Eversource 2014 Annual Report Download - page 28

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they occur, our systems are vulnerable to unauthorized access and cyber intrusions. We cannot determine the probability that a security breach may
occur or quantify the potential impact of such an event.
The actions of regulators can significantly affect our earnings, liquidity and business activities.
The rates that our Regulated companies charge their customers are determined by their state utility commissions and by FERC. These commissions
also regulate the companies'accounting, operations, the issuance of certain securities and certain other matters. FERC also regulates their
transmission of electric energy, the sale of electric energy at wholesale, accounting, issuance of certain securities and certain other matters. The
commissions'policies and regulatory actions could have a material impact on the Regulated companies'financial position, results of operations and
cash flows.
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,
including information technology 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;
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. As a result of our merger in 2012, we have implemented
or expect to implement process and information technology system changes that are expected to provide significant improvements to our businesses.
If these changes do not result in the improvements that we expect, regulators may determine that the costs for these improvements are not prudent
and therefore not recoverable from customers, which may result in reduced earnings. At PSNH, outages at generating stations may be deemed
imprudent by the NHPUC resulting in disallowance of replacement power and repair 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.
We expect to invest in strategic development opportunities in both electric and natural gas transmission, but we may not be successful and
projects may not commence operation as scheduled or be completed within budget, which could have a material adverse effect on our
business prospects.
We are pursuing broader strategic development investment opportunities related to the construction of electric and natural gas transmission facilities,
interconnections to generating resources and other investment opportunities. The development, construction and expansion of electric transmission
and natural gas transmission facilities involve numerous risks. Various factors could result in increased costs or result in delays or cancellation of
these projects. Risks include regulatory approval processes, new legislation, economic events or factors, environmental and community concerns,
design and siting issues, difficulties in obtaining required rights of way, competition from incumbent utilities and other entities, 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 or our future growth opportunities may not be realized as anticipated.
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.