Yankee Gas tells PURA $171M in cost‑of‑removal charges; $11M not linked to completed retirements

Yankee Gas told the Public Utilities Regulatory Authority on June 24 that it has about $171 million recorded in FERC Account 108.030 for cost‑of‑removal work related to retiring aged mains and services. Garrett Murray, manager of revenue requirements for Eversource Energy Service Company, said about $11 million of that balance did not have an associated completed retirement date as of March 31, 2025.

Why it matters: Cost‑of‑removal charges are the accounting entries for work to dismantle, remove or otherwise make an old gas facility unusable. Under the FERC Uniform System of Accounts, those removal costs are tracked separately and are recovered over time through depreciation. The accounting classification affects how costs appear in rate cases and whether they are presenting as accrued work versus final retirements.

Murray told the authority that most of the $171 million does have associated retirements or is tied to projects in which the new assets are already in service. "The majority of that value has an associated completed retirement," Murray said. He described a residual portion — about $18.9 million in the company’s spreadsheet — that represents projects where the new construction is in service but the formal retirement entry has not yet been finalized; and about $11 million for which neither an in‑service designation for the replacement nor a retirement date had been recorded.

Company witnesses explained the timing and internal controls behind those classifications. They described a multi‑step accounting and operational process: work orders are opened for combined replacement and retirement projects; contractors submit daily activity reports and invoices; the company posts removal expenditures to Account 108.030 as they are spent; and, when a project is finally unitized and fully closed, the company reclasses those amounts to accumulated depreciation (Account 108.010) and retires original book cost (crediting gross plant accounts). Murray said the company does not perform the final reclassification to accumulated depreciation until the work order has reached its "final state" and the replacement asset has been fully unitized (moved into FERC Account 101).

Operational witnesses said the field work can require multiple, separate excavations (test holes, tie‑over points and later abandonment excavations), and final pavement restoration or settlement checks can delay the administrative steps that produce a formal retirement date. "We would not do that reclass until the work order has reached its final state," Murray testified, describing the company’s practice to avoid premature accounting moves.

Company documents shown in the hearing indicate a broad mix of retired assets, many decades old; Murray emphasized that negative net salvage embedded in depreciation rates is the mechanism to spread removal costs to customers over a generation so that retiring costs are not borne solely by future customers.

Ending: PURA staff and intervenors probed how many of the listed removal dollars correspond to work orders that are fully closed versus in progress; the company agreed to provide additional, work‑order level clarifications as supplements to several late‑filed exhibits requested during the hearing.