Eversource 2014 Annual Report Download - page 25

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OTHER REGULATORY AND ENVIRONMENTAL MATTERS
General
We are regulated in virtually all aspects of our business by various federal and state agencies, including FERC, the SEC, and various state and/or
local regulatory authorities with jurisdiction over the industry and the service areas in which each of our companies operates, including the PURA,
which has jurisdiction over CL&P and Yankee Gas, the NHPUC, which has jurisdiction over PSNH, and the DPU, which has jurisdiction over
NSTAR Electric, NSTAR Gas and WMECO.
Environmental Regulation
We are subject to various federal, state and local requirements with respect to water quality, air quality, toxic substances, hazardous waste and other
environmental matters. Additionally, major generation and transmission facilities may not be constructed or significantly modified without a review
of the environmental impact of the proposed construction or modification by the applicable federal or state agencies.
Water Quality Requirements
The Clean Water Act requires every "point source" discharger of pollutants into navigable waters to obtain a National Pollutant Discharge
Elimination System (NPDES) permit from the EPA or state environmental agency specifying the allowable quantity and characteristics of its
effluent. States may also require additional permits for discharges into state waters. We are in the process of maintaining or renewing all required
NPDES or state discharge permits in effect for PSNH's generation facilities.
In 1997, PSNH filed in a timely manner for a renewal of the NPDES permit for the Merrimack Station. As a result, the existing permit was
administratively continued. In 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. 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. On April 18, 2014 EPA issued a revised section of the draft NPDES permit for Merrimack Station. The revised portion of the draft
permit deals solely with the treatment of wastewater from the flue gas desulfurization system. On August 18, 2014 PSNH again submitted
comments. 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 coal-and oil-fired electric generating stations, we believe it is unlikely that they would face similar
permitting determinations.
Air Quality Requirements
The Clean Air Act Amendments (CAAA), as well as New Hampshire law, impose stringent requirements on emissions of SO2and NOXfor the
purpose of controlling acid rain and ground level ozone. In addition, the CAAA address the control of toxic air pollutants. Requirements for the
installation of continuous emissions monitors and expanded permitting provisions also are included.
In 2011, the EPA finalized the Mercury and Air Toxic Standards (MATS) that require the reduction of emissions of hazardous air pollutants from
new and existing coal-and oil-fired electric generating stations. Previously referred to as the Utility MACT (maximum achievable control
technology) rules, it establishes emission limits for mercury, arsenic and other hazardous air pollutants from coal-and oil-fired electric generating
stations. MATS is the first implementation of a nationwide emissions standard for hazardous air pollutants across all electric generating units and
provides utility companies with up to five years to meet the requirements. PSNH owns and operates approximately 1,000 MW of coal-and oil-fired
electric generating stations subject to MATS, including the two units at Merrimack Station, Newington Station and the two coal units at Schiller
Station. We believe the Clean Air Project at our Merrimack Station, together with existing equipment, will enable the facility to meet the MATS
requirements. At Schiller Station additional controls are being installed at the two coal-fired units, the cost of which is estimated to be approximately
$2.5 million.
Each of the states in which we do business also has Renewable Portfolio Standards (RPS) requirements, which generally require fixed percentages of
our energy supply to come from renewable energy sources such as solar, hydropower, landfill gas, fuel cells and other similar sources.
New Hampshire's RPS provision requires increasing percentages of the electricity sold to retail customers to have direct ties to renewable sources. In
2014, the total RPS obligation was 9.7 percent and it will ultimately reach 24.8 percent in 2025. Energy suppliers, like PSNH, purchase RECs from
producers that generate energy from a qualifying resource and use them to satisfy the RPS requirements. PSNH also owns renewable sources and
uses a portion of internally generated RECs to meet its RPS obligations. To the extent that PSNH is unable to purchase sufficient RECs, it makes up
the difference between the RECs purchased and its total obligation by making an alternative compliance payment for each REC requirement for
which PSNH is deficient. The costs of both the RECs and alternative compliance payments are recovered by PSNH through its ES rates charged to
customers.
The RECs generated from PSNH's Northern Wood Power Project, a wood-burning facility, are typically sold to other energy suppliers or load
carrying entities, and the net proceeds from the sale of these RECs are credited back to customers.