Eversource 2012 Annual Report Download - page 35

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Changes in regulatory or legislative policy or unfavorable outcomes in regulatory proceedings could jeopardize our full
and/or timely recovery of costs incurred by our regulated distribution and generation businesses.
Under state law, our Regulated companies are entitled to charge rates that are sufficient to allow them an opportunity to recover their
reasonable operating and capital costs, to attract needed capital and maintain their financial integrity, while also protecting relevant
public interests. Each of these companies prepares and submits periodic rate filings with their respective state regulatory commissions
for review and approval. There is no assurance that these state commissions will approve the recovery of all such costs incurred by our
Regulated companies, such as for construction, operation and maintenance, as well as a return on investment on their respective
regulated assets, including the construction costs incurred by PSNH for the Clean Air Project at its Merrimack Station. PSNH’s
expenditures for the project are subject to prudence review by the NHPUC. The amount of costs incurred by the Regulated companies,
coupled with increases in fuel and energy prices, could lead to consumer or regulatory resistance to the timely recovery of such costs,
thereby adversely affecting our financial position, results of operations or cash flows.
Additionally, state legislators may enact laws that significantly impact our Regulated companies’ revenues, including by mandating
electric or gas rate relief and/or by requiring surcharges to customer bills to support state programs not related to the utilities or energy
policy. Such increases could pressure overall rates to our customers and our routine requests to regulators for rate relief.
In addition, CL&P, NSTAR Electric and WMECO procure energy for a substantial portion of their customers’ needs via requests for
proposal on an annual, semi-annual or quarterly basis. CL&P, NSTAR Electric and WMECO receive approval to recover the costs of
these contracts from the PURA and DPU, respectively. While both regulatory agencies have consistently approved the solicitation
processes, results and recovery of costs, management cannot predict the outcome of future solicitation efforts or the regulatory
proceedings related thereto.
PSNH meets most of its energy requirements through its own generation resources and fixed-price forward purchase contracts.
PSNH’s remaining energy needs are met primarily through spot market purchases. Unplanned forced outages of its generating plants
could increase the level of energy purchases needed by PSNH and therefore increase the market risk associated with procuring the
energy to meet its requirements. PSNH recovers these costs through its ES rate, subject to a prudence review by the NHPUC. We
cannot predict the outcome of future regulatory proceedings related to recovery of these costs.
Migration of customers from PSNH energy service to competitive energy suppliers may increase the cost to the remaining
customers of energy produced by PSNH generation assets.
The competitiveness of PSNH’s ES rates are sensitive to the cost of fuels, most notably natural gas, and customer load. Recently,
PSNH’s ES rate has been higher than competitive energy prices offered to some customers. Further increases may occur as the costs
associated with the Clean Air Project are fully phased into rates. Customers remaining on PSNH’s ES rate may experience an increase
in cost due to the lower base over which to recover PSNH's fixed generation costs. Any such increase may in turn cause further
migration and further impact PSNH’s ES rate. This trend could lead to PSNH continuing to lose retail customers and increasing the
burden of supporting the cost of its generation facilities on remaining customers and being unable to support the cost of its generation
facilities through an ES rate.
Judicial or regulatory proceedings or changes in regulatory or legislative policy could jeopardize full recovery of costs
incurred by PSNH in constructing the Clean Air Project.
Pursuant to New Hampshire law, PSNH placed the Clean Air Project in service at its Merrimack Station in Bow, New Hampshire.
PSNH’s recovery of costs in constructing the project is subject to prudence review by the NHPUC. A material prudence disallowance
could adversely affect PSNH’s financial position, results of operations or cash flows. While we believe we have prudently incurred all
expenditures to date, we cannot predict the outcome of any prudence reviews. Our projected earnings and growth could be adversely
affected were the NHPUC to deny recovery of some or all of PSNH’s investment in the project.
The loss of key personnel or the inability to hire and retain qualified employees could have an adverse effect on our business,
financial position and results of operations.
Our operations depend on the continued efforts of our employees. Retaining key employees and maintaining the ability to attract new
employees are important to both our operational and financial performance. We cannot guarantee that any member of our
management or any key employee at the NU parent or subsidiary level will continue to serve in any capacity for any particular period of
time. In addition, a significant portion of our workforce, including many workers with specialized skills maintaining and servicing the
electrical infrastructure, will be eligible to retire over the next five to ten years. Such highly skilled individuals cannot be quickly replaced
due to the technically complex work they perform. We have developed strategic workforce plans to identify key functions and
proactively implement plans to assure a ready and qualified workforce, but cannot predict the impact of these plans on our ability to hire
and retain key employees.
Market performance or changes in assumptions require us to make significant contributions to our pension and other post-
employment benefit plans.
We provide a defined benefit pension plan and other post-retirement benefits for a substantial number of employees, former employees
and retirees. Our future pension obligations, costs and liabilities are highly dependent on a variety of factors beyond our control. These
factors include estimated investment returns, interest rates, discount rates, health care cost trends, benefit changes, salary increases