Eversource 2015 Annual Report Download - page 48

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Projected Capital Expenditures: A summary of the projected capital expenditures for the Regulated companies’ electric transmission and for the total
electric distribution, generation, and natural gas distribution businesses for 2016 through 2019, including information technology and facilities
upgrades and enhancements on behalf of the Regulated companies, is as follows:
Years
(Millions of Dollars) 2016 2017 2018 2019
2016-2019
Total
CL&P Transmission $ 351 $ 250 $ 215 $ 157 $ 973
NSTAR Electric Transmission
302 216 238 149 905
PSNH Transmission 112 65 38 56 271
WMECO Transmission 115 78 22 40 255
NPT
31 684 636 149 1,500
Total Electric Transmission $ 911 $ 1,293 $ 1,149 $ 551 $ 3,904
Electric Distribution $ 892 $ 963 $ 888 $ 840 $ 3,583
Generation 20 - - - 20
Natural Gas
284 318 339 357 1,298
Total Distribution $ 1,196 $ 1,281 $ 1,227 $ 1,197 $ 4,901
Information Technology and All Other $ 105 $ 88 $ 82 $ 87 $ 362
Total $ 2,212 $ 2,662 $ 2,458 $ 1,835 $ 9,167
The projections do not include capital investments related to Access Northeast or Clean Energy Connect. Actual capital expenditures could vary
from the projected amounts for the companies and years above.
FERC Regulatory Issues
FERC ROE Complaints: Three separate complaints have been filed at FERC by combinations of New England state attorneys general, state
regulatory commissions, consumer advocates, consumer groups, municipal parties and other parties (the “Complainants”). In these three separate
complaints, the Complainants challenged the NETOs’ base ROE of 11.14 percent that had been utilized since 2006 and sought an order to reduce it
prospectively from the date of the final FERC order and for the 15-month complaint refund periods stipulated in the separate complaints. In 2014,
the FERC ordered a 10.57 percent base ROE for the first complaint refund period and prospectively from October 16, 2014, and that a utility’s total
or maximum ROE shall not exceed the top of the new zone of reasonableness, which was set at 11.74 percent. The NETOs and the Complainants
sought rehearing from FERC. In late 2014, the NETOs made a compliance filing and the Company began issuing refunds to customers from the first
complaint period.
As a result of the actions taken by the FERC and other developments in the first complaint matter, the Company recorded reserves at its electric
subsidiaries in 2015, 2014 and 2013. In 2015, Eversource recognized an after-tax charge to earnings (excluding interest) of $12.4 million, of which
$7.9 million was recorded at CL&P, $1.4 million at NSTAR Electric, $0.6 million at PSNH, and $2.5 million at WMECO. The net aggregate after-
tax charge to earnings (excluding interest) in 2014 totaled $22.4 million, of which $12.4 million was recorded at CL&P, $4.9 million at NSTAR
Electric, $1.7 million at PSNH and $3.4 million at WMECO. The aggregate after-tax charge to earnings (excluding interest) in 2013 totaled $14.3
million, of which $7.7 million was recorded at CL&P, $3.4 million at NSTAR Electric, $1.4 million at PSNH and $1.8 million at WMECO. The
NETOs and Complainants have filed appeals to the D.C. Circuit Court of Appeals. A court decision is expected in late 2016.
For the second and third complaints, the state parties, municipal utilities and FERC trial staff each believe that the base ROE should be reduced to an
amount lower than 10.57 percent. The NETOs believe that the Complainants’ positions are without merit, and the existing base ROE of 10.57
percent is just and reasonable and should be maintained. The FERC ALJ’s initial recommendation is expected by March 31, 2016. A final FERC
order is expected in late 2016 or early 2017.
As of December 31, 2015, CL&P, NSTAR Electric, PSNH, and WMECO had approximately $2.7 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 $2.7 million. Although we are uncertain on the final outcome of the second and third complaints regarding the ROE, we believe the
current reserves established are appropriate to reflect probable and reasonably estimable refunds.
FERC Order No. 1000: On August 15, 2014, the D.C. Circuit Court of Appeals upheld the FERC’s authority to order major changes to transmission
planning and cost allocation in FERC Order No. 1000 and Order No. 1000-A, including transmission planning for public policy needs, and the
requirement that utilities remove from their transmission tariffs their rights of first refusal to build transmission. On March 19, 2015, the FERC acted
on all rehearing requests filed by the NETOs, including CL&P, NSTAR Electric, PSNH and WMECO, and other parties and accepted the November
2013 compliance filing made by ISO-NE and the NETOs, subject to further compliance. The FERC accepted our proposal that the new competitive
transmission planning process will not apply to certain projects, which have been declared as the preferred solution by ISO-NE, unless ISO-NE later
decides a solution must be re-evaluated. The FERC determined on rehearing that we can restore provisions that recognize the NETOs’ rights to
retain use and control of their existing rights of ways. Final compliance was filed by the NETOs in November 2015 and was accepted by the FERC
on December 14, 2015.
Additionally, the FERC affirmed that it can eliminate our right of first refusal to build transmission in New England even though the FERC
previously approved and granted special protections to these rights. The NETOs filed an appeal to the D.C. Circuit Court of Appeals, challenging
this FERC ruling. State regulators also filed an appeal, challenging FERC’s determination that ISO-NE should select public policy transmission
projects after a competitive process. The Court is expected to resolve the appeals in 2016.