Eversource 2012 Annual Report Download - page 94

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regulatory tracker deferrals that are in a regulatory asset position are earning a return. The following regulatory reconciliation
mechanisms were recorded as either regulatory assets or liabilities as of December 31, 2012 and 2011:
CL&P: The PURA has established several reconciliation mechanisms, which allow CL&P to recover costs associated with the
procurement of energy for SS and LRS, congestion and other costs associated with power market rules approved by the FERC or as
approved by the PURA, C&LM programs, the retail transmission of energy, certain regulatory and energy public policy costs, such as
hardship protection costs and transition period property taxes, and stranded costs, such as the amortization of regulatory assets and
IPP over market costs. As part of the CTA mechanism reconciliation process, CL&P had also established an obligation to refund the
variable incentive portion of its transition service procurement fee, which totaled $26.3 million as of December 31, 2011 and was
recorded as a regulatory liability. During 2012, PURA issued a decision approving a joint settlement agreement submitted October 2,
2012, by CL&P, UI, and the Connecticut Consumer Counsel, in resolution of all issues associated with the procurement incentive for
2004, 2005 and 2006. Under the joint settlement agreement, CL&P refunded to customers $5.7 million of funds collected and
associated interest. CL&P will be allowed to retain approximately $11.5 million of procurement incentive along with the remaining
accrued interest that it was not required to refund to customers.
NSTAR Electric and WMECO: Each company recovers certain of its costs on a fully reconciling basis through DPU-approved cost
recovery mechanisms. These rate mechanisms recover costs associated with the procurement of energy for basic service, the retail
transmission of energy, costs associated with electric industry restructuring, pension and postretirement benefits, and energy efficiency
programs. Costs associated with industry restructuring include RRB debt service, nuclear decommissioning costs and above-market
IPP costs. In addition, WMECO recovers costs associated with its investments in renewable energy, such as solar projects and credits
given to customers who generate renewable energy.
In the January 31, 2011 rate case, WMECO received approval for a revenue decoupling reconciliation mechanism, which provides
assurance that WMECO will recover a DPU pre-established level of baseline distribution delivery service revenue to manage all other
distribution operating expenses and earn a level of return on its capital investment.
PSNH: The NHPUC permits PSNH to recover the costs of providing generation, restructuring costs as a result of deregulation, the
retail transmission of energy, and the cost of C&LM programs through various reconciliation mechanisms.
Asset Retirement Obligations: The costs associated with the depreciation of the Regulated companies' ARO assets and accretion of
the ARO liabilities are recorded as regulatory assets in accordance with regulatory accounting guidance. For CL&P, NSTAR Electric
and WMECO, ARO assets, regulatory assets and liabilities offset and are excluded from rate base. PSNH's ARO assets, regulatory
assets and liabilities are included in rate base. These costs are being recovered over the life of the underlying property, plant and
equipment.
Other Regulatory Assets: Other Regulatory Assets primarily include environmental remediation costs, losses associated with the
reacquisition or redemption of long-term debt, and costs related to previously recognized lost tax benefits as a result of a provision in
the 2010 Healthcare Act that eliminated the tax deductibility of actuarially equivalent Medicare Part D benefits for retirees, partially
offset by purchase price adjustments recorded in connection with the merger with NSTAR reflected in regulatory assets.
Regulatory Liabilities: The components of regulatory liabilities are as follows:
NU
As of December 31,
(Millions of Dollars)
2012
2011
Cost of Removal
$
440.8
$
172.2
Regulatory Tracker Deferrals
95.1
139.1
AFUDC Transmission Incentive
70.0
67.0
Spent Nuclear Fuel Costs and Contractual Obligations 15.4 15.4
Other Regulatory Liabilities
53.0
40.2
Total Regulatory Liabilities
$
674.3
$
433.9
Less: Current Portion
$
134.1
$
167.8
Total Long-Term Regulatory Liabilities
$
540.2
$
266.1