Eversource 2015 Annual Report Download - page 79

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2015 Regulatory Developments:
FERC ROE Complaints: As a result of the actions taken by the FERC and other developments in the pending ROE complaint proceedings described
in Note 11E, “Commitments and Contingencies – FERC ROE Complaints,” Eversource recorded reserves for the first and second ROE complaints,
which were recorded as a regulatory liability and as a reduction to operating revenues. The cumulative pre-tax reserves (excluding interest) as of
December 31, 2015, which include the impact of refunds given to customers, totaled $39.1 million for Eversource (including $21.4 million for
CL&P, $8.5 million for NSTAR Electric, $3.1 million for PSNH, and $6.1 million for WMECO).
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 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 $21.7 million pre-tax benefit in 2015.
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 a pre-tax benefit in 2015. 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, effective January 1, 2016.
CL&P Distribution Rates: On July 2, 2015, PURA issued a final order that approved a settlement agreement filed on May 19, 2015, which 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.
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 GSA, effective January 1, 2016. In the order, the DPU also approved an authorized regulatory ROE of 9.8 percent, the
establishment of a revenue decoupling mechanism, the recovery of certain bad debt expenses, and a 52.1 percent equity component of its capital
structure. On November 19, 2015, NSTAR Gas filed a motion for reconsideration of the order with the DPU seeking the correction of mathematical
errors and other plant and cost of service items.
As a result of this order, Eversource recorded regulatory deferrals for costs that have been approved for recovery or are expected to be approved for
recovery in future rate proceedings, which resulted in the recognition of a $17.2 million pre-tax benefit in 2015. Included in this amount is a $10.5
million pre-tax benefit recorded at NSTAR Electric for certain uncollectible hardship accounts receivable that are expected to be recovered in future
rates given the allowed recoveries of uncollectible hardship accounts receivable by WMECO and NSTAR Gas.
3. PROPERTY, PLANT AND EQUIPMENT AND ACCUMULATED DEPRECIATION
Utility property, plant and equipment is recorded at original cost. Original cost includes materials, labor, construction overhead and AFUDC for
regulated property. The cost of repairs and maintenance, including planned major maintenance activities, is charged to Operating Expenses as
incurred.
The following tables summarize the investments in utility property, plant and equipment by asset category:
Eversource As of December 31,
(Millions of Dollars)
2015 2014
Distribution - Electric $ 13,054.8 $ 12,495.2
Distribution - Natural Gas 2,727.2 2,595.4
Transmission - Electric 7,691.9 6,930.7
Generation 1,194.1 1,170.9
Electric and Natural Gas Utility 24,668.0 23,192.2
Other
(1)
558.6 551.3
Property, Plant and Equipment, Gross 25,226.6 23,743.5
Less: Accumulated Depreciation
Electric and Natural Gas Utility (6,141.1) (5,777.8)
Other (255.6) (231.8)
Total Accumulated Depreciation (6,396.7) (6,009.6)
Property, Plant and Equipment, Net 18,829.9 17,733.9
Construction Work in Progress 1,062.5 913.1
Total Property, Plant and Equipment, Net $ 19,892.4 $ 18,647.0
(1)
These assets are primarily comprised of building improvements, computer software, hardware and equipment at Eversource Service.