8-KMaterial Agreements

EVERSOURCE ENERGY 8-K Report, Material Agreement (Oct 5, 2010)

Filed October 5, 2010For Securities:ES

Summary

Eversource Energy (then Northeast Utilities) filed this Form 8-K on October 5, 2010, to report the entry into a material definitive agreement. Specifically, Northern Pass Transmission LLC (NPT), a joint venture 75% owned by Northeast Utilities and 25% by NSTAR, entered into a Transmission Service Agreement (TSA) with Hydro Renewable Energy, an indirect subsidiary of Hydro-Québec. This agreement is for the development of the Northern Pass Transmission Line, a new high-voltage direct current (HVDC) transmission line originating at the Canadian border and extending to southern New Hampshire. The TSA grants Hydro Renewable Energy firm electric transmission rights for 1,200 megawatts (MW) over the Line for a substantial forty-year term. This strategic agreement is a significant step towards monetizing a major infrastructure project that will connect renewable energy sources to the New England market. The filing outlines the projected timeline for regulatory approvals, construction, and the commencement of power flow, as well as the cost structure and financing arrangements for the project.

Key Highlights

  • 1Execution of a Transmission Service Agreement (TSA) by Northern Pass Transmission LLC (NPT) with Hydro Renewable Energy (Hydro-Québec subsidiary) for the Northern Pass Transmission Line.
  • 2The TSA secures 1,200 MW of firm electric transmission rights for Hydro Renewable Energy for a 40-year term.
  • 3NPT is a joint venture with Northeast Utilities (now Eversource Energy) holding a 75% stake and NSTAR holding 25%.
  • 4The Northern Pass Transmission Line is a new HVDC line connecting the Canadian border to southern New Hampshire.
  • 5NPT expects to file the TSA with FERC in Q4 2010 and begin construction in late 2012 or early 2013, with power flow expected in H2 2015.
  • 6Projected total cost for the Line is $1.1 billion, with Northeast Utilities' share estimated at $830 million.
  • 7The agreement includes cost-based rates with a projected return on equity (ROE) of 12.56% during construction, transitioning to ISO-New England regional rates plus 1.42% upon commercial operation.

Frequently Asked Questions

The primary purpose of this 8-K filing is to announce and detail a material definitive agreement: the Transmission Service Agreement (TSA) entered into by Northern Pass Transmission LLC (NPT) with Hydro Renewable Energy. This agreement is crucial for the development of the Northern Pass Transmission Line.

The TSA grants Hydro Renewable Energy firm electric transmission rights for 1,200 megawatts (MW) over the Northern Pass Transmission Line for a term of forty years. The rates will be cost-based, determined by a FERC-approved formula, and include a specific return on equity.

The Northern Pass Transmission Line is a proposed new high-voltage direct current (HVDC) transmission line connecting the Canadian border in New Hampshire to southern New Hampshire. It is being developed by Northern Pass Transmission LLC (NPT), a joint venture where Northeast Utilities (now Eversource Energy) owns 75% and NSTAR owns 25%. Hydro Renewable Energy, a subsidiary of Hydro-Québec, is the counterparty to the TSA, securing transmission capacity.

The total estimated cost for the Line is $1.1 billion, with Northeast Utilities' share projected to be $830 million. NPT anticipates commencing construction in late 2012 or early 2013, with the line expected to be operational in the second half of 2015, contingent upon timely regulatory and permitting approvals.