Eversource 2015 Annual Report Download - page 78

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CL&P (effective December 1, 2014) and WMECO each have a regulatory commission approved revenue decoupling mechanism. Distribution
revenues are decoupled from customer sales volumes, which breaks the relationship between sales volumes and revenues recognized. CL&P and
WMECO reconcile their annual base distribution rate recovery to pre-established levels of baseline distribution delivery service revenues. Any
difference between the allowed level of distribution revenue and the actual amount received during a 12-month period is adjusted through rates in the
following period. CL&P and WMECO’s revenue decoupling mechanisms permit recovery of an annual base amount of distribution revenues of
$1.059 billion and $132.4 million, respectively.
Contractual Obligations - Yankee Companies: CL&P, NSTAR Electric, PSNH and WMECO are responsible for their proportionate share of the
remaining costs of the CYAPC, YAEC and MYAPC nuclear facilities, including nuclear fuel storage. A portion of these costs was recorded as a
regulatory asset. Amounts for CL&P are earning a return and are being recovered through the CTA. Amounts for NSTAR Electric and WMECO are
being recovered without a return through the transition charge. Amounts for PSNH were fully recovered in 2006. As a result of Eversource’s
consolidation of CYAPC and YAEC, Eversource’s regulatory asset balance also includes the regulatory assets of CYAPC and YAEC, which totaled
$110.9 million and $97.8 million as of December 31, 2015 and 2014, respectively. Intercompany transactions between CL&P, NSTAR Electric,
PSNH and WMECO and the CYAPC and YAEC companies have been eliminated in consolidation of the Eversource financial statements.
Other Regulatory Assets: Other Regulatory Assets primarily include asset retirement obligations, environmental remediation costs, losses associated
with the reacquisition or redemption of long-term debt, purchase power contract termination costs and various other items.
Regulatory Costs in Other Long-Term Assets: The Regulated companies had $75.3 million (including $3.1 million for CL&P, $35.4 million for
NSTAR Electric, $4.8 million for PSNH and $16.7 million for WMECO) and $60.5 million (including $1.3 million for CL&P, $33.2 million for
NSTAR Electric, $0.9 million for PSNH, and $11 million for WMECO) of additional regulatory costs as of December 31, 2015 and 2014,
respectively, that were included in Other Long-Term Assets on the balance sheets. These amounts represent incurred costs for which recovery has
not yet been specifically approved by the applicable regulatory agency. However, based on regulatory policies or past precedent on similar costs,
management believes it is probable that these costs will ultimately be approved and recovered from customers in rates. The NSTAR Electric balance
as of December 31, 2015 and 2014 primarily related to the deferral of certain bad debt costs expected to be recovered in future rates.
Equity Return on Regulatory Assets: For rate-making purposes, the Regulated companies recover the carrying costs related to their regulatory assets.
For certain regulatory assets, the carrying cost recovered includes an equity return component. This equity return, which is not recorded on the
balance sheets, totaled $1.5 million and $1.7 million for CL&P as of December 31, 2015 and 2014, respectively. These carrying costs will be
recovered from customers in future rates.
As of December 31, 2015 and 2014, this equity return, which is not recorded on the balance sheets, totaled $48.3 million and $43.3 million,
respectively, for PSNH. These amounts include $25 million of equity return on the Clean Air Project costs that PSNH has agreed not to bill
customers pending NHPUC approval of a generation divestiture settlement agreement. For further information on the divestiture, see Note 11H,
“Commitments and Contingencies – PSNH Generation Restructuring.”
Regulatory Liabilities: The components of regulatory liabilities were as follows:
Eversource As of December 31,
(Millions of Dollars)
2015 2014
Cost of Removal $ 437.1 $ 439.9
Regulatory Tracker Mechanisms 99.7 192.3
AFUDC - Transmission 66.1 67.1
Other Regulatory Liabilities 18.5 50.8
Total Regulatory Liabilities 621.4 750.1
Less: Current Portion 107.8 235.0
Total Long-Term Regulatory Liabilities $ 513.6 $ 515.1
As of December 31,
2015 2014
NSTAR NSTAR
(Millions of Dollars)
CL&P Electric PSNH WMECO CL&P Electric PSNH WMECO
Cost of Removal $ 24.1 $ 257.4 $ 47.2 $ 2.8 $ 19.7 $ 258.3 $ 50.3 $ 1.1
Regulatory Tracker Mechanisms 56.2 3.3 3.4 12.9 122.6 20.7 14.2 22.3
AFUDC - Transmission 51.5 5.7 - 8.9 53.6 4.4 - 9.1
Other Regulatory Liabilities 4.2 1.3 4.2 0.1 10.1 28.9 2.9 0.8
Total Regulatory Liabilities 136.0 267.7 54.8 24.7 206.0 312.3 67.4 33.3
Less: Current Portion 61.2 3.3 6.9 13.1 124.7 49.6 16.0 22.5
Total Long-Term Regulatory Liabilities $ 74.8 $ 264.4 $ 47.9 $ 11.6 $ 81.3 $ 262.7 $ 51.4 $ 10.8
Cost of Removal: Eversource’s Regulated companies currently recover amounts in rates for future costs of removal of plant assets over the lives of
the assets. The estimated cost to remove utility assets from service is recognized as a component of depreciation expense and the cumulative amount
collected from customers but not yet expended is recognized as a regulatory liability. Expended costs that exceed amounts collected from customers
are recognized as regulatory assets, as they are probable of recovery in future rates.
AFUDC - Transmission: Regulatory liabilities were recorded by CL&P and WMECO for AFUDC accrued on certain reliability-related transmission
projects to reflect local rate base recovery as a result of a FERC-approved transmission tariff. A regulatory liability was recorded by NSTAR Electric
for AFUDC accrued on certain reliability-related transmission projects through December 31, 2015 to reflect local rate base recovery. These
regulatory liabilities for CL&P, NSTAR Electric and WMECO will be amortized over the depreciable life of the related transmission assets.