Eversource 2006 Annual Report Download - page 26

24 NU 2006 ANNUAL REPORT
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.
CL&P’s portion of the project is estimated to cost $72 million. Final
permits are expected by mid-2007 with marine construction activities
commencing in October of 2007. The project in-service date is
expected to be in 2008. At December 31, 2006, CL&P has capitalized
$16.9 million associated with this project.
In 2006, CL&P completed construction of a new substation in Killingly,
Connecticut, which will improve CL&P’s 345 KV and 115 KV transmission
systems in northeast Connecticut. At December 31, 2006, CL&P has
capitalized $25.9 million associated with this project and estimates the
final cost to be approximately $29 million, $3 million below the budget
of $32 million.
As part of a larger regional system plan, NU, ISO-NE and National Grid
have begun planning upgrades to the transmission system connecting
Massachusetts, Rhode Island and Connecticut in a comprehensive
study called the Southern New England Transmission Reinforcement
(SNETR) Project. That study has led to the identification of three
interdependent NU projects that work together to address the region’s
transmission needs: the Greater Springfield Reliability Project, the
Central Connecticut Reliability Project, and the InterstateReliability
Project. Together, these three projects, along with National Grid’s
Rhode Island Reliability Project, are referred to as the New England
East-WestSolution (NEEWS). NU and National Grid havenot yet
completed a detailed estimate of the total cost for these upgrades, but
NU estimates that its share of these projects may range from $1.1 billion
to$1.4 billion of which approximately$710 million is included in its
$2.5 billion 2007 through 2011 capital budget. NU and National Grid
have entered into a formal agreement to plan and permit these projects.
Distribution and Generation: In December of 2003, the DPUC approved
in rates $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 2006, CL&P’s distribution capital expenditures
were $210.3 million, compared with $254.6 million in 2005 and $254.8
million in 2004. In 2007, CL&P projects an increase in distribution capital
expenditures to $270 million.
In 2006, PSNH’s distribution capital expenditures totaled $77.5 million,
compared with $73.6 million in 2005 and $84.4 million in 2004. PSNH’s
generation capital expenditures were $32.1 million in 2006, compared
with $70 million in 2005 and $36.2 million in 2004. In 2007, PSNH’s
distribution capital expenditures are expected to be $91 million and its
generation capital expenditures are expected to be $37 million. The
increase in distribution capital expenditures is due to additional
reliability spending. The decline in generation capital expenditures
projected for 2007 is due to the completion in 2006 of the Northern
Wood Power Project. The project became operational on December 1,
2006. The total cost was on budget at approximately $74 million.
Under the terms of the order issued by the NHPUC approving the
Northern Wood Power Project, the costs of the project are subject to a
prudence review by the NHPUC, and the cost of the project was
capped at $75 million with PSNH and its customers each sharing half
of any overrun. While the project’s cost was approximately $74 million
and PSNH’s actions during the construction of the project have been
prudent and consistent with industry practices, PSNH is unable to
determine the impact, if any, of the NHPUC’s prudence review on
PSNH’s earnings, financial position or cash flows.
In 2006, WMECO’s distribution capital expenditures were $30 million,
compared with $32.4 million in 2005 and $32.1 million in 2004. In 2007,
WMECO projects distribution capital expenditures of approximately
$34 million.
In 2006, Yankee Gas’ capital expenditures were $89.9 million, compared
with $78.5 million in 2005 and $62 million in 2004. Yankee Gas is
constructing an LNG storage and production facility in Waterbury,
Connecticut, which will be capable of storing the equivalent of 1.2 billion
cubic feet of natural gas. Construction of the facility began in March of
2005 and is expected to be put in service by mid-2007 in time for the
2007/2008 heating season. At December 31, 2006, the facility, which is
expected to cost $108 million, is 89 percent complete and Yankee Gas
had capitalized $95.3 million related to this project. In its order approving
the construction of the LNG facility, the DPUC viewed construction of
the LNG facility as reasonable in light of expected increases in peak
capacity demand and market uncertainties. The DPUC will review the
LNG expenditures as part of Yankee Gas’ 2007 rate case.
The LNG project represented approximately 54 percent of Yankee Gas’
capital expenditures in 2006. In 2007, Yankee Gas projects total capital
expenditures of approximately $62 million. The decline is attributable
to the expected completion of the LNG facility.
Asummary of projected year end distribution and generation rate base
by Utility Group company is as follows (millions of dollars):
Year
2007 2008 2009 2010 2011
CL&P $1,964 $2,083 $2,220 $2,359 $2,466
PSNH 974 1,092 1,153 1,225 1,293
WMECO 367 388 406 422 436
Yankee Gas 646 655 656 669 679
Totals $3,951 $4,218 $4,435 $4,675 $4,874
Several factors may impact the Utility Group distribution and generation
rate base amounts above, including the level and timing of capital
expenditures and plant placed in service, regulatory approval of rate
increases and other factors.