Eversource 2010 Annual Report Download - page 55

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Yankee Gas determines the amount of capital spending by category based on business needs and opportunities. Future capital
spending will likely be affected by price differences between the cost of natural gas with respect to home heating oil, natural gas supply,
new home construction, road reconstruction, regulatory mandates and business requirements.
Actual capital expenditures could vary from the projected amounts for the companies and periods above. Economic conditions in the
northeast could impact the timing of our major transmission projects. Most of these capital investment projections, including those for
NPT, assume timely regulatory approval, which in most cases requires extensive review. Delays in or denials of those approvals could
reduce the levels of expenditures, associated rate base, and anticipated EPS growth.
Based on the 2010 actual and 2011 through 2015 projected capital expenditures, the 2010 actual and 2011 through 2015 projected
transmission, distribution and generation rate base as of December 31 of each year are as follows:
Year
(Millions of Dollars) 2010 2011 2012 2013 2014 2015
CL&P transmission $ 2,149 $ 2,114 $ 2,178 $ 2,234 $ 2,394 $ 2,552
PSNH transmission 341 360 406 406 505 540
WMECO transmission 269 459 650 730 834 803
NPT - - - - - 830
Total transmission 2,759 2,933 3,234 3,370 3,733 4,725
CL&P distribution 2,273 2,382 2,540 2,736 3,007 3,297
PSNH distribution 803 866 947 1,006 1,070 1,143
WMECO distribution 412 422 425 429 439 453
Total electric distribution 3,488 3,670 3,912 4,171 4,516 4,893
PSNH generation 394 399 727 742 740 728
WMECO generation 11 27 31 31 33 35
Total generation 405 426 758 773 773 763
Yankee Gas distribution 682 743 756 790 847 969
Total $ 7,334 $ 7,772 $ 8,660 $ 9,104 $ 9,869 $ 11,350
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 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,
2010, NU was in a total overrecovery position of $40.9 million ($37.2 million for CL&P, $3 million for PSNH, and $0.7 million for
WMECO), which will be refunded to customers in June 2011.
Pursuant to a series of orders involving the ROE for regionally planned New England transmission projects, the FERC set the base
ROE at 11.14 percent and approved incentives that increased the ROE to 12.64 percent for those projects that were in-service by the
end of 2008. In addition, certain projects were granted additional ROE incentives by FERC under its transmission incentive policy. As
a result, CL&P earns between 12.64 percent and 13.1 percent on its major transmission projects. All appeals of FERC's orders on the
ROE for New England transmission owners have been denied.
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 (1) an ROE of 12.89 percent, representing an incentive of 125
basis points; (2) 100 percent inclusion of CWIP in rate base; and (3) 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. Several parties have sought rehearing of this
yet to be acted upon FERC order.
Legislative Matters
2010 Federal Legislation: On March 23, 2010, President Obama signed into law the 2010 Healthcare Act. The 2010 Healthcare Act
was amended by a Reconciliation Bill signed into law on March 30, 2010. The 2010 Healthcare Act includes a provision that eliminated
the tax deductibility of certain PBOP contributions equal to the amount of the federal subsidy received by companies like NU, which
sponsor retiree health care benefit plans with a prescription drug benefit that is actuarially equivalent to Medicare Part D. The tax
deduction eliminated by this legislation represented a loss of previously recognized deferred income tax assets established through
2009 and as a result, these assets were written down by approximately $18 million in the first quarter of 2010. Since the electric and