Eversource 2005 Annual Report Download - page 24

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the process of marketing Woods Electrical to potential buyers and
expects to complete the sale of Woods Electrical during 2006.
NU Enterprises’ two remaining energy services businesses, SECI-CT
and Boulos will be actively marketed during 2006. For further information
regarding these companies, see Note 4, “Assets Held For Sale and
Discontinued Operations,” to the consolidated financial statements.
Business Development and Capital Expenditures
Consolidated: In 2005, NU’s capital expenditures totaled $775.4 million,
compared with depreciation of $235.2 million. In 2004 and 2003, capital
expenditures totaled $671.5 million and $558.1 million, compared with
depreciation of $224.9 million and $204.4 million, respectively. In 2006,
total capital expenditures are projected to approach $900 million. The
increasing level of capital expenditures was caused primarily by a need
to continue to improve the capacity and reliability of NU’s regulated
transmission system. That increased level of capital expenditures,
compared with depreciation levels, also is increasing the amount of
plant in service and the regulated companies’ earnings base, provided
that NU’s Utility Group companies achieve timely recovery of their
investment. Unless otherwise noted, the capital expenditure amounts
below exclude AFUDC.
NU currently forecasts transmission expenditures of up to $2.3 billion
from 2006 through 2010. Those expenditures include $1.3 billion on
the four southwest Connecticut projects as more fully described below,
$0.8 billion of additional transmission projects management expects to
be built, and $0.2 billion on projects that remain in the conceptual phase.
Management forecasts approximately $450 million of transmission
capital expenditures in 2006 and approximately $550 million of
transmission capital expenditures in 2007 and 2008, including AFUDC.
In addition, approximately $2 billion of distribution and generation
projects is currently forecasted from 2006 to 2010, totaling up to
$4.3 billion in total Utility Group capital projects. Capital expenditures
for NU Enterprises are still expected to be modest.
Utility Group:
CL&P: In December of 2003, the DPUC approved a total of $900 million
of distribution capital expenditures for CL&P from 2004 through 2007.
Those expenditures are intended to improve the reliability of the
distribution system and to meet growth requirements on the distribution
system. In 2005, CL&P’s distribution capital expenditures totaled
$236.6 million, compared with $254.7 million in 2004 and $255.9 million
in 2003. In 2006, CL&P projects distribution capital expenditures of
approximately $200 million.
CL&P’stransmission capital expenditures totaled $207.8 million in
2005, compared with $134.6 million in 2004 and $62.6 million in 2003.
The increase in CL&P’stransmission capital expenditures in 2005 was
primarily the result of increased spending on a new 21-mile 345 kilovolt
(kV) transmission project between Bethel, Connecticut and Norwalk,
Connecticut. In 2006, CL&P’stransmission capital expenditures are
projected to total approximately $400 million.
Transmission capital expenditures in Connecticut are focused primarily
on four major transmission projects in southwest Connecticut. These
projects include 1) the Bethel to Norwalk project noted above, 2) a
Middletown to Norwalk 345 kV transmission project, 3) a related 115 kV
underground project (Glenbrook Cables), and 4) the replacement of the
existing 138 kV cable between Connecticut and Long Island. Each of
these projects has received approval from the Connecticut Siting
Council (CSC) and ISO-NE. Capital expenditures for these projects in
southwest Connecticut totaled $156 million (including AFUDC) in 2005
out of the $207.8 million ($257.3 million including AFUDC) in total
transmission and other capital expenditures in 2005.
Underground line construction activities began in April of 2005 on a
21-mile 115 kV/345 kV line project between Bethel and Norwalk, with
overhead line work commencing in September of 2005. The first substation
(Plumtree) was successfully energized on September 23, 2005. The
first 6.2 mile section of 115 kV cable was energized in the fourth quarter
of 2005. This project is expected to cost approximately $350 million of
which CL&P spent $130.7 million (including AFUDC) in 2005. The project
is approximately 70 percent complete and CL&P had capitalized $196
million associated with the project at December 31, 2005. This project
is expected to be completed by the end of 2006.
On April 7, 2005, the CSC unanimously approved a proposal by CL&P
and United Illuminating to build a 69-mile 345 kV transmission line
from Middletown to Norwalk, Connecticut. Approximately 24 miles of
the 345 kV line will be built underground with the balance being built
overhead. The project still requires CSC review of detailed construction
plans, as well as United States Army Corps of Engineers approval to
bury the line beneath certain navigable rivers and Department of
Environmental Protection (DEP) approvals. The CSC decision included
provisions for low-magnetic field designs in certain areas and made
variations to the proposed route. CL&P’s portion of the project is estimated
to cost approximately $1.05 billion. CL&P received final technical
approval from ISO-NE on January 20, 2006 and expects to award the
major construction-related contracts during the second quarter of
2006. CL&P expects the project to be completed by the end of 2009.
Legal review of three appeals related to this project is ongoing. At
this time, CL&P does not expect any of these three appeals to delay
construction. At December 31, 2005, CL&P has capitalized $41 million
associated with this project.
CL&P’s construction of the Glenbrook Cables Project, two 115 kV
underground transmission lines between Norwalk and Stamford,
Connecticut, was approved by the CSC on July 20, 2005 and by ISO-NE
on August 3, 2005. There were no court appeals of the project, which
is expected to cost approximately $120 million and help meet growing
electric demands in the area. Management expects to begin construction
during 2007 and expects the lines to be in service during 2008. At
December 31, 2005, CL&P has capitalized $7 million associated with
this project.
On October 1, 2004, CL&P and the Long Island Power Authority (LIPA)
jointly filed plans with the Connecticut DEP to replace an undersea
13-mile electric transmission line between Norwalk, Connecticut and
Northport – Long Island, New York, consistent with a comprehensive
settlement agreement reached on June 24, 2004. CL&P and LIPA each
own approximately 50 percent of the line. On June 20, 2005, the
New York State Controller’sOfficer and the New York State Attorney
General approved the settlement agreement between CL&P and LIPA
to replace the cable and the project had earlier received CSC approval.
State and federal permits areexpected to be issued in the second
quarter of 2006. Assuming these permits are received by no later than
the second quarter of 2006 and the necessary construction contracts
aresigned, construction activities will begin when material lead times
allow. Management will provide the estimated removal and in service
dates when these construction contracts are signed. At December 31,
2005, CL&P has capitalized $6 million associated with this project.