Eversource 2008 Annual Report Download - page 30

generators through May 31, 2010 began. The first forward
capacity auction concluded in early February 2008 for the
capacity year of June 2010 through May 2011. The bidding
reached the established minimum of $4.50 per kilowatt-
month with 2,047 MW of excess remaining capacity,
which resulted in an eective capacity price of $4.25 per
kilowatt-month compared to the previously established
price of $4.10 per kilowatt-month for the capacity year
preceding June 2010. The second auction concluded on
December10, 2008 for the capacity year of June 2011
through May 2012. The bidding reached the established
minimum of $3.60 per kilowatt-month with 4,755 MW of
excess remaining capacity, which resulted in an eective
capacity price of $3.12 per kilowatt-month. These costs
are recoverable in all jurisdictions through the currently
established rate structures.
Connecticut - CL&P:
Distribution Rates: On January 28, 2008, the DPUC
issued a final decision in a rate case CL&P filed on July
30, 2007. As a result of the decision, CL&P implemented
a $77.8 million annualized distribution rate increase
eective February 1, 2008 and an incremental $20.1 million
annualized distribution rate increase eective
February 1, 2009.
Peaking Generation Filing: In 2007, Connecticut passed
“An Act Concerning Electricity and Energy Eciency”
(Energy Eciency Act). Among other provisions, the
Energy Eciency Act required electric distribution
companies, including CL&P, to file proposals with the
DPUC to build cost-of-service peaking generation facilities.
In 2008, the DPUC selected three projects, none of which
were proposals submitted by CL&P, to provide peaking
generation totaling approximately 500 MW. CL&P entered
into CfDs with the developers of the three selected
peaking generation units (Peaker CfDs). The Peaker
CfDs pay the developer the dierence between capacity,
forward reserve and energy market revenues and a cost-of-
service payment stream for 30 years. As directed by the
DPUC, CL&P and UI entered into a cost sharing agreement,
whereby CL&P is responsible for 80 percent and UI for
20 percent of the net costs or benefits of these CfDs.
CL&P’s portion of the costs and benefits will be paid by or
refunded to its customers.
Renewable Energy Contracts: In 2008, pursuant to
Connecticut’s “Act Concerning Energy Independence,”
(Energy Independence Act), CL&P signed five contracts,
and UI signed two contracts each to purchase energy,
capacity and renewable energy credits from planned
renewable energy plants, including biomass and fuel cell
projects approved by the DPUC, comprising a total of
109 MW of capacity. CL&P signed one contract with a
biomass project in 2007 to purchase 15 MW of its output.
Purchases under the contracts are scheduled to begin
between 2009 and 2011 and will extend for periods ranging
from 15 to 20 years. As directed by the DPUC, CL&P and
UI have also signed a sharing agreement under which they
will share the costs and benefits of these contracts, with
80 percent to CL&P and 20 percent to UI. On January
16, 2009, the DPUC issued a draft decision selecting two
additional renewable energy projects for a total of 6 MW
with which CL&P or UI will sign similar contracts. The
DPUC’s final decision on these projects is scheduled for
March 11, 2009. Additional projects are expected to be
selected by the DPUC to achieve a total of 150 MW of
renewable energy sources in Connecticut in accordance
with the Energy Independence Act. CL&P’s portion of the
costs and benefits of these contracts will be paid by or
refunded to CL&P’s customers.
AMI Filing: On December 19, 2007, the DPUC issued a
final decision on CL&P’s compliance plan that requires a
pilot program to test customer interest in, and response
to, peak-time based rates and technical capabilities of an
advanced metering infrastructure (AMI). On May 2, 2008,
the DPUC approved CL&P’s revised pilot plan, which was
subsequently modified to provide for a summer 2009 rate
pilot supported by meters for 3,000 voluntary rate pilot
customers. The restriction of meters to only rate pilot
participants decreased the required number of meters
from 10,000 to the current 3,000. The rate pilot customer
enrollment campaign began in November 2008. CL&P is
required to submit a report on the customer response to
the pilot, including technical capabilities of AMI meters and
customer response to peak-time based rates by December
1, 2009. The estimated incremental cost of the program
currently has a range of $10.6 million to $13 million. The
incremental costs associated with the pilot are authorized
to be recovered from customers, initially through CL&P’s
FMCC. The non-incremental costs are projected to be
less than $2 million.
FMCC Filing: In September 2008, the DPUC approved
CL&P’s semi-annual FMCC filing, which reconciled
actual FMCC revenues and charges (including Energy
Independence Act charges), and generation service
charge (GSC) revenues and expenses for the full year
period January 1, 2007 through December 31, 2007, and
that identified a total overrecovery of $105.4 million at
December 31, 2007. The majority of this overrecovery was
returned to customers in 2008 through credits included
in 2008 rates that were determined in separate rate
proceedings. On August 5, 2008, CL&P filed with the
DPUC its semi-annual FMCC filing for the period January
1, 2008 through June 30, 2008. This filing identified a net
overrecovery totaling $30.9 million including the remaining
unamortized overrecovery from 2007. In December 2008,
the DPUC issued a final decision covering this period that
approved all costs as filed.
On February 6, 2009, CL&P filed with the DPUC its semi-
annual FMCC filing for the year ended December 31, 2008,
which identified an underrecovery totaling approximately
$31.9 million, which has been recorded as a regulatory
asset on the accompanying consolidated balance sheet.
A decision schedule has not yet been set at this time.
We do not expect the outcome of the DPUC’s review of
this filing to have a material adverse eect on CL&P’s net
income, financial position or cash flows.
Standard Service and Last Resort Service Rates: CL&P’s
residential and small commercial customers who do not
choose competitive suppliers are served under Standard
Service (SS) rates, and large commercial and industrial
customers who do not choose competitive suppliers are
served under Last Resort Service (LRS) rates. Eective
January1, 2009, the DPUC approved an increase to
CL&P’s total average SS rate of approximately 2.4 percent
and a decrease to CL&P’s total average LRS rate of
approximately 5.9 percent. The energy supply portion of
the total average SS rate increased from 11.852 cents per
KWH to 12.316 cents per KWH. The energy supply portion
of the total average LRS rate decreased from 12.667 cents
per KWH to 11.738 cents per KWH. Eective April1, 2009,
the DPUC approved a decrease to CL&P’s total average
LRS rate of approximately 22 percent, which was a result
of the energy supply portion decreasing to 8.207 cents
per KWH from January 1, 2009. CL&P is fully and timely
recovering the costs of its SS and LRS services.
CTA and SBC Reconciliation: On March 31, 2008, CL&P
filed with the DPUC its 2007 Competitive Transition
Assessment (CTA) and SBC reconciliation, which compared
CTA and SBC revenues to revenue requirements. For
the 12 months ended December 31, 2007, total CTA
revenues exceeded CTA revenue requirements by $26.1
million, which has been recorded as a decrease to the
CTA regulatory asset on the accompanying consolidated
balance sheet. For the 12 months ended December 31,
2007, the SBC cost of service exceeded SBC revenues by
$39.4 million, which has been recorded as a regulatory
asset on the accompanying consolidated balance sheet.
On December 3, 2008, the DPUC issued a final decision
in this docket that approved the 2007 CTA and SBC
reconciliation with minor modifications. The decision
referred to a potential change in the CTA rate eective
January 1, 2009, when new rates were to be determined
for all CL&P rate components. By letter dated December
23, 2008, the DPUC approved CL&P’s recommendation
to slightly decrease the base CTA rate and to establish a
separate CTA refund credit beginning January 1, 2009. The
CTA refund credit is intended to return to customers over
a twelve month period a projected 2008 CTA overrecovery
of $46.2 million, plus $1.8 million of incremental distribution
revenues attributable to accelerating CL&P’s previously
allowed 2009 distribution rate increase from a start date
of February 1, 2009 to January 1, 2009. The DPUC also
approved an increase in the SBC rate to bill an additional
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