Eversource 2008 Annual Report Download - page 76

currently in rates but does not have an environmental cost recovery tracking mechanism.
Accordingly, changes in CL&P’s environmental reserves impact CL&P’s earnings. WMECO
does not have a separate regulatory mechanism to recover environmental costs from its
customers, and changes in WMECO’s environmental reserves impact WMECO’s earnings.
HWP does not have the ability to recover environmental costs in rates, and changes in
HWP’s environmental reserves impact HWP’s earnings.
C. Spent Nuclear Fuel Disposal Costs
Under the Nuclear Waste Policy Act of 1982 (the Act), CL&P and WMECO must pay the
United States Department of Energy (DOE) for the costs of disposal of spent nuclear fuel
and high-level radioactive waste for the period prior to the sale of their ownership in the
Millstone nuclear power stations.
The DOE is responsible for the selection and development of repositories for, and the
disposal of, spent nuclear fuel and high-level radioactive waste. For nuclear fuel used to
generate electricity prior to April 7, 1983 (Prior Period Spent Nuclear Fuel) for CL&P and
WMECO, an accrual has been recorded for the full liability, and payment must be made
by CL&P and WMECO to the DOE prior to the first delivery of spent fuel to the DOE.
After the sale of Millstone, CL&P and WMECO remained responsible for their share of the
disposal costs associated with the Prior Period Spent Nuclear Fuel. Until such payment to
the DOE is made, the outstanding liability will continue to accrue interest at the 3-month
treasury bill yield rate. At December 31, 2008 and 2007, fees due to the DOE for the
disposal of Prior Period Spent Nuclear Fuel for the year ended December 31, 2008 and
2007, respectively, are included in long-term debt and were $298.6 million and $294.3
million, respectively, including accumulated interest costs of $217.9 million and $212.6
million, respectively.
During 2004, WMECO established a trust that holds marketable securities to fund
amounts due to the DOE for the disposal of WMECO’s Prior Period Spent Nuclear
Fuel. For further information on this trust, see Note 9, “Marketable Securities,” to the
consolidated financial statements.
D. Long-Term Contractual Arrangements
Regulated Companies: Estimated Future Annual Regulated Companies Costs: The
estimated future annual costs of the regulated companies’ significant long-term
contractual arrangements at December31, 2008 are as follows:
(Millions of Dollars) 2009 2010 2011 2012 2013 Thereafter Totals
VYNPC $ 30.3 $ 29.6 $ 30.2 $ 7.2 $ - $ - $ 97.3
Supply/stranded cost contracts 233.0 222.7 259.6 261.0 252.5 834.5 2,063.3
Renewable energy contracts 2.8 36.8 64.6 119.0 118.9 1,667.5 2,009.6
Peaker CfDs - 5.2 15.0 21.6 20.8 35.5 98.1
Natural gas procurement contracts 58.5 58.3 57.3 50.5 27.0 122.9 374.5
Wood, coal and
transportation contracts 141.5 87.6 82.5 56.1 - - 367.7
PNGTS pipeline commitments 2.1 2.0 2.0 2.0 2.0 7.9 18.0
Hydro-Québec support
commitments 20.2 20.5 20.6 20.3 19.9 136.5 238.0
Transmission segment
project commitments 186.6 156.0 153.4 131.1 48.0 - 675.1
Yankee Companies billings 25.7 28.0 29.7 29.8 29.4 50.4 193.0
Clean air project
commitments 76.3 75.3 36.3 16.4 5.1 - 209.4
Vehicle/equipment
commitments 14.6 1.9 28.5 - - - 45.0
Totals $791.6 $723.9 $779.7 $715.0 $523.6 $2,855.2 $6,389.0
VYNPC: CL&P, PSNH and WMECO have commitments to buy approximately 9.5
percent, 4 percent and 2.5 percent, respectively, of the Vermont Yankee Nuclear Power
Corporation (VYNPC) plant’s output through March 2012 at a range of fixed prices. The
total cost of purchases under contracts with VYNPC amounted to $26.5 million in 2008,
$25.6 million in 2007 and $32.2 million in 2006.
Supply/Stranded Cost Contracts: CL&P, PSNH and WMECO have entered into various
IPP contracts that extend through 2024 for the purchase of electricity, including
payment obligations resulting from the buydown of electricity purchase contracts.
The total cost of purchases and obligations under these contracts amounted to $237.6
million in 2008, $281.5 million in 2007 and $331.9 million in 2006. The majority of the
contracts expire by 2014.
In addition, CL&P and UI have entered into four CfDs for a total of approximately 787
MW of capacity with three generation projects to be built or modified and one new
demand response project. The CfDs extend through 2026 and obligate the utilities to
pay the dierence between a set capacity price and the value that the projects receive
in the ISO-NE capacity markets. The contracts have terms of up to 15 years beginning in
2009 and are subject to a sharing agreement with UI, whereby UI will share 20 percent
of the costs and benefits of these contracts. The information in the table above includes
100 percent of the payments projected under the contracts entered into by CL&P
and 80 percent of the payments projected under the contracts entered into by UI, are
subject to changes in capacity prices that the projects receive in the ISO-NE capacity
markets and CL&P’s portion of the costs and benefits of these contracts will be paid by
or refunded to CL&P’s customers.
These amounts do not include contractual commitments related to CL&P’s standard
or last resort service or WMECO’s default service, both of which represent contractual
commitments that are conditional upon CL&P and WMECO customers’ use of energy,
and PSNH’s short-term power supply management.
Renewable Energy Contracts: CL&P has entered into various agreements to purchase
energy, capacity and renewable energy credits from renewable energy facilities.
Amounts payable under these contracts are subject to a sharing agreement with UI,
whereby UI will share approximately 20 percent of the costs and benefits of these
contracts. In addition, UI has entered into contracts that are subject to this cost sharing
agreement under which CL&P will share in approximately 80 percent of the costs and
benefits of the contract. The information in the table above includes 100 percent of the
payments projected under the contracts entered into by CL&P and 80 percent of the
payments projected under the contracts entered into by UI. CL&P’s portion of the costs
and benefits of these contracts will be paid by or refunded to CL&P’s customers.
Peaker CfDs: In 2008, CL&P has entered into three CfDs with developers of peaking
generation units approved by the DPUC (Peaker CfDs). These units will have a total of
approximately 500 MW of peaking capacity. As directed by the DPUC, CL&P and UI
have entered into a sharing agreement, whereby CL&P is responsible for 80 percent and
UI for 20 percent of the net costs or benefits of these 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. The information in the table above
includes 100 percent of the estimated payments projected under the contracts, before
reimbursement from UI under the sharing agreement. The ultimate cost or benefit
to CL&P under these contracts will depend on the costs of plant construction and
operation and the prices that the projects receive for capacity and other products in the
ISO-NE markets. CL&P’s portion of the amounts paid or received under the Peaker CfDs
will be recoverable from or refunded to CL&P’s customers.
Natural Gas Procurement Contracts: Yankee Gas has entered into long-term contracts
for the purchase of a specified quantity of natural gas in the normal course of business
as part of its portfolio of supplies to meet its actual sales commitments. These contracts
extend through 2022. The total cost of Yankee Gas’ procurement portfolio, including
these contracts, amounted to $352.5 million in 2008, $305.3 million in 2007 and $275.1
million in 2006.
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