Eversource 2010 Annual Report Download - page 88

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The Regulated companies estimate unbilled revenues monthly using the daily load cycle method. The daily load cycle method
allocates billed sales to the current calendar month based on the daily load for each billing cycle. The billed sales are subtracted from
total calendar month sales to estimate unbilled sales. Unbilled revenues are estimated by first allocating sales to the respective rate
classes, then applying an average rate to the estimate of unbilled sales.
Regulated Companies' Transmission Revenues - Wholesale Rates: Wholesale transmission revenues are based on formula rates that
are approved by the FERC. Wholesale transmission revenues for CL&P, PSNH, and WMECO are collected under the ISO-NE FERC,
Transmission, Markets and Services Tariff (ISO-NE Tariff). The ISO-NE Tariff includes Regional Network Service (RNS) and Schedule
21 - NU rate schedules to recover fees for transmission and other services. The RNS rate, administered by ISO-NE and billed to all
New England transmission users, including CL&P, PSNH, and WMECO's transmission businesses, is reset on June 1st of each year
and recovers the revenue requirements associated with transmission facilities that benefit the New England region. The Schedule 21 -
NU rate, administered by NU, is reset on January 1st and June 1st of each year and recovers the revenue requirements for local
transmission facilities and other transmission costs not recovered under the RNS rate, including 100 percent of the CWIP that is
included in rate base on the NEEWS projects. The Schedule 21 - NU rate calculation recovers total transmission revenue requirements
net of revenues received from other sources (i.e., RNS, rentals, etc.), thereby ensuring that NU recovers all of CL&P's, PSNH's and
WMECO's regional and local revenue requirements as prescribed in the ISO-NE Tariff. Both the RNS and Schedule 21 - NU rates
provide for the annual reconciliation and recovery/refund of estimated (or projected) costs to actual costs. The financial impacts of
differences between actual and projected costs are deferred for future recovery from, or refunded to, customers. As of December 31,
2010, the Schedule 21 - NU rates were 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.
Regulated Companies' Transmission Revenues - Retail Rates: A significant portion of the NU transmission segment revenue comes
from ISO-NE charges to the distribution segments of CL&P, PSNH and WMECO, each of which recovers these costs through rates
charged to their retail customers. CL&P, PSNH and WMECO each have a retail transmission cost tracking mechanism as part of their
rates, which allows the companies to charge their retail customers for transmission costs on a timely basis.
NU Enterprises: Service revenues are recognized as services are provided, often on a percentage of completion basis. Wholesale
marketing revenues are recognized through mark-to-market accounting on underlying derivative contracts and recorded in Fuel,
Purchased and Net Interchange Power on the consolidated statements of income. This net presentation of the mark-to-market and
settlement amounts is required as a result of NU Enterprises not being able to assert that physical delivery of contract quantities is
probable.
N. Operating Expenses
Fuel, Purchased and Net Interchange Power: For the years ended December 31, 2010, 2009 and 2008, Fuel, Purchased and Net
Interchange Power included costs related to fuel (and natural gas costs as it related to Yankee Gas) as follows:
For the Years Ended December 31,
(Millions of Dollars) 2010 2009 2008
CL&P $ 0.3 $ 0.5 $ 4.1
PSNH 184.3 174.1 177.4
WMECO 0.1 0.8 0.8
Yankee Gas 206.4 226.1 358.8
Other 0.5 0.2 0.6
NU $ 391.6 $ 401.7 $ 541.7
O. Allowance for Funds Used During Construction
AFUDC is included in the cost of the Regulated companies' utility plant and represents the cost of borrowed and equity funds used to
finance construction. The portion of AFUDC attributable to borrowed funds is recorded as a reduction of Other Interest Expense and
the AFUDC related to equity funds is recorded as Other Income, Net on the accompanying consolidated statements of income.
For the Years Ended December 31,
NU
(Millions of Dollars, except percentages) 2010 2009 2008
A
FUDC:
Borrowed Funds $ 10.2 $ 5.9 $ 17.8
Equity Funds 16.7 9.4 29.0
Total $ 26.9 $ 15.3 $ 46.8
A
verage AFUDC Rates 7.1 % 6.1 % 8.1 %
For the Years Ended December 31,
2010 2009 2008
(Millions of Dollars, except percentages) CL&P PSNH WMECO CL&P PSNH WMECO CL&P PSNH WMECO
A
FUDC:
Borrowed Funds $ 2.7 $ 6.6 $ 0.3 $ 2.2 $ 3.1 $ 0.2 $ 13.0 $ 3.0 $ 1.0
Equity Funds 4.9 10.4 0.6 5.7 3.6 - 23.2 4.4 1.2
Total $ 7.6 $ 17.0 $ 0.9 $ 7.9 $ 6.7 $ 0.2 $ 36.2 $ 7.4 $ 2.2
A
verage AFUDC Rates 8.3 % 6.8 % 6.4 % 7.2 % 6.2 % 1.7 % 8.4 % 7.9 % 7.6 %