Northeast Utilities (NYSE:NU) continues to project $636m in transmission capital expenditures this year, and has invested about $262m in transmission facilities over the first half of the year, according to Leon Olivier, Northeast Utilities executive vice president and COO.
During the company’s 2Q13 earnings webcast on July 30, Olivier also noted that the company’s distribution system has held up well this summer despite the repeated heat waves in late June and early July.
“On the distribution side, we invested $300m in our electric distribution system,” he said, adding “We continue to expect to invest approximately $670m on our electric distribution infrastructure in 2013.”
Olivier presented an update on various major transmission projects, including the Northern Pass project.
In June, Northeast Utilities announced a new route for the northernmost 40-mile section of the Northern Pass transmission project, Olivier said, noting that the company worked on the new route for more than two years.
“This northernmost section of the new route has about 32 miles of overhead line on new rights of way that we either own or have under lease, and approximately eight miles of underground,” he said. “As a result of the underground work and other changes to the structure configuration, we have raised the project’s cost estimate to $1.4bn. The new preferred route addresses many of the concerns that have been raised about the project with the two underground sections, lower structures and heights and a route that takes the project well to the east of our earlier route.”
The company has significantly reduced the potential for visual impact, he said, adding that the number of properties that would have overhead lines has been reduced to 31 from 186. Also, areas with new overhead lines are now located in generally more remote terrain and use natural topography to help with visual screening.
The company filed an amended application with the U.S. Department of Energy (DOE) on July 1.
“We expect the DOE to hold scoping meetings this fall,” he said, adding that the meetings will offer the public the opportunity to comment on the project and will be in addition to the company’s own open house forums, which begin next week in the northernmost area of the project and will eventually cover towns all along the route.
DOE will now continue to work on the draft environmental impact statement for the project, which, when completed, the company will use as part of its siting application with the New Hampshire Site Evaluation Committee.
“Our plan has both the state and federal permitting processes complete by mid-2015,” he said. “On that schedule, we expect to bring the project into service around mid-2017.”
The company expects the project will lower New England energy costs by $200m to $300m annually. Since Hydro-Québec is almost exclusively a hydroelectric system, the project is also expected to reduce the region’s carbon dioxide emissions by up to five million tons per year.
Furthermore, the company expects the project will increase property tax revenue in New Hampshire, in the project host communities, by about $28m per year, Olivier added.
Effective on Aug. 1, Gary Long will move from his position as president of Public Service of New Hampshire (PSNH) to work full time on the Northern Pass and other renewable energy initiatives, Olivier said.
He also discussed the New England East-West Solution (NEEWS) family of projects, noting, for instance, that the Greater Springfield Reliability Project is now about 97% complete, with the new 345-kV line operating “flawlessly this summer, providing significant support for the reliable movement of power in southern New England.”
He said the company continues to project the 115-kV sections of the project and remaining station work will be completed later this year. “We expect the project will come in approximately 5% below its $718m budget,” he said. According to TransmissionHub data, the 39-mile, 345-kV transmission line begins in North Bloomfield, Conn., and ends in Ludlow, Mass. The project will cost $718m, and construction is set to complete late this year. The project involves 35 miles of 345-kV and four miles of 115-kV lines. The project, which will ensure reliability and reduce energy costs, includes three major substations and two switching stations.
Northeast Utilities also cleared a significant milestone last month with another major component of NEEWS, the three-state Interstate Reliability Project (IRP).
Rhode Island siting regulators approved the project, “meaning that we and National Grid [USA] now have two of the three state siting permits we need to start construction,” he said, noting that the Connecticut Siting Council approved the Connecticut aspect of IRP in January.
The final siting approval is in Massachusetts. Hearings on the need for the project will begin in about two weeks and are scheduled to conclude by the end of August, he said.
“We expect to receive Massachusetts approval by the end of this year or early 2014,” he said. “We expect to commence substation construction in Connecticut in late 2013 or early 2014, and line work in mid-2014. Our section is still expected to cost $218m.” According to TransmissionHub data, the IRP is a 75-mile, 345-kV transmission line that originates at Millbury, Massachusetts and terminates at Card Street, Conn. The National Grid portion of the project will begin in Millbury, Massachusetts and travel south through Sutton, Northbridge, Uxbridge and Millville in the vicinity of Route 146 into North Smithfield, Rhode Island. It will then travel west to Burrillville, Rhode Island 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 originates at Killingly and terminates at Card Street, Conn.
National Grid is a subsidiary of National Grid plc.
Olivier said that ISO New England has completed the needs assessment involving another NEEWS project, the Central Connecticut Reliability Project and has found severe thermal and voltage violations on several 115-kV lines within and across the four areas in Connecticut under study. “ISO New England continues to work on the preferred solutions being designed to correct these violations and … those [will be] ready for stakeholder review before the end of the first quarter in 2014,” he said.
According to TransmissionHub data, the Central Connecticut Reliability Project is a 36-mile, 345-kV transmission line, originating at Frostbridge, Conn., and terminating at North Bloomfield, Conn.
Olivier said that through such efforts as the Greater Springfield Reliability Project, the Middletown to Norwalk project that was completed in 2008, and the Bethel project completed in 2006, Northeast Utilities has “dramatically improved the reliability of the region’s bulk power infrastructure. Altogether, our major transmission projects have saved Connecticut customers more than $1bn of congestion, reliability-must-run and other related charges since our first major project entered service in 2006.”
Despite the retirement of older fossil fuel plants in the state, congestion costs during extremely hot weather this month were minimal in Connecticut thanks to the transmission upgrades, he said.
Olivier also noted that NSTAR Electric’s 345-kV Lower SEMA link to Cape Cod, Mass., was energized at the end of June, on schedule and on time for the heavy summer heat loads. The project will lower congestion costs for customers.
According to TransmissionHub data, the project is an 18-mile, 345-kV transmission line that originates at Carver and terminates at Bourne, Mass. The line runs from the Carver substation southeast along an existing NSTAR right of way, cross the Cape Cod Canal and tie into an existing line (Line #120) in the vicinity of the Bourne switching station.
Northeast Utilities on July 29 reported earnings of $171m, or 54 cents per share, in 2Q13, compared with earnings of $44.3m, or 15 cents per share, in 2Q12. The company also said that 2Q12 results included approximately $91.5m, or 30 cents per share, of after-tax charges related to the April 10, 2012 closing of the merger between Northeast Utilities and NSTAR and related merger and regulatory settlement agreements.
In the first half of 2013, Northeast Utilities earned $399.1m, or $1.26 per share, compared with earnings of $143.6m, or 60 cents per share, in the first half of 2012. Excluding merger and related settlement costs of $92.6m, or 38 cents per share, Northeast Utilities earned $236.2m, or 98 cents per share, in the first half of 2012, the company added.