Eversource 2010 Annual Report Download - page 29

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permits in the future; however, due to uncertainty regarding the imposition of new or additional requirements, the Company is unable to
accurately estimate such costs.
Air Quality Requirements
The CAAA, as well as New Hampshire law, impose stringent requirements on emissions of SO2 and NOX for the purpose of controlling
acid rain and ground level ozone. In addition, the CAAA address the control of toxic air pollutants. Installation of continuous emissions
monitors and expanded permitting provisions also are included.
In New Hampshire, the Multiple Pollutant Reduction Program capped NOX, SO2 and CO2 emissions beginning in 2007. In addition, a
2006 New Hampshire law requires PSNH to install a wet flue gas desulphurization system, known as "scrubber" technology, to reduce
mercury emissions of its coal fired plants by at least 80 percent (with the co-benefit of reductions in SO2 emissions as well). The Clean
Air Project addresses this requirement. PSNH began site work for this project in November 2008 and is scheduled to complete it by
mid-2012.
In addition, Connecticut, New Hampshire and Massachusetts are each members of the RGGI, a cooperative effort by ten northeastern
and mid-Atlantic states, to develop a regional program for stabilizing and reducing CO2 emissions from fossil fuel-fired electric
generating plants. Because CO2 allowances issued by any participating state will be usable across all ten RGGI state programs, the
individual state CO2 trading programs, in the aggregate, will form one regional compliance market for CO2 emissions. A regulated
power plant must hold CO2 allowances equal to its emissions to demonstrate compliance at the end of a three-year compliance period
that began in 2009.
Because neither CL&P nor WMECO currently own any generating assets (other than the solar facilities owned by WMECO, which do
not emit CO2), neither is required to acquire CO2 allowances; however, the CO2 allowance costs borne by generators that provide
energy supply to CL&P and WMECO will likely be included in wholesale rates charged to them, which costs are then recoverable from
customers.
PSNH anticipates that its generating units will emit between four million and five million tons of CO2 per year after taking into effect the
operation of PSNH’s Northern Wood Power Project. Under the RGGI formula, this Project decreased PSNH’s responsibility for
reducing fossil-fired CO2 emissions by approximately 425,000 tons per year, or almost ten percent. New Hampshire legislation
provides up to 2.5 million banked CO2 allowances per year for PSNH’s fossil fueled generating plants during the 2009 through 2011
compliance period. These banked CO2 allowances will initially comprise approximately one-half of the yearly CO2 allowances required
for PSNH’s generating plants to comply with RGGI. Such banked allowances will decrease over time. PSNH expects to satisfy its
remaining RGGI requirements by purchasing CO2 allowances at auction or in the secondary market. The cost of complying with RGGI
requirements is recoverable from PSNH customers.
Each of the states in which we do business also has RPS requirements, which generally require fixed percentages of energy supply to
come from renewable energy sources such as solar, hydropower, landfill gas, fuel cells and other similar sources.
New Hampshire’s RPS provision requires increasing percentages of the electricity sold to retail customers to have direct ties to
renewable sources, beginning in 2008 at four percent and ultimately reaching 23.8 percent by 2025. In 2010, the total RPS obligation
was 7.5 percent of total generation supplied to customers. Energy suppliers, like PSNH, purchase RECs from producers that generate
energy from a qualifying resource and use them to satisfy the RPS requirements. PSNH also owns renewable sources and uses both
internally generated RECs and purchased RECs to meet its RPS obligations. To the extent that PSNH is unable to purchase sufficient
RECs, it makes up the difference between the RECs purchased and its total obligation by making an alternative compliance payment
for each REC requirement for which PSNH is deficient. The costs of both the RECs and alternative compliance payments do not
impact earnings, as these costs are recovered by PSNH through its ES rates charged to customers.
Connecticut's RPS statute requires electricity suppliers to meet renewable energy standards, beginning with a four percent RPS in
2004. This percentage increases each year. For 2010, the requirement was 14 percent with goals of 19.5 percent by 2015 and 27
percent by 2020. CL&P is permitted to pass any costs incurred in complying with RPS on to customers through rates.
Massachusetts’ RPS program required electricity suppliers to meet a one percent renewable energy standard in 2003 and has a goal of
15 percent by 2015. For 2010, the requirement was five percent. WMECO is permitted to pass any costs incurred in complying with
RPS on to customers through rates.
In addition, many states and environmental groups have challenged certain of the federal laws and regulations relating to air emissions
as not being sufficiently strict. As a result, it is possible that state and federal regulations could be developed that will impose more
stringent limitations on emissions than are currently in effect.
Hazardous Materials Regulations
Prior to the last quarter of the 20th century when environmental best practices and laws were implemented, utility companies often
disposed of residues from operations by depositing or burying them on-site or disposing of them at off-site landfills or other facilities.
Typical materials disposed of include coal gasification byproducts, fuel oils, ash, and other materials that might contain polychlorinated
biphenyls or that otherwise might be hazardous. It has since been determined that deposited or buried wastes, under certain
circumstances, could cause groundwater contamination or create other environmental risks. We have recorded a liability for what we