Eversource 2015 Annual Report Download - page 42

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Excluding integration costs, our electric distribution segment earnings increased $45.5 million in 2015, as compared to 2014, due primarily to the
impact of the December 1, 2014 CL&P base distribution rate increase, the $27.5 million favorable earnings impact related to the resolution of
NSTAR Electric’s basic service bad debt adder and the settlement with the Massachusetts Attorney General on eleven open dockets covering the
CPSL program filings and the recovery of LBR related to 2009 through 2011 energy efficiency programs at NSTAR Electric, an increase in the
recovery of LBR at NSTAR Electric related to 2015 energy efficiency programs, and higher retail sales volumes at NSTAR Electric and PSNH.
Partially offsetting these favorable earnings impacts were a higher effective tax rate in 2015, higher property taxes, higher depreciation expense and a
$5 million contribution in 2015 to create a clean energy fund in connection with the PSNH divestiture agreement.
Our electric transmission segment earnings increased $9.1 million in 2015, as compared to 2014, due primarily to the result of lower reserve charges
associated with the FERC ROE complaint proceedings of $12.4 million recorded in 2015, as compared to $22.4 million recorded in 2014, and a
higher transmission rate base as a result of an increased investment in our transmission infrastructure. These favorable earnings impacts were
partially offset by a higher effective tax rate in 2015.
Our natural gas distribution segment earnings increased $0.1 million in 2015, as compared to 2014. Our natural gas distribution segment earnings
were favorably impacted by a decrease in operations and maintenance costs primarily attributable to lower employee-related expenses, a lower
effective tax rate in 2015, and additional natural gas heating customers. These favorable earnings impacts were offset by a decrease in firm natural
gas sales volumes driven by record warm weather in the fourth quarter of 2015, as compared to 2014, higher depreciation expense and higher
property taxes.
Eversource Parent and Other Companies: Excluding the impact of integration costs, Eversource parent and other companies had earnings of $9.5
million in 2015, compared with earnings of $11.5 million in 2014. The earnings decrease was due primarily to a higher effective tax rate at
Eversource parent in 2015, as compared to 2014, higher interest expense at Eversource parent as a result of new debt issuances in January 2015, and
reduced earnings in 2015 from Eversource’s unregulated electrical contracting business, which was sold in April 2015. These unfavorable earnings
impacts were partially offset by a reduction in operations and maintenance costs.
Electric and Natural Gas Sales Volumes: Weather, fluctuations in energy supply costs, conservation measures (including utility-sponsored energy
efficiency programs), and economic conditions affect customer energy usage. Industrial sales volumes are less sensitive to temperature variations
than residential and commercial sales volumes. In our service territories, weather impacts electric sales volumes during the summer and both electric
and natural gas sales volumes during the winter; however, natural gas sales volumes are more sensitive to temperature variations than are electric
sales volumes. Customer heating or cooling usage may not directly correlate with historical levels or with the level of degree-days that occur.
Fluctuations in retail electric sales volumes at NSTAR Electric and PSNH impact earnings (“Traditional” in the table below). For CL&P (effective
December 1, 2014) and WMECO, fluctuations in retail electric sales volumes do not impact earnings due to their respective regulatory commission
approved revenue decoupling mechanisms (“Decoupled” in the table below). These distribution revenues are decoupled from their customer sales
volumes, which breaks the relationship between sales volumes and revenues recognized. CL&P and WMECO reconcile their annual base
distribution rate recovery amounts to their respective pre-established levels of baseline distribution delivery service revenues. Any difference
between the allowed level of distribution revenue and the actual amount incurred during a 12-month period is adjusted through rates in the following
period.
A summary of our retail electric GWh sales volumes and our firm natural gas sales volumes in million cubic feet and percentage changes is as
follows:
For the Year Ended December 31, 2015 Compared to 2014
Sales Volumes (GWh) Percentage
Electric 2015 2014 Increase/(Decrease)
Traditional:
Residential 9,882 9,798 0.9%
Commercial 16,486 16,340 0.9%
Industrial 2,614 2,673 (2.2)%
Total - Traditional 28,982 28,811 0.6%
Decoupled:
Residential 11,559 11,519 0.3%
Commercial 11,112 11,109 - %
Industrial 2,963 3,003 (1.3)%
Total - Decoupled 25,634 25,631 - %
Total Sales Volumes 54,616 54,442 0.3%
For the Year Ended December 31, 2015 Compared to 2014
Sales Volumes (million cubic feet) Percentage
Firm Natural Gas 2015 2014 Increase/(Decrease)
Residential 38,455 38,969 (1.3)%
Commercial 43,006 42,977 0.1 %
Industrial 21,538 22,245 (3.2)%
Total Sales Volumes 102,999 104,191 (1.1)%
Total, Net of Special Contracts
(1)
98,458 99,500 (1.0)%
(1)
Special contracts are unique to the natural gas distribution customers who take service under such an arrangement and generally specify the amount of distribution
revenue to be paid to Yankee Gas regardless of the customers’ usage.