Eversource 2013 Annual Report Download - page 27

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• Conservation Adjustment Mechanism (CAM), which allows 100 percent recovery of conservation costs through this
mechanism including program incentives to promote energy efficiency, as well as recovery of any lost revenues associated
with implementation of energy conservation measures. A reconciliation of CAM revenue to expenses is performed annually
with any difference being recovered or refunded with carrying charges in future customer rates the following year.
On June 29, 2011 PURA issued a final decision in Yankee Gas’ rate proceeding, which it amended in September 2011. The final
amended decision approved a regulatory ROE of 8.83 percent, based on a capital structure of 52.2 percent common equity and 47.8
percent debt, approved the inclusion in rates of costs associated with the WWL project, and also allowed for a substantial increase in
annual spending for bare steel and cast iron pipe replacement, as requested by Yankee Gas.
Sources and Availability of Natural Gas Supply
PURA requires that Yankee Gas meet the needs of its firm customers under all weather conditions. Specifically, Yankee Gas must
structure its supply portfolio to meet firm customer needs under a design day scenario (defined as the coldest day in 30 years) and
under a design year scenario (defined as the average of the four coldest years in the last 30 years). Yankee Gas also owns a 1.2 Bcf
LNG facility in Waterbury, Connecticut, which is used primarily to assist Yankee Gas in meeting its supplier-of-last-resort obligations
and also enables Yankee Gas to make economic purchases of natural gas, typically in periods of low demand. Yankee Gas’ on-system
stored LNG and underground storage supplies help to meet consumption needs during the coldest days of winter. Yankee Gas obtains
its interstate capacity from the three interstate pipelines that directly serve Connecticut: the Algonquin, Tennessee and Iroquois
Pipelines. Yankee Gas has long-term firm contracts for capacity on TransCanada Pipelines Limited Pipeline, Vector Pipeline, L.P.,
Tennessee Gas Pipeline, Iroquois Gas Transmission Pipeline, Algonquin Pipeline, Union Gas Limited, Dominion Transmission, Inc.,
National Fuel Gas Supply Corporation, Transcontinental Gas Pipeline Company, and Texas Eastern Transmission, L.P. pipelines.
Based on information currently available regarding projected growth in demand and estimates of availability of future supplies of
pipeline natural gas, Yankee Gas believes that its present sources of natural gas supply are adequate to meet existing load and allow
for future growth in sales.
PROJECTED CAPITAL EXPENDITURES
We project to make capital expenditures of approximately $7.6 billion from 2014 through 2017. Of the $7.6 billion, we expect to invest
approximately $3.5 billion in our electric and natural gas distribution segments and $3.7 billion in our electric transmission segment. In
addition, we project to invest approximately $400 million for our corporate service companies.
FINANCING
Our credit facilities and indentures require that NU parent and certain of its subsidiaries, including CL&P, NSTAR Electric, NSTAR Gas,
PSNH, WMECO and Yankee Gas, comply with certain financial and non-financial covenants as are customarily included in such
agreements, including maintaining a ratio of consolidated debt to total capitalization of no more than 65 percent. All of these companies
currently are, and expect to remain, in compliance with these covenants.
As of December 31, 2013, a total of $501.7 million of NU's long-term debt will be paid in the next 12 months, consisting of $150 million
for CL&P, $301.7 million for NSTAR Electric and $50 million or PSNH.
NUCLEAR DECOMMISSIONING
General
CL&P, NSTAR Electric, PSNH, WMECO and several other New England electric utilities are stockholders in three inactive regional
nuclear generation companies, CYAPC, MYAPC and YAEC (collectively, the Yankee Companies). The Yankee Companies have
completed the physical decommissioning of their respective generation facilities and are now engaged in the long-term storage of their
spent nuclear fuel. Each Yankee Company collects decommissioning and closure costs through wholesale FERC-approved rates
charged under power purchase agreements with CL&P, NSTAR Electric, PSNH and WMECO and several other New England utilities.
These companies in turn recover these costs from their customers through state regulatory commission-approved retail rates.
The ownership percentages of CL&P, NSTAR Electric, PSNH and WMECO in the Yankee Companies are set forth below:
CL&P
NSTAR
Electric
PSNH
WMECO
Total
CYAPC
34.5%
14.0%
5.0%
9.5%
63.0%
YAEC
24.5%
14.0%
7.0%
7.0%
52.5%
MYAPC
12.0%
4.0%
5.0%
3.0%
24.0%
Our share of the obligations to support the Yankee Companies under FERC-approved contracts is the same as the ownership
percentages above. As a result of the Merger, we consolidate the assets and obligations of CYAPC and YAEC on our consolidated
balance sheet.