Eversource 2006 Annual Report Download - page 88

86 NU 2006 ANNUAL REPORT
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
asettlement 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 to 2010, 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 share of CYAPC’s after-tax write-off.
YAEC: In November of 2005, YAEC established an updated estimate of
the costof completing the decommissioning of its plant. On January
31, 2006, the FERC issued an order accepting the rate increase,
effective on February 1, 2006, subject to refund.
On July 31, 2006, the FERC approved a settlement agreement with
the DPUC, the Massachusetts Attorney General and the Vermont
Department of Public Service previously filed 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 cost increase 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 ultimatelybe 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 againstthe 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 tothe 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 initiallyclaimed 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’saggregateshareof these damages would
be $44.7 million. Their respectiveshares 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.
F. NRG Energy, Inc. Exposures
Certain subsidiaries of NU, including CL&P and Yankee Gas, entered
intotransactions with NRG Energy, Inc. (NRG) and certain of its
subsidiaries. On May 14, 2003, NRG and certain subsidiaries of NRG
filed voluntary bankruptcy petitions, and on December 5, 2003, NRG
emerged from bankruptcy.NU’sNRG-related exposures as a result of
these transactions relate to 1) the refunding of approximately $28
million of congestion charges previously withheld from NRG prior to