Eversource 2009 Annual Report Download - page 46

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Based on the 2009 actual and 2010 through 2014 projected capital expenditures, the 2009 actual and 2010 through 2014 projected
transmission, distribution, and generation rate base as of December 31 of each year are as follows:
As of December 31,
(Millions of Dollars) 2009 2010 2011 2012 2013 2014
CL&P transmission $ 2,099 $ 2,105 $ 2,134 $ 2,318 $ 2,545 $ 2,563
PSNH transmission 315 335 433 530 608 584
WMECO transmission 183 240 429 665 889 851
HQ tie line project - - - - - 675
Subtotal transmission $ 2,597 $ 2,680 $ 2,996 $ 3,513 $ 4,042 $ 4,673
CL&P distribution 2,119 2,333 2,497 2,629 2,778 2,911
PSNH distribution 772 849 941 1,030 1,090 1,156
WMECO distribution 412 413 434 447 456 461
Subtotal electric distribution $ 3,303 $ 3,595 $ 3,872 $ 4,106 $ 4,324 $ 4,528
PSNH generation 407 404 414 848 874 857
WMECO generation - - 29 31 28 25
Subtotal generation $ 407 $ 404 $ 443 $ 879 $ 902 $ 882
Yankee Gas distribution 691 764 843 892 932 974
Totals $ 6,998 $ 7,443 $ 8,154 $ 9,390 $ 10,200 $ 11,057
Transmission Rate Matters and FERC Regulatory Issues
CL&P, PSNH and WMECO and most other New England utilities, generation owners and marketers are parties to a series of
agreements that provide for coordinated planning and operation of the region's generation and transmission facilities and the rules by
which these parties participate in the wholesale markets and acquire transmission services. Under these arrangements, ISO-NE, a
non-profit corporation whose board of directors and staff are independent from all market participants, has served as the Regional
Transmission Organization (RTO) for New England since February 1, 2005. ISO-NE works to ensure the reliability of the New England
transmission system, administers the independent system operator tariff, subject to FERC approval, oversees the efficient and
competitive functioning of the regional wholesale power market and determines the portion of the costs of our major transmission
facilities that are regionalized throughout New England.
Transmission - Wholesale Rates: NU's transmission rates recover total transmission revenue requirements, ensuring that we recover
all regional and local revenue requirements. These rates provide for annual true-ups to actual costs. The financial impacts of
differences between actual and projected costs are deferred for future recovery from or refund to customers. As of December 31, 2009,
NU was in a total underrecovery position of $38.8 million ($28.2 million for CL&P) that will be collected from customers in June 2010.
FERC ROE Decision: On March 24, 2008, the FERC issued a rehearing order confirming its initial decision setting the base ROE for
transmission projects for the New England transmission owners. Including a final adjustment, the order provides a base ROE of 11.14
percent for the period beginning November 1, 2006. The order also affirmed the FERC's earlier decision granting a 100 basis point
adder for transmission projects that are part of the ISO-NE Regional System Plan and are "completed and on line" by December 31,
2008. In addition, while not an issue in this rehearing, the initial order increasing the ROE by 50 additional basis points for transmission
owners joining a RTO and giving the RTO operational control of the transmission facilities still stands. This order was appealed to the
D.C. Circuit Court of Appeals by numerous state regulators and consumer advocates. On January 29, 2010, the Court unanimously
rejected the claims on appeal, confirming FERC’s award of the 100 basis point adder. It is not known at this time if appellants will seek
further review from the U.S. Supreme Court.
On May 16, 2008, CL&P filed an application with the FERC to receive ROE incentives for its Middletown-Norwalk project and to seek a
waiver of the "completed and on line" date of December 31, 2008 to earn incentives, pursuant to the FERC’s March 24, 2008 order on
rehearing. Alternatively, we requested the FERC to find that this project met the nexus test requirements for incentives under the
FERC’s guidelines for new projects, and requested an additional 50 basis point adder for advanced technology used in the project.
In July 2008, the FERC granted the waiver request and approved the 100 basis point ROE incentive for the entire Middletown-Norwalk
project. The FERC also found that the project met the nexus test and granted an additional 50 basis point adder for the advanced
technology aspects of the 24-mile underground portion of the project. The 50 basis point adder results in a total ROE for the
underground portion of the Middletown-Norwalk project of 13.1 percent, which represents the overall ROE limit established by the
FERC. Connecticut state regulators have taken an appeal to the D.C. Circuit Court of Appeals. A schedule for the appeal has not yet
been set.
NEEWS Incentives: On November 17, 2008, the FERC issued an order granting incentives and rate amendments to us and National
Grid USA for the NEEWS projects. The approved incentives included:
 An ROE of 12.89 percent, representing an incentive of 125 basis points;
 100 percent inclusion of prudently incurred construction work in progress (CWIP) in rate base; and
 Full recovery of prudently incurred costs if NEEWS, or any portion thereof, is cancelled as a result of factors beyond NU's or
National Grid USA's control.