Eversource Energy’s (NYSE:ES) NSTAR Electric Company, in a July 8 application filed with FERC, requested authorization to acquire by sale certain limited jurisdictional transmission facilities from the Town of Belmont, Mass., acting by and through its Municipal Light Department (Belmont).
NSTAR said that it intends to turn the facilities that it proposes to acquire over to the operational authority of ISO New England (ISO-NE) for the transmission of electric energy in interstate commerce.
The company also said that its proposed acquisition would have no adverse effect on competition, rates or regulation. Furthermore, the proposed transaction would not result in the cross-subsidization of a non-utility associate company or the pledge or encumbrance of utility assets for the benefit of an affiliate company. The company also said that the proposed transaction is consistent with the public interest and should be approved.
NSTAR requested that FERC authorize the proposed acquisition by Oct. 8.
Belmont, which is an existing transmission customer of NSTAR, desires to be directly connected to the high voltage ISO-NE-operated backbone transmission system in order to accommodate Belmont’s current demand and expected future increases to its electrical delivery requirements.
NSTAR also said that the parties entered into a joint development agreement (JDA) in May 2013 that provides for Belmont to design and build a new transmission to distribution 115-kV/13.8-kV substation within the town of Belmont. The substation would be interconnected to an existing 115-kV transmission line that is owned by NSTAR and operated by ISO-NE. NSTAR added that in order for Belmont to avoid becoming a transmission owner, the JDA provides that NSTAR would purchase the transmission interconnection portion of the project, defined as the “transmission project,” after the facilities are tested, but before commissioning.
The cost of the transmission project is estimated to be $71.1m, NSTAR said, adding that it and Belmont have jointly filed with ISO-NE to obtain approval to recover the cost of the transmission project through Regional Network Service (RNS) rates.
The substation would interconnect, via the addition of about one-half mile of underground 115-kV transmission line, to the existing 115-kV transmission line No. 329-530, running between NSTAR’s North Cambridge substation No. 509 and NSTAR’s Brighton substation No. 329. NSTAR added that the connection to line No. 329-530 would be within the fence of Station 509.
The transmission project was identified as the solution that best met Belmont’s needs and had the lowest total cost, NSTAR said. ISO-NE in April 2015 approved the proposed plan application for the transmission project, finding that the project would not have a significant adverse effect on the reliability or operating characteristics of the transmission system.
NSTAR also noted that if ISO-NE grants the parties’ request for regional cost recovery, the transmission project costs would be included in the RNS, and Belmont, which is a customer taking transmission service as load “directly connected to PTF,” would continue to pay RNS rates for its load ratio of New England’s regional transmission system costs, but would no longer require transmission service from NSTAR under the TSA.
The JDA contemplates the possibility that some or all of the transmission project might not qualify for regional rate treatment, NSTAR said. In such an event, the agreement provides alternative, agreed-upon arrangements for NSTAR’s transmission project cost recovery for any portion of the project costs deemed “local costs” by ISO-NE, and Belmont’s arrangements for local transmission service from NSTAR if the application of NSTAR and Belmont for RNS cost recovery is not granted.
Among other things, NSTAR also said that the proposed transaction provides compensating benefits by providing Belmont with access to increased electricity supply through higher voltage transmission facilities than the lower voltage distribution facilities that currently exist to supply its retail customers.
Additionally, NSTAR said, the proposed transaction would allow Belmont and other transmission customers to be served by pool-planned transmission facilities that would be built at a lower cost than if NSTAR financed and built the transmission project, while relieving Belmont of the obligations of a transmission owner under ISO-NE, FERC and NERC compliance requirements.
NSTAR also noted that it commits that it would not collect in its transmission revenue requirements the transaction costs associated with the proposed transaction for five years, except to the extent that NSTAR can demonstrate that transaction-related savings equal or exceed all of the transaction-related costs.