8-KOther Events

EVERSOURCE ENERGY 8-K Report (Nov 25, 2003)

Filed November 25, 2003For Securities:ES

Summary

This 8-K filing from Northeast Utilities (NU) and its subsidiaries reports a significant increase in the estimated cost for decommissioning the Connecticut Yankee Atomic Power Company (CYAPC) nuclear unit. The primary driver for this upward revision is the termination of the contract with the decommissioning contractor, Bechtel Power Corporation, in July 2003 due to performance issues, and the subsequent transition to self-performance by CYAPC. The new draft estimate reflects an approximate $270 million increase over the previous estimate, bringing the total current draft estimate to approximately $820 million, which is an aggregate increase of about $410 million since the 2000 FERC rate case settlement. Northeast Utilities' electric operating subsidiaries collectively own 49% of CYAPC, meaning their share of the increased cost is approximately $132.3 million, allocated among The Connecticut Light and Power Company (CL&P), Public Service Company of New Hampshire (PSNH), and Western Massachusetts Electric Company (WMECO). CYAPC is pursuing litigation against Bechtel for recovery of costs and damages and plans to seek recovery of these increased decommissioning expenses from ratepayers through future filings with the Federal Energy Regulatory Commission (FERC) and state regulatory bodies.

Key Highlights

  • 1Northeast Utilities' (NU) subsidiaries' share of increased nuclear decommissioning costs is approximately $132.3 million.
  • 2The Connecticut Yankee Atomic Power Company (CYAPC) terminated its decommissioning contractor, Bechtel Power Corporation, in July 2003 due to performance issues.
  • 3CYAPC is now self-performing the remaining decommissioning work.
  • 4The updated draft estimate for CYAPC's decommissioning costs has increased by approximately $270 million over the November 2002 estimate.
  • 5The total current draft decommissioning cost estimate is approximately $820 million, an increase of $410 million from the 2000 FERC rate case settlement.
  • 6CYAPC is pursuing litigation against Bechtel for wrongful termination and other damages.
  • 7NU's subsidiaries (CL&P, PSNH, WMECO) plan to seek recovery of their respective shares of allowed decommissioning cost increases from ratepayers.

Frequently Asked Questions

The primary reason for the significant increase in the decommissioning cost estimate for the Connecticut Yankee nuclear unit is the termination of the turnkey decommissioning contractor, Bechtel Power Corporation, in July 2003 due to performance issues. CYAPC has now transitioned to self-performing the remaining decommissioning work.

Northeast Utilities' electric operating subsidiaries collectively own 49% of CYAPC. Their aggregate share of the estimated increased decommissioning cost is approximately $132.3 million. This is further broken down as follows: CL&P ($93.2 million), PSNH ($13.5 million), and WMECO ($25.7 million).

Yes, CYAPC is seeking recovery of additional decommissioning costs and other damages from Bechtel through pending litigation. Additionally, CYAPC plans to structure a rate application to be filed with the FERC to recover these expenses, which would then be charged to its sponsors, including NU's subsidiaries. In turn, CL&P, PSNH, and WMECO will likely seek recovery from ratepayers through appropriate state and federal rate proceedings.

The current estimate of approximately $820 million is a draft and is undergoing review. CYAPC is required to file an updated decommissioning cost estimate with the FERC by no later than July 1, 2004. The timing, amount, and outcome of these regulatory filings cannot be predicted at this time.