Eversource 2013 Annual Report Download - page 32

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Our transmission, distribution and generation systems may not operate as expected, and could require unplanned
expenditures, which could adversely affect our financial position, results of operations and cash flows.
Our ability to properly operate our transmission, distribution and generation systems is critical to the financial performance of our
business. Our transmission, distribution and generation businesses face several operational risks, including the breakdown or failure of
or damage to equipment or processes (especially due to age); labor disputes; disruptions in the delivery of electricity and natural gas,
including impacts on us or our customers; increased capital expenditure requirements, including those due to environmental regulation;
information security risk, such as a breach of our systems on which sensitive utility customer data and account information are stored;
catastrophic events such as fires, explosions, or other similar occurrences; extreme weather conditions beyond equipment and plant
design capacity; other unanticipated operations and maintenance expenses and liabilities; and potential claims for property damage or
personal injuries beyond the scope of our insurance coverage. The failure of our transmission, distribution and generation systems to
operate as planned may result in increased capital costs, reduced earnings or unplanned increases in operation and maintenance
costs. At PSNH, outages at generating stations may be deemed imprudent by the NHPUC resulting in disallowance of replacement
power costs. Such costs that are not recoverable from our customers would have an adverse effect on our financial position, results of
operations and cash flows.
Limits on our access to and increases in the cost of capital may adversely impact our ability to execute our business plan.
We use short-term debt and the long-term capital markets as a significant source of liquidity and funding for capital requirements not
obtained from our operating cash flow. If access to these sources of liquidity becomes constrained, our ability to implement our
business strategy could be adversely affected. In addition, higher interest rates would increase our cost of borrowing, which could
adversely impact our results of operations. A downgrade of our credit ratings or events beyond our control, such as a disruption in
global capital and credit markets, could increase our cost of borrowing and cost of capital or restrict our ability to access the capital
markets and negatively affect our ability to maintain and to expand our businesses.
Our counterparties may not meet their obligations to us or may elect to exercise their termination rights, which could
adversely affect our earnings.
We are exposed to the risk that counterparties to various arrangements who owe us money, have contracted to supply us with energy,
coal, or other commodities or services, or who work with us as strategic partners, including on significant capital projects, will not be
able to perform their obligations, will terminate such arrangements or, with respect to our credit facilities, fail to honor their
commitments. Should any of these counterparties fail to perform their obligations or terminate such arrangements, we might be forced
to replace the underlying commitment at higher market prices and/or have to delay the completion of, or cancel a capital project.
Should any lenders under our credit facilities fail to perform, the level of borrowing capacity under those arrangements could decrease.
In any such events, our financial position, results of operations, or cash flows could be adversely affected.
Difficulties in obtaining necessary rights of way, or siting, design or other approvals for major transmission projects,
environmental concerns or actions of regulatory authorities, communities or strategic partners may cause delays or
cancellation of such projects, which would adversely affect our earnings.
Various factors could result in increased costs or result in delays or cancellation of our transmission projects. These include the
regulatory approval process, environmental and community concerns, design and siting issues, difficulties in obtaining required rights of
way and actions of strategic partners. Should any of these factors result in such delays or cancellations, our financial position, results
of operations, and cash flows could be adversely affected.
Economic events or factors, changes in regulatory or legislative policy and/or regulatory decisions or construction of new
generation may delay completion of or displace or result in the abandonment of our planned transmission projects or
adversely affect our ability to recover our investments or result in lower than expected earnings.
Our transmission construction plans could be adversely affected by economic events or factors, new legislation, regulations, or judicial
or regulatory interpretations of applicable law or regulations or regulatory decisions. Any of such events could cause delays in, or the
inability to complete or abandonment of, economic or reliability related projects, which could adversely affect our ability to achieve
forecasted earnings or to recover our investments or result in lower than expected rates of return. Recoverability of all such
investments in rates may be subject to prudence review at the FERC. While we believe that all of such costs have been and will be
prudently incurred, we cannot predict the outcome of future reviews should they occur.
In addition, our transmission projects may be delayed or displaced by new generation facilities, which could result in reduced
transmission capital investments, reduced earnings, and limited future growth prospects.
Many of our transmission projects are expected to help alleviate identified reliability issues and reduce customers' costs. However, if,
due to economic events or factors or further regulatory or other delays, the in-service date for one or more of these projects is delayed,
there may be increased risk of failures in the electricity transmission system and supply interruptions or blackouts, which could have an
adverse effect on our earnings.
The FERC has followed a policy of providing incentives designed to encourage the construction of new transmission facilities, including
higher returns on equity and allowing facilities under construction to be placed in rate base. Our projected earnings and growth could
be adversely affected were FERC to reduce these incentives in the future below the levels presently anticipated.