8/20/2019 Western Massachusetts Elec Co - Rider Pbop

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WESTERN MASSACHUSETTS ELECTRIC COMPANY

M.D.P.U. No. 1041ICancels M.D.P.U. No. 1041H

PENSION/PBOP ADJUSTMENT MECHANISM(PPAM)

Page 1 of 2

Issued per Order in D.P.U. 12-126I For Consumption On andDated December 17, 2013 After January 1, 2014

The PPAM Factor will be implemented January 1, of each year and will include thedistribution portion of the actual/estimated reconciled under/over-recovery for the 12-month period prior to January 1, of each year as the calculation details below. TheFactor will also include any associated true-up of the actual distribution portion of thepension/PBOP revenue/expense for the previous reconciled period.

PPAMx = (PEXP + PBOPEXP + RAx + cc(URDx + APPAx – DTAx) +PPRAx) A:TPvol

Where:

PPAM = The annual Pension/PBOP Adjustment Mechanism Factor

PEXP = The amount of Distribution Pension Expense to be recovered as approvedby the Department.

PBOPEXP = The amount of Distribution PBOP Expense to be recovered as approvedby the Department.

RAx = The Reconciliation Adjustment for Year x is one-third of the UnamortizedReconciliation Deferral at the end of the Prior Year.

cc = The Cost of Capital is the tax-effected weighted–average cost of capital asdefined in its Transition Cost Reconciliation using the allowed return onequity approved in the Company’s earnings sharing mechanism from itsmost recent rate case

URDx = The Unamortized Reconciliation Deferral is the amount of theReconciliation Deferral not yet included for recovery. At the beginning ofYear x the Unamortized Reconciliation Deferral is the sum of: (1) theUnamortized Reconciliation Deferral at the beginning of the Prior Year;plus (2) the Reconciliation Deferral for the Prior Year; minus (3) theReconciliation Adjustment for the Prior Year.

 APPAx = The Average Pre-Paid Amount, for Year x is one half of the sum of: (1) theDistribution Pre-Paid Amount recorded on WMECO’s books as of theBeginning of the Prior Year; and (2) the Distribution Pre-Paid Amountrecorded on WMECO’s books as of the end of the Prior Year.

DTAx = The Deferred Tax Amount is the deferred taxes associated with theDistribution Pre-Paid amount and the URD at the end of the Prior Year.

8/20/2019 Western Massachusetts Elec Co - Rider Pbop

2/2

WESTERN MASSACHUSETTS ELECTRIC COMPANY

M.D.P.U. No. 1041ICancels M.D.P.U. No. 1041H

PENSION/PBOP ADJUSTMENT MECHANISM(PPAM)

Page 2 of 2

Issued per Order in D.P.U. 12-126I For Consumption On andDated December 17, 2013 After January 1, 2014

PPRAx = The Past Period Reconciliation Amount is (a) the difference between: (1)the amount of PPAM revenue that should have been collected in the PriorYear; and (2) the amount of PPAM revenue actually received by WMECOin the Prior Year and (b) the amount computed in the clause (a) times theprime rate computed in accordance with 220C.M.R.6.08(2).

 A:TPvol = Annual forecasted distribution volumes inclusive of all sales provided byboth WMECO and third party suppliers.

x = The current year.

The uniform rate calculated herein shall be re-allocated to all rate classes by applyingthe Labor Allocator as approved in D.P.U. 12-126I. The Labor Allocator shall be derivedfrom the Company’s most recently approved allocated cost of service study and shall beas follows:

R-1/R-2 45.72%R-3/R-4 8.39%23/24,G-0,T-0 16.12%G-2/T-4 11.44%T-2 9.40%T-5 3.53%S-1/S-2 5.40%

PPAM FACTOR:

Charge per kWh As per M.D.P.U. No. 1052 as in effect from time to time.

 Any adjustment of the PPAM Factor shall be in accordance with a notice filed with theDepartment setting forth the amount of the proposed new factors and the amount of theincrease or decrease. The notice shall further specify the effective date of suchadjustments, which shall not be earlier than thirty days after the filing of the notice, orsuch other date as the Department may authorize.