Northeast Utilities CFO: Transmission earnings reflect continued investment in infrastructure

Transmission earnings from Northeast Utilities’ (NYSE:NU) Connecticut Light & Power (CL&P), Public Service of New Hampshire and Western Massachusetts Electric increased the second quarter’s results by about 5 cents per share, reflecting Northeast Utilities’ continued investment in transmission infrastructure, according to company CFO and senior vice president James Judge.

Speaking during the company’s 2Q12 earnings call July 31, he also said that the addition of NSTAR to the company’s reported results had a positive impact.

Judge also discussed a complaint filed with FERC by various parties about the current base return on equities (ROEs) earned by New England transmission owners.

Massachusetts Attorney General Martha Coakley and others on Sept. 30, 2011, filed the complaint seeking an order to reduce the base ROE used in calculating formula rates for transmission service under ISO New England’s open access transmission tariff from 11.14% to a “just and reasonable” rate of 9.2%.

Judge noted that FERC has issued an order establishing hearing and settlement procedures for the complaint.

“I cannot predict whether the case will be settled or not, but we do feel comfortable with our position that the current base ROE of 11.14% is reasonable,” he said. “If the case does not settle, we believe that FERC’s litigation and decision process will take more than a year.”

He also noted that Connecticut state regulators recently issued a draft order addressing companies’ responses to 2011 storms.

The state Public Utilities Regulatory Authority on July 17 found that CL&P’s response to Tropical Storm Irene in August 2011 and an October 2011 snow storm and the power outages they caused, was “deficient and inadequate.”

Judge said the company has submitted written exceptions and participated in arguments regarding the draft decision, adding that a final order is expected soon.

CL&P will file for recovery of its deferred storm costs, which total about $285m, he said, adding that the recovery will begin on Dec. 1, 2014. “Additionally, we have agreed as part of our merger agreement [with NSTAR], not to recover $40m of those costs and that $40m was among the charges in the second quarter,” he said, adding that CL&P has also agreed to begin a $300m distribution resiliency program.

Update on transmission projects

Northeast Utilities COO and executive vice president Leon Olivier said the company will invest $718m in transmission this year.

He noted that the company made progress in the second quarter on the Greater Springfield Reliability Project, with the project being 75% complete at the end of June.

According to TransmissionHub data, the project is a 39-mile, 345-kV transmission line that begins at New Bloomfield, Conn., and ends at Ludlow, Mass. The project is one of four projects that make up the New England East-West Solution (NEEWS).

“We continue to expect the project to be complete by late 2013 at a cost of $718m,” Olivier said. “Of that sum, nearly $500m was invested as of June of this year.”

He also noted that evidentiary hearings on the Interstate Reliability Project – which is also part of NEEWS – began in June. In July, Northeast Utilities and ISO New England (ISO-NE) filed testimony in Connecticut attesting to the need of the project, he said, adding that project partner National Grid plc subsidiary National Grid USA filed the siting application in Massachusetts in June and in Rhode Island in July.

With these filings, all major permit and siting processes are underway, he said.

“We expect to receive final state approvals for the project by the end of 2013, which would support construction in 2014 and 2015,” he said, adding that CL&P’s share of the project continues to be forecast to be $218m.

According to TransmissionHub data, the project is a 75-mile, 345-kV transmission line that begins at Millbury, Mass., and ends at Card Street, Conn. The National Grid portion of the project will begin in Millbury and travel south through Sutton, Northbridge, Uxbridge and Millville in the vicinity of Route 146 into North Smithfield, R.I. It will then travel west to Burrillville, R.I., and into Connecticut where it will connect to a Northeast Utilities line at Killingly. The Northeast Utilities project is a 38-mile, 345-kV transmission line that begins at Killingly and ends at Card Street, Conn.

Another element of NEEWS, the Central Connecticut Reliability Project, is also moving forward, Olivier said, noting that it is expected that ISO-NE will issue preliminary needs results at this month’s planning and advisory committee meeting.

According to TransmissionHub data, the project is a 36-mile, 345-kV line that begins at Frostbridge, Conn., and ends at North Bloomfield, Conn.

“While the final solutions are not yet known, the widespread concerns across Connecticut identified as part of the [Greater Hartford Central Connecticut] study may require several 115-kV line and related substation upgrades across Connecticut rather than the original Central Connecticut 345-kV line project,” he said.

Olivier said the company continues to make progress on its Northern Pass project, which, according to TransmissionHub data, would involve 140 miles of 300-kV DC and 40 miles of 345-kV AC transmission lines and bring renewable energy from Quebec into New Hampshire to satisfy the need for additional renewable energy in New England.

The company expects to buy the remaining segments and finalize the route in the third quarter, Olivier said, adding that there will be extensive outreach with New Hampshire communities.

“As we begin the community outreach process, the new route will be filed with the U.S. Department of Energy in the fourth quarter of this year,” he said, noting that should support the start of construction in the second half of 2014 and completion by the end of 2016. However, should the process of securing the property continue beyond the end of this quarter, the project completion would move to early 2017, he said.

As for NSTAR Electric, Olivier said Massachusetts Energy Facilities Siting Board approval has been obtained for a new 18-mile, 345-kV line to be built to Cape Cod, Mass., with an Army Corps of Engineers permit expected shortly.

“We expect to begin the construction of [the] $110m project later this quarter and expect to complete it by [the] middle of next year,” he said.

About Corina Rivera-Linares 3286 Articles
Corina Rivera-Linares was TransmissionHub’s chief editor until August 2021, as well as part of the team that established TransmissionHub in 2011. Before joining TransmissionHub, Corina covered renewable energy and environmental issues, as well as transmission, generation, regulation, legislation and ISO/RTO matters at SNL Financial from 2005 to 2011. She has also covered such topics as health, politics, and education for weekly newspapers and national magazines.