Eversource 2012 Annual Report Download - page 56

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Projected Capital Expenditures: A summary of the projected capital expenditures for the Regulated companies' electric transmission
business for 2013 through 2017 and for their distribution business for 2013 through 2015, including our corporate service companies'
capital expenditures on behalf of the Regulated companies, is as follows:
Year
(Millions of Dollars)
2013
2014
2015
2016
2017
2013-2017
Total
CL&P Transmission
$
193
$
243
$
157
$
135
$
89
$
817
NSTAR Electric Transmission
211
198
278
222
248
1,157
PSNH Transmission
92
147
102
63
15
419
WMECO Transmission 95 102 77 11 2 287
NPT
45
84
235
394
447
1,205
Total Transmission $ 636 $ 774 $ 849 $ 825 $ 801 $ 3,885
Electric Distribution
670
648
635
Generation
30
30
34
Natural Gas 170 160 161
Total Distribution
$
870
$
838
$
830
Corporate Service Companies
$
84
$
62
$
55
Total
$
1,590
$
1,674
$
1,734
Actual capital expenditures could vary from the projected amounts for the companies and periods above.
FERC Regulatory Issues
FERC Base ROE Complaint: On September 30, 2011, several New England state attorneys general, state regulatory commissions,
consumer advocates and other parties filed a joint complaint with the FERC under Sections 206 and 306 of the Federal Power Act
alleging that the base ROE used in calculating formula rates for transmission service under the ISO-NE Open Access Transmission
Tariff by New England transmission owners, including CL&P, NSTAR Electric, PSNH and WMECO, is unjust and unreasonable. The
complainants asserted that the current 11.14 percent rate, which became effective in 2006, is excessive due to changes in the capital
markets and are seeking an order to reduce the rate, which would be effective September 30, 2011 through December 31, 2012. In
response, the New England transmission owners filed testimony and analysis based on standard FERC methodology and precedent,
demonstrating that the base ROE of 11.14 percent remained just and reasonable.
On May 3, 2012, the FERC issued an order establishing hearing and settlement procedures for the complaint. The settlement
proceedings were subsequently terminated, as the parties had reached an impasse in their efforts to reach a settlement. In August
2012, the FERC trial judge assigned to the complaint established a schedule for the trial phase of the proceedings. Complainant
testimony supporting a base ROE of 9 percent was filed on October 1, 2012. Additional testimony was filed on October 1, 2012 by a
group of Massachusetts municipal electric companies, which recommended a base ROE of 8.2 percent. The New England
transmission owners filed testimony and analysis on November 20, 2012, demonstrating they believe that the current base ROE
continues to be just and reasonable. On January 18, 2013, the FERC trial staff filed testimony and analysis recommending a base
ROE of 9.66 percent based on the midpoint of their analysis with a range of reasonableness of 6.82 percent to 12.51 percent. Hearings
on this complaint are scheduled for May 2013 and a trial judge’s recommended decision is due in September 2013. A decision from
FERC commissioners is expected in 2014. Refunds to customers, if any, as a result of a reduction in the NU transmission companies’
base ROE would be retroactive to October 1, 2011.
On December 27, 2012, several additional parties filed a separate complaint concerning the New England transmission owners' base
ROE with the FERC. This new complaint seeks to reduce the New England transmission owner’s base transmission ROE effective
January 1, 2013, and to consolidate this new complaint with the joint complaint filed on September 30, 2011. The New England
transmission owners have asked the FERC to reject this new complaint. The FERC has not yet acted on this request.
As of December 31, 2012, CL&P, NSTAR Electric, PSNH, and WMECO had approximately $2.1 billion of aggregate shareholder equity
invested in their transmission facilities. As a result, each 10 basis point change in the authorized base ROE would change annual
consolidated earnings by an approximate $2.1 million. We cannot at this time predict the ultimate outcome of this proceeding or the
estimated impact on CL&P’s, NSTAR Electric’s, PSNH’s, or WMECO’s respective financial position, results of operations or cash flows.
FERC Order No. 1000: On October 25, 2012, ISO-NE and a majority of the New England transmission owners, including CL&P,
NSTAR Electric, PSNH and WMECO, made a comprehensive compliance filing as required by FERC Order No. 1000 and Order No.
1000-A, issued on July 21, 2011 and May 17, 2012, respectively. The compliance filing first seeks to preserve the existing reliability
planning process in New England, based on FERC’s previous approval of transmission owners’ rights under the Transmission
Operating Agreement with ISO-NE, and the superiority of the current planning process, which has resulted in major transmission
construction, large reliability benefits and reduction of market costs. The filing also contains a new process for public policy
transmission planning that incorporates opportunities for competing, non-incumbent projects and cost allocation among the supporting
states. In mid-January 2013, ISO-NE and the majority of New England transmission owners filed answers to various stakeholders that
submitted protests to the compliance filing. We cannot predict the final outcome or impact on us; however implementation of FERC’s
goals in New England, including within our service territories, may expose us to competition for construction of transmission projects,
additional regulatory considerations, and potential delay with respect to future transmission projects.