8-KMaterial AgreementsExhibits & Filings

EVERSOURCE ENERGY 8-K Report, Material Agreement (Oct 24, 2006)

Filed October 24, 2006For Securities:ES

Summary

This Form 8-K filing by EVERSOURCE ENERGY (parent company Northeast Utilities, with Western Massachusetts Electric Company (WMECO) as a subsidiary) reports on a significant rate settlement agreement. On October 19, 2006, WMECO, along with the Massachusetts Attorney General, Associated Industries of Massachusetts, and the Low Income Energy Affordability Network, filed a two-year rate settlement with the Massachusetts Department of Telecommunications and Energy (DTE). This settlement, if approved, will replace a previously planned $27 million distribution rate increase with more modest increases of $1 million in 2007 and $3 million in 2008. The agreement introduces several key mechanisms for cost recovery and customer protection. It includes cost tracking for pension and post-retirement benefits, uncollectible energy costs, and capital improvements for reliability. Additionally, WMECO will have the ability to recover certain extraordinary costs incurred beyond its control. A notable feature is an earnings sharing mechanism, where profits are split 50-50 with customers if WMECO's return on equity falls below 8% or exceeds 12% during the settlement term. This settlement is expected to result in a modest increase in residential customer bills, approximately 2.4% or $2.64 per month for a typical customer.

Key Highlights

  • 1Western Massachusetts Electric Company (WMECO) has entered into a two-year rate settlement agreement with key stakeholders, including the Massachusetts Attorney General.
  • 2The settlement replaces a planned $27 million distribution rate increase with much smaller increases: $1 million effective January 1, 2007, and $3 million effective January 1, 2008.
  • 3Cost tracking mechanisms for pension/post-retirement benefits, uncollectibles, and reliability capital improvements are included.
  • 4WMECO can recover certain extraordinary costs incurred beyond its control.
  • 5An earnings sharing mechanism is established: profits are shared 50-50 with customers if return on equity is below 8% or above 12%.
  • 6Residential customer bills are expected to increase by approximately 2.4%, or $2.64 per month for a customer using 700 kWh.
  • 7The parties have requested a DTE decision by December 14, 2006.

Frequently Asked Questions

This filing announces a material definitive agreement, specifically a two-year rate settlement between Western Massachusetts Electric Company (WMECO) and key state stakeholders. The settlement outlines future electricity distribution rate adjustments and cost recovery mechanisms, pending regulatory approval.

The settlement proposes modest rate increases, totaling $1 million in 2007 and $3 million in 2008, significantly less than the $27 million increase WMECO had initially planned. For a residential customer using 700 kWh per month, this translates to an approximate monthly bill increase of $2.64, or about 2.4%.

Key provisions include phased-in rate increases, cost tracking mechanisms for specific expenses (pension, uncollectibles, capital improvements), recovery of certain extraordinary costs, and an earnings sharing mechanism that splits profits with customers if returns on equity fall outside the 8%-12% range.

The parties involved have requested that the Massachusetts Department of Telecommunications and Energy (DTE) issue a decision on the settlement by December 14, 2006.