Eversource 2009 Annual Report Download - page 44

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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 those reflected above. Since inception of NEEWS through December 31, 2009, CL&P
and WMECO have capitalized approximately $67.5 million and $74.3 million, respectively, in costs associated with NEEWS, of which
$34.2 million and $40 million, respectively, were capitalized in 2009.
NU and NSTAR are jointly planning a new, participant-funded, HVDC 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.
The FERC granted approval of the HQ tie line project structure on May 22, 2009.
We have made significant progress in the design of the HQ tie line project and reached conceptual agreement in the development of a
Transmission Service 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 the 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.
Distribution Segment: Distribution segment capital expenditures increased by $73.6 million in 2009, as compared with 2008, due
primarily to increased generation business capital expenditures at PSNH related to its Clean Air Project and the absence in 2009 of a
$17.5 million capital cost recovery by Yankee Gas related to a legal settlement in February 2008. A summary of distribution segment
capital expenditures by company for 2009, 2008 and 2007 is as follows:
For the Years Ended December 31,
(Millions of Dollars) 2009 2008 2007
CL&P $ 283.0 $ 296.6 $ 283.3
PSNH 98.8 98.2 88.3
WMECO 37.7 37.8 34.0
Totals - electric distribution (excluding generation) 419.5 432.6 405.6
Yankee Gas 59.6 44.0 63.7
Other 0.6 0.5 0.4
Total distribution 479.7 477.1 469.7
PSNH generation 145.0 74.0 35.3
Total distribution segment $ 624.7 $ 551.1 $ 505.0
PSNH's Clean Air Project is a $457 million wet scrubber project at its Merrimack coal station, the cost of which will be recovered through
PSNH's default energy service (ES) rates under New Hampshire law. Construction is expected to be under budget and completed in
mid-2012. Since inception of the project, PSNH has capitalized approximately $146.8 million associated with this project, of which
$119.3 million was capitalized in 2009. Construction of the project was approximately 34 percent complete as of December 31, 2009.
On January 6, 2010, the DPUC issued a decision approving Yankee Gas' request to sell its four remaining propane plants that were
used to supply gas during peak periods. As a result, in order to meet future supply needs during peak periods, Yankee Gas has
initiated a project to construct 16 miles of main gas pipeline between Waterbury, Connecticut and Wallingford, Connecticut and an
expansion of the Yankee Gas liquefied natural gas (LNG) plant's vaporization output (collectively, the WWL project), which are
estimated to cost $67 million. The WWL Project will connect the LNG storage facility, which is located in Waterbury, Connecticut and is
capable of storing the equivalent of 1.2 bcf of natural gas, to areas with growing demand. This project is scheduled to begin
construction in the second quarter of 2010 and completed by late 2011. In 2009, Yankee Gas capitalized $0.8 million associated with
this project.
Strategic Initiatives: We continue to evaluate certain development projects, some of which would benefit our customers, such as
investments in AMI systems and other projects that are detailed below:
Over the past two years, we have participated in discussions with other utilities, policymakers, and prospective developers of renewable
energy projects in the New England region regarding a framework whereby renewable power projects built in rural areas of northern
New England could be connected to the electric load centers of New England. We believe there are significant opportunities for
developers to build wind and biomass projects in northern New England that could help the region meet its renewable portfolio