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Yankee Companies Billings: CL&P, PSNH and WMECO have significant decommissioning and plant closure cost obligations to the
Yankee Companies, which have each completed the physical decommissioning of their respective nuclear facilities and are now
engaged in the long-term storage of their spent fuel. The Yankee Companies collect decommissioning and closure costs through
wholesale, FERC-approved rates charged under power purchase agreements with several New England utilities, including CL&P,
PSNH and WMECO. These companies in turn recover these costs from their customers through state regulatory commission-approved
retail rates. CL&P, PSNH and WMECO's total cost of these billings amounted to $22.7 million, $4.1 million and $6.2 million,
respectively, in 2010, $18.2 million, $3.7 million and $5 million, respectively, in 2009, and $20 million, $4.4 million and $5.4 million,
respectively, in 2008 ($33 million in 2010, $26.9 million in 2009 and $29.8 million in 2008 in the aggregate for NU).
See Note 12D "Commitments and Contingencies - Deferred Contractual Obligations," to the consolidated financial statements for
information regarding the collection of the Yankee Companies' decommissioning costs.
Clean Air Project Commitments: These amounts represent commitments for engineering, program management services and major
component supply and installation associated with PSNH's coal-fired 440 MW Merrimack Station clean air project, which includes the
addition of a wet scrubber to reduce mercury and SO2 emissions at Merrimack Station Units 1 and 2. The total cost under these
contracts amounted to $129.6 million in 2010, $107.5 million in 2009 and $20.5 million in 2008.
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 nonderivative contract, which is accounted for on the accrual basis.
Select Energy's purchase commitment amounts are reported on a net basis in Fuel, Purchased and Net Interchange Power on the
accompanying consolidated statements of income along with certain sales contracts and mark-to-market amounts. Accordingly, the
amount included in Fuel, Purchased and Net Interchange Power will be less than the amounts included in the table above. 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. These contracts are included in the table above.
D. Deferred Contractual Obligations
CL&P, PSNH and WMECO have decommissioning and plant closure cost obligations to the Yankee Companies, which have each
completed the physical decommissioning of their respective nuclear facilities and are now engaged in the long-term storage of their
spent fuel. The Yankee Companies collect decommissioning and closure costs through wholesale, FERC-approved rates charged
under power purchase agreements with several New England utilities, including CL&P, PSNH and WMECO. These companies in turn
recover these costs from their customers through state regulatory commission-approved retail rates.
CL&P, PSNH and WMECO's percentage share of the obligations to support the Yankee Companies under FERC-approved rate tariffs
is the same as their respective ownership percentages in the Yankee Companies. For further information on the ownership
percentages, see Note 1L, "Summary of Significant Accounting Policies - Equity Method Investments," to the consolidated financial
statements.
The Yankee Companies are currently collecting amounts that management believes are adequate to recover the remaining
decommissioning and closure cost estimates for the respective plants. Management believes CL&P and WMECO will recover their
shares of these decommissioning and closure obligations from their customers. PSNH has already recovered its share of these costs
from its customers.
Spent Nuclear Fuel Litigation: In 1998, CYAPC, YAEC and MYAPC filed separate complaints against the DOE in the Court of Federal
Claims seeking monetary damages resulting from the DOE's failure to begin accepting spent nuclear fuel for disposal by January 31,
1998 pursuant to the terms of the 1983 spent fuel and high level waste disposal contracts between the Yankee Companies and the
DOE. 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. In December 2007, the
Yankee Companies each filed subsequent lawsuits against the DOE seeking recovery of actual damages incurred in the years following
2001/2002.
In December 2006, the DOE appealed the ruling, and the Yankee Companies filed cross-appeals. The Court of Appeals issued its
decision on August 7, 2008, effectively agreeing with the trial court's findings as to the liability of the DOE but disagreeing with the
method that the trial court used to calculate damages. The Court of Appeals vacated the decision and remanded the case for new
findings consistent with its decision.
On September 7, 2010, the trial court issued its decision following remand, and judgment on the decision was entered on September 9,
2010. The judgment awarded CYAPC $39.7 million, YAEC $21.2 million and MYAPC $81.7 million. The DOE filed an appeal and the
Yankee Companies cross-appealed on November 8, 2010. Briefs will be due absent extensions during the first quarter of 2011.
Interest on the judgments does not start to accrue until all appeals have been decided and/or all appeal periods have expired without
appeals being filed. The application of any damages, which are ultimately recovered to benefit customers, is established in the Yankee
Companies' FERC-approved rate settlement agreements, although implementation will be subject to the final determination of the
FERC.