Eversource 2010 Annual Report Download - page 37

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and Locational Installed Capacity (LICAP) costs. In addition, Section 83 of Public Act 07-242, "An Act Concerning Electricity and
Energy Efficiency," states that if an existing electric generating plant located in Connecticut is offered for sale, then an electric
distribution company, such as CL&P, would be eligible to purchase the generation plant upon obtaining prior approval from the DPUC
and a determination by the DPUC that such purchase is in the public interest.
PSNH. The NHPUC, pursuant to statutory requirements, has issued orders granting PSNH exclusive franchises to distribute electricity
in the respective areas in which it is now supplying such service.
In addition to the right to distribute electricity as set forth above, the franchises of PSNH include, among others, rights and powers to
manufacture, generate, purchase, and transmit electricity, to sell electricity at wholesale to other utility companies and municipalities
and to erect and maintain certain facilities on certain public highways and grounds, all subject to such consents and approvals of public
authority and others as may be required by law. The distribution and transmission franchises of PSNH include the power of eminent
domain.
WMECO. WMECO is authorized by its charter to conduct its electric business in the territories served by it, and has locations in the
public highways for transmission and distribution lines. Such locations are granted pursuant to the laws of Massachusetts by the
Department of Public Works of Massachusetts or local municipal authorities and are of unlimited duration, but the rights thereby granted
are not vested. Such locations are for specific lines only and for extensions of lines in public highways. Further similar locations must
be obtained from the Department of Public Works of Massachusetts or the local municipal authorities. In addition, WMECO has been
granted easements for its lines in the Massachusetts Turnpike by the Massachusetts Turnpike Authority and pursuant to state laws, has
the power of eminent domain.
The Massachusetts restructuring legislation defines service territories as those territories actually served on July 1, 1997 and following
municipal boundaries to the extent possible. The restructuring legislation further provides that until terminated by law or otherwise,
distribution companies shall have the exclusive obligation to serve all retail customers within their service territories and no other person
shall provide distribution service within such service territories without the written consent of such distribution companies. Pursuant to
the Massachusetts restructuring legislation, the DPU (then, the Department of Telecommunications and Energy) was required to define
service territories for each distribution company, including WMECO. The DPU subsequently determined that there were advantages to
the exclusivity of service territories and issued a report to the Massachusetts Legislature recommending against, in this regard, any
changes to the restructuring legislation.
Yankee Gas. Yankee Gas holds valid franchises to sell gas in the areas in which Yankee Gas supplies gas service, which it acquired
either directly or from its predecessors in interest. Generally, Yankee Gas holds franchises to serve customers in areas designated by
those franchises as well as in most other areas throughout Connecticut so long as those areas are not occupied and served by another
gas utility under a valid franchise of its own or are not subject to an exclusive franchise of another gas utility. Yankee Gas’ franchises
are perpetual but remain subject to the power of alteration, amendment or repeal by the General Assembly of the State of Connecticut,
the power of revocation by the DPUC and certain approvals, permits and consents of public authorities and others prescribed by
statute. Generally, Yankee Gas’ franchises include, among other rights and powers, the right and power to manufacture, generate,
purchase, transmit and distribute gas and to erect and maintain certain facilities on public highways and grounds, and the right of
eminent domain, all subject to such consents and approvals of public authorities and others as may be required by law.
Item 3. Legal Proceedings
1. Yankee Companies v. U.S. Department of Energy
The Yankee Companies (YAEC, MYAPC, and CYAPC) commenced litigation in 1998 against the DOE charging that the federal
government breached contracts it entered into with each company in 1983 under the Nuclear Waste Policy Act of 1982 to begin
removing spent nuclear fuel from the respective nuclear plants no later than January 31, 1998 in return for payments by each company
into the Nuclear Waste Fund. The funds for those payments were collected from regional electric customers. The Yankee Companies
initially claimed damages for incremental spent nuclear fuel storage, security, construction and other costs through 2010.
In 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 2006, the DOE appealed the decision and the
Yankee Companies filed cross-appeals. The Court of Appeals disagreed with the trial court’s method of calculation of the amount of
the DOE’s liability, among other things, and vacated the decision of the Court of Federal Claims and remanded the case to make new
findings consistent with its decision. On September 7, 2010, the trial court issued its decision following remand and 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.
Briefs are due in the first quarter of 2011. The application of any damages that 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.
In December 2007, the Yankee Companies filed a second round of lawsuits against the DOE seeking recovery of actual damages
incurred in the years following 2001 and 2002.