8-KOther Events

EVERSOURCE ENERGY 8-K Report, Corporate Update (Apr 30, 2010)

Filed April 30, 2010For Securities:ES

Summary

This Form 8-K filing by Eversource Energy (formerly Northeast Utilities) details a significant settlement reached by its subsidiary, Public Service Company of New Hampshire (PSNH), regarding permanent distribution rates. The "2010 Settlement" filed with the New Hampshire Public Utilities Commission (NHPUC) establishes a net distribution rate increase of $45.5 million annually, effective July 1, 2010. This increase includes a reconciliation amount to true up temporary rates implemented in August 2009. A key aspect for investors is PSNH's commitment not to file for new distribution rate increases until June 30, 2015, with limited exceptions tied to performance metrics and external events, providing a period of rate stability.

Key Highlights

  • 1PSNH and NHPUC, along with the Office of Consumer Advocate, reached a Settlement on Permanent Distribution Rates filed on April 30, 2010.
  • 2The settlement approves a net annual distribution rate increase of $45.5 million, effective July 1, 2010.
  • 3This $45.5 million includes a $13.7 million reconciliation to adjust for differences between temporary and permanent rates dating back to August 1, 2009.
  • 4PSNH has agreed not to file for new distribution rate cases until June 30, 2015, ensuring rate stability for a defined period.
  • 5Rate adjustments in subsequent years (July 1, 2011-2013) are projected, with a net decrease of $2.9 million in 2011 primarily due to the end of the reconciliation recoupment.
  • 6The allowed Return on Equity (ROE) for distribution plant is set at 9.67%, and a 75% refund mechanism is in place if ROE exceeds 10%.
  • 7Certain expenses previously recovered in distribution rates will now be recovered through other reconciled rate components.

Frequently Asked Questions

The primary financial impact is a $45.5 million annual increase in distribution revenues effective July 1, 2010. This provides a more predictable revenue stream and includes a reconciliation for past periods. The commitment to refrain from new rate cases until June 30, 2015, offers a period of regulatory and earnings stability for investors.

The $45.5 million increase is the net permanent rate increase. It is in addition to a $25.6 million temporary increase that took effect on August 1, 2009. A portion of the $45.5 million, specifically $13.7 million, is to reconcile the difference between the temporary rates and the newly established permanent rates back to August 1, 2009.

This agreement provides significant rate stability for PSNH and its customers. For investors, it reduces regulatory uncertainty regarding future revenue generation from distribution rates for the next five years. PSNH's ability to seek rate changes is restricted to specific conditions, such as ROE falling below 7% or significant external events.

Yes, the settlement includes performance metrics. If PSNH's distribution Return on Equity (ROE) exceeds 10%, 75% of the excess earnings must be refunded to customers. Additionally, projected rate adjustments in future years are subject to reductions if PSNH's actual net distribution utility plant falls below specified levels.