transmission leadership forum
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Transmission Leadership Forum. JANUARY 13, 2011. Safe Harbor Provisions. - PowerPoint PPT PresentationTRANSCRIPT
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Transmission Leadership Forum
JANUARY 13, 2011
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This presentation contains 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 statements” within the meaning of the Private Securities Litigation Reform Act of 1995. In some cases, a listener or reader can identify these forward-looking statements through the use of words or phrases such as “estimate”, “expect”, “anticipate”, “intend”, “plan”, “project”, “believe”, “forecast”, “should”, “could”, and other similar expressions. Forward-looking statements are based on the current expectations, estimates, assumptions or projections of management and are not guarantees of future performance. These expectations, estimates, assumptions or projections may vary materially from actual results. Accordingly, any such statements are qualified in their entirety by reference to, and are accompanied by, the following important factors that could cause our actual results to differ materially from those contained in our forward-looking statements, including, but not limited to, actions or inaction of local, state and federal regulatory and taxing bodies; changes in business and economic conditions, including their impact on interest rates, bad debt expense and demand for our products and services; changes in weather patterns; changes in laws, regulations or regulatory policy; changes in levels and timing of capital expenditures; disruptions in the capital markets or other events that make our access to necessary capital more difficult or costly; developments in legal or public policy doctrines; technological developments; changes in accounting standards and financial reporting regulations; fluctuations in the value of our remaining competitive electricity positions; actions of rating agencies; the effects and outcome of our pending merger with NSTAR; and other presently unknown or unforeseen factors. Other risk factors are detailed from time to time in our reports to the Securities and Exchange Commission (SEC). Any forward-looking statement speaks only as of the date on which such statement is made, and we undertake no obligation to update the information contained in any forward-looking statements to reflect developments or circumstances occurring after the statement is made or to reflect the occurrence of unanticipated events.
This presentation does not include any information concerning our proposed merger with NSTAR. Please refer to our and NSTAR’s joint Registration Statement Form S-4 which was filed with the SEC on November 22, 2010 for information concerning this proposed merger.
Please refer to our reports to the SEC for further details concerning the matters described in this presentation.
Safe Harbor Provisions
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How Investors Analyze NU Today
• 2010 share price performance
• Transmission, as investors see the business
• Distribution rate cases and results
• Generation initiatives
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2010 Stock Comparisons
12/31/2010 11/30/2010 Difference 12/31/2010 09/30/2010 Difference 12/31/2010 12/31/2009 Difference
Northeast Utilities $31.88 $31.10 2.51% $31.88 $29.57 7.81% $31.88 $25.79 23.61%
NU Comparators Avg. 1.80% 1.97% 11.68%
Primarily Regulated Companies Avg. 3.11% 3.38% 7.59%
Utilities with Merchant Generation Avg. 3.94% -2.23% -7.24%
Pure Merchants Avg. 7.25% 2.83% -19.71%
Dow Jones Industrial Avg. 11577.51 11006.02 5.19% 11577.51 10,788.05 7.32% 11577.51 10428.05 11.02%Dow Jones Utility Avg. 404.99 391.4 3.47% 404.99 398.23 1.70% 404.99 398.01 1.75%NASDAQ 2652.87 2498.23 6.19% 2652.87 2,368.62 12.00% 2652.87 2269.15 16.91%S&P 500 Avg. 1257.64 1180.55 6.53% 1257.64 1,141.20 10.20% 1257.64 1115.1 12.78%
Month Quarter Year To Date
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NU Comparator Companies
How Did NU Shares Perform in 2010?Actual YTD
TSR
Total Shareholder Return for Comparator Companies Through 12/31/10
Rank Company TSR
1 NU 28.3%
2 LNT 27.2%
3 OGE 27.1%
4 CMS 23.6%
5 TEG 22.4%
6 WEC 21.7%
7 NI 21.3%
8 NST 19.8%
9 PNW 19.7%
10 NVE 17.7%
11 XEL 16.1%
12 TE 15.4%
13 POM 15.3%
14 ED 14.9%
14 CNP 14.2%
15 SCG 13.2%
16 PGN 12.6%
17 DTE 8.9%
18 AEE 6.9%
20 AYE 6.0%
21 GXP 4.7%
GXPAYEAEEDTENU LNT OGE CMS TEG WEC NI NST PNW NVE XEL TE POM ED CNP SCG PGN
-5.0%
0.0%
5.0%
10.0%
15.0%
20.0%
25.0%
30.0%
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NU Comparator Companies
2008 – 2010Actual YTD
TSR
Total Shareholder Return for Comparator Companies Through 12/31/10 Rank Company TSR
1 NST 33.1%
2 WEC 31.6%
3 TE 22.1%
4 XEL 20.5%
5 ED 19.9%
6 CMS 19.2%
7 PNW 17.3%
8 NU 13.8%
9 NI 12.9%
10 SCG 12.8%
11 CNP 8.4%
12 LNT 4.5%
13 NVE -8.2%
14 POM -24.6%
15 AEE -37.4%
16 AYE -59.3%
NST WEC TE XEL ED CMS PNW NU NI SCG CNP LNT
NVE POM AEE AYE
-60.0%
-50.0%
-40.0%
-30.0%
-20.0%
-10.0%
0.0%
10.0%
20.0%
30.0%
40.0%
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Transmission Now Represents More Than 50% of Regulated Earnings
$41.1
$122.3$171.6
2005 12 Months Ended September 30, 2010
Regulated Net Income and EPS(In millions except EPS)
Distribution/Generation
Transmission
Net Income: $163.4Regulated EPS: $1.24
Net Income: $341.6Regulated EPS: $1.94
74.8%
25.2%50.2%
49.8%
$170.0
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$0.3
$42.8
$22.5
$64.8
($0.8)
$100.5
$0.1($0.5)
$45.2
$55.7
($10)
$10
$30
$50
$70
$90
$110
2009
2010
Third Quarter 2010 Results
Distribution and Generation
Transmission Parent/Other Competitive Total
Ear
nin
gs
Fo
r C
om
mo
n In
Mill
ion
s
147.5%
5.6%
55.1%
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Third Quarter 2010 Distribution and Generation Results
($4.5)
$10.7$11.4
$4.9
($2.9)
$3.7
$23.4
$31.5
($10)
$0
$10
$20
$30
$40
2009
2010
CL&P PSNH WMECO Yankee Gas
Ear
nin
gs
Fo
r C
om
mo
n In
Mill
ion
s
176.3%
118.7%
24.5%
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2010 EPS Guidance Raised in November
2009 ActualInitial
2010 Guidance
August
2010 GuidanceNovember 2010
Guidance
Net income attributable to controlling interest (GAAP)
$1.91 $1.80 - $2.00 $1.95 - $2.05 $2.10 - $2.20
Distribution/Generation $0.92 $0.95 - $1.05 $1.00 - $1.10 $1.10 - $1.20
Transmission $0.95 $0.90 - $0.95 $0.95 $1.00
Competitive $0.09 $0.00 - $0.05 $0.05 $0.05
NU Parent/Other ($0.05) ($0.05) ($0.05) ($0.05)*
NU Consolidated (Non-GAAP)
$1.91 $1.80 – $2.00 $1.95 – $2.05 $2.10 – $2.20*
*Excludes a $0.09 fourth quarter non-recurring tax gain at NU Parent and approximately $0.07 of NU-NSTAR merger related expenses that will be recorded in the fourth quarter
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Strong Dividend Growth Continued Through 2010
Dividend policy ($)
$0.00
$0.25
$0.50
$0.75
$1.00
$1.25
$1.50
$1.75
$2.00
$2.25
2006 2007 2008 2009 2010
0.0%
10.0%
20.0%
30.0%
40.0%
50.0%
60.0%
70.0%
62.5%
48.7%
44.3%
49.7%
$1.95–$2.05
$1.86²
$1.16¹
$1.59
$0.825$0.775
$0.725
$0.95
Payout ratiosEPS Dividends paid/declared per share
1 Excludes net income of competitive businesses, one-time CL&P tax reduction2 Excludes litigation settlement charge
$1.91
$1.025
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Investors Watching Closely as NEEWS Projects Advance
Greater Springfield Reliability Project
• Received siting approval in CT and MA
• Development and Management Plans approved by CT Siting Council
• Commence substation construction in MA: Dec. 2010
• Commence overhead construction in MA: Spring 2011
• Commence overhead construction in CT: early 2012
• Project in-service: late 2013
Interstate Reliability Project
• Joint project with National Grid (NU in CT; NGrid in MA & RI)
• ISO-NE confirmed need date in August 2010
• ISO-NE PAC process in late 2010
• File siting application in CT in mid/late 2011
• Siting decision in CT in mid/late 2013
• Commence construction: late 2013/early 2014
• Project in-service: late 2015
SPRINGFIELD
HARTFORD
345-kV SubstationGeneration Station345-kV ROW
115-kV ROW
Central ConnecticutReliability Project
InterstateReliability Project
Greater SpringfieldReliability Project
Central Connecticut Reliability Project
• Awaiting completion of ISO-NE’s reassessment of need and need date
• Project milestones estimated 12 months behind IRP
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Northern Pass Transmission – a $1.1 Billion Capital Investment
´
• To be owned by Northern Pass Transmission LLC - NU (75%) and NSTAR (25%)
• 1,200 MW transfer capability
• Northern terminus at Des Cantons (Québec), southern terminus in Franklin (New Hampshire)
• Québec terminal will convert the power from AC to DC (rectifier)
• US terminal will convert the power from DC to AC (inverter)
• Capital cost estimate for US segment: $1.1 billion
• TSA signed on October 4 and filed with FERC in December
• Permitting process began October 14 with U.S. DOE application
• PPAs under discussion
Des Cantons
HVDC Line
HVDC Converter Station
345-kV Line
Existing Deerfield Substation
Deerfield
Franklin
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Third Quarter 2010 Results Benefited From CL&P and PSNH Rate Decisions
• Five-year settlement approved by NHPUC on 6/28/2010
• $45.5 million increase on 7/1/10 in addition to 8/1/09 temporary increase of $25.6 million
• $2.9 million decrease on 7/1/11
• 2012 & 2013 projected increases of $9.5 million & $11.1 million
• Authorized ROE remains 9.67% (trailing 12-month distribution/generation ROE of 7.7%)
• Recovery of ice storm costs over 7 years
• Final decision 6/30/2010
• $63.4 million increase effective 7/1/10
• $38.5 million increase effective 7/1/11
• Authorized 9.4% ROE at 6/30/10 (trailing 12-month ROE of 5.4%)
• 49.2% equity in capital structure
• Deferring initial increase until 1/1/11
• Ruling on health care issue deferred to next rate case
• Capex plan approved
PSNH CL&P• Filed 7/16/2010
• Requested $28.4 million increase effective 2/1/11
• Requested ROE: 10.5% at 6/30/10 (trailing 12-month ROE of 6.6%)
• Requested capital structure: 50.7% equity; 49.3% debt
• Decoupling
• Capital investment recovery mechanism
• Recovery of past storm costs
• 2010 distribution ROE projected to be about 5%
WMECO
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Questions
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2006 – 2010 NU Consolidating EPS GAAP / Non-GAAP Reconciliation
2006 Actual
2007 Actual
2008 Actual
2009 Actual
2010 Projected Guidance
Distribution/Generation $0.80 $0.94 $0.96 $0.92 $1.00 – $1.10
Transmission 0.39 0.53 0.89 0.95 0.95
Total Regulated 1.19 1.47 1.85 1.87 1.95 – 2.05
NU Parent/Other (0.03) 0.04 (0.07) (0.05) (0.05)
Total Regulated and Parent $1.16 $1.51 $1.78 $1.82 $1.90 – $2.00
Competitive (0.63) 0.08 0.08 0.09 0.05
NU Consolidated Operating Results (Non GAAP) $0.53 $1.59 $1.86 $1.91 $1.95 – $2.05
CL&P Income Tax Reduction 0.48 N/A N/A N/A N/A
Gain on Sale of Competitive Generation 2.04 N/A N/A N/A N/A
Litigation Charge N/A N/A (0.19) N/A N/A
NU Consolidated GAAP $3.05 $1.59 $1.67 $1.91 $1.95 - $2.05