Eversource 2015 Annual Report Download - page 57

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recovery of our approved base distribution revenue requirements. Therefore, changes in sales volumes had no impact on the level of base distribution
revenue realized at our decoupled companies.
Firm natural gas base distribution segment revenues decreased $4.9 million due primarily to a 1.1 percent decrease in firm natural gas sales volumes
in 2015, as compared to 2014. This was due to record warm weather in the fourth quarter of 2015 when compared to 2014, partially offset by colder
winter weather in the first quarter of 2015 compared to 2014. Weather-normalized firm natural gas sales volumes (based on 30-year average
temperatures) increased 2.5 percent in 2015 compared to 2014, due primarily to improved economic conditions as well as residential and commercial
customer growth, partially offset by the impact of customer conservation efforts resulting from company-sponsored energy efficiency programs.
Tracked distribution revenues: Tracked revenues consist of certain costs that are recovered from customers in rates through regulatory commission-
approved cost tracking mechanisms and therefore have no impact on earnings. Costs recovered through cost tracking mechanisms include energy
supply procurement costs and other energy-related costs for our electric and natural gas customers, retail transmission charges, energy efficiency
program costs, and restructuring and stranded cost recovery revenues. Tracked electric distribution segment revenues increased primarily as a result
of increases in energy supply costs ($176.4 million), driven by increased average retail rates, and increases in energy efficiency program revenues
($18.3 million). These increases were partially offset by a decrease in retail electric transmission charges ($77.5 million) and a decrease in the
federally mandated congestion charge primarily driven by refunds in 2015 for a prior year overrecovery ($103.9 million). Tracked natural gas supply
revenues decreased $20.1 million as a result of a decrease in average rates related to the recovery of natural gas supply costs.
Electric transmission revenues: The electric transmission segment revenues increased by $50.9 million due primarily to the result of lower reserves
associated with the FERC ROE complaint proceedings in 2015 compared to 2014 and higher revenue requirements associated with ongoing
investments in our transmission infrastructure.
Other: Other revenues decreased due primarily to the sale of Eversource’s unregulated contracting business on April 13, 2015 ($55 million).
Purchased Power, Fuel and Transmission expense includes costs associated with purchasing electricity and natural gas on behalf of our customers.
These energy supply costs are recovered from customers in rates through reconciling cost tracking mechanisms, which have no impact on earnings
(tracked costs). Purchased Power, Fuel and Transmission increased in 2015, as compared to 2014, due primarily to the following:
(Millions of Dollars) Increase/(Decrease)
Electric Distribution $ 74.8
Natural Gas Distribution
(1.6)
Electric Transmission 2.8
Other and Eliminations (10.7)
Total Purchased Power, Fuel and Transmission $ 65.3
The increase in purchased power costs at the electric distribution business was driven by higher prices associated with the procurement of energy
supply in 2015, as compared to 2014. The decrease in purchased power costs at the natural gas distribution business was due to lower average
natural gas prices in 2015, as compared to 2014.
Operations and Maintenance expense includes tracked costs and costs that are part of base electric and natural gas distribution rates with changes
impacting earnings (non-tracked costs). Operations and Maintenance decreased in 2015, as compared to 2014, due primarily to the following:
(Millions of Dollars) Increase/(Decrease)
Base Electric Distribution:
Resolution of basic service bad debt adder mechanism at NSTAR Electric $ (24.2)
Contribution to create clean energy fund in connection with the generation
divestiture agreement at PSNH 5.0
Increase in employee-related expenses, including labor and benefits 1.8
Other operations and maintenance 7.0
Total Base Electric Distribution (10.4)
Total Base Natural Gas Distribution (1.5)
Total Tracked costs (Transmission and Electric and Natural Gas Distribution) (9.3)
Total Distribution and Transmission (21.2)
Other and eliminations:
Integration costs (8.4)
Absence of Eversource’s unregulated electrical contracting business due to sale
in April 2015, net (45.7)
Merger-related costs allowed for recovery (7.0)
ES Parent and Other Companies (16.0)
Total Operations and Maintenance $ (98.3)
Depreciation increased in 2015, as compared to 2014, due primarily to higher utility plant in service balances resulting from completed construction
projects placed into service and an increase in depreciation rates at CL&P as a result of the distribution rate case effective December 1, 2014.