Eversource 2012 Annual Report Download - page 58

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Connecticut:
Standard Service and Last Resort Service Rates: CL&P's residential and small commercial customers who do not choose competitive
suppliers are served under SS rates, and large commercial and industrial customers who do not choose competitive suppliers are served
under LRS rates. Effective January 1, 2013, the PURA approved a decrease to CL&P’s total average SS rate of approximately 4.5 percent
and an increase to CL&P’s total average LRS rate of approximately 15.3 percent. The energy supply portion of the total average SS rate
decreased from 8.443 cents per kWh to 7.68 cents per kWh while the energy supply portion of the total average LRS rate increased from
6.06 cents per kWh to 7.679 cents per kWh. These changes were due primarily to the market conditions for the procurement of energy.
CL&P is fully recovering from customers the costs of its SS and LRS services.
CTA and SBC Reconciliation: On December 12, 2012, PURA approved CL&P’s 2011 CTA and SBC reconciliation as filed on
March 30, 2012, which compared CTA and SBC revenues to revenue requirements. Prospectively, PURA has required CL&P to
include only the billed revenues when filing its future CTA and SBC reconciliations. This adjustment to the filing will have no impact to
CL&P’s financial position, results of operations or cash flows. CL&P will file its 2012 CTA and SBC reconciliation in March 2013.
FMCC Filing: Semi-annually, CL&P files with PURA its FMCC filing, which reconciles actual FMCC revenues and charges and GSC
revenues and expenses, for the six-month period under consideration. The filing identifies a total net over or under recovery, which
includes the remaining uncollected or non-refunded portions from previous filings. On February 22, 2013, CL&P filed with PURA its
semi-annual FMCC filing for the period July 1, 2012 through December 31, 2012. This filing also reflects the January 1, 2012 through
June 30, 2012 amounts as approved by PURA in the previous semi-annual filing. The filing identified a total net over recovery of $7.9
million for the period. PURA has not established a schedule for review of this filing, however, we do not expect the outcome of the
PURA's review to have a material adverse impact on CL&P's financial position, results of operations or cash flows.
Conservation Adjustment Mechanism: On November 7, 2012, CL&P filed an application with PURA for the establishment of a CAM.
The CAM would collect the costs associated with expanded energy efficiency programs beyond that already collected through the
statutory charge and the revenues lost because of the expanded energy efficiency programs.
Procurement Fee Rate Proceedings: In prior years, CL&P submitted to the PURA its proposed methodology to calculate the variable
incentive portion of its transition service procurement fee, which was effective for the years 2004, 2005 and 2006, and requested
approval of the pre-tax $5.8 million 2004 incentive fee. At the time, CL&P had not recorded amounts related to the 2005 and 2006
procurement fee in earnings. CL&P recovered the $5.8 million pre-tax amount, which was recorded in 2005 earnings, through a CTA
reconciliation process. On January 15, 2009, the PURA issued a final decision in this docket reversing its December 2005 draft
decision and stated that CL&P was not eligible for the procurement incentive compensation for 2004. A $5.8 million pre-tax charge
(approximately $3.5 million net of tax) was recorded in the 2008 earnings of CL&P, and an obligation to refund the $5.8 million to
customers was established as of December 31, 2008. CL&P filed an appeal of this decision on February 26, 2009. On February 4,
2010, the Connecticut Superior Court reversed the PURA decision. The Court remanded the case back to the PURA for the correction
of several specific errors. On February 22, 2010, the PURA appealed the Connecticut Superior Court’s February 4, 2010 decision to
the Connecticut Appellate Court, which then transferred the appeal to the Connecticut Supreme Court. In lieu of a decision from the
Connecticut Supreme Court, the parties involved, including CL&P, agreed to resolve all issues associated with the 2004, 2005 and
2006 procurement fee and settle the matter. On October 2, 2012, the PURA issued a decision approving the parties’ joint settlement
agreement. As a result of the joint settlement agreement, CL&P is allowed to retain $11.5 million of procurement incentives for the
years 2004, 2005 and 2006.
PURA Storm Review: On August 1, 2012, PURA issued a final decision in the investigation of CL&P’s performance related to both
Tropical Storm Irene and the October 2011 snowstorm. The decision concluded that CL&P was deficient and inadequate in its
preparation, response, and communication in both storms, and identified certain penalties that could be imposed on CL&P during its
next rate case, including a reduction in allowed regulatory ROE and the disallowance of certain deferred storm restoration costs.
However, PURA will consider and weigh the extent to which CL&P has taken steps in its restructuring of storm management and the
establishment of new practices for execution in future storm response in determining any potential penalties. We believe such steps to
improve current storm preparation and response practices have been successfully executed in recent storms. At this time, we cannot
estimate the impact on CL&P’s financial position, results of operations or cash flows. We continue to believe that CL&P's response to
these 2011 storms was prudent and consistent with industry standards, and that it is probable that it will be able to recover its deferred
costs.
System Resiliency Plan: On January 16, 2013, PURA approved the $300 million plan CL&P filed on July 9, 2012 to improve the
resiliency of the CL&P electric distribution system. For further information, see "Business Development and Capital Expenditures –
Distribution Business" in this Management's Discussion and Analysis.
PURA Establishment of Performance Standards for Electric and Gas Companies Docket: On November 1, 2012, PURA issued its
report to the Connecticut legislature concerning specific standards for acceptable performance for electric and gas companies under
emergency situations. Emergency situations were defined as more than 10 percent of electric customers and 1 percent of gas
customers being without service for more than 48 consecutive hours. The performance standards the electric and gas companies,
including CL&P and Yankee Gas, were directed to incorporate into their emergency response plans (ERP), and implement into their
operations, include (1) the National Incident Management System and utilization of the Incident Command System, (2) scalable action
and trigger points for various levels of outages, (3) a damage assessment model and mode of delivery, (4) guidelines for setting
restoration priorities, (5) a description of how the utility will insure safety for the public and utility’s employees, (6) a storm matrix for
various storm levels that identify the mutual aid and/or contractor resources necessary to restore customers within a prescribed period