Eversource’s transmission investments totaled about $170m in 1Q17

Eversource Energy’s (NYSE:ES) transmission investments totaled about $170m in 1Q17, compared to about $140m in 1Q16, and the company continues to target nearly $1bn in transmission investments for the year, Phil Lembo, Eversource executive vice president and CFO, said on May 4.

The company continues to make progress on a number of major transmission reliability projects, he said during the company’s 1Q17 earnings call.

Through March, Eversource has invested just over $146m in 28 projects that comprise the Greater Boston Reliability Solution, he said, adding, “[W]e expect to complete the Greater Boston work in 2019.”

Lembo also noted that Eversource has invested just over $141m in the Greater Hartford projects, which are comprised of 27 smaller projects that are expected to be completed next year.

Also speaking on the call was Lee Olivier, Eversource executive vice president, Enterprise Energy Strategy and Business Development, who noted that the New Hampshire Site Evaluation Committee (SEC) began final evidentiary hearings for the Northern Pass Transmission project in April, and that hearings are scheduled to run through early August.

“We consider the New Hampshire SEC schedule to be supportive of the committee’s stated objective of issuing a final written order no later than Sept. 30, 2017,” he said.

Prior to the start of the hearings, the state Department of Environmental Services and Department of Transportation recommended approval of the project by the SEC, Olivier said, noting that both of those departments approved their respective permits for the project.

“The recommended conditions from these agencies were reasonable and consistent with our design,” he said.

Once the SEC process is complete, and assuming that the project is approved with reasonable conditions, Olivier said that the company expects a U.S. Department of Energy (DOE) presidential permit to be issued by the end of this year.

“Before that point, probably late in the third quarter, we expect the DOE to release its final environmental impact statement on Northern Pass,” he said.

Hydro-Québec has been pursuing siting for the project on the Canadian side, he said, noting that the three-year Canadian process should be completed this summer. As a result, by the end of this year, Eversource expects Northern Pass to be fully permitted in both countries, which supports the company’s plan to move into the construction phase in 1Q18, he said.

In addition, Olivier said that the New Hampshire Public Utilities Commission (NHPUC) in April ruled that it could move ahead with a review of the terms of the Northern Pass Transmission proposed lease of PSNH transmission rights of way. A decision from the NHPUC on the proposed lease terms is expected later this year.

He also discussed the NHPUC’s recent action concerning a power purchase agreement (PPA).

As TransmissionHub reported, the NHPUC in April denied Eversource’s petition for reconsideration regarding the NHPUC’s March 27 order, in which the NHPUC dismissed the company’s petition requesting approval of the proposed PPA.

As noted in the NHPUC’s April 20 order denying the petition, PSNH d/b/a Eversource last June filed the petition for approval of the proposed 20-year PPA between Eversource and Hydro Renewable Energy (HRE), which is an indirect wholly-owned subsidiary of Hydro-Québec.

Under the PPA’s terms, HRE would sell, and Eversource would buy, about 100 MW of firm, on-peak electric energy delivered to Eversource’s Deerfield substation over the proposed Northern Pass Transmission line.

The NHPUC said in its March 27 order that “the proposal cannot be approved because it is inconsistent with New Hampshire law, specifically the Electric Utility Restructuring Statute, RSA Chapter 374-F.”

The NHPUC noted that the company pointed to the recent passage of Senate Bill 128 through the New Hampshire Senate on March 30 as offering the potential, if enacted, for fundamentally changing the law (RSA Chapter 374-F) on which the NHPUC relied when it issued its March order.

According to the text of the bill that is posted on the General Court’s website, Senate Bill 128 modifies electric utility restructuring policy principles by permitting the commission and electric utilities to pursue measures to mitigate the cost of electric service, reduce the price volatility of that service, and reduce the potential for disruptions in electricity supply, subject to the commission’s determination that such measures are in the public interest.

Olivier said during the call that the current legislative session is due to end in late June, and that company “will be watching the progress of this bill closely.”

He noted that Eversource and Hydro-Québec will bid the Northern Pass project into a clean energy request for proposals (RFP) that Massachusetts initiated in late March for up to 9.45 terawatt hours annually for a period of up to 20 years.

Bids are due in late July, and the schedule indicates that the projects will be selected for negotiations by January, he said.

Separately, a draft RFP exclusively for offshore wind energy was recently filed by Massachusetts utilities with the Massachusetts Department of Public Utilities (DPU), he said, adding that the schedule calls for that RFP to be final and issued to the market by June 30. The timeline of the draft RFP calls for the selection of the winning bids by spring 2018, and the submission of contracts to the DPU by late 2018, he said.

Bay State Wind, a 50/50 partnership between Eversource and DONG Energy, will bid into that RFP, Olivier said.

Regulatory activity

Discussing regulatory activity, Lembo noted, for instance, that hearings will begin in June on the electric rate reviews that were filed in January with the DPU for NSTAR Electric and Western Massachusetts Electric Company (WMECO).

As noted in the company’s earnings presentation, NSTAR and WMECO filed applications to raise base distribution rates by $60m and $36m, respectively.

“[W]e expect to get a decision on the case around the end of November, with new rates effective in January of ’18,” Lembo said.

One of the items included in the case “is to legally combine NSTAR Electric and Western Mass. Electric,” he said. “FERC approved that combination earlier this year, and we hope to receive DPU approval later this year in our rate case.”

Lembo also discussed the recent action by the United States Court of Appeals for the District of Columbia Circuit to vacate “FERC’s 2014 order that lowered the base New England transmission ROE from 11.14% to 10.57%.”

He added, “We continue to review the implementation of this decision with the other New England Transmission Owners.”

As TransmissionHub reported, the court, in an April 14 opinion, granted petitions for review – filed by the New England Transmission Owners, as well as “Petitioners Massachusetts and various consumer-side stakeholders” (referred to as customers) – regarding the base ROE for the Transmission Owners, which are a group of privately owned utilities that provide transmission services in New England.

Lembo noted that “FERC must still address the [administrative law judge, or] ALJ recommendations received in 2016 in the second and third ROE complaints. On the fourth complaint, FERC’s chief administrative law judge has scheduled arguments for May 18 on why FERC should not just dismiss the complaints in light of the Circuit Court of Appeals decision.”

He noted that FERC likely will not be able to address any of the complaints until after the commission has a quorum.

“The transmission earnings we provided today were based on the commission’s original decision in the first complaint,” Lembo said. “We’ll continue to evaluate whether this is the appropriate assumption as we move through the second quarter.”

As TransmissionHub reported, FERC Commissioner Colette Honorable on April 28 said that she has decided not to pursue another term at FERC. Former FERC Chairman Norman Bay resigned, effective as of Feb. 3, and prior to his resignation, there were already two vacancies at FERC, following the departures of former Commissioners Philip Moeller and Tony Clark. A FERC spokesperson on May 1 confirmed to TransmissionHub that if someone is not appointed to serve on the commission before Honorable leaves, it will be the first time in FERC’s history that the commission has only one commissioner – in this case, FERC Acting Chairman Cheryl LaFleur.

Earnings report

Eversource on May 3 reported 1Q17 earnings of $259.5m, or 82 cents per share, compared with earnings of $244.2m, or 77 cents per share, in 1Q16.

The company also said that its transmission segment earned $94.2m in 1Q17, compared with earnings of $85.7m in 1Q16. Higher transmission earnings were primarily due to Eversource Energy’s additional investment in its electric transmission system, the company said.

About Corina Rivera-Linares 3056 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.