Eversource 2009 Annual Report Download - page 18

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We estimate that CL&P's and WMECO's total capital expenditures for NEEWS will be $1.49 billion. Our current capital expenditure and
rate base forecasts assume that all NEEWS projects are completed by the end of 2014. However, the timing and amount of our
projected annual capital spending could be affected if receipt of siting approvals is delayed or if the need dates for these projects
change through ISO-NE's regional system planning process. During the siting approval process, state regulators may require changes
in configuration (including placing some lines underground) to address local concerns that could increase construction costs. Our
current design for NEEWS does not contemplate any underground lines. Building any lines underground, particularly 345 KV lines,
would increase total costs of the project beyond our current projections.
HQ Tie Line Project
NU and NSTAR, a major Massachusetts utility that serves the greater Boston area, are jointly planning a new, participant-funded, high
voltage direct current transmission line from New Hampshire to Canada (HQ tie line project) where it will interconnect with a
transmission line being planned by Hydro-Québec (HQ), a large Canadian utility. Under the proposed arrangement, NU and NSTAR
would sell to HQ 1,200 MW of firm electric transmission service over the HQ tie line project in order for HQ to sell and deliver this same
amount of firm electric power from Canadian low-carbon energy resources to New England. FERC granted approval of the HQ tie line
project structure in May 2009.
We have made significant progress in the design of the HQ tie line project and reached conceptual agreement in the development of
Transmission Services Agreement (TSA) with HQ. There are several routing options still under technical review and we expect to
resolve them by the end of the first half of 2010. We anticipate that we will be filing the TSA with FERC, which will regulate the tariff
charges under the TSA, and the project design with ISO-NE for technical review by mid-2010. In addition, there are a number of state
and Federal permits that will be required to site the HQ tie line project and we anticipate filing those applications in 2010 as well.
Though contingent on timely siting approvals, we currently expect to begin construction of the line in 2012 and have power flowing in
2015 (which coincides with HQ’s planned completion of several new hydro-electric facilities). We estimate NU's share of this project to
be $675 million.
In addition, we have started to negotiate a long term power purchase agreement with HQ for power flows over the HQ tie line project.
Our intention is to create a power purchase agreement structure that could be offered to other load serving entities in addition to NU
and NSTAR. Power purchase agreement terms will be subject to state regulatory approvals and critical to winning state policy maker
support for the HQ tie line project. We anticipate these agreements to be filed in 2010 as well.
Transmission Rate Base
Under our FERC-approved tariff, transmission projects enter rate base once they are placed in commercial operation. Additionally,
100 percent of the NEEWS projects will enter rate base during their construction period. At the end of 2009, our transmission rate base
was approximately $2.6 billion, including approximately $2.1 billion at CL&P, $315 million at PSNH and $183 million at WMECO. We
forecast that our total transmission rate base will grow to approximately $4.67 billion by the end of 2014. This increase in transmission
rate base is driven by the need to improve the capacity and reliability of our regulated transmission system and the construction of the
HQ tie line project.
Based on the 2009 actual and 2010 through 2014 projected capital expenditures, our 2009 actual and 2010 through 2014 projected
transmission rate base as of December 31 of each year are as follows:
As of December 31,
(Millions of Dollars) 2009 2010 2011 2012 2013 2014
CL&P transmission $ 2,099 $ 2,105 $ 2,134 $ 2,318 $ 2,545 $ 2,563
PSNH transmission 315 335 433 530 608 584
WMECO transmission 183 240 429 665 889 851
HQ tie line Project - - - - - 675
Total transmission $ 2,597 $ 2,680 $ 2,996 $ 3,513 $ 4,042 $ 4,673
The projected rate base amounts reflected above assume our projected capital expenditures occur as planned, including capital
expenditures of $1.49 billion for CL&P and WMECO in the NEEWS program. Capital expenditures could vary from the projected
amounts for the companies and periods above. The continuation of weak economic conditions in the Northeast could impact the timing
of our major transmission projects. Most of these capital investment projections, including those for the HQ tie line project, assume
timely regulatory approval, which in some cases requires extensive review. Delays in or denials of those approvals could reduce the
levels of expenditures and associated rate base projections. For more information regarding Regulated Transmission matters, see
"Transmission Rate Matters and FERC Regulatory Issues" and "Business Development and Capital Expenditures" under Item 7,
Management's Discussion and Analysis of Financial Condition and Results of Operations contained in this Annual Report on Form 10-
K.
CONSTRUCTION AND CAPITAL IMPROVEMENT PROGRAM
The principal focus of our construction and capital improvement program is maintaining, upgrading and expanding our existing electric
generation, transmission and distribution systems and our natural gas distribution system. Our consolidated capital expenditures in
2009, including amounts incurred but not paid, cost of removal, allowance for funds used during construction and the capitalized portion