Eversource 2010 Annual Report Download - page 52

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CL&P and WMECO have received siting approvals in Connecticut and Massachusetts, respectively, for the first and largest component
of our NEEWS project, GSRP, which involves the construction of 115 KV and 345 KV lines from Ludlow, Massachusetts, to Bloomfield,
Connecticut. We commenced substation construction in December 2010 and expect to begin overhead line construction in the first half
of 2011. We expect the cost of GSRP to be $795 million and to place the project in service in late 2013. In June 2010, residents living
near the proposed Connecticut route of the GSRP appealed the CSC approval in New Britain Superior Court, claiming that the CSC
acted improperly by approving an overhead route for the line. We do not expect the appeal to have a material impact on the timing of
construction.
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 all overhead line from Lebanon, Connecticut to the
Connecticut-Rhode Island border where it would connect with enhancements National Grid USA is designing in Rhode Island and
Massachusetts. In August 2010, ISO-NE reaffirmed the need for the Interstate Reliability Project, which is now expected to be placed
in service in late 2015. This in-service date assumes that siting applications are filed in all three states in late 2011, with orders
received in mid/late 2013 and construction commencing in late 2013 or early 2014. We expect CL&P's share of the costs of this project
to be $301 million.
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 another 345 KV all overhead connection to move power across the
state of Connecticut. The timing of this project is expected to be twelve months behind the Interstate Reliability Project. We expect the
cost of this project to be $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 of which are under construction. The in-service dates for these projects range from later this year through 2013.
Since inception of NEEWS through December 31, 2010, CL&P and WMECO have capitalized approximately $105.9 million and $136.9
million, respectively, in costs associated with NEEWS, of which $38.4 million and $62.6 million, respectively, were capitalized in 2010.
The total cost estimate for the NEEWS projects is $1.52 billion. As these projects are completed and put in service, actual costs may
differ from these estimates.
On October 4, 2010, NPT and Hydro Renewable Energy entered into a TSA in connection with the Northern Pass transmission project.
Northern Pass is comprised of a planned HVDC transmission line from the U.S./Canadian border to Franklin, New Hampshire and an
associated alternating current radial transmission line between Franklin and Deerfield, New Hampshire that will be constructed by NPT.
Northern Pass will interconnect at the U.S./Canadian border with a planned HVDC transmission line that HQ TransÉnergie, the
transmission division of HQ, will construct in Québec.
Consistent with the FERC's February 11, 2011 order accepting without modification the TSA between NPT and Hydro Renewable
Energy that was filed on December 15, 2010, NPT will sell to Hydro Renewable Energy 1,200 MW of firm electric transmission rights
over the Northern Pass for a 40-year term and charge cost-based rates. The projected cost-of-service calculation includes an ROE of
12.56 percent through the construction phase of the project, and upon commercial operation, the ROE will be equal to the ISO-NE
regional rates base ROE (currently 11.14 percent) plus 1.42 percent. The TSA rates will be based on a deemed capital structure for
NPT of 50 percent debt and 50 percent equity. During the development and the construction phases under the TSA, NPT will be
recording non-cash AFUDC earnings.
On October 13, 2010, NPT filed the Northern Pass project design with ISO-NE for technical approval and on October 14, 2010, NPT
filed a presidential permit application with the DOE, which seeks permission to construct and maintain facilities that cross the U.S.
border and connect to HQ TransÉnergie's facilities in Canada. NPT anticipates filing additional state and federal permit and siting
applications in 2011. Assuming timely regulatory review and siting approvals, NPT expects to commence construction of Northern
Pass in 2013 and complete the line with power flowing in late 2015.
We currently estimate that NU's 75 percent share of the Northern Pass transmission project will be approximately $830 million and
NSTAR’s 25 percent share of the Northern Pass transmission project will be approximately $280 million, for a combined total expected
cost of approximately $1.1 billion (including capitalized AFUDC).
In July 2010, CL&P and UI entered into an agreement providing UI an option to make quarterly payments to CL&P in exchange for
ownership of specific Connecticut based NEEWS transmission assets as they come into commercial operation. Under the agreement,
which has received approval of the FERC and the DPUC, UI will have the right to invest up to $69 million or an amount equal to 8.4
percent of CL&P's costs for the Connecticut portion of these projects, which are expected to aggregate to approximately $828 million.
On December 30, 2010, CL&P received the first of these deposits in the amount of $7.2 million. The impact of the UI transaction is
reflected in the 2010 capital expenditures and our five-year capital expenditures and rate base forecasts.
On December 17, 2010, CL&P and the Connecticut Transmission Municipal Electric Energy Cooperative (CTMEEC), a non-profit
municipal joint action transmission entity formed by several Connecticut municipal electric companies, filed with the DPUC and the
FERC a joint application seeking regulatory approval of the transfer of a segment of high voltage transmission lines built by CL&P in the
town of Wallingford, Connecticut. FERC approval for the transfer was received 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, plus any additional closing adjustments. This segment of lines
is projected to have a value of $42.3 million at the anticipated time of closing in May of 2011. CL&P will continue to operate and