Eversource 2013 Annual Report Download - page 53

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Yankee Gas Expansion Plan: In accordance with 2013 Connecticut law and regulation, on June 14, 2013, Yankee Gas and other
Connecticut natural gas distribution companies filed a comprehensive joint natural gas infrastructure expansion plan (expansion plan)
with DEEP and PURA. The expansion plan described how Yankee Gas expects to add approximately 82,000 new natural gas heating
customers over the next 10 years. Yankee Gas estimates that its portion of the plan will cost approximately $700 million over 10 years.
For further information on the expansion plan, see "Regulatory Developments and Rate Matters - Connecticut - Yankee Gas Natural
Gas Expansion Plan" in this Management’s Discussion and Analysis. For further information on the Connecticut law, see "Legislative
and Policy Matters - Connecticut" in this Management’s Discussion and Analysis.
Projected Capital Expenditures: A summary of the projected capital expenditures for the Regulated companies' electric transmission
and for the total electric distribution, generation, and natural gas distribution businesses for 2014 through 2017, including our corporate
service companies' capital expenditures on behalf of the Regulated companies, is as follows:
Year
(Millions of Dollars)
2014
2015
2016
2017
2014-2017
Total
CL&P Transmission
$
247
$
199
$
178
$
165
$
789
NSTAR Electric Transmission
191
250
285
202
928
PSNH Transmission
106
124
123
42
395
WMECO Transmission
73
85
49
2
209
NPT
47
222
610
487
1,366
Total Transmission
$
664
$
880
$
1,245
$
898
$
3,687
Electric Distribution
$
679
$
647
$
647
$
619
$
2,592
Generation
24
34
20
15
93
Natural Gas
189
219
201
227
836
Total Distribution
$
892
$
900
$
868
$
861
$
3,521
Corporate Service Companies
$
117
$
93
$
76
$
76
$
362
Total
$
1,673
$
1,873
$
2,189
$
1,835
$
7,570
Actual capital expenditures could vary from the projected amounts for the companies and years above.
FERC Regulatory Issues
FERC Base ROE Complaint: On September 30, 2011, several New England state attorneys general, state regulatory commissions,
consumer advocates and other parties filed a joint complaint with the FERC under Sections 206 and 306 of the Federal Power Act
alleging that the base ROE used in calculating formula rates for transmission service under the ISO-NE Open Access Transmission
Tariff by NETOs, including CL&P, NSTAR Electric, PSNH and WMECO, is unjust and unreasonable. The complainants asserted that
the current 11.14 percent rate, which became effective in 2006, is excessive due to changes in the capital markets and are seeking an
order to reduce the rate, which would be effective October 1, 2011. In response, the NETOs filed testimony and analysis based on
standard FERC methodology and precedent demonstrating that the base ROE of 11.14 percent remained just and reasonable. The
FERC set the case for trial before a FERC ALJ after settlement negotiations were unsuccessful in August 2012.
Hearings before the FERC ALJ were held in May 2013, followed by the filing of briefs by the complainants, the Massachusetts
municipal electric utilities (late interveners to the case), the FERC trial staff and the NETOs. The NETOs recommended that the current
base ROE of 11.14 percent should remain in effect for the refund period (October 1, 2011 through December 31, 2012) and the
prospective period (beginning when FERC issues its final decision). The complainants, the Massachusetts municipal electric utilities,
and the FERC trial staff each recommended a base ROE of 9 percent or below.
On August 6, 2013, the FERC ALJ issued an initial decision, finding that the base ROE in effect from October 2011 through December
2012 was not reasonable under the standard application of FERC methodology, but leaving policy considerations and additional
adjustments to the FERC. Using the established FERC methodology, the FERC ALJ determined that separate base ROEs should be
set for the refund period and the prospective period. The FERC ALJ found those base ROEs to be 10.6 percent and 9.7 percent,
respectively. The FERC may adjust the prospective period base ROE in its final decision to reflect movement in 10-year Treasury bond
rates from the date that the case was filed (April 2013) to the date of the final decision. The parties filed briefs on this decision with the
FERC, and a decision from the FERC is expected in 2014. Though NU cannot predict the ultimate outcome of this proceeding, in 2013
the Company recorded a series of reserves at its electric subsidiaries to recognize the potential financial impact from the FERC ALJ's
initial decision for the refund period. The aggregate after-tax charge to earnings totaled $14.3 million at NU, which represents reserves
of $7.7 million at CL&P, $3.4 million at NSTAR Electric, $1.4 million at PSNH and $1.8 million at WMECO.
On December 27, 2012, several additional parties filed a separate complaint concerning the NETOs' base ROE with the FERC. This
complaint seeks to reduce the NETOs’ base ROE effective January 1, 2013, effectively extending the refund period for an additional 15
months, and to consolidate this complaint with the joint complaint filed on September 30, 2011. The NETOs have asked the FERC to
reject this complaint. The FERC has not yet acted on this complaint, and management is unable to predict the ultimate outcome or
estimate the impacts of this complaint on the financial position, results of operations or cash flows.
As of December 31, 2013, the CL&P, NSTAR Electric, PSNH, and WMECO aggregate shareholder equity invested in their transmission
facilities was approximately $2.3 billion. As a result, each 10 basis point change in the prospective period authorized base ROE would
change annual consolidated earnings by an approximate $2.3 million.