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Eversource says it will meet growth rate 'with or without' Northern Pass project

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Eversource says it will meet growth rate 'with or without' Northern Pass project

Eversource Energy has told investors that the utility will make its forecast growth rate of 5% to 7% "with or without Northern Pass" after New Hampshire regulators denied the above- and below-ground transmission project a necessary siting permit.

During a Feb. 23 earnings call, James Judge, chairman, CEO and president of Eversource, said the surprising Feb. 1 siting decision for the 1,090-MW Northern Pass transmission project has "humbled" Eversource Energy, but the utility and its partner Hydro-Québec remain committed to the proposed high-voltage, direct current line. Eversource has until March 27 to appeal its permitting denial by the New Hampshire Site Evaluation Committee, or Massachusetts will move on with its clean energy procurement that initially picked Northern Pass as the sole winner.

Judge said it is clear from New Hampshire's unfavorable siting decision that Eversource has not yet fully addressed "all the major concerns" on the impact of Northern Pass. However, he said the utility seeks to address those concerns in a rehearing as Massachusetts simultaneously moves forward with an alternative winning bid for its clean energy solicitation – Avangrid Inc. subsidiary Central Maine Power Co.'s 1,200-MW New England Clean Energy Connect transmission project.

Judge also stressed that Northern Pass is not dependent upon any single request for proposals by a state and that the hydropower-supplied project remains "very advanced, very cost effective for customers" in delivering emissions-free electricity into New England.

Philip Lembo, CFO, executive vice president and treasurer, said the utility is furthermore confident in meeting its forecast growth rate of 5% to 7% through 2021 "with or without Northern Pass."

"We understand that the market is currently giving us very limited, if any, credit for future Northern Pass earnings," said Lembo. "Our new end-of-year 2020 rate base forecast, even without Northern Pass, is about $500 million higher today than it was a year ago with Northern Pass."

After all, Lembo noted Northern Pass constituted just 1.5% of the 8.1% rate base CAGR for Eversource's $10.8 billion capital investment plan from 2018 through 2021. The projected growth rate is based on a $3.11 per share earned in 2017.

Turning to offshore wind, Leon Olivier, executive vice president of enterprise energy strategy and business development, said its Bay State Offshore Wind project is "very well situated" to serve Connecticut, Massachusetts, New York and Rhode Island, which are pursuing long-term contracts for renewable and offshore wind. The Bay State Wind project is a joint venture with Danish developer Ørsted A/S to build at least 2,000-MW offshore wind about 15 to 25 miles south of Martha's Vineyard, Mass.

Already, Bay State Wind has submitted two 400-MW and 800-MW bids to a Massachusetts RFP in December 2017. This 800-MW solicitation by Massachusetts is part of the state's goal of procuring 1,600-MW of offshore wind by 2027.

In addition, Connecticut recently issued an RFP for Class I renewables, including 200-MW of offshore wind while Rhode Island has also expressed interest for contracting for up to 1,000 MW of renewables by 2020, and announced plans for a 400-MW renewable RFP later in 2018. Finally, New York is slated to solicit for 800 MW through 2019.

"Bay State Wind's favorable geographic location would allow it to bid into all of these RFPs," explained Olivier. "But due to competitive reasons, we have not provided investors with specific levels of expected investment in Bay State Wind at this time."