Eversource 2014 Annual Report Download - page 76

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 The tax effect of temporary book-tax differences (differences between the periods in which transactions affect income in the
financial statements and the periods in which they affect the determination of taxable income, including those differences relating to uncertain tax
positions) is accounted for in accordance with the rate-making treatment of the applicable regulatory commissions and accounting guidance for
income taxes. Differences in income taxes between the accounting guidance and the rate-making treatment of the applicable regulatory commissions
are recorded as regulatory assets. As these assets are offset by deferred income tax liabilities, no carrying charge is collected. For further information
regarding income taxes, see Note 10, "Income Taxes," to the financial statements.
The storm restoration cost deferrals relate to costs incurred at CL&P, NSTAR Electric, PSNH and WMECO that each
company expects to recover from customers. A storm must meet certain criteria to be declared a major storm with the criteria specific to each state
jurisdiction and utility company. Once a storm is declared major, all qualifying expenses incurred during storm restoration efforts are deferred and
recovered from customers. In addition to storm restoration costs, CL&P and PSNH are each allowed to recover storm pre-staging costs in
accordance with applicable regulation.
CL&P, NSTAR Electric, PSNH and WMECO experienced several significant storm events, including Tropical Storm Irene in 2011, the October
2011 snowstorm, Storm Sandy in 2012 and the February 2013 blizzard. As a result of these storm events, each company suffered extensive damage
to its distribution and transmission systems resulting in customer outages. Each company incurred significant costs to repair damage and restore
customers' service. In addition, on November 26, 2014, a snowstorm caused damage to the electric delivery systems of PSNH and WMECO. This
snowstorm resulted in estimated deferred storm restoration costs of approximately $23 million at PSNH and approximately $3 million at WMECO.
The storm restoration cost regulatory asset balance at CL&P, NSTAR Electric, PSNH and WMECO reflects deferrable costs incurred for major storm
events. Management believes the storm restoration costs were prudent and meet the criteria for specific cost recovery in Connecticut, Massachusetts
and New Hampshire, and that recovery from customers is probable through the applicable regulatory recovery process.
Storm Filings: Each electric utility has sought, or is seeking, recovery of its deferred storm restoration costs through its applicable regulatory
recovery process.
CL&P: As of December 31, 2014, all CL&P deferred storm costs have been reviewed and approved for recovery in distribution rates.
On March 12, 2014, the PURA approved recovery of $365 million of deferred storm restoration costs (with carrying charges) associated with five
major storms that occurred in 2011 and 2012 and ordered CL&P to capitalize approximately $18 million of the deferred storm restoration costs as
utility plant, which will be recovered through depreciation expense in future rate proceedings. CL&P will recover the $365 million in its distribution
rates over a six-year period that commenced on December 1, 2014. The remaining costs were either disallowed or are probable of recovery from
other sources. These costs did not have a material impact on CL&P's financial position, results of operations or cash flows.
Effective June 1, 2014, CL&P received $65.4 million of DOE Phase II Damages proceeds. On June 17, 2014, the PURA ordered CL&P to refund
these proceeds to customers by offsetting the deferred storm restoration costs regulatory asset. For further information on the DOE Phase II
Damages proceeds received from the Yankee Companies, see Note 11C, "Commitments and Contingencies -Contractual Obligations -Yankee
Companies," to the financial statements.
On December17, 2014, as part of the distribution rate case decision, CL&P was also allowed recovery of the 2013 storm costs and residual 2012
Storm Sandy costs over a seven-year period that commenced on December 1, 2014.
NSTAR Electric: On December 30, 2013, the DPU approved recovery of $34.2 million of NSTAR Electric's storm restoration costs, plus carrying
costs, related to Tropical Storm Irene in 2011 and the October 2011 snowstorm. NSTAR Electric is recovering these costs, plus carrying costs, in its
distribution rates over a five-year period that commenced on January 1, 2014.
PSNH: On June 27, 2013, the NHPUC approved an increase to PSNH's distribution rates effective July 1, 2013, which included a $5 million
increase to the level of funding for the major storm cost reserve. The major storm cost reserve is used to offset the storm restoration cost regulatory
asset. On April 7, 2014, PSNH received an audit report from the NHPUC approving storm costs from 2011 through March 2013.
WMECO: On December 20, 2013, the DPU approved WMECO's 2013 Annual Storm Reserve Recovery Cost Adjustment filing to begin recovering
the October 2011 snowstorm and 2012 Storm Sandy restoration costs, which commenced on January 1, 2014, subject to further review and
reconciliation. On December 5, 2014, the DPU approved the majority of deferred storm costs through 2011.
- The goodwill regulatory asset originated from the transaction that created NSTAR in 1999. This regulatory asset is currently
being amortized and recovered from customers in rates without a carrying charge over a 40-year period (as of December 31, 2014, there were 25
years of amortization remaining).
The Regulated companies' approved rates are designed to recover their incurred costs to provide service to
customers. The Regulated companies recover certain of their costs on a fully-reconciling basis through regulatory commission-approved tracking
mechanisms. The difference between the costs incurred (or the rate recovery allowed) and the actual revenues is recorded as regulatory assets (for
undercollections) or regulatory liabilities (for overcollections) to be included in future customer rates each year. Carrying charges are recorded on all
material regulatory tracker mechanisms.
CL&P, NSTAR Electric, PSNH and WMECO each recover the costs associated with the procurement of energy, transmission related costs from
FERC-approved transmission tariffs, energy efficiency programs, low income assistance programs, and restructuring and stranded costs as a result of
deregulation, on a fully reconciling basis. Energy procurement costs at PSNH include the costs related to its generating stations.