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Connecticut:
CL&P Distribution Rates: In December 2014, the PURA granted a re-opener request to CL&P’s base distribution rate application for further review
of the appropriate balance of ADIT utilized in the calculation of rate base. On July 2, 2015, the PURA issued a final order that approved a settlement
agreement filed on May 19, 2015 between CL&P and the PURA Prosecutorial Staff. The order allows for an increase to rate base of approximately
$163 million associated with ADIT, including a regulatory asset to recover the incremental revenue requirement for the period December 1, 2014
through November 30, 2015 over a subsequent 24-month period. The rate base increase provided an increase to total allowed annual revenue
requirements of $18.4 million beginning December 1, 2014. As part of the settlement agreement, the $18.4 million for the period December 1, 2014
through November 30, 2015 was recorded as a regulatory asset with a corresponding increase in Operating Revenues, and is being collected from
customers in rates over a 24-month period beginning December 1, 2015.
CL&P and Yankee Gas Conservation and Load Management Plan: On December 31, 2015, DEEP approved the three-year electric and natural gas
C&LM plan filed by CL&P and Yankee Gas, which was jointly developed with the Connecticut EDCs and natural gas distribution companies. The
C&LM plan, which covers the years 2016 through 2018, was built upon the continued success and momentum of the previous C&LM plans and
includes performance incentives totaling $24 million over the three-year period related to proposed savings goals for CL&P and Yankee Gas.
Yankee Gas Settlement Agreement: On April 29, 2015, the PURA approved a settlement agreement entered into among Yankee Gas, the
Connecticut Office of Consumer Counsel, and the PURA Staff, which eliminated the requirement to file a base distribution rate case in 2015. Under
the terms of the settlement agreement, Yankee Gas provided a $1.5 million rate credit to firm customers beginning in December 2015 and continued
through February 2016, and established an earnings sharing mechanism whereby Yankee Gas and its customers will share equally in any earnings
exceeding a 9.5 percent ROE in a twelve month period commencing with the period from April 1, 2015 through March 31, 2016. Additionally,
Yankee Gas shall forgo its right to file a rate case for an increase in its base distribution rates prior to January 1, 2017. This does not impact the rates
charged under the Connecticut comprehensive energy strategy (CES) program. The settlement agreement also resolved two pending regulatory
proceedings before the PURA pertaining to a review of Yankee Gas’ overearnings. In 2015, Yankee Gas recorded the $1.5 million expected refund
to customers as a reduction to operating revenues.
Massachusetts:
NSTAR Electric and NSTAR Gas Comprehensive Settlement Agreement: On March 2, 2015, the DPU approved the comprehensive settlement
agreement between NSTAR Electric, NSTAR Gas and the Massachusetts Attorney General (the “Settlement”) as filed with the DPU on
December 31, 2014. The Settlement resolved the outstanding NSTAR Electric CPSL program filings for 2006 through 2011, the NSTAR Electric
and NSTAR Gas PAM and energy efficiency-related customer billing adjustments reported in 2012, and the recovery of LBR related to NSTAR
Electric’s energy efficiency programs for 2009 through 2011 (11 dockets in total). In the first quarter of 2015, as a result of the DPU order, NSTAR
Electric and NSTAR Gas commenced refunding a combined $44.7 million to customers, which was recorded as a regulatory liability. Refunds to
customers will continue through December 2016. As a result of the Settlement, NSTAR Electric increased its operating revenues and decreased its
amortization expense in 2015, resulting in the recognition of a $13 million after-tax benefit.
NSTAR Electric Basic Service Bad Debt Adder: On January 7, 2015, the DPU issued an order concluding that NSTAR Electric had removed
energy-related bad debt costs from base distribution rates effective January 1, 2006. As a result of the DPU order, in the first quarter of 2015,
NSTAR Electric increased its regulatory assets and reduced its operations and maintenance expense by an under recovered amount of $24.2 million
for energy-related bad debt costs through 2014, resulting in after-tax earnings of $14.5 million. NSTAR Electric filed for recovery of the energy-
related bad debt costs regulatory asset from customers and on November 20, 2015, the DPU approved NSTAR Electric’s proposed rate increase to
recover these costs over a 12-month period, beginning January 1, 2016.
NSTAR Electric and WMECO Grid Modernization Plan: As part of the DPU’s investigation into the modernization of the electric grid, in August
2015, NSTAR Electric and WMECO filed a comprehensive ten-year plan with the DPU. The plan focuses on technologies and investments that
modernize the grid with proposed investments in equipment that reduces the frequency and duration of power outages, optimizes and manages
electrical demand, integrates distributed energy resources, and improves workforce and asset management. The plan includes incremental spending
of approximately $430 million over the first five years, which would be recovered from customers in rates, and is pending DPU review and approval.
There is currently no timeline for the DPU to take any action on this plan.
NSTAR Electric, WMECO and NSTAR Gas Energy Efficiency Plan: The Massachusetts EDCs and natural gas distribution companies have
increased their energy efficiency savings achievements significantly since the enactment of the Green Communities Act in 2008, with electric savings
almost tripling between 2008 and 2014. On January 28, 2016, the DPU issued an order approving NSTAR Electric’s, WMECO’s, and NSTAR Gas’
three-year electric and natural gas energy efficiency plan, which was jointly developed with other Massachusetts EDCs and natural gas distribution
companies. As part of this plan, which covers the years 2016 through 2018, NSTAR Electric, WMECO, and NSTAR Gas will maintain aggressive
savings goals. The plan includes the ability to earn performance incentives related to these aggressive savings goals totaling $58 million over the
three-year period for NSTAR Electric, WMECO and NSTAR Gas, as well as recovery of LBR of approximately $50 million on an annual basis for
NSTAR Electric until it is operating under a decoupled rate structure.
NSTAR Electric DPU Safety and Reliability Programs: The safety and reliability programs allowed NSTAR Electric to recover $15 million per year,
through December 31, 2015, 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.
NSTAR Gas Distribution Rates: On October 30, 2015, the DPU issued its order in the NSTAR Gas distribution rate case, which approved an
annualized base rate increase of $15.8 million, plus other increases of approximately $11.5 million, mostly relating to recovery of pension and PBOP
expenses and the Hopkinton Gas Service Agreement (GSA), effective January 1, 2016. In the order, the DPU also approved an authorized regulatory