — — — — 37.4
Hess commitment 14.8 — — — — — 14.8
Totals $689.8 $212.3 $29.7 $32.1 $31.3 $20.6 $1,015.8
Select Energy’s purchase commitment amounts exceed the amount
expected to be reported in fuel, purchased and net interchange power
because many wholesale sales transactions are also classified in fuel,
purchased and net interchange power, and certain purchases are
included in revenues. Select Energy also maintains certain energy
commitments whose mark-to-market values have been recorded on
the consolidated balance sheets as derivative assets and liabilities, a
portion of which is included in assets held for sale and liabilities of
assets held for sale. These contracts areincluded in the table above.
The amounts and timing of the costs associated with Select Energy’s
purchase agreements will be impacted by the exit from the NU
Enterprises’ businesses.
E. Deferred Contractual Obligations
NU has significant decommissioning and plant closure cost
obligations tothe Yankee Companies. The Yankee Companies collect
decommissioning and closure costs through wholesale, FERC-
approved rates charged under power purchase agreements with
several New England utilities, including NU’s electric utility companies.
Asummary of each of NU’s subsidiaries’ ownership percentages in the
Yankee Companies at December 31, 2006 is as follows:
CYAPC YAEC MYAPC
CL&P 34.5% 24.5% 12.0%
PSNH 5.0% 7.0% 5.0%
WMECO 9.5% 7.0% 3.0%
Totals 49.0% 38.5% 20.0%
CYAPC: On July 1, 2004, CYAPC filed with the FERC seeking to increase
its annual decommissioning collections from $16.7 million to $93
million for a six-year period of January 1, 2005 to January 1, 2011. On
August 30, 2004, the FERC issued an order accepting the rates, with
collection by CYAPC beginning on February 1, 2005, subject to refund.
On June 10, 2004, the DPUC and the Office of Consumer Counsel (OCC)
filed a petition with the FERC seeking a declaratory order that CYAPC
be allowed to recover all decommissioning costs from its wholesale
purchasers, including CL&P, PSNH and WMECO, but that such
purchasersmay not be allowed to recover in their retail rates any costs
that the FERC might determine to have been imprudently incurred. The
FERC rejected the DPUC’s and OCC’s petition, whereupon the DPUC
filed an appeal of the FERC’s decision with the D.C. Circuit Court of
Appeals (Court of Appeals).
On August 15, 2006, CYAPC, the DPUC, the OCC and Maine state
regulatorsfiled a settlement agreement with the FERC. The settlement
agreement was approved by the FERC on November 16, 2006 and
disposes of the pending litigation at the FERC and the Court of
Appeals, among other issues.
Under the terms of the settlement agreement, the parties have agreed
to a revised decommissioning estimate of $642.9 million (in 2006
dollars), 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 decommissioning costs and extension of the collection period