Hurricane Sandy, which landed near Atlantic City, N.J., on Oct. 29 as a post-tropical cyclone, was an “epic storm” that caused “unprecedented damage,” Northeast Utilities (NYSE:NU) President and CEO Thomas May said on Nov. 13 in a webcast presentation from the 2012 Edison Electric Institute (EEI) Financial Conference.
“We still have crews in New Jersey and New York that are working on this,” he said, adding, “[I]t’s just an incredibly devastating experience.”
The storm hit New Jersey, New York and southern Connecticut pretty badly, he said, adding that about 1.5 million of the company’s customers lost power.
“This isn’t just about restoration,” he said. “I’ve seen the pictures – I’ve seen it in person. It really is rebuilding an infrastructure.”
May said that like any storm, there are two parts to it: the restoration part and the information part, that is, keeping people informed of the company’s progress.
“People don’t like to be in the dark, literally or figuratively,” he said.
While the company experienced criticism a year ago regarding its storm response, “the universal result of this one was praise,” he said. “I got calls from all three governors in New Hampshire, Connecticut and Massachusetts, praising us [and] thanking us for the great job we did.”
The company’s employees and contractors worked to restore power in New Hampshire in about 2.5 days, followed with restoration efforts in southwest Connecticut. “We then wrapped up in western Massachusetts and in eastern Massachusetts in about three days and again sent all contractors and own…crews down to the devastation,” May said.
“We had over 1,200 crews working at the end of last week in southwest Connecticut, probably more than they had in New York State, so we were really proud of what we were able to accomplish,” he said.
The ‘gas bubble’
May addressed the “gas bubble and the resulting low prices,” adding that “everyone in our region of the country in the Northeast is scrambling to find new gas supply.”
He said Connecticut became the first state to really target a major infrastructure improvement in gas distribution systems through the recently announced comprehensive energy strategy, which Gov. Dannel Malloy unveiled on Oct. 5.
“[Malloy] wants to increase the penetration or the use of natural gas from the current 31% of our homes and businesses that use it to 60[%] to 70%, so it’s a pretty dramatic shift,” May said, adding that is the right thing to do as it will help the economy and affect the state’s carbon footprint.
“I do believe that other states, after seeing this, will follow in the footsteps – of course, I hope one of those is Massachusetts,” he said.
Without any changes in energy policy, the company expects about 74,000 new gas customers over the next 10 years, which would grow NU’s business by about 15%.
“That would be about a $40m a year investment in capital,” May said.
Under Malloy’s plan, the scenario represents about 89,000 new customers or “in total, 163,000 customers over this period of time, which would be a 33% increase in our gas business over that 10-year period,” he said.
In addition to its two major components – reducing natural gas prices and expanding efficiency programs – the plan considers raising Connecticut’s current 20% by 2020 renewable portfolio standard and expanding the resource mix of its power portfolio.
Optimism from merger
May said that by merging with NSTAR, “we have the size and scale that, we think, allows us to accomplish a lot more than we could had we stayed independent.”
The company has a customer base of 3.5 million customers throughout New England.
With the merger, “I believe we can create shareholder value at a greater rate than our industry peers and we can outperform just about everybody…around us, so we’re pretty optimistic about the future,” he said.
On Nov. 1, the company reported 3Q12 earnings of $207.6m, or 66 cents per share, compared with earnings of $90m, or 51 cents per share in 3Q11.