Eversource 2012 Annual Report Download - page 34

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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.
Increases in electric and gas prices and/or a weak economy, can lead to changes in legislative and regulatory policy
promoting energy efficiency, conservation, and self-generation and/or a reduction in our customers’ ability to pay their bills,
which may adversely impact our business.
Energy consumption is significantly impacted by the general level of economic activity and cost of energy supply. Economic downturns
or periods of high energy supply costs typically can lead to the development of legislative and regulatory policy designed to promote
reductions in energy consumption and increased energy efficiency and self-generation by customers. This focus on conservation,
energy efficiency and self-generation may result in a decline in electricity and gas sales in our service territories. If any such declines
were to occur without corresponding adjustments in rates, then our revenues would be reduced and our future growth prospects would
be limited.
In addition, a period of prolonged economic weakness could impact customers’ ability to pay bills in a timely manner and increase
customer bankruptcies, which may lead to increased bad debt expenses or other adverse effects on our financial position, results of
operations or cash flows.
Changes in regulatory and/or legislative policy could negatively impact our transmission planning and cost allocation rules.
The existing FERC-approved New England transmission tariff allocates the costs of transmission facilities that provide regional benefits
to all customers of participating transmission-owning utilities. As new investment in regional transmission infrastructure occurs in any
one state, its cost is shared across New England in accordance with a FERC approved formula found in the transmission tariff. All New
England transmission owners' agreement to this regional cost allocation is set forth in the Transmission Operating Agreement. This
agreement can be modified with the approval of a majority of the transmission owning utilities and approval by FERC. In addition, other
parties, such as state regulators, may seek certain changes to the regional cost allocation formula, which could have adverse effects on
the rates our distribution companies charge their retail customers.
FERC has issued rules requiring all regional transmission organizations and transmission owning utilities to make compliance changes
to their tariffs and contracts in order to further encourage the construction of transmission for generation, including renewable
generation. This compliance will require ISO-NE and New England transmission owners to develop methodologies that allow for
regional planning and cost allocation for transmission projects chosen in the regional plan that are designed to meet public policy goals
such as reducing greenhouse gas emissions or encouraging renewable generation. Such compliance may also allow non-incumbent
utilities and other entities to participate in the planning and construction of new projects in our service area and regionally.
Changes in the Transmission Operating Agreement, the New England Transmission Tariff or legislative policy, or implementation of
these new FERC planning rules, could adversely affect our transmission planning, our earnings and our prospects for growth.