Eversource Energy (d/b/a) · NYSE:ES
Eversource Energy (d/b/a) — Northeast Utilities — Investor Day (February 2014)
57 slides from Eversource Energy (d/b/a)'s investor day presentation, Feb 6, 2014
Slide 1: Northeast Utilities
Northeast Utilities
Slide 2: Safe Harbor
Northeast Utilities Safe Harbor 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-lo
Slide 3: Utilities
Northeast Utilities
Slide 4: Today's Agenda
Today’s Agenda Utilities Tom May Chairman, President & CEO Welcome Delivering on Commitments and Looking Ahead Lee Olivier Executive Vice President & COO Electric Transmission Development Natural Gas Expansion Jim Judge Executive Vice President & CFO Creating Shareholder Value Through Superior Execu
Slide 5: NU's Long-Term Strategy
NU’s Long-Term Strategy ¢ Deliver Top-Tier Financial Results ¢ Grow the Transmission and Gas Businesses ¢ Drive Operational Efficiencies and Reduce Costs ¢ Enhance Customer Service and Company Image
Slide 6: Delivered on Commitments...
Northeast Usilities Delivered on Commitments... Our Commitments: Results Delivered: 1. Deed industry EPS & Dividend Grew 2013 EPS by 11% & increased dividend 7.1% growth 2. Reduce spending Met 3% O&M reduction target & reduced financing costs 3. Maintain strong financial condition “A” credit rating
Slide 7: The Power of "One Company" Delivering Transformative Results
The Power of “One Company” Delivering Transformative Results * Strengthen organization + Adopt new operating philosophy and service model * Standardize: Operating procedures System configuration Maintenance practices Equipment and fleet * Reconfigure service centers to optimize execution + Reduce sp
Slide 8: The Energy Environment
The Energy Environment Northeast F Utilities NE-1SO January 2014 Power (S/MWh) @ 8 Jan1 Jan31 Cold weather in January causes “Market Dislocation” Gas pipeline capacity tight and oil displacing gas Generation peakers running as “base load” Power prices volatile — ranging from near $0.0 to $1,116 mW/h
Slide 9: Regional Energy Policy Developments
<— “Yt Regional Energy Policy Developments SX NR soy *NESCOE & ISO-NE Transmission Gas Pipeline ¢Grid Modernization Docket Comprehensive Energy Strategy ¢Canadian Hydro elnterest in Energy Policy is Picking Up
Slide 10: Cost Control
ae Cost Control
Slide 11: Utilities
Northeast Utilities
Slide 12: New England's Current Energy Environment Provides Significant Opportunities for NU
New England’s Current Energy Northeast Usllities Environment Provides Significant Opportunities for N > New England electric generation market increasingly dependent on natural gas as a primary fuel...leading to extreme price volatility and potential challenges to grid reliability > Additionally, nu
Slide 13: Natural Gas: Increased Supply, Lower Prices...
Northeast Usllities Natural Gas: Increased Supply, Lower Prices... Abundant domestic supplies... ... leading to forecast low prices. + Marcellus Shale is a “game changer” * Oil and natural gas prices have with enormous potential for the region: diverged to an unprecedented degree - Abundant 100+ yea
Slide 14: ... Have Made Natural Gas Units the Dominant Generators in New England
... Have Made Natural Gas Units the SD orient PET Dominant Generators in New : 7 S . England...Except When It’s Cold Sh = 2012 New England Fuel Mix Fuel Mix During Peak on 1/7/14 m@ Natural Gas m Nuclear mi Oil & Coal ™ Other Source: ISO-NE, Net Energy by Source
Slide 15: But Those Oil & Coal Units Are Retiring
Northeast Utilities But Those Oil & Coal Units Are Retiring + — Recentannouncements: Vermont Yankee to close in Q4 2014; Brayton Point, Norwalk Harbor and Bridgeport Harbor 2 to close in June 2017 New England Capacity Resources at Risk of Retirement ™w Maximum | in-service Maximum | in-service Assum
Slide 16: Additionally, New England Renewable, GHG Reduction Requirements are Rising Rapidly
Additionally, New England Renewable, Northeast Utilities GHG Reduction Requirements are Rising Rapidly B a RPS requirements present a significant challenge: g Bee * Class | demand to double by 2022 (RPS Gap) Poa © sen * Even if the region can reduce the RPS Gap, the annual 2 RPS Gap of 9 Twhr compli
Slide 17: Quebec
Quebec # Significant hydro, wind resources to the north i x- Drummondville Sherbrooke / : RPS requirements rise every year (24 1 ' Vermont he { l Significant demand to the south Policymakers understand the need: .. the New England States, through NESCOE, have agreed that one or more request for prop
Slide 18: These interfaces, or "bottlenecks" often result in curtailment of generation
These interfaces, or “bottlenecks” often result in curtailment of generation Mageiueies * “Locked in” generation amounts shown are based on nameplate system dispatch Reeuio mae Led + changes continuously due to multiple re og tecsae system conditions - generation, economic dispatch, system load, win
Slide 19: All Solutions Require Significantly Increased Transmission Investment
Northeast All Solutions Require Significantly en Increased Transmission Investment Connects new clean resources * Canadian hydroelectric power + Northern New England wind development Vv Vv Enables plant retirements without disruption Vv Reduces over reliance on natural gas Vv Ensures reliability for
Slide 20: Transmission Investing $4.3 Billion From 2013-2017, Up 15% From Previous Plan
Transmission Investing $4.3 Billion From a © Ve 2013-2017, Up 15% From Previous Plan : fe Actual Forecast $660M $3.7 Billion Northen Pass HVDC K K Line to Canada US portion estimated at $1.4B in 5 year period NEEWS projects progressing NU’s share estimated at $1.3B; $448M in 4 year period ‘Base Rela
Slide 21: Changes in 2013-2017 Capital Program Since October 2012 Analyst Day
Northeast Changes in 2013-2017 Capital Program om Since October 2012 Analyst Day $365 $4,347 $4,300 ‘$4,200 $4,100 $4,000 $234 $3,900 $3,800 $3,732 $(99) $88 saz00 | | $3,500 ‘October 2012 Timing of Some GSRP Completed Stamford/ NH 10-yr Study Additional Base NPT Re-estimate Current 2013- $ in Milli
Slide 22: Transmission Rate Base Growth Projections
Northeast Usilities Transmission Rate Base Growth Projections Transmission accounts for about 50% of EPS growth through 2017 $8,000 11% CAGR $7,115 $7,000 - $6,000 - $5,581 $5,150 $4,756 $5,000 $4,231 $4,475 $ in Millions $4,000 $3,000 22 $962 $2,000 — $1,000 - $0 2012A 2013E 2014E 2015E 2016E 2017E
Slide 23: NPT - Overview
NPT - Overview 1,200 MW of clean energy $1.4 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 connect to the New England bulk powe
Slide 24: NEEWS: A $1.3 Billion Success Story
Northeast Utilities NEEWS: A $1.3 Billion Success Story Greater Springfield Reliability Project Interstate Rel + Joint project with National Grid (NU in CT; NGrid + In-service: November 2013 in MA& RI) + Completed for 6% below $718 million budget * CT section approved by Siting Councilin January 201
Slide 25: NU's Investment in Transmission: Big Payoff for Customers
Northeast Utilities NU’s Investmentin Transmission: Big Payoff for Customers Actual New England Congestion Costs Reported in the ISO-NE Markets Report 600 $500 ee S383 a $359 g s 2 $200 o $200 $133 $100 $82 c $0 a 2005 2006-~=S««2007-=«2008=S 2009S D012 2 “Final 2013 figures not yet available 25
Slide 26: Previously identified reliability projects beyond 2017
Previously identified reliability projects beyond 2017 Moving renewable power to load Generation retirements Physical security mandates Cyber security mandates Storm and flood hardening FERC Order 1000 26
Slide 27: NU Natural Gas LDCs: Significant Expansion Ahead
NU Natural Gas LDCs: Significant Expansion Ahead Northeast Utilities = Shale gas lowering natural gas prices in Northeast = Qil heat much more expensive, yet remains dominant fuel source = Huge conversion potential = Favorable enabling legislation in Connecticut = Long-term pipeline contracts, stora
Slide 28: Annual Customer Additions Doubled Since 2009 and Ready to Grow Faster
Annual Customer Additions Doubled Since 2009 and Ready to Grow Faster Conversions will accelerate due to new Connecticut rules Timely cost recovery fully tracked without rate cases New rates and incentives More flexibility for reducing/eliminating construction reimbursements to LDCs Conversions of r
Slide 29: Potential for 151,000 Additional New Heating Customers Over the Next Ten Years
Potential for 151,000 Additional New Northeast Usilities Heating Customers Over the Next Ten Years Potential conversion targets by year 18,000 | —————————_ Expansion Plan Timeframe 2014-2023, 16,000 14,000 12,000 ~} 10,000 + = NSTAR Gas 8,000 ~ 6,000 ~ Yankee Gas 4,000 ~ 2,000 ~) 0 2014 «2015-2016 «
Slide 30: Additional Opportunities For Our Natural Gas Business
Additional Opportunities For Our Natural Gas Business > Accelerated expansion opportunities, infrastructure replacement at NSTAR Gas > LNG storage enhancements > Compressed natural gas (CNG) as a transportation fuel > CNG in lieu of pipelines in more remote areas
Slide 31: Utilities
Northeast Utilities
Slide 32: Financial Overview
theast Usilities Financial Overview * 2013 performance 2013 financial results Operating performance * EPS guidance 2014 Long-term financial outlook * Regulatory update * Financial strength * Key takeaways
Slide 33: 2013 Earnings Results — 11% Growth
Northeast Usilities 2013 Earnings Results — 11% Growth Fourth Quarter Full Year Electric Distribution & Generation] $0.25/share $1.35/share Electric Transmission $0.23/share $0.91/share Natural Gas Distribution $0.08/share $0.19/share NU Parent & Other $0.01/share* $0.08/share* Total Recurring Earni
Slide 34: Fifth Consecutive Year of Double Digit Total Shareholder Returns
Northeast Fifth Consecutive Year of Double Digit Te ie Shareholder Returns Shareholder Returns Significantly Outperform Industry Cumulative Returns 2013 3-Year | 5-Year 10-Year | 15-Year EEI Index 13.0% 38.4% 64.0% 143.9% 182.1% S&P 500 32.4% 56.8% 128.2% 104.3% 98.5% 34
Slide 35: Significant Improvements in Key Performance Measures
Significant Improvements in Key Performance Measures jortheast Utilities NU Months Between Interruptions NU Average Restoration Time 2011 2012 2013 2011 2012 2013 35
Slide 36: 2014 Guidance
Northeast Usllities 2014 Guidance EPS Range $2.60 - $2.75 Key Drivers Compared to 2013 Distribution revenue growth of $35M - $40M O&M reduction—4% Transmission rate-base growth of 6% - 7% ¢ Depreciation and property taxes e Interest costs 26
Slide 37: Longer Term Growth — Exceeds Industry
Northeast Utilities Longer Term Growth — Exceeds Industry =—> 2012 - 2015: 6 - 9% CAGR =— 2012 - 2017: 6 - 8% CAGR Key Drivers for Long Term Guidance: ¢ Significant growth in FERC-regulated transmission — 11% CAGR ¢ 3%- 4% annual decline in O&M through 2017 ¢ Annual retail sales growth—Electric 0.0%
Slide 38: Dividend Growth In-Line with Earnings Growth
Northeast Utilities Dividend Growth In-Line with Earnings Growth Annualized Dividend $1.10 $1.025 2010 2011 2012 2013 2014 * Reflects impact of the merger 239
Slide 39: Transmission Portion of NU Rate Base
Northeast Utilities Transmission Portion of NU Rate Base Rate Base By Business $17.2billion EES Expands $13.1billion $3 billion increase in Transmission Rate Base over 5 years Combined 2012 Year-End Projected Combined 2017 Rate Base Rate Base M@ ElectricTransmission [ Electric Distribution —) Gas Di
Slide 40: Transmission expected to account for about 50% of consolidated earnings growth through 2017
Transmission expected to account for about 50% of consolidated earnings growth through 2017 $287.0 2011 2004 2005 2006 2007 2008 2009 2010 *Includes NSTAR Electric transmission earings for last 9 months of 2012 and full year 2013. 40
Slide 41: Natural Gas Segment Earnings Could Double in Next Decade
Natural Gas Segment Earnings Could -m va Double in Next Decade Growth driven by: $60.9M * Increased conversions * New construction Natural Gas Segment Earnings * Additional investments 2013A <—$—___> 2018E <> 2023E 42
Slide 42: Long-term Rate Stability
2 Long-term Rate Stability ] | I Jurisdiction Company Commentary NSTAR Electric Base rates frozen through 12/31/15 Massachusetts NSTAR Gas Base rate review filings likely 2016 - 2017 WMECO Base rate filing expected in late spring- CL&P effective 12/1/14 Connecticut Yankee Gas Base rate review requir
Slide 43: Regulatory update dockets
ALJ decision - 8/6/13 Interest rates have moved higher since the record closed in April 2013 Decision expected in first half 2014 @usmar PSNH storm costrecovery in place NSTAR 2011 storm cost recoveryin place CL&P seeking to recover $414 million from 2011 & 2012 storms; draft decision issued 2/3/14
Slide 44: Very Strong Financial Condition
Northeast Usilities Very Strong Financial Condition Northeast Utilities Wisconsin Energy Con Edison s Credit Ratings Distribution A A BBB+ BBB-A Below Investment Grade CenterPoint Energy National Grid Holdings Xcel Energy OGE Energy Alliant Energy Integrys 10. Dominion PeENavrene 11. Vectren Corp. 1
Slide 45: A Rare Investment Opportunity...
A Rare Investment Opportunity... * Projected long-term EPS growth of 6%-8% - nearly 2X industry Unique transmission growth platform Unique opportunity to reduce O&M by 3% - 4% annually Unique robust gas expansion plans * Projected dividend growth of 6%-8% - nearly 2X industry * Very strong financial
Slide 46: Utilities
Northeast Utilities
Slide 47: Projected Transmission Capital Expenditures
Northeast Utilities Projected Transmission Capital Expenditures $1,400 $1,245 $1,200 ~ $1,000 ~ $880 $898 $300 $660 $664 $ in Millions $600 - $400 $200 $0 - 2013A 2014E 2015E 2016E 2017E =CL&P = =mNSTAR Electric = =PSNH = WMVECO — @ NPT 48
Slide 48: Projected Distribution/Generation Capital Expenditures
Expenditures SS tities \ ei Projected Distribution/Generation Capital Sn — $1,000 + $895, $892 $900 $868 $861 $800 -— _ - _ ~ _ _ ~ 2 $600 = «© $400 $200 $189 $201 $227 $0 2013A 2014E 2015E 2016E 2017E = Natural Gas Distribution Generation _» Electric Distribution 49
Slide 49: Total Projected Capital Expenditures
Northeast Usilities Total Projected Capital Expenditures $ in Millions $2,400 $2,000 - $1,600 $1,200 $800 $400 $0 $2,189 $1,873 $1,835 $1,673 $1,600 $868 $900 $1,245 $880 $898 $660 $664 2013A 2014E 2015E 2016E 2017E MiTransmission MDistribution andGeneration | Other, Primarily IT 50
Slide 50: Financing Activities Completed or Planned
Northeast Utilities Financing Activities Completed or Planned = Implemented new commercial paper program at NU DEBT ISSUED SINCE MERGER DEBT RETIRED SINCE MERGER Security Date ‘Coupon Securi Coupon \WMEGO Unsecured 5180 10182 3.50% CLAP PoRBS stad ronnz | 535%-s95% NSTAR Electric Unsecured ‘400 rons
Slide 51: Transmission Has Invested $4.2 Billion from 2001-2012
Northeast Utilities Transmission Has Invested $4.2 Billion from 2001-2012 Historic $4.2 Billion _ MN - / $1,200 a NEEWS Projects $1,000 GSRP completed in 2013 , IRP & GHCC in progress ~ Sa $600 400 $200 $0 ot 2002 204 004 2005 2008 007 20 2000 010 2011 2012 ™Base Reliability | "Major Southwest CT =
Slide 52: NPT - Expected Schedule
NPT -— Expected Schedule ey. se Le 2013 2014 2015 2016 2017 ed * x New route DOE draft announced; EIS: NH Start In Service DOE filing SEC Tiling construction updated NPT Permitting Process Who Timeline N.H. Site Evaluation Committee Application expected in 2014 Draft Environmental Impact Statement (
Slide 53: 2014-2017 NU Transmission Capital Program
Northeast Utilities 2014-2017 NU Transmission Capital Program Other Projects — In Millions CL&P NSTAR Electric PSNH WMECO Other Transmission Capital Projects In RSP | Not Yetin RSP ___ Total $990 Million Se 333 High confidence level in “Other 296 Projects”, 75% in RSP as required. 0 224 Breakdown of
Slide 54: Overview of Other Major Projects
Northeast Utilities Overview of Other Major Projects Stamford / Greenwich / Southwest CT Reliability Stamford CT - A new underground cable from Glenbrook Substation to South End Substation to address reliability concems in the area + Project has an 3.9 approval; construction will begin in March with
Slide 55: Key Regulatory Dockets - FERC ROEs
Northeast Usilities Key Regulatory Dockets - FERC ROEs 13.50% 13.10% 13.00% 12.89%) 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 MN Service Network Service Regional Underground Base Projects I NU's Local Network Service Ta
Slide 56: Customer Growth Has Picked Up for NU's Natural Gas Business
Customer Growth Has Picked Up for NU’s Natural Gas Business NU Natural Gas Business — NSTAR Gas and Yankee Gas 2007-2013 Annual Customer Additions (Conversions and new construction) Natural gas prices 12,000 10,000 ‘4 s = 8,000 = z & 6000 3 10,356 3 % 4,000 8,874 2 6,802 6,628 & not 5,162 5,575 2,00
Slide 57: NU Generation Fleet
NU Generation Fleet Northeast Usilities PSNH 1,200 MW of coal, hydro, biomass, fossil peaking units Used with purchases to serve about 50 percent of PSNH customer load Rate base of approximately $760 million Significant investment in past decade to reduce emissions > SCR at Merrimack installed in 19