Eversource 2014 Annual Report Download - page 51

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CL&P CTA and SBC Reconciliation: CL&P filed its 2013 CTA and SBC reconciliation on March 31, 2014, which compared CTA and SBC billed
revenues to revenue requirements, as required by PURA. The 2013 reconciliation filing produced net over recoveries of $16.9 million and $4.3
million for the CTA and SBC, respectively, and was approved by PURA.
CL&P FMCC Filing: CL&P files with PURA its FMCC filing, which reconciles actual FMCC revenues and charges and GSC revenues and
expenses. The filing identifies a total net over or under recovery, which includes the remaining uncollected or non-refunded portions from previous
filings. On February 3, 2014, CL&P filed with PURA its FMCC filing for the period July 1, 2013 through December 31, 2013. The filing identified
a total net over recovery through December 31, 2013 of $24.1 million and was approved by PURA.
CL&P Conservation Adjustment Mechanism: In 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. In 2013, DEEP approved CL&P's request of an expanded conservation spending budget
and reiterated that PURA is directed to approve a CAM to fund the expanded conservation budget. The PURA approved a CAM effective January 1,
2014 subject to a future review of its revenue and expense reconciliation filing to be submitted by CL&P. CL&P has continued its approved
January 1, 2014 CAM rate through 2015.
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Basic Service Rates: Electric distribution companies in Massachusetts are required to obtain and resell power to retail customers through Basic
Service for those customers who choose not to buy energy from a competitive energy supplier. Basic Service rates are reset every six months (every
three months for large commercial and industrial customers). NSTAR Electric and WMECO fully recover their energy costs through DPU-approved
regulatory rate mechanisms.
2015 Annual Reconciliation Filing: In the fourth quarter of 2014, NSTAR Electric and WMECO filed separately their respective 2015 annual cost
recovery mechanisms, including the mechanisms to collect the costs to provide retail transmission, energy supply and energy efficiency services to its
customers as well as the costs related to pension and other post-retirement employee benefit costs. The reconciliation filings compared the total
revenues to revenue requirements related to these services. In December 2014, the DPU issued a final decision approving the rates as filed, subject to
future review and reconciliation.
Energy Efficiency Plans: In accordance with Massachusetts law passed in 2008 known as the Green Communities Act, natural gas and electric
distribution companies must file three-year energy efficiency plans, which were initially filed by NSTAR Electric and WMECO, and approved by the
DPU, in 2010 covering the period 2010 through 2012. The NSTAR Electric and WMECO three-year plans covering the period 2013 through 2015
were approved by the DPU in 2013. Distribution companies that do not yet have rate decoupling mechanisms in place, like NSTAR Electric, include
LBR rate adjustment mechanisms in order to offset reduced distribution rate revenues as a result of successful energy efficiency programs. NSTAR
Electric's LBR rate adjustment mechanism is in place through December 31, 2015.
DPU Safety and Reliability Programs (CPSL): The CPSL program allows NSTAR Electric to recover $15 million per year related to DPU approved
safety and reliability programs, which are designed to mitigate stray voltage and repair and replace portions of the system to increase and enhance
customer safety. This annual level of recovery was established by the 2012 DPU-approved comprehensive merger settlement agreement with the
Massachusetts Attorney General. The CPSL program will expire on December 31, 2015.
2014 Comprehensive Settlement Agreement: On December 31, 2014, NSTAR Electric, NSTAR Gas and the Massachusetts Attorney General filed a
comprehensive settlement agreement with the DPU. The comprehensive settlement agreement included resolution of the outstanding NSTAR
Electric CPSL program filings for the periods 2006 through 2011, the NSTAR Electric and NSTAR Gas PAM and energy efficiency-related
customer billing adjustments reported in 2012, and the NSTAR Electric energy efficiency program filings regarding LBR for the periods 2008
through 2011. If approved by the DPU, NSTAR Electric and NSTAR Gas will be required to refund a total of $44.7 million to their respective
customers, which was included in our regulatory liabilities as of December 31, 2014. Upon the DPU's approval, we will adjust our regulatory
liabilities, which we expect will result in an after-tax benefit of approximately $14 million. We expect a response from the DPU in the first quarter of
2015.
Basic Service Bad Debt Adder: In accordance with a generic 2005 DPU order, electric utilities in Massachusetts recover the energy-related portion
of bad debt costs in their Basic Service rates. In 2007, NSTAR Electric filed its 2006 Basic Service reconciliation with the DPU proposing an
adjustment related to the increase of its Basic Service bad debt charge-offs. The DPU issued an order approving the implementation of a revised
Basic Service rate but instructed NSTAR Electric to reduce distribution rates by an amount equal to the increase in its Basic Service bad debt charge-
offs. This adjustment to NSTAR Electric's distribution rates would eliminate the fully reconciling nature of the Basic Service bad debt adder.
In 2010, NSTAR Electric filed an appeal of the DPU's order with the SJC. NSTAR Electric's position was that it had fully removed the collection of
energy-related bad debt costs from its distribution rates effective January 1, 2006. Therefore, no further adjustment to distribution rates was
warranted. In 2012, the SJC vacated the DPU order and remanded the matter to the DPU for further review.
As of December 31, 2014, NSTAR Electric has a total deferred regulatory asset of approximately $33 million of costs associated with energy-related
bad debt.
On January 7, 2015, the DPU issued an order on remand stating that NSTAR Electric had, in fact, removed energy-related bad debt costs from
distribution rates effective January 1, 2006. The DPU order approved NSTAR Electric's 2005 and 2006 reconciliation filings and ordered NSTAR
Electric and the Massachusetts Attorney General to collaborate on the submission of a proposal for the reconciliation of energy-related bad debt costs
for the open years of 2007 through 2014 by April 7, 2015. Management expects to present a proposal to the Attorney General in the first quarter of
2015 with a decision from the DPU later in 2015.