Eversource 2012 Annual Report Download - page 57

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Regulatory Developments and Rate Matters
Federal:
EPA Proposed NPDES Permit: PSNH maintains a NPDES permit consistent with requirements of the Clean Water Act for Merrimack
Station. In 1997, PSNH filed in a timely manner for a renewal of this permit. As a result, the existing permit was administratively
continued. On September 29, 2011, the EPA issued a draft renewal NPDES permit for PSNH's Merrimack Station for public review and
comment. The proposed permit contains many significant conditions to future operation. The proposed permit would require PSNH to
install a closed-cycle cooling system (including cooling towers) at the station. The EPA estimated that the net present value cost to
install this system and operate it over a 20-year period would be approximately $112 million.
On October 27, 2011, the EPA extended the initial 60-day period for public review and comment on the draft permit for an additional 90
days until February 28, 2012. PSNH and other electric utility groups filed thousands of pages of comments contesting EPA’s draft
permit requirements. PSNH stated that the data and studies supplied to the EPA demonstrate the fact that a closed-cycle cooling
system is not warranted. The EPA does not have a set deadline to consider comments and to issue a final permit. Merrimack Station
is permitted to continue to operate under its present permit pending issuance of the final permit and subsequent resolution of matters
appealed by PSNH and other parties. Due to the site specific characteristics of PSNH's other fossil generating stations, we believe it is
unlikely that they would face similar permitting determinations.
Major Storms:
2013, 2012 and 2011 Major Storms: On August 28, 2011, Tropical Storm Irene caused extensive damage to our distribution system.
Approximately 800,000 CL&P, PSNH and WMECO customers were without power at the peak of the outages, with approximately
670,000 of those customers in Connecticut. Approximately 500,000 customer outages occurred on the NSTAR Electric distribution
system in its aftermath.
On October 29, 2011, an unprecedented storm inundated our service territory with heavy snow causing significant damage to our
distribution and transmission systems. Approximately 1.2 million of CL&P, PSNH and WMECO’s electric distribution customers were
without power at the peak of the outages, with 810,000 of those customers in Connecticut, 237,000 in New Hampshire, and 140,000 in
western Massachusetts. In terms of customer outages, this was the most severe storm in CL&P’s history, surpassing Tropical Storm
Irene; the third most severe in PSNH’s history; and the most severe in WMECO's history. The storm also caused approximately
200,000 customer outages on the NSTAR Electric distribution system.
On October 29, 2012, Hurricane Sandy caused extensive damage to our electric distribution system across all three states.
Approximately 1.5 million of our 3.1 million electric distribution customers were without power during or following the storm, with
approximately 850,000 of those customers in Connecticut, approximately 472,000 in Massachusetts, and approximately 137,000 in
New Hampshire.
As of December 31, 2012, deferred storm restoration costs related to these major storms that are deferred for future recovery at CL&P,
NSTAR Electric, PSNH, and WMECO were as follows:
(Millions of Dollars)
Tropical
Storm Irene
October
Snowstorm
Hurricane
Sandy
Total
CL&P
$ 108.6
$ 173.0
$ 159.9
$ 441.5
NSTAR Electric
21.9
13.9
27.8
63.6
PSNH
6.8
15.5
12.1
34.4
WMECO
3.2
23.3
4.2
30.7
Total
$ 140.5
$ 225.7
$ 204.0
$ 570.2
On February 8, 2013, a blizzard caused damage to the electric delivery systems of CL&P and NSTAR Electric. We have estimated that
approximately 71,000 and 350,000 of CL&P and NSTAR Electric's distribution customers, respectively, were without power during or
following the storm. We believe that this storm will cost between $100 million to $120 million, with approximately 90 percent of those
costs relating to NSTAR Electric. Management expects the costs to meet the criteria for specific cost recovery in Connecticut and
Massachusetts and, as a result, does not expect the storm to have a material impact on the results of operations of CL&P or NSTAR
Electric. Each operating company will seek recovery of these anticipated deferred storm costs through its applicable regulatory
recovery process.
The magnitude of these storms’ restoration costs and damages met the criteria for cost deferral in Connecticut, New Hampshire, and
Massachusetts and as a result, the storms had no material impact on the results of operations of CL&P, NSTAR Electric, PSNH and
WMECO. As covered by the Connecticut settlement agreement, CL&P agreed to forego recovery of $40 million (pre-tax) of the
deferred storm restoration costs associated with Tropical Storm Irene and the October 2011 snowstorm. We believe our response to all
storms was prudent and therefore we believe it is probable that CL&P, NSTAR Electric, PSNH and WMECO will be allowed to recover
the deferred storm restoration costs. Each operating company will seek recovery of its estimated deferred storm restoration costs
through its applicable regulatory recovery process.