Eversource 2015 Annual Report Download - page 26

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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, 2015 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, 2015 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 SO
2
and NO
X
for 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 2015, the total RPS obligation was 8.3 percent and it will ultimately reach 24.8 percent in 2025. Energy suppliers, like PSNH, must possess
sufficient quantities of RECs to satisfy the RPS requirements. PSNH owns renewable sources and uses a portion of internally generated RECs to
meet its RPS obligations and sells other internally generated RECs when it is economically beneficial to do so. To the extent that a supplier, like
PSNH, does not possess sufficient RECs to satisfy its RPS requirements, it makes up any shortfall by making an alternative compliance payment at a
rate per REC established by law. The costs of both the RECs and alternative compliance payments are recovered by PSNH through its default energy
service rates charged to customers.
Similarly, Connecticut’s RPS statute requires increasing percentages of the electricity sold to retail customers to have direct ties to renewable
sources. In 2015, the total RPS obligation was 19.5 percent and will ultimately reach 27 percent in 2020. CL&P is permitted to recover any costs
incurred in complying with RPS from its customers through its GSC rate.
Massachusetts’ RPS program also requires electricity suppliers to meet renewable energy standards. For 2015, the requirement was 19.25 percent,
and will ultimately reach 22.1 percent in 2020. NSTAR Electric and WMECO are permitted to recover any costs incurred in complying with RPS
from its customers through rates. WMECO also owns renewable solar generation resources. The RECs generated from WMECO’s solar units are
sold to other energy suppliers, and the proceeds from these sales are credited back to customers.
Hazardous Materials Regulations
We have recorded a liability for what we believe, based upon currently available information, is our reasonably estimable environmental
investigation, remediation, and/or Natural Resource Damages costs for waste disposal sites for which we have probable liability. Under federal and
state law, government agencies and private parties can attempt to impose liability on us for recovery of investigation and remediation costs at
hazardous waste sites. As of December 31, 2015, the liability recorded for our reasonably estimable and probable environmental remediation costs
for known sites needing investigation and/or remediation, exclusive of recoveries from insurance or from third parties, was approximately
$51.1 million, representing 64 sites. These costs could be significantly higher if additional remediation becomes necessary or when additional
information as to the extent of contamination becomes available.
The most significant liabilities currently relate to future clean-up costs at former MGP facilities. These facilities were owned and operated by our
predecessor companies from the mid-1800’s to mid-1900’s. By-products from the manufacture of gas using coal resulted in fuel oils, hydrocarbons,
coal tar, purifier wastes, metals and other waste products that may pose risks to human health and the environment. We currently have partial or full
ownership responsibilities at former MGP sites that have a reserve balance of $45.5 million of the total $51.1 million as of December 31, 2015.
Many of these MGP costs are recoverable from customers through our rates.
Electric and Magnetic Fields
For more than twenty years, published reports have discussed the possibility of adverse health effects from electric and magnetic fields (EMF)
associated with electric transmission and distribution facilities and appliances and wiring in buildings and homes. Although weak health risk
associations reported in some epidemiology studies remain unexplained, most researchers, as well as numerous scientific review panels, considering