Eversource 2009 Annual Report Download - page 17

9
Wholesale Transmission Rates
Wholesale transmission revenues are based on formula rates that are approved by the FERC. A significant portion of our transmission
revenues comes from ISO-NE charges to the distribution segments of CL&P, PSNH and WMECO which are collected under ISO-NE’s
FERC Electric Tariff No. 3, Transmission, Markets and Services Tariff (Tariff No. 3). Tariff No. 3 includes the Regional Network Service
(RNS) and Schedule 21 - NU rate schedules to recover costs of transmission and other transmission-related services. The RNS rate,
administered by ISO-NE and billed to all New England transmission users, including CL&P, PSNH, and WMECO's transmission
businesses, is reset on June 1st of each year and recovers the revenue requirements associated with transmission facilities that benefit
the entire New England region. The Schedule 21 - NU rate, administered by NU, is reset on January 1st and June 1st of each year and
recovers the revenue requirements for local transmission facilities and other transmission costs not recovered under the RNS rate,
including 100 percent of the construction work in progress (CWIP) that is included in rate base on the New England East-West Solutions
(NEEWS) projects. The Schedule 21 - NU rate calculation recovers total transmission revenue requirements net of revenues received
from other sources (i.e., RNS, rentals, etc.), thereby ensuring that NU recovers all regional and local revenue requirements as
prescribed in Tariff No. 3. Both the RNS and Schedule 21 - NU rates provide for annual true-ups to actual costs. The financial impacts
of differences between actual and projected costs are deferred for future recovery from or refunded to customers.
FERC ROE Decision
Pursuant to a series of orders issued in 2008, FERC set the base ROE for New England transmission projects at 11.14 percent and
provided for certain incentives which could increase the ROE to 13.1 percent. As a result CL&P earns between 12.64 percent and
13.1 percent on its major transmission projects completed by the end of 2008. Certain state regulators and municipal utilities had
sought rehearing which was denied by FERC. Connecticut state regulators appealed the order to the D.C. Circuit Court of Appeals
which appeal was denied on January 29, 2010.
On November 17, 2008, the FERC issued an order granting certain incentives and rate amendments to National Grid USA (National
Grid) and us for certain components of the proposed NEEWS projects. The approved incentives included (1) an ROE of 12.89 percent;
(2) inclusion of 100 percent CWIP costs in rate base; and (3) full recovery of prudently incurred costs if any portion of NEEWS is
abandoned for reasons beyond our control. Our portion of the components that received these incentives is estimated to cost
approximately $1.41 billion of our $1.49 billion share of the total NEEWS projects. Several parties have sought rehearing of this FERC
order on which FERC has not yet acted.
Transmission Projects
NEEWS
In October 2008, CL&P and WMECO made state siting filings with the Connecticut Siting Council (CSC) in Connecticut and the Energy
Facilities Siting Board (EFSB) in Massachusetts, respectively, for the first and largest component of our New England East-West
Solutions (NEEWS) project, the Greater Springfield Reliability Project (GSRP). In October 2009, ISO-NE affirmed the need and need
date for GSRP. In Connecticut, hearings have been completed and final briefs were filed in mid-January 2010 with the CSC. We
believe a final decision may be received from the CSC as early as March 2010. In Massachusetts, hearings were completed in mid-
February 2010 with final briefs expected to be filed in the spring. We expect to receive a final decision from the EFSB in the third
quarter of 2010. GSRP, which involves the construction of a 115 kilovolt (KV)/345 KV line from Ludlow, Massachusetts to Bloomfield,
Connecticut, is the largest and most complicated project within NEEWS and is expected to cost approximately $714 million if built
according to our preferred route configuration. Following decisions from the state siting boards, we expect to commence construction in
late 2010 and to place the project in service in 2013.
Our second major NEEWS project is the Interstate Reliability Project, which is being designed and built in coordination with National
Grid USA. CL&P's share of this project includes an approximately 40-mile 345 KV line from Lebanon, Connecticut to the Connecticut-
Rhode Island border where it would connect with enhancements National Grid USA is designing. We estimate CL&P's share of the
costs of this project will be approximately $250 million. Municipal consultations concluded in November 2008, and CL&P plans to file its
siting application with Connecticut regulators later in 2010, following the completion of ISO-NE’s reassessment of the need date and
issuance of its regional system plan. We currently expect the project to be placed in service in 2014.
The third major part of NEEWS is the Central Connecticut Reliability Project, which involves construction of a new line from Bloomfield,
Connecticut to Watertown, Connecticut. This line would provide us with another 345 KV connection to move power across the state of
Connecticut. The timing of this project would be six to twelve months behind the Interstate Reliability Project. This project is currently
expected to cost approximately $315 million.
ISO-NE is currently performing an evaluation of all projects in its regional system plan, including the Interstate Reliability Project and the
Central Connecticut Reliability Project, and assessing the presently estimated need dates for these projects. We expect ISO-NE’s view
on need dates for the second and third major NEEWS projects to be updated in the next version of the regional system plan, which we
expect to see as a draft during the third quarter of 2010.
Included as part of NEEWS are approximately $211 million of associated reliability related expenditures for projects, over $50 million of
which are moving forward through the siting and construction phases and are expected to be completed in advance of the three major
projects.