Eversource CFO: Transmission investments at four regulated utilities expected to total $950m for 2017

Eversource Energy’s (NYSE:ES) transmission investments in 2016 totaled about $900m, compared to about $800m in 2015, and $700m in 2014, Phil Lembo, Eversource executive vice president, CFO and treasurer, said on Feb. 22 during the company’s 4Q16 earnings call.

“Through Dec. 31, [2016,] we invested $134 in 28 different projects that together comprise the $560m Greater Boston Reliability Solution fleet,” he said. “We expect to conclude the final Greater Boston work in 2019.”

Eversource also invested $117m through 2016 in the Greater Hartford projects, which involve 27 different projects that the company expects to complete in 2018, at a cost of about $350m.

Eversource President and CEO Jim Judge said during the call that the company completed its $2.2bn capital plan for the year in 2016.

Lembo said that while Eversource has moved most of the Northern Pass Transmission project’s construction from 2017 to 2018 and 2019, the company has identified other critical work for this year, resulting in a capital budget for 2017 of $2.71bn, which is consistent and slightly ahead of the $2.66bn estimate for 2017 that Eversource had forecast at this time last year.

“Transmission investments at our four regulated utilities are expected to total $950m for this year, as compared with $609m we had projected a year ago,” Lembo said during the call. “We are forecasting $1.4bn of transmission capital expenditures in 2018, and $1.2bn in 2019. All told, we expect to invest $3.9bn in electric transmission over the next four years.”

The increased capital expenditures in 2017 and 2018 are driven by such items as spending on critical infrastructure protection projects, storm hardening, and various projects related to reliability in terms of line replacement and pole structural changes, he said.

Lembo said that on the electric distribution side, Eversource is projecting investments of about $1.2bn this year, including a $200m investment in solar energy, and about $900m per year from 2018 through 2020.

Of the Northern Pass project, Lee Olivier, Eversource executive vice president – Enterprise Energy Strategy and Business Development, during the call noted that the New Hampshire Site Evaluation Committee (SEC) has set evidentiary hearing dates for the project beginning in April and continuing through July.

“We consider the schedule supportive of the SEC’s stated commitment to issue a final written order no later than Sept. 30, 2017,” he said. “The project also secured a major legal victory on Jan. 31 when the New Hampshire Supreme Court upheld a lower court decision, which found that the state Department of Transportation has exclusive authority to approve construction of utility facilities along and beneath state highways. Project opponents had claimed the utilities were also required to obtain permission of adjacent property owners to construct facilities in the public right of way. This was a very important ruling for the project since 60 miles of undergrounding we have proposed is largely under state and local roads.”

As reported, the project, which would extend about 192 miles from the Canadian border through New Hampshire to southern New England, is comprised of a single circuit 320-kV high voltage direct current (HVDC) transmission line linked to a 345-kV alternating current (AC) transmission line via an HVDC/AC converter terminal located in Franklin, N.H.

Olivier noted that assuming that the project receives a favorable decision from the SEC in September, the company expects to receive U.S. Department of Energy approval before the end of the year.

“With those approvals in hand, we expect to begin construction early in 2018, and for the project to be completed by the end of 2019,” he said. “Our new capital forecast shows capital expenditures associated with Northern Pass of about $680m in 2018, and $800m in 2019.”

Clean energy

Olivier said that the Northern Pass project will be bid into the clean energy request for proposals (RFP) that Massachusetts will run this spring; the RFP is scheduled to be released by April 1.

Legislation signed last August by Massachusetts Gov. Charlie Baker authorizes the state’s electric distribution companies to purchase 9.5 terawatt hours of clean energy, with the full amount contracted by 2022, he said.

“We believe that Northern Pass is very well positioned for this RFP, which specifically allows large hydro to be eligible,” Olivier said.

The same legislation that created the clean energy RFP also requires the state to issue an RFP by the end of June for a minimum of 400 MW of offshore wind, with the full 1,600 MW contracted by 2027, he said.

Judge noted that in December 2016, the company announced the formation of Bay State Wind with DONG Energy to develop an offshore wind energy project.

As reported, the proposed offshore wind farm would be located about 15 miles to 25 miles south of Martha’s Vineyard in an area that has the potential to develop at least 2,000 MW.

Olivier said that the area is attractive because the water depths are relatively shallow and the wind speeds are high and reliable, resulting in high capacity factors, similar to base load generation.

“This is particularly valuable in the winter when electricity is more costly in New England due to our natural gas pipeline constraints,” he said. “We expect that once a winner, or winners, are selected, contracts with Massachusetts electric companies will be filed with the [state Department of Public Utilities, or] DPU in the first half of 2018, with … approvals later in the year. We expect that permitting would take several years, with construction not starting until after 2020.”

As a result, Bay State Wind construction expenditures are not reflected in Eversource’s capital forecast now, he said.

Regulatory matters

Lembo noted that Eversource has filed electric rate reviews with the DPU for NSTAR Electric and Western Massachusetts Electric, and that Eversource has notified the DPU and FERC that it is seeking to legally merge those two companies in 2018.

Eversource’s other general distribution rate review this year will involve Connecticut Light and Power, he said.

He also noted that Eversource continues to have multiple dockets around transmission returns on equity pending at FERC.

“[N]o decision was made on complaints 2 and 3 before” former FERC Chairman Norman Bay left the commission earlier this month, he said, adding, “[S]o, it may be a number of months before these complaints are decided.”

Earnings report

Eversource on Feb. 21 reported full-year 2016 earnings of $942.3m, or $2.96 per share, compared with 2015 earnings of $878.5m, or $2.76 per share.

Eversource said that it earned $229.2m, or 72 cents per share, in 4Q16, compared with earnings of $181.8m, or 57 cents per share, in 4Q15.

About Corina Rivera-Linares 3052 Articles
Corina Rivera-Linares, chief editor for TransmissionHub, has covered the U.S. power industry for the past 15 years. Before joining TransmissionHub, Corina covered renewable energy and environmental issues, as well as transmission, generation, regulation, legislation and ISO/RTO matters at SNL Financial. She has also covered such topics as health, politics, and education for weekly newspapers and national magazines. She can be reached at clinares@endeavorb2b.com.