Eversource Energy’s (NYSE:ES) transmission investments totaled about $559m in the first nine months of 2016, and the company continues to target transmission capital investments of about $910m for the full year, Phil Lembo, Eversource’s executive vice president, CFO and treasurer, said on Nov. 2 during the company’s 3Q16 earnings call.
“[W]e continue to move ahead on our major transmission reliability projects across the system,” he said. “We are making solid progress on our two large families of reliability projects, the Greater Boston Reliability Solution and the Greater Hartford-Central Connecticut solution. Last month, we announced that we had received approval of the Merrimack Valley Reliability Project, our nearly $125m transmission project in New Hampshire and Massachusetts, which we and National Grid are building.”
To date, Eversource has invested $91m in the approximately $565m set of Greater Boston solutions, he said, adding that the company expects to conclude the final Greater Boston work in 2019.
Lembo also noted that during the company’s July earnings call, the company discussed the impact of a nine-month extension of the state review of the Northern Pass transmission project on the company’s 2017 capital budget, and it indicated that other projects are being identified to offset an approximate $600m reduction in projected Northern Pass capex in 2017.
“In July, we noted an additional $200m in transmission reliability projects, about $200m of solar projects in Massachusetts, and $30-$50m of additional investments in our natural gas distribution segment,” he said. “Since then, we’ve identified about $50m of additional transmission reliability projects above the original $200m, and as we move through our 2017 budget process, that could go higher. We’ll continue to evaluate additional opportunities as we move through the next few months and give a complete update during our year-end earnings call.”
Lee Olivier, executive vice president for Enterprise Energy Strategy and Business Development for Eversource, noted during the call that the New Hampshire Public Utilities Commission (NHPUC) in October issued an order authorizing Northern Pass to do business as a New Hampshire utility.
He also noted that the New Hampshire Site Evaluation Committee (SEC) in September and October held more than 20 days of technical sessions on the project, featuring witnesses on topics that included reliability, project construction and historical resources.
“We are very pleased with how well these sessions went overall,” Olivier said. “They were an excellent opportunity for us to demonstrate the thoughtful planning, design and engineering that we have already devoted to this project, and to underscore the significant economic and environmental benefits Northern Pass will provide to the region. The next key milestone is the submission of intervenor testimony in mid-November.”
Reports from the state agencies that are reviewing the project are due to the SEC next March, and the company anticipates the final committee hearings starting in April 2017, he said.
If the SEC issues a written order approving the 192-mile New Hampshire section of Northern Pass in September 2017, the company would expect to receive U.S. Department of Energy approval by the end of that year, he said.
“Based on that schedule, we should be in the position to construct the project during the 2018 and ‘19 timeframe,” he said.
Discussing recent developments involving legislative and regulatory bodies in Massachusetts and New Hampshire, Lembo noted that Massachusetts Gov. Charlie Baker in August signed legislation that requires the state to contract for 1,600 MW of offshore wind energy over the next 11 years (involving solicitations of at least 400 MW a piece). Subsequently, Baker announced that several farms have acquired federal leases to attractive offshore wind sites that are 25 miles to 50 miles south of Cape Cod, he said.
“Massachusetts is clearly positioning itself to be a national leader in offshore wind development,” he said. “We look forward to supporting that effort and believe there will be considerable opportunities for Eversource to build transmission over the coming decade to connect that offshore wind to the electric load.”
The legislation also calls for Massachusetts electric companies to commence competitive solicitations by April 2017 for nearly 9,500 GWh of additional clean energy annually, he said, adding, “[W]e look forward to working with our policymakers on helping to provide the transmission links that will bring that clean energy to Massachusetts consumers.”
Lembo also noted that Eversource’s two bids, which included hydroelectric generation, did not strictly meet the “Class 1” criteria in the clean energy request for proposals (RFP) that recently concluded and was conducted by Massachusetts, Connecticut and Rhode Island.
The RFP’s “selections focused on small-scale renewables, and as a result, neither Northern Pass nor Clean Energy Connect was selected,” he said. “The states chose only 460 MW of Class 1 renewables, about two-thirds of that solar, and one-third wind.”
He added, “We are focusing our efforts on the next round of contracting that is immediately around the corner, that involves solicitations to the nearly 9,500 GWh [and] the Massachusetts legislation explicitly allows large hydroelectric sources to participate. We believe that both Northern Pass and Clean Energy Connect would be excellent candidates for these next solicitations due to their potentially significant impact on lowering carbon emissions.”
Lembo also discussed the current status of various return on equity (ROE) complaints before FERC related to transmission investment in New England.
“The latest development involves the fourth complaint,” which FERC accepted in September and subsequently assigned a settlement judge to the case, he said. “If we do not settle, FERC expects that an order on the complaint would be issued in mid-2018. We continue to record earnings based on our original October 2014 decision in the first complaint, even though that case remains on appeal before the D.C. Circuit Court of Appeals, where oral arguments have been scheduled for” early December.
Eversource on Nov. 1 reported earnings of $265.3m, or 83 cents per share, in 3Q16, compared with earnings of $235.9m, or 74 cents per share, in 3Q15. The company also said that in the first nine months of 2016, it earned $713.1m, or $2.24 per share, compared with earnings of $696.7m, or $2.19 per share, in the first nine months of 2015.
Eversource also said that its transmission segment earned $88.4m in 3Q16 and $266.6m in the first nine months of 2016, compared with earnings of $78m in 3Q15 and $225m in the first nine months of 2015. The improved results for both periods were primarily due to an increased level of investment in the company’s transmission system, as well as the absence in 2016 of a $12.4m 1Q15 charge related to an order issued by FERC concerning the return on equity allowed New England transmission owners, Eversource said.