Eversource Energy (d/b/a) · NYSE:ES
Eversource Energy (d/b/a) — Northeast Utilities — Northeast EEI Financial Conference 2012
45 slides from Eversource Energy (d/b/a)'s conference presentation, November 2012
Slide 1: Northeast EEI Financial Conference
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Slide 2: NU Safe Harbor Provisions
NU Safe Harbor Provisions This presentation includes statements concerning NU’s expectations, beliefs, plans, objectives, goals, strategies, assumptions of future events, future financial performance or growth and other statements that are not historical facts. These statements are “forward-looking
Slide 3: Agenda
Agenda • Hurricane Sandy • New NU • Energy Policy/Gas Expansion • Transmission Update • Merger Integration • Financial Review and Outlook 3
Slide 4: Hurricane Sandy Update
Hurricane Sandy Update • Devastating storm hit the Eastern Seaboard - late October • About half – 1.5M of NU’s electric customers were impacted • Restoration resources at the ready • Over 10,000 FTEs • Major storm cost deferrals allowed for all 4 electric companies • NU’s effective restoration respo
Slide 5: New NU Has Extensive Scale and Scope
New NU Has Extensive Scale and Scope Combined, the new NU is now: •Providing reliable electric & gas service to: • 3.5 million electric and gas customers •Leveraging investments for our customers & shareholders: • $12.4 billion combined rate base (2011) •Serving 525 cities & towns throughout New Eng
Slide 6: "Crown Jewel" of a Service Territory
“Crown Jewel” of a Service Territory $ # $ !" # $ 6
Slide 7: Creating Superior Value
Creating Superior Value Growing the Transmission and Gas Businesses Redefining the Customer Service Model 7
Slide 8: Connecticut Draft Energy Policy
Connecticut Draft Energy Policy 8
Slide 9: NU's Gas Business Could Be Significantly Expanded
NU’s Gas Business Could Be Significantly Expanded NU Gas Business – NSTAR Gas, Yankee Gas 2013-2022 Projected Annual Customer Additions 20,000 15,000 Potential High Growth Projection • ~$100M incremental 89,000 incremental new customers Annual customer additions capex/year 33% total customer base gr
Slide 10: Transmission Update
Transmission Update • $700M of additional transmission projects • About $2B of equity invested in transmission business expected to grow to $3.5B by 2017 • FERC committed to incentives for needed infrastructure investments 10
Slide 11: NEEWS Transmission Update
NEEWS Transmission Update Greater Springfield Reliability Project Interstate Reliability Project Under Construction In Siting Phase •Projected in-service: late 2013 • Joint project with National Grid (NU in CT; •Project 85% complete as of 9/30/12 NGrid in MA & RI) •Total projected NU cost: $718 mill
Slide 12: Northern Pass Transmission Project Overview
Northern Pass Transmission Project Overview • 1,200 MW clean energy • $1.1 billion HVDC line, terminal and AC facilities • Participant-funded structure; no impact on the Regional Transmission Rate • Uses HVDC technology at +/- 300-kV with AC/DC converters in Quebec and NH • AC radial 345-kV line to
Slide 13: Financial Review
Financial Review Jim Judge Executive Vice President & Chief Financial Officer 13
Slide 14: Outline
Outline • A Great Platform for Future Success • Regulatory and business diversity • Strong financial condition • Merger integration • Financial Results and Expectations • Key assumptions • Interest savings • Full-year 2012 and 2013 projections and third quarter 2012 results • Dividend growth 14
Slide 15: Regulatory and Business Segment Diversity
Regulatory and Business Segment Diversity Rate Base By State / Federal Rate Base By Business MA Electric Distribution 31% 52% NH 12% FERC 32% Electric Generation 6% Electric Gas Transmission CT Distribution 32% 25% 10% Combined 2011 Rate Base: $12.4 billion 15
Slide 16: Very Strong Ratings Rank Highly in the Industry
Very Strong Ratings Rank Highly in the Industry Utilities Credit Ratings Distribution(1) 1. Wisconsin Energy 2. Northeast Number ofUtilities Issuers 3. Con Edison 4. National Grid Holdings 5. Xcel Energy 6. Integrys 7. Dominion 8. NextEra 1. Source: Standard & Poor’s, “Industry Report Card: U.S. Reg
Slide 17: Merger Integration Priorities
Merger Integration Priorities Merger integration initiatives Category Activity Staffing Levels Achieving reductions in staff, vendors and contractors Information Consolidating IT infrastructure, data storage, data centers, security Technology Implementing enterprise-wide application investments acro
Slide 18: Key Assumptions Through 2015
Key Assumptions Through 2015 Electric sales: Annual growth of approximately 0.5% - 1.0% Natural gas sales: Weather-normalized annual growth of 1%-2% Impact of a return to normal weather for 2013 adds approximately 7% to sales O&M: Annual decreases of approximately 3% Cost savings more than offset wa
Slide 19: Merger Has Enhanced Opportunities for Financing Savings
Merger Has Enhanced Opportunities for Financing Savings • NSTAR commercial paper program • NSTAR Electric is refinancing $400M expanded to NU in July of senior unsecured debt this month. Annual savings of approximately $10M • Effectively lowered short-term borrowing costs on $700M by 150 • NU Parent
Slide 20: Projected 2012 Recurring EPS: Major Drivers vs. 2011
Projected 2012 Recurring EPS Major Drivers vs. 2011 • NSTAR earnings • Higher transmission rate base • Lower interest costs • Initial cost savings • PSNH, Yankee Gas distribution rate increases $2.25 - $2.30 • Higher share count • Additional emergency preparedness expense at CL&P • Higher untracked
Slide 21: Strong Third Quarter Results Support 2012 Guidance
Strong Third Quarter Results Support 2012 Guidance (Recurring EPS) $0.04 $0.05 $0.08 $0.28 $0.03 $0.33 $0.70 $0.51 Q3-2011 NSTAR Earnings Transmission Electric and gas Other, primarily Higher shares Higher O&M Q3-2012 sales growth lower tax outstanding expense 21
Slide 22: Projected EPS Range for 2013
Projected EPS Range for 2013 Major Drivers vs. 2012 • Normal weather • Lower interest costs • Additional transmission rate base • PSNH, Yankee Gas distribution rate increases • Cost savings • Additional PSNH $2.40 - $2.60 generation return • Higher depreciation and property tax expense 22
Slide 23: EPS Growth Beyond 2013
EPS Growth Beyond 2013 Major Drivers • Continued investment in transmission reliability projects, including NEEWS • Northern Pass Transmission Long-term • Increase in gas conversions 6% - 9% • Increased cost savings CAGR off of 2012 • Higher property tax and depreciation expense 23
Slide 24: Dividend Growth In-Line with Earnings Growth
Dividend Growth In-Line with Earnings Growth Annualized Dividend 2009 2010 2011 Q1 2012 Q2-Q4 2012 24
Slide 25: Additional Upside Opportunities Not Reflected in Projections
Additional Upside Opportunities Not Reflected in Projections • Additional natural gas expansion investments • Additional transmission investments • Favorable CT energy efficiency/ energy policy outcomes • Accelerated economic recovery 25
Slide 26: Today's Key Takeaways
Today’s Key Takeaways…. • 6% - 9% projected long-term growth rate exceeds peers • Transmission capital spending increases $700 million from previous forecast • Significant interest savings • Top tier financial condition • Strong management team that delivers 26
Slide 27: Northeast Utilities
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Slide 28: Appendix
| & Northeast “AI Utilities Append ix A) 28
Slide 29: The Regulatory Environment: High Level of Rate Certainty
The Regulatory Environment: NU Business Segments Have a High Level of Rate Certainty NSTAR Electric Rates frozen through 12/31/15; NSTAR Gas reconciling adjustments continue to WMECO operate Rates frozen through 11/30/14; CL&P reconciling adjustments continue to Distribution operate Yankee Gas $7M r
Slide 30: Review of FERC-Approved Transmission ROEs
Review of FERC-Approved Transmission ROEs 13.50% 13.10% 12.89% 13.00% 12.56% 12.64% 12.50% 12.00% 11.64% 11.50% 11.14% 11.00% 10.50% 10.00% Local Network Regional Northern Pass 2005-2008 NEEWS M-N Service Network Service Regional Underground Base Projects NU’s Local Network Service Tariff ROE (this
Slide 31: Schedule for New England Base ROE Complaint
Schedule for New England Base ROE Complaint 10/1 11/20 Transmission Complainants’ Owners Case Case Filed Filed 1/18 2/27 4/17 5/6 9/10 Complainants’ Updated ROE Initial Decision FERC Staff Rebuttal Case Hearings Start Analyses Due From Judge Filed FERC Possible Requests Decision for Rehearing Expect
Slide 32: CT Governor's Energy Policy Addresses Fuel Oil Dependence
CT Governor’s Energy Policy Addresses State’s Dependence on Higher-Cost, Higher-Emission Fuel Oil CT & MA Residential Gas Heating CT Residential Market Penetration by Penetration vs. Nearby States Heating Source 80% 72% 60% 50% 60% 53% 48% 47% 40% 40% 31% 31% 20% 20% 15% 4% 0% 0% NJ NY RI MA CT Heat
Slide 33: Customer Growth Has Picked Up for NU's Gas Business
Customer Growth Has Picked Up for NU’s Gas Business NU Gas Business – NSTAR, Yankee Gas 2007-2012 Annual Customer Additions (Conversions and new construction) Natural gas prices decreasing Economic downturn Annual customer additions 33
Slide 34: Natural Gas Prices Have Reduced Wholesale Electricity Costs
Natural Gas Prices Have Reduced New England’s Wholesale Electricity Costs By More Than 50% ISO-NE Wholesale Market Costs, Energy Component $12 $12 Electricity Value $9 $9 Natural Gas (Henry Hub) $ MMBtu $ billions $6 $6 $3 $3 $0 $0 2006 2007 2008 2009 2010 2011 2012 Average Cost (cents/kWh) New Engl
Slide 35: Lower Wholesale Prices Have Reduced Retail Electric Bills
Lower Wholesale Prices and Lower Congestion Costs Have Significantly Reduced Our Retail Electric Bills Since 2008 19.51 19.22 14.87 14.20 Cents/KWH Cents/KWH NSTAR CL&P Electric 27.2% 22.6% 2008 Bill Today’s Bill 2008 Bill Today’s Bill Generation/Supply Distribution Transmission Other 35
Slide 36: Near Term Upside: Record Mild Weather in 2011-2012
Near Term Upside: Record Mild Weather in 2011-2012 Reduced Our Gas Delivery Margins by $30 Million 2000 – Present Winter Heating Degree Days (1) Heating Degree Days 6,500 6,000 5,500 Avg.: 5,331 5,000 4,500 5,680 5,876 5,579 5,682 5,579 5,545 5,318 5,130 5,179 5,151 4,000 4,726 4,529 3,500 3,000 200
Slide 37: NEEWS: Greater Springfield Reliability Project
NEEWS: The Greater Springfield Reliability Project – A Case Study In NU’s Transmission Development Expertise Greater Springfield Reliability Project (GSRP) Under Construction •Projected in-service: late 2013 •Total projected NU cost: $718 million •Project 83% complete as of 9/15/12 GSRP: Massive Sca
Slide 38: NEEWS: Interstate Reliability Project
NEEWS: Interstate Reliability Project Interstate Reliability Project • Joint project with National Grid (NU in CT; NGrid in MA & RI) • All major permit applications filed • CT siting hearings are complete with decision in early 2013 • Projected commencement of construction: late 2013/early 2014 • Pr
Slide 39: NEEWS: Greater Hartford Central Connecticut Project
NEEWS: Greater Hartford Central Connecticut Project (GHCC) • The 345-kV Central Connecticut Reliability Project (CCRP) was designed to address east-to-west power flow constraints across CT • As expected, ISO has issued its need reassessment for CCRP, expanding the study to include other electricity
Slide 40: Transmission's Projected Capital Investment Has Grown by $700M
Transmission’s Projected Capital Investment Has Grown by $700M to $3.7B from Last Year’s Forecast Historic Budget Forecast Northern Pass HVDC $3.5 Billion $718M $3.7 Billion Line to Canada US portion estimated at $1.1B; $1.04B in forecast period Successful completion of NEEWS projects SWCT projects
Slide 41: 2013-2017 NU Transmission Capital Program
2013-2017 NU Transmission Capital Program Other Projects – In Millions CL&P NSTAR PSNH WMECO 1990 Line Structure Replacement 62.0 Overhead Infrastructure 101.6 NH 10-Yr Study Reliability Projects 231.2 Pittsfield / Greenfield Area Solution 109.0 Greater Hartford / Central CT 53.2 Obsolete Equipment
Slide 42: Transmission Rate Base Growth Projections
Transmission Rate Base Growth Projections 10% CAGR $6,811 $6,636 $5,424 $4,991 $4,613 $ in millions $4,214 $3,823 42
Slide 43: Projected Distribution/Generation Capital Expenditures
Projected Distribution/Generation Capital Expenditures $1,000 $889 $886 $858 $840 $25 $45 $52 $800 $600 $ In Millions $665 $637 $603 $583 $400 $200 $51 $61 $50 $44 $173 $163 $160 $161 $0 2012 2013 2014 2015 Natural Gas Distribution Generation Electric Distribution CL&P Resiliency 43
Slide 44: Total Projected Capital Expenditures
Total Projected Capital Expenditures $2,000 $1,848 $1,818 $1,711 $62 $55 $104 $1,575 $1,600 $62 $858 $840 $1,200 $889 $886 $800 $928 $923 $400 $718 $627 $0 2012 2013 2014 2015 Transmission Electric & Gas Distribution and Generation (including CL&P resiliency) Other, Primarily IT 44
Slide 45: Projected Rate Base Growth - 2015
Projected Rate Base Growth - 2015 Rate Base By Business* Electric Distribution 47% Electric Electric Generation Transmission 5% 39% Gas Distribution 9% Projected Combined 2015 Rate Base: $15.6 billion *Electric Transmission includes projected Northern Pass AFUDC as of 12/31/15 45
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