Eversource 2014 Annual Report Download - page 52

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Long-Term Wind Contracts: On January 6, 2015, NSTAR Electric terminated a 15-year renewable energy contract with Cape Wind Associates, LLC
due to Cape Wind Associates, LLC's failure to fulfill obligations under the contract. Under this contract, NSTAR Electric would have purchased 129
MW of renewable energy from an offshore wind energy facility, which was scheduled to achieve commercial operation by December 2016. As a
result, and in accordance with the 2012 DPU-approved comprehensive merger settlement agreement with the DOER, NSTAR Electric will issue a
request for proposal (RFP) for new Massachusetts RPS Class I qualified renewable contracts with a term of at least 15 years, for approximately 2
percent of its electric load requirement. The RFP shall be issued no later than March 31, 2016 in accordance with the provisions of the procurement
obligations of the Green Communities Act.
NSTAR Gas Distribution Rates: On December 17, 2014, NSTAR Gas filed an application with the DPU requesting an increase in rates, effective
January 1, 2016. NSTAR Gas requested an increase in base distribution rates of $33.9 million. We expect a final decision in the fourth quarter of
2015.
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Distribution Rates: In 2014, PSNH filed for a distribution rate decrease in accordance with the Earnings Sharing Agreement addressed in the 2010
NHPUC approved distribution rate case settlement. On June 27, 2014, the NHPUC approved a one year decrease to distribution rates of $1.3 million,
effective July 1, 2014.
ES and SCRC Rates:On December 15, 2014, PSNH updated its request with the NHPUC to adjust its ES and SCRC rates effective January 1, 2015.
PSNH's update proposed to increase the current ES and SCRC billing rates to reflect projected costs for 2015. On December 29, 2014, the NHPUC
approved the request. The approved energy supply portion of the 2015 rate is 10.56 cents per kWh and the SCRC rate for 2015 is 0.110 cents per
kWh.
Clean Air Project Prudence Proceeding: The Clean Air Project, which involved the installation of wet scrubber technology at PSNH's Merrimack
coal-fired generation station in Bow, New Hampshire, pursuant to state law, was placed in service in September 2011. In November 2011, the
NHPUC opened a docket to review the Clean Air Project, including the establishment of temporary rates for near-term recovery of Clean Air Project
costs, a prudence review of PSNH's overall construction program, and establishment of permanent rates for recovery of prudently incurred Clean Air
Project costs. In April 2012, the NHPUC issued an order authorizing temporary rates to recover a significant portion of the Clean Air Project costs.
The docket remains open to conduct a comprehensive prudence review of the Clean Air Project and the establishment of permanent rates. The
temporary rates will remain in effect until permanent rates allowing full recovery of all prudently incurred costs are approved. At that time, the
NHPUC will reconcile recoveries collected under the temporary rates with approved permanent rates.
The NHPUC concluded its prudence hearings in October 2014. On December 26, 2014, PSNH requested that the NHPUC stay this proceeding in
order to allow discussions to take place with other significant parties to determine whether a collaborative resolution of all issues was achievable.
The New Hampshire Governor and Senate Majority Leader expressed support for this effort. On January 15, 2015, the NHPUC issued an order
granting the motion to stay in this proceeding, and settlement discussions have ensued.
While we cannot predict with certainty the outcome of the Clean Air Project prudence review, we believe all costs were incurred appropriately and
continue to remain probable of recovery.
Generation:In 2013, the NHPUC opened a docket to investigate market conditions affecting PSNH's ES rate, how PSNH will maintain just and
reasonable rates in light of those conditions, and any impact of PSNH's generation ownership on the New Hampshire competitive electric market.
The NHPUC accepted from the NHPUC Staff a "Report on Investigation into Market Conditions, Default Service Rate, Generation Ownership and
Impact on the Competitive Electricity Market." The report recommended that the NHPUC examine whether default service rates remain sustainable
on a going forward basis, define "just and reasonable" with respect to default service in the context of competitive retail markets, analyze the current
and expected value of PSNH's generating units, and identify means to mitigate and address stranded cost recovery.
In 2013, the NHPUC issued a Request for Proposal to hire a valuation expert to determine the market value of PSNH's generation assets and
entitlements. The State of New Hampshire Legislative Oversight Committee on Electric Utility Restructuring (Oversight Committee) requested that
the NHPUC conduct an analysis to determine whether it is now in the economic interest of PSNH's retail customers for PSNH to divest its interest in
generation plants. The Oversight Committee asked for a preliminary report on the findings by April 1, 2014 that would include at a minimum the
NHPUC Staff's position, the analysis of the valuation expert, and any recommendations for legislation that may be needed concerning divestiture or
otherwise related to this issue.
On April 1, 2014, the NHPUC staff issued a "Preliminary Status Report Addressing the Economic Interest of PSNH's Retail Customers as it Relates
to the Potential Divestiture of PSNH's Generating Plants," which included a consultant's analysis of the fair market value of PSNH generating assets
and long-term power purchase contracts. The consultant's analysis estimated the fair market value of PSNH's generation assets to be $225 million as
of December 31, 2013 and compared that amount to a stated net book value of $660 million, implying potential "stranded costs" of approximately
$435 million. NHPUC staff made three recommendations: (1) that any further actions relating to PSNH's generating assets await a final decision in
the Clean Air Project (scrubber) prudence proceeding; (2) that existing laws regarding divestiture, energy service, and cost recovery be harmonized;
and (3) that ISO-NE provide input on the economic and reliability consequences of retirement of PSNH's coal-and oil-fired electric generating
plants.
During the 2014 Legislative session, in response to the NHPUC staff report, the Legislature enacted changes to the laws governing divestiture of
PSNH's generation assets, effective September 30, 2014. The new law required the NHPUC to initiate a proceeding before January 1, 2015, to
determine whether all or some of PSNH's generation assets should be divested. The NHPUC opened its docket DE 14-238 on September 16, 2014.
A progress report from the NHPUC must be provided to the Oversight Committee by March 31, 2015. The law gives the NHPUC express authority