Eversource 2010 Annual Report Download - page 26

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On November 17, 2008, the FERC issued an order granting certain incentives and rate amendments to National Grid and us for certain
components of the proposed NEEWS project, which is described below. The approved incentives include (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. Several parties have sought rehearing of this FERC order on which FERC has not yet
acted.
Transmission Projects
NEEWS
CL&P and WMECO are continuing to develop and build the NEEWS project, which is comprised of GSRP, the Interstate Reliability
Project and the Central Connecticut Reliability Project, and is estimated to cost $1.52 billion in the aggregate (approximately $1.45
billion reflecting the impact of UI’s potential investment of up to approximately $69 million as discussed below). CL&P and WMECO
commenced substation construction on GSRP in December 2010 and expect to begin overhead line construction in the first half of
2011. We expect GSRP to be placed in service in late 2013 at a cost of approximately $795 million.
CL&P is designing and building the Interstate Reliability Project in coordination with National Grid USA, whose segment of this phase
will interconnect with CL&P’s at the Connecticut-Rhode Island border. In August 2010, ISO-NE reaffirmed the need for the Interstate
Reliability Project. We expect CL&P's share of the costs of this project to be $301 million and that the project will be placed in service in
late 2015.
The timing of the Central Connecticut Reliability Project is expected to be twelve months behind the Interstate Reliability Project and
cost approximately $338 million. ISO-NE continues to assess the need date for the Central Connecticut Reliability Project and we
expect that ISO-NE will conclude its evaluation by mid-2011.
Included as part of NEEWS are $84 million of expenditures for associated reliability related projects, all of which have received siting
approval and most are under construction. The in-service dates for these projects range from later this year through 2013.
Northern Pass Transmission Line Project
NPT is a limited liability company jointly formed by NU and NSTAR to construct, own and operate the Northern Pass transmission line,
a new HVDC transmission line from the border of Canada and the United States to Franklin, New Hampshire that will interconnect at
the border with a new HVDC transmission line being developed by HQ TransEnergie, the transmission subsidiary of HQ. NUTV, a
subsidiary of NU, holds a 75 percent interest in NPT, with NSTAR Transmission Ventures, Inc., a subsidiary of NSTAR, holding the
remaining 25 percent. Consistent with FERC's February 11, 2011 order accepting the TSA between NPT and Hydro Renewable
Energy that was filed December 15, 2011, NPT will charge Hydro Renewable Energy cost-based rates for firm transmission service
over the Northern Pass line for a 40-year term. The projected cost-of-service calculation includes an ROE of 12.56 percent through the
construction phase of the project. Upon commercial operation, the ROE will be equal to the ISO-NE regional rates base ROE (currently
11.14 percent) plus 1.42 percent based on a deemed capital structure for NPT of 50 percent debt and 50 percent equity.
In October 2010, NPT filed the Northern Pass project design with ISO-NE for technical approval and filed a presidential permit
application with the DOE. The DOE application seeks permission for NPT to construct and maintain facilities that cross the U.S. border
and connect to HQ TransEnergie's facilities in Canada. Assuming timely regulatory review and siting approvals, NPT expects to
commence construction of the Northern Pass in 2013, with power flowing across the line in late 2015.
We currently estimate that our 75 percent share of the costs to build the Northern Pass transmission project will be approximately $830
million out of total expected costs of approximately $1.1 billion (including capitalized AFUDC).
Other Transmission Transactions
In July 2010, CL&P and UI entered into an agreement under which UI would acquire certain transmission assets within CL&P's portion
of each of the NEEWS segments. Under the terms of the agreement, which has received approval from the FERC and the DPUC, UI
will have the option to invest up to $69 million or an amount equal to 8.4 percent of CL&P's costs for the assets, which are expected to
aggregate approximately $828 million.
On December 17, 2010, CL&P and CTMEEC, a non-profit municipal joint action transmission entity formed by several Connecticut
municipal electric companies, entered into an agreement, subject to DPUC approval, under which CTMEEC would acquire a segment
of CL&P’s high voltage transmission lines in the town of Wallingford, Connecticut. The transaction was approved by FERC on
January 31, 2011. The purchase price will be based on the net book value of the assets at the time of the closing of the sale in May
2011, projected to be approximately $42.3 million. CL&P will continue to operate and maintain the lines for CTMEEC.