EXHIBIT 10.16.3
THIRD AMENDMENT TO THE RATE AGREEMENT
This THIRD AMENDATORY AGREEMENT executed as of the date written below,
is between the parties to the agreement dated as of November 22, 1989, as
amended by the First Amendatory Agreement dated as of December 5, 1989, and
the Second Amendatory Agreement dated as of December 12, 1989 (the "Rate
Agreement") between Northeast Utilities Service Company, acting on behalf of
its parent Northeast Utilities, and the Attorney General of the State of New
Hampshire, acting on behalf of the State of New Hampshire (the "State").
WHEREAS, the parties desire to amend the Rate Agreement in the respects
specified below, and the Attorney General is authorized to act for the State
in agreeing to such amendments.
NOW, THEREFORE, in consideration of the mutual agreement below, the
Parties agree as follows:
1. Definition of "Cumulative Net Present Value of Earnings for Common" for
Purposes of the Xxxxx River/Wausau Papers Special Contracts.
The paragraph in Exhibit B to the Rate Agreement establishing how PSNH's
Cumulative Net Present Value of Earnings for Common shall be computed (DR
89-244, Ex. NU 1E, paragraph beginning on the third line from the bottom of
page D-83 and carried over onto page D-84) shall, subject to the approval of
the New Hampshire Public Utilities Commission (the "Commission"), be amended
and restated as follows:
The Cumulative Net Present Value of Earnings for Common shall be the sum of
the present value of Stand-Alone PSNH or NUNH earnings for common as reported
in the FERC Form No. 1 from the base year through the current year (i)
adjusted to eliminate the effects of any accruals recorded for expected
future refunds or rate increases as a result of the operation of this collar
from the base year through the current year, (ii) if PSNH is acquired by NU,
the earnings for common shall be further adjusted to eliminate any impacts of
the Seabrook investment during the Interim Period, and (iii) shall be further
adjusted to eliminate the effect of the discounts provided to Xxxxx River
Corporation in Special Contract Electricity NUPUC-71 and to Wausau Papers of
New Hampshire in Special Contract - Electricity NUPUC-72, on file with the
NHPUC on June 22, 1993. The present value of earnings for common shall be the
earnings for common for the reported year divided by the present value factor
applicable to that year.
2. Amendment of Paragraph 5 and 8 of the Rate Agreement to Prevent
Compounding the Increases in Nuclear Decommissioning Costs.
a. Amendment of Paragraph 5(a)(v). Paragraph 5(a)(v) of the Rate
Agreement relative to adjustments in base rates in addition to the annual
5.5% base rate changes (DR 89-244, Ex. NU 1E, pages D-12 to D-13) shall,
subject to the approval of the Commission, be amended and restated as
follows:
(v) except for changes required by subparagraphs (ii), (iii) and (iv)
above, the only changes to base rates during the period commencing on the
First Effective Date and ending six years after the effective date of the
rate increase referred to in paragraph (a)(ii) (the "fixed rate period") will
be ones to adjust rates (A) for legislative or regulatory changes such as
changes to federal or state tax laws or regulations of environmental orders,
regulations, and laws, which require capital expenditures of at least
$20,000,000 or an increase or decrease in annual expenses of at least
$2,000,000, or (B) to reflect changes required by the Nuclear Decommissioning
Financing Committee in the level of monthly payments to be made into the
Nuclear Decommissioning Fund from the level prescribed in the Committee's
Seventeenth Supplemental Order of June 2, 1989, or (C) to provide revenues to
accomplish programs mandated for Stand-Alone PSNH or NUNH by legislators or
regulators, or (D) to recover costs associated with conservation and load
management programs that have been undertaken with the specific approval of
the NUPUC. In the event that a change or circumstance of the nature described
in clause (A), (B), (C) or (D) above occurs, Stand-Alone PSNH (or NUNH) shall
be entitled to file for a temporary rate increase, subject to refund, and the
temporary rate increase if granted by the NHPUC will remain in effect until a
final order by the NHPUC after a determination that the additional revenues
are associated with the reasonable expenses caused by such change. Rate
adjustments authorized under this paragraph, except for rate adjustments
authorized by clause (B) above, will increase or decrease the ongoing base
rate level which is subject to the 5.5% annual increases occurring in the
remainder of the fixed rate period. In addition, to the extent any new
accounting standards are promulgated during the fixed rate period,
Stand-Alone PSNH (or NUNH) shall be entitled to the same general rate
treatment accorded other utilities in the State by the NHPUC, including, but
not limited to, new accounting rules currently being contemplated by the
Financial Accounting Standards Board for Post-retirement benefits other than
pensions.
b. Amendment of Paragraph 8(a). Paragraph 8(a) of the Rate Agreement
relative to the obligations for payments into the Nuclear Decommissioning
Financing Fund and recovery of nuclear decommissioning costs (DR 89-244, Ex.
NU 1E, page D-17) shall, subject to the approval of the Commission, (the
"Commission"), be amended and restated as follows:
8. Decommissioning and Low Level Nuclear Waste.
Seabrook decommissioning costs, at the level specified by the Nuclear
Decommissioning Financing Committee's Seventeenth Supplemental Order of June
2, 1989, have been included in the rate increases provided in paragraph 5 of
this Agreement. All decommissioning costs attributable to Stand-Alone PSNH's
and later NEWCO's ownership interest in the Seabrook Project, including any
adjustments ordered by the Nuclear Decommissioning Financing Committee to the
levels of contributions in said Seventeenth Supplemental Order and subject to
paragraph 5(a)(v)(B) in this Agreement, shall be collected from NUNH by NEWCO
through Section E of Schedule I of the Unit Contract with respect to Seabrook
Nuclear Power Plan, Unit No. 1 ("Power Contract") and in accordance with New
Hampshire law. NEWCO will make all required payments to the Nuclear
Decommissioning Financing Fund.
c. Amendment of Paragraph 8(b). Paragraph 8(b) of the Rate Agreement
relative to nuclear decommissioning costs treatment in the event of a
premature decommissioning of Seabrook (DR 89-244, Ex. NU 1E, page D-18)
shall, subject to the approval of the Commission, be amended and restated as
follows:
(b) In the event of premature decommissioning of Seabrook,
decommissioning costs shall continue to be collected pursuant to paragraph
(a) under the Power Contract with NEWCO, and the NHPUC shall permit the pass
through to customers of the decommissioning costs NUNH pays to NEWCO in
accordance with paragraphs 5(a)(v) and 8(a) of this Agreement and New
Hampshire law.
3. Amendment of Paragraph B.E)(2) of Exhibit C - Delay in Recovery of
Deferred Seabrook Capital Expense. Paragraph B.E)(2) of Exhibit C to the Rate
Agreement relative to costs paid to NEWCO under the Seabrook Power Contract
that are recovered under FPPAC (DR 89-244, Ex. NU 1E, page D-96) shall,
subject to the approval of the Commission, be amended and restated as
follows:
(2) After the Second Effective Date, the entire payment made under the
Power Contract after Seabrook operates (but excluding decommissioning
payments which are to be made directly to the state Nuclear Decommissioning
Fund and which are included in the rates provided in paragraph 5 of the
Agreement); except for depreciation or amortization of, and a return on,
Stand-Alone PSNH's share of costs incurred after the First Effective Date to
place Seabrook in commercial operation which are determined by the NHPUC to
be imprudent in accordance with subparagraph (3) of this paragraph E;
provided, however, the charges made by NEWCO and collected from NUNH under
paragraph U of Schedule I of the Power Contract for the period from December
1, 1997 through May 31, 1998 will be deferred, with interest paid on the
unrecovered balance at three percent (3.00%), and thereafter will be
recovered through FPPAC beginning June 1, 1998 over a thirty-six month period
on an amortization basis comparable to that described in paragraph H of
Schedule I in addition to the Deferred Capital Expenses expected to be
collected under paragraph H of Schedule I of the Power Contract.
IN WITNESS WHEREOF, each of the Parties has duly executed this Third
Amendatory Agreement as of the day and year first above written.
NORTHEAST UTILITIES SERVICE Company
By: /s/ Xxxx X. Xxxxx
Date: December 28, 0000
XXX XXXXX XX XXX XXXXXXXXX
By: /s/ Xxxxxxx X. Xxxxxx
Date: December 3, 1993
