Eversource Energy (d/b/a) · NYSE:ES
Eversource Energy (d/b/a) — Northeast Utilities — EEI Financial Conference 2007
59 slides from Eversource Energy (d/b/a)'s conference presentation, Nov 5, 2007
Slide 1: EEI Financial Conference
EEI Financial Conference NOVEMBER 5, 2007 Exhibit 99.3
Slide 2: Safe Harbor Provisions
Safe Harbor Provisions This presentation contains statements concerning NU’s expectations, plans, objectives, future financial performance and other statements that are not historical facts. These statements are “forward-looking statements” within the meaning of the Private Securities Litigation Ref
Slide 3: Overview
Overview 2007: Strong, successful year 2008: Another strong growth year projected 2008-2012: Continued attractive investment opportunities identified and quantified Long-term outlook: Opportunities for NU as significant changes sweep across the industry
Slide 4: Key Initiatives for 2008-2012
Key Initiatives for 2008-2012 Continue to successfully execute Effectively deploy the capital in the 5 year plan Manage the regulatory business model to earn on the capital Develop and deliver solutions for the region’s energy challenges
Slide 5: Regional Challenges Create Opportunities
Regional Challenges Create Opportunities Next Initiatives: Dealing With New England’s Emerging Energy Challenges Increasing Peak Load High Fuel Prices Regional Greenhouse Gas Initiative (RGGI) Requirements Increasing Renewable Portfolio Standards (RPS) Increased Energy Efficiency
Slide 6: New England States Are Increasing Their Renewable Portfolio Expectations
New England States Are Increasing Their Renewable Portfolio Expectations CT: 27% by 2020 VT: 2005-2012 Load growth to be met with renewables and capped at 10%. (Voluntary goal) ME: 30% by 2000, additional 10% new resources by 2017. Total is 40%. NH: 23.8% by 2025 RI: 16% by 2019 MA: 4% in 2009; pote
Slide 7: Growing Gap In Meeting New England Renewable Portfolio Standards
0% 5% 10% 15% 20% 25% Year RPS Requirements - % Existing Renewables - % Beyond 2010, A Growing Gap In Meeting New England Renewable Portfolio Standards (RPS) Is Projected 17,269 GWh Decrease in percentage of existing renewables is due to growth in New England energy requirements
Slide 8: New England's Renewable Challenge
New England’s Renewable Challenge The gap between existing and required renewables widens significantly over time We believe The gap cannot be filled with existing or planned generation New England will need to look elsewhere to meet the region’s renewable energy needs Renewables are only one part o
Slide 9: Meeting the RGGI Requirements Will Be Challenging
Meeting the RGGI Requirements Will Be Challenging Under Any Load Growth Scenario 1.3% energy growth 0% energy growth RGGI Cap New England CO2 Emissions Year New England RGGI CO2 Cap Projected CO2 Emissions
Slide 10: S| Northeast
we", S| Northeast iis” Utilities System
Slide 11: Addressing New England's Challenge
New England needs Resources assembled to meet the opportunities Partnerships among key stakeholders An expanded dialogue to identify a portfolio of solutions Results Addressing New England’s Challenge NU Organized an internal team to define the issues and develop solutions Reaching out to regional s
Slide 12: Regulated Investment Strategy
Regulated Investment Strategy
Slide 13: The Execution Of Our Strategy Has Been Successful
The Execution Of Our Strategy Has Been Successful, Resulting In Favorable Outcomes For Investors And Customers Strong operations are the linchpin of our overall strategy Our capital investment plan is on track and providing investors with continued growth Customers are benefiting from increased reli
Slide 14: Current and Future Investments Produce Customer Benefits
Current and Future Investments Produce Customer Benefits Through Nearly $6 Billion Investment Plan Generation Existing New Hampshire generation will require an ongoing level of capital investment totaling around $100 million Installation of a scrubber at our PSNH Merrimack station is projected to co
Slide 15: Transmission, Distribution and Regulated Generation Projects Provide Savings
Transmission, Distribution and Regulated Generation Projects Provide Savings for Customers Transmission projects provide benefits in the form of increased reliability and reduced congestion and capacity market costs Bethel-Norwalk has reduced Connecticut congestion costs by more than $130 million si
Slide 16: Regulated Generation Investments -- Merrimack Scrubber
Regulated Generation Investments -- Merrimack Scrubber Reduces sulfur emissions by 98% Reduces mercury emissions by 85% Avoids $15-20 million annually in sulfur credit purchases Impact on Merrimack production costs of no more than 0.6 cents/kWh, preserving PSNH’s low-cost generation fleet Investment
Slide 17: Distribution Infrastructure Investments
Distribution Infrastructure Investments 2008 – 2012 investment Invest $2.5 billion in distribution capital spending CL&P: $1.5 billion PSNH: $525 million WMECO: $175 million Yankee Gas: $300 million Peak Load Growth & New Business Support - 44% Basic Business Requirements - 31% Plant Relocations Equ
Slide 18: Transmission Capital Program and Rate Base Continue to Grow
Transmission Capital Program and Rate Base Continue to Grow Fall 2005 EEI Conference Fall 2007 EEI Conference Fall 2006 EEI Conference Five-Year Capital Program -- $2.3 Billion Five-Year Capital Program -- $3.0 Billion Five-Year Capital Program -- $2.4 Billion Annual Plant-in- Service: $ Millions $3
Slide 19: 2008-2012 Transmission Capital Expenditures Increase By Over 20%
$560 million of major SWCT projects in 2008- 2012 forecast period; $1.68 billion in total NEEWS projects estimated at $1 billion during the 2008-2012 forecast period $1.1 billion of additional forecasted projects Springfield 115-kV Cables projects estimated at $350 million during the 2008-2012 forec
Slide 20: Py Northeast
Py Northeast iis” Utilities System \D
Slide 21: = Northeast
Ao = Northeast i)’ Utilities System
Slide 22: Springfield 115-kV Cables & NEEWS Project Schedules
Springfield 115-kV Cables & NEEWS Project Schedules Late 2012/2013 Late 2012/2013 In-service 2010/Early 2011 Construction targeted to start on staggered basis Late 2009/Early Late 2009/Early Early 2009 Siting completed 2010 -2012 2009 -2012 2009 -2012 2008 - Procurement contracts Late 2008 Mid 2008
Slide 23: Other Forecast Projects Total $1.1 Billion
Other Forecast Projects Total $1.1 Billion $1.1 Billion CL&P 115-kV Reliability Program 30.0 Fiber Optic Communications 20.0 310/368 Line Split 29.0 Eastern Connecticut Reliability 190.5 Barbour Hill Autotransformer 10.7 Aging Equipment & NERC Compliance Upgrades (24% in RSP) 91.4 Numerous Projects
Slide 24: Future Resources Aligned with Our Strategic Business Plans
Future Resources Aligned with Our Strategic Business Plans Construction Expertise – experienced, proven firms, track record with NU Burns & McDonnell (Transmission, including NEEWS) Washington Group International (Merrimack Scrubber) Material – negotiating to lock in key components Transformers, 115
Slide 25: Established Worldwide Access to Key Suppliers
GC Cable from Prysmian in Finland GC DFR from Qualitrol in Ireland GC Breakers & Switches from ABB Power in U.S. GC Scada Cabinet from GE Harris in Canada M-N Steel Poles from Thomas & Betts in U.S. M-N Overhead Ground Wire from Intral in Canada M-N 345-kV Breakers from HICO in South Korea M-N Autot
Slide 26: Regulated Investment Strategy In Summary
Regulated Investment Strategy In Summary Strong execution of our business plan Transmission CapEx program up by over 20% and on schedule Resources aligned with our strategic business plans Infrastructure upgrades providing reliability improvements and savings for customers
Slide 27: Financial
Financial
Slide 28: Overview
Overview NU raising 2007 earnings guidance 2008 guidance is consistent with our growth plan Our new $6 billion, five-year capital program reflects significantly increased transmission investment needs Rate base growth and ROE improvement support underlying 10-14% five-year EPS growth rate Capital pr
Slide 29: Third Quarter Results
$18.2 $3.2 $28.5 $20.0 $1.0 $0.7 $50.2 $37.5* $13.7* $2.4 $0.0 $10.0 $20.0 $30.0 $40.0 $50.0 $60.0 3Q 2006 3Q 2007 Third Quarter Results Distribution and Generation Transmission Parent/Other Competitive Total *Excludes one-time $74 million benefit to CL&P from 2006 tax reduction 108.0% 9.9% 33.9%
Slide 30: 2007 Results Through September
2007 Results Through September 30 Distribution and Generation Transmission Parent/Other Competitive Total 31.0% 30.7% $43.6 ($73.7) $100.1 $57.0 $8.6 $8.1 $173.8 $3.3 $49.6* $76.4* ($100.0) ($80.0) ($60.0) ($40.0) ($20.0) $0.0 $20.0 $40.0 $60.0 $80.0 $100.0 $120.0 $140.0 $160.0 $180.0 9 Mos. 2006 9
Slide 31: Distribution and Generation Through September 30
$21.2 $6.4 $44.3 $31.7 $13.6 $10.5 $40.2* $8.6 $0.0 $15.0 $30.0 $45.0 $60.0 9 Mos. 2006 9 Mos. 2007 Distribution and Generation Through September 30 CL&P PSNH WMECO Yankee Gas 10.2% 49.5% 58.1% 64.1% *Excludes one-time $74 million benefit to CL&P from 2006 tax reduction
Slide 32: Transmission Earnings Tracking Rate Base Investment
$43.6 $57.0 Transmission Earnings Tracking Rate Base Investment $945 $1,240 $455 $605 $1,030 $59.8 $41.1 $28.2 $0 $200 $400 $600 $800 $1,000 $1,200 $1,400 $0.0 $10.0 $20.0 $30.0 $40.0 $50.0 $60.0 $70.0 Year End Rate Base Net Income Nine Months
Slide 33: 2008 EPS Guidance
2007 – 2008 EPS Guidance $1.65 - $1.95 Breakeven** ($0.15) - ($0.10) $0.70 - $0.80 $1.10 - $1.25 Projected $1.45 - $1.60 $1.30 - $1.55 $1.16* NU Consolidated $0.05** Breakeven** N/A Competitive $0.05 $0.00 - $0.05 $0.02 NU Parent/Other $0.50 - $0.55 $0.50 - $0.60 $0.39 Transmission $0.85 - $0.95 $0.
Slide 34: Drivers Of Earnings Growth
Increased transmission investment PSNH rate settlement Yankee rate settlement WMECO rate settlement Interest income on cash from generation sale Drivers Of Earnings Growth Increased transmission investment CL&P rate case Rate settlements Managing costs Offset by Decreasing cash position at NU Parent
Slide 35: Trailing 12-Month Distribution Regulatory ROEs
Trailing 12-Month Distribution Regulatory ROEs 7.5% 6.4% 5.9% 9.6% 9.0% 9.4% 9.9% 6.6% 0.0% 2.0% 4.0% 6.0% 8.0% 10.0% 12.0% CL&P PSNH WMECO Yankee Gas 12 Months Ended 9/30/07 9 – 10% Long-term Expectation
Slide 36: Completed Distribution Rate Cases
Completed Distribution Rate Cases Sharing outside 8-12% $1 million plus trackers $3 million 1/1/07 1/1/08 Settled and approved WMECO 10.1% $22.1 million net 7/1/07 Settled and approved Yankee Gas 9.67% $46.6 million $3 million 7/1/07 1/1/08 Settled and approved PSNH Authorized ROE Increases Effectiv
Slide 37: CL&P Distribution Rate Case
January 1, 2008 July 30, 2007 December 13, 2007 December 27, 2007 Double to $25 million/year to support shorter clearing cycle $290 million/year Guaranteed revenue/customer No weather normalization 45% equity (per rating agency) 11% $189 million in 2008 $22 million in 2009 CL&P Rate Proposals CL&P D
Slide 38: 2007-2012: New Capital Expenditure Forecast
Five-year 2008-2012 capital spending of $6.0 billion, compared with last year’s 2007-2011 $4.9 billion plan; 2007-2011 period up by $950 million 2007-2012: New Capital Expenditure Forecast $0 $200 $400 $600 $800 $1,000 $1,200 $1,400 Distribution Capex From 11/06 Forecast Transmission Capex From 11/0
Slide 39: Elements of 2008-2012 Capex Projections
$560 million to complete SW CT transmission projects $1.3 billion for NEEWS, Springfield projects $1.1 billion for smaller transmission projects $290 million/year for CL&P distribution Higher PSNH, Yankee Gas distribution capex per rate settlements $215 million for Merrimack scrubber $25 million for
Slide 40: Rate Base in Millions
Rate Base in Millions = Northeast iis” Utilities System LJ
Slide 41: Slide 41
Slide 42: Projected Combined Year-End Rate Base
$3,429 $3,881 $4,321 $4,638 $4,910 $5,170 $5,431 Rate Base 2008-2012 CAGR of 12% Supports EPS CAGR of 10-14% Projected Distribution & Generation Rate Base CAGR of 7% Transmission Rate Base CAGR of 22% Projected Combined Year-End Rate Base $1,046 $1,469 $2,132 $2,752 $3,045 $3,489 $3,944 $0 $1,000 $2
Slide 43: Rate Base Composition
Electricity Distribution & Generation Gas LDC Transmission becomes much larger share of total rate base Rate Base Composition 2006 Rate Base Composition 2012E Rate Base Composition $4.5 billion $9.4 billion Rate Base: $1.05 billion (Actual 2006) ’07-’12 Capex: $3.8 billion Rate Base: $2.9 billion (A
Slide 44: Transmission Becomes a Much Larger Share of Earnings
Transmission Becomes a Much Larger Share of Earnings 36.3% 21.2% 18.1% 25.2% 32.6% 0.0% 10.0% 20.0% 30.0% 40.0% 50.0% 60.0% 2006* YTD *Excludes benefit to CL&P from 2006 tax reduction
Slide 45: Ability To Finance Growth
$3,628 $116 $2,874 Ability To Finance Growth Total Debt Preferred Stock Common Equity 9/30/07 Strong balance sheet Strong cash and liquidity position Strong access to capital $655 million 2007 financing program complete Approximately $350 million of NU parent cash Nearly $1 billion unused bank, acco
Slide 46: Funding The Capital Program and Dividends
$2.8 $3.6 Funding The Capital Program and Dividends 2008 - $0.35 $6.75 Billion Existing cash • Cash remaining from 2006 NUEI generation sale Net new financings • $2.3 billion of new debt, A/R • $0.5 billion of new Parent common equity/hybrids Internally generated cash net of RRB retirements • Approx
Slide 47: Key Financial Considerations
Key Financial Considerations Commitment to investment grade ratings Strong balance sheet 55% leverage target at utility subsidiaries 60% consolidated leverage target Improve cash flow during construction cycle Maintain financial flexibility to allow additional investment opportunities Use of NU equi
Slide 48: Questions and Answers
Questions and Answers
Slide 49: = Northeast
= Northeast iis” Utilities System
Slide 50: Significant capital spending through 2012
Significant capital spending through 2012 2006-2012: Capital Expenditures and Depreciation $946 $1,276 $1,069 $987 $1,247 $1,372 $1,311 $362 $340 $329 $338 $298 $285 $241 $0 $200 $400 $600 $800 $1,000 $1,200 $1,400 $1,600 Actual 2007 Est. 2008 Est. 2009 Est. 2010 Est. 2011 Est. 2012 Est. Total Capex
Slide 51: Projected Transmission Capital Expenditures
$658 $538 $311 $155 $420 $530 $77 $108 $58 $55 $108 $72 $19 $50 $137 $222 $135 $104 $0 $100 $200 $300 $400 $500 $600 $700 $800 CL&P PSNH WMECO Projected Transmission Capital Expenditures $754 $432 $663 $706 $506 $696
Slide 52: Projected Distribution and Generation Capital Expenditures
$279 $334 $291 $289 $298 $298 $125 $167 $144 $153 $172 $252 $34 $35 $40 $34 $34 $34 $65 $57 $61 $60 $62 $68 $0 $100 $200 $300 $400 $500 $600 $700 CL&P PSNH* WMECO Yankee Gas *PSNH Generation = $36 million in 2007; $63 million in 2008; $44 million in 2009; $51 million in 2010; $66 million in 2011; an
Slide 53: $ Millions
§ Millions = Northeast 79 Utilities System
Slide 54: Slide 54
Slide 55: Projected Distribution and Generation Year-End Rate Base
$1,918 $2,128 $2,305 $2,459 $2,594 $2,711 $925 $1,085 $1,176 $1,248 $1,322 $1,404 Projected Distribution & Generation Rate Base CAGR of 7% Projected Distribution and Generation Year-End Rate Base $372 $394 $424 $449 $475 $504 $666 $714 $733 $754 $779 $812 $0 $1,000 $2,000 $3,000 $4,000 $5,000 CL&P P
Slide 56: $ Millions
§ Millions = Northeast ~ 79 Utilities System
Slide 57: Slide 57
Slide 58: Projected Transmission Year-End Rate Base
$1,221 $2,239 $2,553 $2,864 $168 $296 $307 $368 $372 $459 $1,722 $2,203 Transmission Rate Base CAGR of 22% Projected Transmission Year-End Rate Base* $80 $114 $242 $438 $564 $621 $0 $500 $1,000 $1,500 $2,000 $2,500 $3,000 $3,500 $4,000 CL&P PSNH WMECO $1,469 $2,132 $2,752 $3,045 $3,489 $3,944 *100%
Slide 59: Numerous Firms Support NU Transmission's Capital Program
Substations $300M Engineering Firms $90M Construction $1.3B Numerous Firms Support NU Transmission’s Capital Program Poles $75M PennSummitt Tubular LLC Sabre Tubular Structures TransAmerican Power Products Thomas & Betts Valmont ABB Areva BTW Crompton Greaves / Pauwels Group General Electric HICO Mi