All right. We're good. We are back on. All right. So very, very happy to have from the mean streets, is it the mean streets of Bedford?
Boston. Mean streets of Boston.
All right.
Hardscrabble streets.
Yeah. Eversource CEO, Joe Nolan. Joe, why don't you kick us off with five minutes—
Great
—kind of summary on the company. You've had a lot going on.
Sure.
A lot of recent progress,—
Great
—talk through that, and then we'll-
Great. Well, thanks, Steve, for having me here. I'm Joe Nolan. I'm the CEO of Eversource Energy in Boston. We have the best service territory probably in the world. We serve all the hospitals, universities. We have a lot of the defense contractors. We serve from the Canadian border to the New York border. We are able to ride through very difficult times in our area because we have such a blue-chip base of clients. We did experience some challenging times with the regulatory climate in Connecticut. A year ago, the governor, everybody was fired on the commission. We have five new commissioners. Very stable environment. We've been really focused on getting back to basics. We are a pure-play pipes and wires company, strictly regulated. We have exited the wind business.
I'm pleased to report that last week, the final wind turbine was installed, so 65 out of 65 turbines are installed. Our partner that's constructing it, Ørsted, has stated that we will be COD by the end of the year. We're very excited about that. In addition to that, we did have a water business. People always like to ask me to say water because they make fun of my accent. We did have a water business. Aquarion Water that I had some challenges on the sale of that with the previous regulatory commission. I'm pleased to report we did sell that. $2.4 billion, $1.7 billion of cash came in. That was very pleasing to the rating agencies. Three rating agencies, all of them gave us upgrades. We're very pleased with our credit metrics. We've got a nice cushion in there now.
We're not worried. We were owed over $1 billion in Connecticut for storm costs, and I'm pleased to report that we achieved 96% of our ask.
We still have an opportunity to get the remaining $40 million, but we did get $960 million in storm costs. We filed last Friday, the securitization plan for that, and that cash will be coming in the door. That's another significant opportunity. That's a great tool that we have in Connecticut. We also have it in New Hampshire. We were owed about $500 million in storm costs in New Hampshire. That money, we'll get that probably within about a year. That's a little bit further behind than Connecticut. Again, additional cash. This is over $1 billion in cash coming in the door. We're very, very pleased with that. In terms of opportunities, we have a five-year capital plan of $26.5 billion that we've shown everybody here.
But in addition to that, we just won last week a project with Iberdrola to build a line up to Canada. This is in our regulated space. That line's $2.2 billion. $700 million of that is ours. We're very pleased. That will be added to the plan. In addition to that, we have an opportunity, we're working with our regulators in Connecticut for AMI. That's a billion-dollar opportunity, not in the plan. We're working through to make sure that we can get timely recovery, and we feel good about that. The Eversource story is a much better story today than it's ever been. We do have a rate case right now in Connecticut with Connecticut Light and Power. We are in there, very productive dialogue with our regulators and with PURA. We will start hearings in February, and we are very optimistic about that outcome.
The last piece I know is probably on all of your mind is the FERC issue. The FERC did come out with an order that we've been waiting for 13, 14 years. It was an order that we think has got a lot of flour in it. But we will see a new rate. We've filed our 205. We'll see a new rate by November 30, effective of billing on December 1. We're optimistic that will be a good number because we basically use the same formula that FERC used to apply a very low rate. As you know, money in 2012, 2011 was practically free. It's not free today. I think we know how much that's costing and impacting our business. With that, I'll stop, Steve, and we can go where you want to go.
Yeah. No, that's great. Maybe we could start with Connecticut because it would be great to get a little more color on just the change in the environment there, how much of a difference that's making as you go into this case, why you feel so confident in a productive case there. Just more color on—
Sure
—the changes in Connecticut.
Yeah, what we're pleased at is the commission has gone from three commissioners to five commissioners. These are five professionals. Everybody in the space is a professional. Two of them are former legislators that worked on the energy and the environment legislative committee. They know the business very well. We have a good relationship with them. Another one was a former investment banker, Edward Smith, understands regulated business, and he's very engaged. Then we have the chair, who came out of the Office of Consumer Counsel that we've had a working relationship for many years. What's different today than it was from before is that all five commissioners sit on the bench, all five commissioners engage in the dialogue. There's a lot of give and take, and we're able to have this dialogue. Then the final commissioner is a woman that has taught at NARUC for many, many years.
She understands the regulatory environment, she understands the regulatory rules. We're not going to get the types of surprises that we've gotten in the past. This is a stable regulatory body that's engaged. The other thing I'll tell you is that they're very interested in investments. If you look at the state of Connecticut, when we took over that utility, it used to be 12 months between interruptions. That means a customer would see an interruption every 12 months. Today, it's 24 months between interruptions. So we're operating a top decile utility. Then just this past weekend, we had those storms that rolled through, and I never thought it would end. It just kept going from Friday night all the way through. We just kept getting all of these different items.
But I will tell you that all the feedback from folks in all three states was they cannot believe the work that we did to keep things on, and that's what's important. That's my business. I grew up in the business. I worked, started in regulatory affairs. I know you got to make sure that regulators in your communities are happy, and I will tell you that all of the feedback and the response and the collaboration, it went a long way.
Then maybe just on the part of it has also been kind of the just political noise, Governor Healey noise, things like that. How are you feeling about the elections, Connecticut, Massachusetts, and just, I guess with a more professional commission, that maybe kind of makes that a little less critical, but it'd be good to get more color on that.
As I said to Governor Healey and Lieutenant Governor Driscoll in Massachusetts last week, There's only 37 more days to go, Governor. There's obviously in an election year, they got three governors that are running. They're in this space. At the end of the day, all three of them are going to have a victory. There's no question about it, double digits, in every space. We have good relations with all of them. As much as you might hear them maybe take a whack or a knock at us or at me or at certain things, I will tell you if I had a dollar for every time they would say, "Hey, nothing personal, Joe. You know you're our friend." They have to do that. Obviously, they're getting attacked. Utility issues are front and center. Rates are front and center.
All that noise, in 37 days, you're going to see the volume's going to go right down, and you won't hear much of that.
That'll be helpful into the rate case in Connecticut as well.
Yeah, for sure, and I think we can get back to the days where we're able to collaborate. As I used to say to the governor, I'd say to the, What's good for you is good for me. We don't want any light shining between us in terms of priorities. If something's important to you, we're going to make it important to us. So let's collaborate because it's. Matter of fact, we just talked with the governor in Massachusetts. She's frustrated with the legislature. She wants to get some things done. What does she do? She called us to collaborate. What can we do to bring reductions to customers? She wants to work with us, and that's what we're used to working. That's the way we're used to working.
Okay. Then maybe just on the FERC issue and the ROEs. You are filing to bring the ROE back up to reflect higher cost of capital. But then there is also this refund piece, and I guess there are periods where maybe you could try to settle with parties or not. I do not know how willing they are. Just how do you think this plays out? Does this just go to a commission decision? Do you think there are opportunities to try to settle out both those issues?
Yeah. As you know, there is no really better utility at kind of settling. That is what we do. We are always looking for win-wins. But I will tell you, on this particular situation, you are talking about a point in time where none of the current parties involved were there. So it is hard for them to kind of understand what we are dealing with. But I will tell you that I think the first step in this will be what is the rate going to be? What will they come up with? And they have to decide by November 30. So the good news for all of you is that you do not have to wait a long time. You have November 30 for FERC, you have the Connecticut Light and Power case, which is going to be draft decision in May. You have COD and our wind.
All this uncertainty that you have been experiencing over the past two or three years, it is upon us now. The storm clouds have passed. So, I think the thing that is going to happen here is we are going to get a rate. You know it is going to be a lot better than 9.57%. If anybody is using proper calculations, it is going to be better than what they have proposed. So we are optimistic about that. Is that going to be enough of an opportunity to get the parties to the table? I do not know. But I will tell you this. You have a court that is very aggressive in terms of wanting to resolve this. They have told FERC to get the record in, and to certify the record and all the evidence this week. They had 30 days to do that.
That has not moved at that type of a pace in a long time. We think we could have a final decision from the courts on this case as soon as August. And I will tell you that we feel very strongly that—
August next year?
—August 27th.
Okay.
Yep. We feel very strongly that the FERC case is flawed because one of the things on your ROE, on the test is, it's a two-part test. First, is it just and reasonable? And they found it was not in 2014. But what they failed to recognize is that in 2017, the court, and one of the judges that's on this current case is sitting on this new case.
The one that took that order out, it dismissed the case from 2014, vacated the order from FERC. They don't have the first test, part of the test. They vacated the 2014 order. The underlying first part of the test doesn't exist. That's why we feel so good that this is significantly flawed. We agree that they get a 15th-month refund, and we're going to do that. But this notion that they can get any longer than that, we don't feel is true. And all we did, we like to say to folks, What's good for the goose is good for the gander. We took their formula, we applied it, and then we came out with this rate of 11.37%. It's going to be interesting. But again, we're ready to sit down at any time and—
—try to work this through. There might be a way that we don't need to accept this higher rate, but let's talk about the retroactive treatment that—
Yeah
—we think is very unfair.
Maybe switching gears to the capital plan,—
Sure
—you mentioned the AMI in Connecticut, so maybe we could talk a little bit about status of that. But just overall, I assume given back a year or two ago with that commission, you were probably holding back capital from what you would otherwise do, wait for the rate case, whatever. But if you're in a more normalized environment, what are other opportunities? There's the AMI. Are there other things that you could be doing that we could see that you had to kind of hold back because you weren't getting recovery timely?
Sure. Yeah, we have plenty of opportunities. We just shut the faucet off in Connecticut until we get the storm cost.
Yeah
We weren't going to put another dime down there. AMI, we see it's a five-year program. We can get a tracker there. That's something, it's front and center. We have a station, a substation down there that's a key point of injection that we could bring renewables in. We could make that a clean energy hub in Connecticut if we start to see the environment change there. We're excited about it. As you know, we bought from Joe Dominguez at Constellation, we bought 26 acres in Boston that has 2,400 MW of switchgear and input capabilities that we now own. We can inject in Boston. We have another site in Boston. So, there's no shortage. This AMI, it's unfortunate because AMI in Connecticut was only going to cost probably $750 million- $800 million. Because of these delays, now the cost is going to be $1 billion.
Totally unnecessary, but this is what takes place. We feel we're in a good place. We'll get the securitization. We'll get that money in the door. We'll get our rate case, and then we'll get our eyes on how we can recover this billion. We're not going to get ourself in the same situation we got ourself in with storm costs where we were waiting. We're not waiting. We're going to stay very close to it. If there's a little blip, we're going to stop. AMI is a couple of things. First is the new billing system. That's a big item. Put that in, make sure we're staying up with.
The recovery. I guess to answer your question, AMI is a good opportunity in Connecticut. We've got this clean energy hub in Connecticut where we can make some investments. Those are things I can think of right off the bat. If there's other things they want, we're trying to tell them they should put $60 million additional in the storm fund. It's funny, Edward Smith, we had some over-collection. He wanted to put $200 million in, the rest of them up with $100 million, but he already understands the importance. He only gave us $200 million to prefund that, so that was very, very good news. We have other things in there for reliability, and it's tree trimming. We want to spend an additional $60 million. They don't want to spend it. It's not going to have any impact on our bottom line.
We just think it makes sense.
Yep. I'm going to open up for questions in a minute, but maybe just on power supply—
Yeah
—in New England, how are you feeling about that? I know there was supposed to be something, I think, later this year on Millstone and the like. Is there any update on whether you'll be able to keep accessing that?
Sure.
Yeah.
Yeah, I'm very pleased with ISO New England. If you look at ISO New England compared to PJM, we don't have the volatility, and we like it that way. I am anti-data centers. I don't like data centers. I get friends and everyone calling me. I said, We're not interested in a data center. We've got such growth opportunities with electrification in our territory that we don't need to have this volatility. We have a finite amount of generation in the region. I'm not going to go give it to a data center that's going to employ one person and a dog. I'm not interested in it. I want to get somebody that's going to employ two, three, 400 people. It's going to be sustainable. It's not going to create volatility in our marketplace.
I may be an outlier on that, but the fact of the matter is, that's what's good for our customers, and if it's good for our customers, then that's what I'm going to do. I will tell you the other thing that's happened last year, which I was thrilled with. We injected 1,100 MW from Hydro-Québec, clean energy, okay? 1,100 MW of hydropower, unbelievable, into the ISO New England grid. We injected 800 MW from Vineyard Wind into the grid, and we injected 704 MW from Revolution. That's 2,600 MW of new power coming into ISO New England. I will tell you, offshore wind at a 50% availability factor is a game changer for us, especially in these winter months. It's having a positive impact. You're not seeing these price spikes in the region. We have an opportunity.
We're taking in from the RARE project, with Enbridge, gas coming into the region, and that's designed to getting off of LNG. As I like to say to folks, you don't build a church for Christmas and Easter. What we have to do is store liquids in the region for these winter months. But the fact of the matter is, it's very expensive. It's Dom Pérignon champagne, so we have to get off of that. The Enbridge line's going to allow us to get off of the LNG. That's going to reduce prices for customers. We are really blessed. We've got facilities in Waterbury. We have two massive facilities in Massachusetts around. These are our own LNGs, so we're not going to be dependent on a third party.
All we're working on right now is keeping a very stable energy environment in New England so we don't see the volatility, we don't see the price spikes, and we help our customers. With regard to Millstone, listen, maybe when this election's over, obviously they've got a merger going on, and that merger would have that one owner of two units in New England. We need to take a good look at that.
Well, let me open up to questions from the audience.
I guess I would just like to ask about Connecticut. I know you said that it's five new commissioners. I guess your view of the storm cost case went okay. You didn't get carrying costs, which to me, as a utility investor, was disappointing. I understand that maybe there's a new thought process that they're working through. Just what evidence can you really give us about how, have you had meetings with them? Just what evidence can you give that you really think you're going to get a fair and balanced outcome here?
Well, it's a good question.
Just repeat the question.
Carrie's asking, how can we be sure that we're going to get a fair hearing in Connecticut? How are we going to get fair treatment given what's taken place down there with this commission? What's giving me the comfort? What's giving me the comfort is this commission right here is the one that took a Yankee Gas case that we had got a draft decision that was $70 million, very low ROE. By the time they got through with it, she got fired. By the time they got through with it, we got $104 million. We got the highest ROE in Connecticut, 9.47%. That's what gives me comfort. That was the first one. Storm costs. We get 96% of our storm costs. Listen, we asked for these carrying charges. Carrying charges are important that we feel they owe us the money, and that's not over yet.
We still have another chapter in that right now, but the fact of the matter is we wanted to get the lion's share money in, number one. Number two, we're getting carrying charges right now until such time as the securitization happens. We think we're owed it, but we had a lot of wood to chop, and we got a lot behind us. We got a little more to go, and we're going to keep doing it. What gives me comfort that this is a better commission? Those are two big milestones. The fact that they want a PBR. They were working on their own PBR. Then when we filed our rate case, they kind of liked it, so they put theirs on hold, and I think we've got a mechanism in place with our rate case that's going to be meaningful to them.
The fact that all five sit on the bench, all five are engaged, all five of them are asking questions. That's what gives me the comfort that we're going to get treated fairly.
I was actually going to put this in there, but also knowing this Millstone contract's coming up. I guess what I'm just the context of affordability about, I appreciate that these people are more thoughtful about their jobs and everything like that, but I guess just the numbers of your rate impact plus the pending change in Millstone, does that give you pause? What are you guys suggesting to kind of feather that in and understanding the affordability concerns that exist throughout the country, but also in Connecticut?
Yeah. The Millstone contract is up in 2029. We got a couple years here to think that through. Obviously, this won't be something. I don't think we're going to see anything on Millstone until a few other things happen.
Do you think the timing is you get your rate decision ahead of—
Oh, yeah.
—decision on Millstone?
Absolutely, yes.
Okay.
Keep in mind, all the public benefit charges that they were hitting us with, about $125 million of it now is getting bonded. They sent us a check for $125 million. That reduced the customer's bill. That took some pressure off. We're not going to be the tax collector for Connecticut anymore.
Thank you.
Other questions?
No.
Maybe, Joe, just on the FERC. Well, first of all, overall on your plan, as you've resolved more of these issues, just what's your conviction on kind of the visibility of the growth rate? I know you talked to getting to the high end of it. Is there upside to it that you're maybe starting to see any color there?
Sure. I will tell you that we have so many substations on the drawing board and three that are getting filed right now just in Massachusetts to fuel this electrification. The electric growth, we are seeing extraordinary electric growth in our region because these communities, like Cambridge, Massachusetts, you take that, biotech, they put their money where their mouth is. They are allowing us to build a substation right in Cambridge. It is 120 feet underground. It is $1.8 billion. All of that because they want to get off of fossil fuels. There is an opportunity. We have got two more. We have got one in Boston. We have got one out in the suburbs that we are filing for substations. Those growth opportunities, currently, those new ones are not. The substation in Cambridge is in it, but these ones are not. That is what I see, the tremendous growth.
We always have in our back pocket $900 million, or 900 MW of solar that we can build in Massachusetts. We have been leaking that in. If there is something that does not come to fruition, we can build that. There is going to be no shortage. We already have, of the 26 and a half, we have got another 700 million we just got from the Iberdrola. A pretty good shot at this other billion. As you can see, those are two right there. But every day, new opportunities are coming about. I will tell you, we just had this project that we had worked with the Dartmouth College in their engineering area, SPARK project. It was a $100 million project. We went and chased, on behalf of our customers, some federal dollars. We got 50 of that 100 million.
We were able to get a federal grant. That just happened.
We just announced it yesterday. Those are opportunities. ISO New England is really working to unlock generation all over New England, and they are coming to us. These are projects that are running 30, 50, $70 million that we are just good at. Those are the types of things that I see opportunities. Okay. Dave?
Can you touch on some of those projects that ISO New England is unlocking?—
Yep
—from a generation perspective? There's been a perception that things are a little tight in New England.
Oh yeah, they're definitely tight. I'll tell you the one that kind of started it was when Constellation was shutting down those two units, and that was the Boston Reliability Project. It was $100 million. They went out to a bunch of people, but at the end of the day, it was Grid has that had won that project, and we brought it in ahead of schedule and under budget. There are other little ones out in Western Mass, where there's some congestion. It might be a $20 million or $30 million that the engineers are working on doing that. But there's a lot of generation in the rural environment. As you know, everybody wants to build in a rural environment because the land is cheap, but if there's no load there, it's of no value, and that's why they come to us to unlock that.
These solar developers, they'll buy a farm a dump at the end of a road, but there's no load. So those are the opportunities. They don't seem like a lot at $25 million- $30 million, but if you put five or six of these together, that's what we're working on. And they probably have four or five right now. I wish ISO New England would, they must have 30 they want done, put them all out, we might see a global solution that would be beneficial, and that's what we're looking at.
[inaudible]
A lot of it is a renewable. It would be a solar, it would be a wind. These are onshore. Those are the types of projects that it would be.
I think we are at time.
Wow. What a great audience.
Thank you, Joe.
Tip of the day is Eversource, all right? It's undervalued. Get in heavy.
Thank you.
See, nobody better than you.
Great to see you.