Common use of Risk Sharing Clause in Contracts

Risk Sharing. PSNH agrees to share in the risk of recovery of unsecuritized stranded costs. Specifically, PSNH shall forego the right to recover all such costs that remain unrecovered as of September 30, 2007 (the "Recovery End Date"). The Recovery End Date is based on the load growth and other data and assumptions contained in the June 4, 1999 financial scenario that supports this MOU including the assumed wholesale market prices for the sale of the output of generating assets and entitlements prior to divestiture, Rate Recovery Bonds costing 7.25%, an assumed $100 million price for Seabrook, an assumed $360 million price for the fossil/hydro assets and the Transition Service prices contained in Section 10. The only adjustments to the Recovery End Date shall be made within 30 days following the sale of the fossil/hydro assets, shall be for the period until September 30, 2007 and shall be for the actual sales price for the fossil/hydro assets, the actual cost of Transition Service, a price of less than 7.25% for the Rate Reduction Bonds, and the difference between the assumed wholesale market prices and a proxy for the wholesale price for the sale of the output of nuclear and IPP entitlements and the actual revenue from the sale of the output for the fossil/hydro units prior to divestiture. For nuclear and IPP entitlements, the proxy wholesale price shall be determined based on the average price realized from the auction of CL&P's and WMECO's shares of Millstone 2, Millstone 3 and Seabrook, adjusted for differences in capacity factors. After the Transition Period, the proxy prices will be escalated 3% per year. After the Recovery End Date, all unrecovered stranded costs remaining in Part 3 of the SCRC shall be borne by PSNH, and the SCRC shall be reduced accordingly. It is the parties' best estimate that upon the Recovery End Date, the SCRC will drop from 3.79 cents per kWh to under 2.0 cents, representing substantial additional rate reductions.