This excerpt taken from the NST 10-K filed Feb 22, 2005.
Note I. Pension and Postretirement Benefits Other Than Pensions (PBOP) Adjustment Mechanism Tariff Filing
On October 31, 2003, NSTAR received an order from the MDTE regarding NSTARs request (filed on April 16, 2003) for the approval of a reconciliation rate adjustment mechanism (PAM) for recovery of costs associated with the Companys obligation to provide its employees qualified pension and PBOP benefits. Prior to the PAM order, the Company had accounted for these obligations in accordance with an Accounting Order received from the MDTE in December 2002.
The PAM order authorizes NSTAR to recover its qualified pension and PBOP expenses through a reconciling rate mechanism. This mechanism removes the volatility in earnings that may have resulted from requirements of existing accounting standards and provides for an annual filing and rate adjustment with the MDTE. This order effectuates the
Accounting Order, which allowed NSTAR to record a regulatory asset in lieu of taking a charge to OCI at December 31, 2002 for the additional minimum liability in accordance with SFAS 87. In addition, the order revised the effective date included in the Accounting Order on which the Company could begin to defer the difference between the level of qualified pension and PBOP expense included in rates and the amounts that are required to be recorded under the pension and PBOP accounting rules to September 1, 2003. This date coincides to the expiration of NSTARs utility subsidiaries four-year distribution rate freeze. As a result, NSTAR recognized $18.0 million of expenses in the third quarter of 2003 that had been deferred earlier in the year. In accordance with the PAM order, the Company recognized in 2003 $16.3 million of revenue related to carrying charges on the net prepaid balance. This carrying charge was collected from customers during 2004. In 2004, the Company recognized $17.4 million of revenue related to carrying charges on the net prepaid balance. This carrying charge will be collected from customers during 2005.
On November 20, 2003, both NSTAR and the Massachusetts Attorney General filed motions with the MDTE for reconsideration of its PAM order. On November 19, 2004, the MDTE denied the request for reconsideration for both NSTAR and the Massachusetts Attorney General.