Adjusting its second quarter results for the impact of weather, Northeast Utilities registered its first increase in sales on a year-over-year basis since 2007 ”“ as measured by gigawatt hours delivered, anyway.
Based in Hartford, Northeast Utilities owns Connecticut Light & Power, the largest utility providing electric service in Fairfield County.
In the second quarter, retail electricity sales were up 6 percent from a year ago on a gigawatt basis, though just 1 percent once “normalizing” the results against last year”™s wet and mild start to summer.
Even with this year”™s hotter weather boosting air conditioners and other electricity use, Northeast Utilities profits dimmed to $72 million from $83 million a year ago. The company typically records an additional $3.5 million in profits for each percentage point gain in retail sales, according to David McHale, the company”™s chief financial officer, who spoke during a conference call in early August.
“We have seen the regional economy move from recession, to stabilization, to perhaps now a glimmer of recovery,” McHale said. “Of course, we also benefited from June”™s warm weather and we know July sales (were) very strong due to record temperatures.”
The weather has strained utility systems and personnel on two fronts ”“ a punishing July heat wave that provided a major test for new transmission lines and substations; and intense storm cells that produced a tornado that ripped through part of Bridgeport, and another that touched down in four other Connecticut towns.
“(We) had record high temperatures in the Northeast in the week after July 4; New England experienced peak electric loads we had not seen since August of 2006,” said Lee Olivier, chief operating officer of Northeast Utilities. “While our systems handled the heat well, we”™ve had a number of severe storms this year, which have impacted our operational and financial results. Over the first two quarters in 2010, we recorded more than $60 million in storm restoration costs.
“Our transmission system is much less prone to storm damage, and it performed superbly including our new southwest Connecticut lines, handling very high loads along the Connecticut shoreline despite the fact that the heat there was more intense than the inland areas,” Olivier added. “The loads we experienced underscored the need for transmission capital investments we continue to make in our system.”
Talks are progressing on one of the company”™s biggest proposals, in conjunction with Massachusetts-based NStar: a “Northern Pass” transmission line that would feed electricity to southern New England from Hydro-Québec. At 1,200 megawatts, the feed would furnish sufficient electricity for the equivalent of a million homes.
Northeast Utilities CEO Chuck Shivery said negotiations continue on a transmission services agreement; once signed, that agreement would be forwarded to the Federal Energy Regulatory Commission even as the companies get to work on state-level approvals.
“We continue to make good progress, very positive momentum, and I would hope to see something in the reasonably near future,” Shivery said. “We (targeted the) third quarter. It”™s almost the middle of August now, ”¦ but I”™m very confident that that”™s continuing to move forward. There are certainly no issues with Hydro-Québec”™s commitment to the project. In fact, I had a discussion with (CEO) Thierry Vandal yesterday talking about that, and both (want) to get this budget done and get it completed quickly.”
