8-KOther Events

EVERSOURCE ENERGY 8-K Report, Corporate Update (Jun 18, 2010)

Filed June 18, 2010For Securities:ES

Summary

Eversource Energy (via its subsidiary The Connecticut Light and Power Company - CL&P) has received a Preliminary Decision from the Connecticut Department of Public Utility Control (CT DPUC) regarding its electric distribution rate case. The decision, issued on June 14, 2010, approves significantly lower increases in distribution revenues than CL&P had requested. Specifically, the DPUC approved increases of $61.1 million for 2010 and $37.7 million for 2011, compared to CL&P's revised requests of $129 million and $41.4 million, respectively. While the new rates are set to become effective July 1, 2010, their financial impact is deferred until January 1, 2011, and CL&P anticipates that a decline in stranded cost recoveries will offset the approved increase. The Preliminary Decision also approved annual construction expenditures necessary for system reliability and safety, but denied CL&P's proposals for earnings decoupling and pension tracking. The authorized return on equity (ROE) was set at 9.40%, below the requested 10.5%, although the capital structure and weighted cost of capital were approved as requested. CL&P is also required to maintain its existing earnings sharing mechanism with customers. Investors should note that this is a preliminary decision, with a final decision expected by June 30, 2010, following written exceptions and oral arguments.

Key Highlights

  • 1The Connecticut Department of Public Utility Control (CT DPUC) issued a Preliminary Decision on CL&P's electric distribution rate case on June 14, 2010.
  • 2Approved distribution revenue increases are substantially lower than requested: $61.1 million for 2010 and $37.7 million for 2011.
  • 3The financial impact of the approved rate increase is deferred until January 1, 2011.
  • 4CL&P's proposals to decouple earnings from sales and to track pension costs were denied.
  • 5The authorized Return on Equity (ROE) is set at 9.40%, lower than the requested 10.5%.
  • 6Annual construction expenditures for system reliability and safety were approved ($310M for 2010, $331M for 2011, $314M for 2012).
  • 7CL&P must continue its existing earnings sharing mechanism with customers.

Frequently Asked Questions

The Preliminary Decision approves significantly lower increases in distribution revenues than CL&P had requested. Approved increases are $61.1 million for 2010 and $37.7 million for 2011, whereas CL&P had requested increases of $133.4 million (later revised to $129 million) for 2010 and $44.2 million (later revised to $41.4 million) for 2011. Furthermore, the financial impact of the approved increase is deferred until January 1, 2011.

The CT DPUC denied CL&P's proposals to decouple earnings from sales and to implement a pension tracking mechanism. The DPUC stated that decoupling was already effectively occurring through a cost-based rate design implemented in 2008.

The Preliminary Decision authorized an ROE of 9.40%. This is lower than the 10.5% ROE that CL&P had requested in its application.

Written exceptions to the Preliminary Decision are due on June 22nd, oral arguments are scheduled for June 28th, and a final decision from the CT DPUC is expected to be issued on June 30, 2010.