Eversource Energy (d/b/a) · NYSE:ES
Eversource Energy (d/b/a) — Northeast Utilities — EEI Financial Conference 2006
58 slides from Eversource Energy (d/b/a)'s conference presentation, Nov 6, 2006
Slide 1: EEI Financial Conference
EEI Financial Conference NOVEMBER 6, 2006 Energy / Growth / Leadership 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: Agenda
Agenda 2006 results and guidance Strategic transformation 2007 guidance 2007-2011 capital expenditures and rate base projections Distribution, PSNH regulated generation businesses Transmission business
Slide 4: 2006 EPS Results and Guidance
$0.34 $1.57 Consolidated 2006 earnings guidance unchanged 2006 EPS Results and Guidance $1.70 $0.00 $1.33 $0.37 $0.00 $0.20 $0.40 $0.60 $0.80 $1.00 $1.20 $1.40 $1.60 $1.80 Regulated/Distribution Generation Transmission Parent Total Regulated/Parent $0.70 $1.28 $0.00 $0.20 $0.40 $0.60 $0.80 $1.00 $1.
Slide 5: Strategic Progress – Last Year's Decision
Announced November 7, 2005 Strategic Progress – Last Year’s Decision Divest all competitive businesses Focus on regulated utility infrastructure capital expenditure programs.
Slide 6: Strategic Progress - Divestitures
Northeast Utilities Electric Distribution Competitive Regulated Electric Transmission Regulated Generation Gas Distribution Retail Sold 6/1/06 Wholesale New England Contracts Divested 12/31/05 Services 5 of 6 Sold Generation Sold 11/1/06 We are nearly complete transforming ourselves into a 100% regu
Slide 7: Strategic Progress: Investing In Regulated Businesses
Strategic Progress: Investing In Regulated Businesses Transmission Bethel-Norwalk 100% complete Middletown-Norwalk 9% complete Glenbrook Cables under construction Long Island Cable under construction Distribution/Generation Northern Wood in final testing Waterbury LNG 85% complete $654 $766 $880 200
Slide 8: Benefits Of Transformation
Each reason provided a year ago has been validated Benefits Of Transformation Simplified our business model and strategy Reduced our business risk and improved financial flexibility Capitalized on increasing valuation of generation Enhanced our earnings visibility Increased our focus on regulated in
Slide 9: The Next Five Years
The Next Five Years $1,217 $1,142 $890 $797 $896 Projected Capital Expenditures $890* $926* $773* $778* *November 2005 projections
Slide 10: Rate Base Composition
Electricity Transmission Electricity Distribution & Generation Transmission to comprise much larger share of total rate base Rate Base Composition 2005 Rate Base Composition 2011E Rate Base Composition 2005 Rate Base: $3.3 billion 2011E Rate Base: $7.9 billion Rate Base: $605 million (Actual 2005) ’
Slide 11: Guidance for 2007 and Beyond
$1.30 - $1.55/share in 2007 Compound annual EPS growth rate of 10-14% from year-end Dividend policy, earnings growth create attractive total shareholder return Guidance for 2007 and Beyond
Slide 12: NU's Presence In New England
NU will continue to provide leadership in developing region’s energy policy NU’s Presence In New England Largest transmission owning IOU in New England Majority of the ISO identified transmission need is in the NU franchise National leader in transmission technology One of the largest landowners in
Slide 13: Additional Opportunities Not In This Forecast
Additional Opportunities Not In This Forecast Transmission Regulated generation New technologies
Slide 14: Financial
Financial
Slide 15: Year-To-Date Results
$76.4 Year-To-Date Results $83.8 ($344.1) ($239.9) $150.4 $43.6 ($73.7) $123.6 ($10.1) $30.5 $3.3 ($400.0) ($300.0) ($200.0) ($100.0) $0.0 $100.0 $200.0 Distribution/ Regulated Generation Transmission Parent Competitive Total $83.8 ($344.1) ($239.9) $150.4 $43.6 ($73.7) $123.6 ($10.1) $30.5 $3.3 ($4
Slide 16: Third Quarter Regulated Results
Results higher due to transmission, lower CL&P tax expense $10.4 $13.7 Third Quarter Regulated Results $16.9 $3.7 $26.9 $84.4 $5.8 $2.8 $87.7 $10.5 ($4.2) ($5.3) ($10.0) $0.0 $10.0 $20.0 $30.0 $40.0 $50.0 $60.0 $70.0 $80.0 $90.0 $100.0 CL&P PSNH WMECO Yankee Total $9.2 $1.1 $15.2 $2.1 $0.9 $11.8 $1.
Slide 17: 2006-2007 EPS Projections
2006-2007 EPS Projections Distribution/Regulated Generation $0.75 - $0.85 $0.80 - $0.90 Transmission $0.34 - $0.37 $0.50 - $0.60 Parent/Other Affiliates Breakeven $0.00 - $0.05 Competitive N/A Breakeven Total $1.09 - $1.22 $1.30 - $1.55 *2006 results exclude $0.48 effect of CL&P Private Letter Rulin
Slide 18: 2007 and 2008 Earnings Drivers
Distribution Regulated Generation Transmission Parent Competitive 2007 and 2008 Earnings Drivers Business Drivers • Rate base growth • Electric and gas retail sales up about 1% • Operating costs Regulatory Drivers • WMECO rate settlement • PSNH, Yankee Gas rate case outcomes • CL&P 1/1/07 $7 million
Slide 19: 2007-2011: Capital Expenditures and Depreciation
Five-year 2007-2011 capital spending of $4.9 billion, compared with last year’s 2006-2010 $4.3 billion plan 2007-2011: Capital Expenditures and Depreciation $0 $200 $400 $600 $800 $1,000 $1,200 $1,400 Distribution Capex From 11/05 Forecast Transmission Capex From 11/05 Forecast Distribution Capex Fr
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Slide 22: Projected Combined Rate Base
$1,072 $1,776 $2,337 $2,531 $2,726 $2,995 $3,465 $3,979 $4,249 $4,474 $4,711 $4,909 Regulated Rate Base 2006-2011 CAGR of 12% Supports EPS CAGR of 10-14% Projected Distribution & Generation Rate Base CAGR of 7% Transmission Rate Base 2006-2011 CAGR of 23% Projected Combined Rate Base $0 $1,000 $2,00
Slide 23: Financing The Growth: 2007
Projected Uses Projected Sources Cash from generation sale helps to comfortably fund requirements Financing The Growth: 2007 • Cash from generation sale: $1 billion • Regulated company long-term debt issuances: $600-$700 million • Cash from operations: $500-$600 million • Capital expenditures: $1.2
Slide 24: Ais ales System
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Slide 25: Capitalization at September 30, 2006
NU’s leverage comfortably within its targets 1.9% 5.2% 47.9% 40.1% 4.9% 1.9% Capitalization at September 30, 2006 ($ millions) $2,957 $304 $320 $2,473 $116 Long-Term Debt Common Equity NGC Debt Short-Term Debt Preferred Stock
Slide 26: Distribution and Generation
Distribution and Generation
Slide 27: 2007 will be a pivotal year for distribution businesses
2007 will be a pivotal year for distribution businesses Key Issues For Next Fourteen Months Successful distribution rate cases Addressing reliability challenges resulting from strong peak load growth, aging equipment Managing the business in a modest sales growth environment Bringing major projects
Slide 28: CL&P distribution earnings will lag until 2008 rate relief
CL&P distribution earnings will lag until 2008 rate relief CL&P Rate Case Distribution only Transmission, federally mandated charges, supply costs tracked through other charges To be filed around 7/1/07 New rates to be implemented by 1/1/08 Need to improve ROE level Distribution capital spending wil
Slide 29: Load factors continue to fall as peak loads rise
Load factors continue to fall as peak loads rise Peak Load Growing Much Faster Than Overall Consumption 0.9 1.0 1.1 1.2 1.3 1.4 1.5 Residential Use Per Customer Summer Peak 0.9 1.0 1.1 1.2 1.3 1.4 1.5 1.6 Residential Use Per Customer Summer Peak CL&P Residential Use Per Customer and Summer Peak Weat
Slide 30: WMECO rate settlement a fair resolution
WMECO rate settlement a fair resolution WMECO Rate Case Filed joint settlement with AG and other parties on October 19 $1 million distribution increase on 1/1/07; $3 million distribution increase on 1/1/08 New trackers for pension, other post-retirement benefits, and certain uncollectibles and capit
Slide 31: PSNH distribution request modest compared with recent rate reduction
PSNH distribution request modest compared with recent overall rate reduction PSNH Rate Case Filed in May 2006 for $49 million annualized permanent rate increase Interim $24.5 million temporary rate increase effective 7/1/06 Overall bill declined 15 percent due to lower stranded cost recovery, and en
Slide 32: PSNH rates now lowest in New England
PSNH rates now lowest in New England 1.34 1.91 0.72 0.48 2.75 2.90 2.70 9.47 10.36 8.18 1.83 0.80 0.43 Average Electric Rates Other includes C&LM, CTA, Stranded Costs, Consumption Tax, SBC, DSM, Transition and Renewables. Average Rates as of 8/1/06 for CL&P, 10/1/2006 for WMECO and 7/1/06 for PSNH T
Slide 33: Yankee financial performance expected to improve
Yankee financial performance expected to improve beginning with third quarter 2007 Yankee Rate Case To be filed around 1/1/07 and effective around 7/1/07 Reflecting LNG facility in base rates key item Annual cost likely to be offset by lower commodity, pipeline capacity charges Additional rate relie
Slide 34: Major Projects
Major Projects Yankee Gas’s 1.2 Bcf liquid natural gas production facility in Waterbury, CT $108 million cost About 85 percent complete Scheduled to be in service for 2007- 2008 heating season Will enhance reliability, help insulate customers from price volatility Conversion of PSNH’s 50 MW Schiller
Slide 35: Future Regulated Generation Opportunities
Potential new generation not reflected in long-term growth forecasts Future Regulated Generation Opportunities Under Way: • Legislation to install scrubber at Merrimack approved in spring 2006 • Projected completion: Mid-2013 • Estimated cost: $250 million The Future: • Connecticut legislature may r
Slide 36: Transmission
Transmission
Slide 37: Northeast
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Slide 38: 2006 Transmission Highlights
2006 Transmission Highlights Our transmission system operated well over the summer Peak load grew by more than 4% in New England in 2006 Peak load grew by 14% (3,000 MW) in New England since 2003 We have maintained excellent safety and environmental records Project construction remains on-time and o
Slide 39: NU's Transmission Revenue Requirements are 100% FERC Regulated
NU’s Transmission Revenue Requirements are 100% FERC Regulated NU’s FERC-approved transmission tariffs fully track all transmission costs We have forward-looking rates, adjusted every six months, with an annual true-up provision to ensure timely recovery of transmission investment FERC ROE decision
Slide 40: Four Major SW Connecticut Projects – A $1.65 Billion Investment
Four Major SW Connecticut Projects – A $1.65 Billion Investment SWCT improvements have been a top priority in each of ISO-NE’s last four regional transmission expansion plans. Our four major projects there total about $1.65 billion in investment. 50% of CT Load Bethel-Norwalk 345 kV Underground & Ov
Slide 41: NU is a Major Part of New England's Transmission Infrastructure Upgrade
55% NU 14% NGRID 12% Vermont 9% NST 6% UI Under Construction ISO-NE Approved Future Regional System Plan Projects Legend Complete Manchester-Hopewell Oxford Substation Fitzwilliam Substation Barbour Hill Substation Frost Bridge Corridor Gosling Road Substation Berkshire Solution Springfield Solution
Slide 42: § Millions
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Slide 44: The Next Five Years: Transmission Capital Expenditures
$1.1 Billion of major CT projects in 2007-2011 forecast period; $1.65 billion in total SNETR family of projects estimated at $710 million during the 2007- 2011 forecast period The Next Five Years: Transmission Capital Expenditures $0.00 $100.00 $200.00 $300.00 $400.00 $500.00 $600.00 $700.00 $800.00
Slide 45: Southern New England Transmission Reinforcement Projects Are the Next Major Undertaking
Construction Siting 2005 2006 2007 2008 2009 2010 2011 2012 2013 Southern New England Transmission Reinforcement Projects Are the Next Major Undertaking Planning The SNETR projects solve four area problems: 1. Interstate transfer capability 2. Connecticut East-West transfer capability 3. Springfield
Slide 46: Looking Beyond the Five-Year Horizon
Looking Beyond the Five-Year Horizon The Southern New England Transmission Reinforcement family of projects will be our next major undertaking ISO-NE’s Regional System Plan has identified longer-term projects within our franchise ISO-NE is planning beyond the 30 GW grid to a 50 GW grid Providing add
Slide 47: NU's Transformation Producing Solid Results, Prospects
NU’s Transformation Producing Solid Results, Prospects Strategic plan elements announced one year ago are on or ahead of schedule Financial flexibility is significantly improved Transmission business is growing rapidly to meet customer needs Distribution results expected to improve with reasonable r
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Slide 52: Projected Transmission Year-End Rate Base
$862 $2,073 $2,180 $2,428 $134 $172 $273 $279 $332 $322 $1,927 $1,520 Transmission Rate Base 2006-2011 CAGR of 23% Projected Transmission Year-End Rate Base $76 $84 $137 $179 $214 $245 $0 $500 $1,000 $1,500 $2,000 $2,500 $3,000 $3,500 CL&P PSNH WMECO
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Slide 55: Projected Distribution and Regulated Generation Year-End Rate Base
$1,790 $1,991 $2,116 $2,254 $2,393 $2,499 $837 $953 $1,073 $1,135 $1,207 $1,275 $341 $365 $384 $408 $424 $438 $497 $670 $676 $677 $687 $697 Projected Distribution & Generation Rate Base CAGR of 7% Projected Distribution and Regulated Generation Year-End Rate Base $0 $500 $1,000 $1,500 $2,000 $2,500
Slide 56: Projected Distribution Capital Expenditures
$206 $271 $260 $266 $270 $279 $105 $128 $134 $112 $128 $148 $28 $34 $32 $31 $31 $31 $86 $62 $42 $41 $41 $41 Projected Distribution Capital Expenditures $0 $100 $200 $300 $400 $500 $600 CL&P PSNH WMECO Yankee Gas
Slide 57: Projected Transmission Capital Expenditures
$420 $600 $517 $343 $231 $333 $87 $85 $37 $35 $6 $54 $45 $43 $42 $25 $17 $10 Projected Transmission Capital Expenditures $0 $100 $200 $300 $400 $500 $600 $700 $800 CL&P PSNH WMECO
Slide 58: Significant capital spending in 2007-2008
Significant capital spending in 2007-2008 2007-2011: Capital Expenditures and Depreciation $766 $880 $1,217 $1,142 $890 $797 $896 $320 $309 $303 $290 $265 $234 $215 $0 $200 $400 $600 $800 $1,000 $1,200 $1,400 Actual 2006 Est. 2007 Est. 2008 Est. 2009 Est. 2010 Est. 2011 Est. Regulated Capex (Incl. A