) unit, Connecticut Light & Power ("CL&P"), has received
approvals from the Connecticut Public Utilities Regulatory
Authority ("PURA") to implement its System Resiliency Plan. The
main objective of this program is to supply uninterrupted power
to consumers in any situation. The company intends to start this
program in the forthcoming spring.
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As per the program, the company will primarily focus on three
particular areas including trimming of trees, hardening the
electrical infrastructure along with fixing the coated
thicker-gauge wire known as "tree wire", and toughening the
utility poles, cross-arms and allied system equipments for
System Resiliency Plan comes under Northeast's five-year
Infrastructure Strengthening Plan with investment of $300
million. The primary focus of this program is to improve
service-reliability while minimizing the impact of severe weather
on the supply of utility.
In the event of strong winds and snow fall, branches of the trees
often fall on the electricity distribution and transmission lines
and poles. In Connecticut, supply of power is disrupted primarily
due to the damage of electrical equipments related to these
Recently, Northeast Utilities and another utility company
) suffered badly due to Hurricane Sandy. The companies had spent
a substantial amount to repair their existing facilities and
construct new utility delivery systems in the parts of
Connecticut and Eastern Pennsylvania.
Northeast intends to utilize a major chunk of $300 million for
the tree-trimming activities. In addition to its usual Vegetation
Management Program, the company plans to deploy $32 million for
the tree-trimming purposes in 2013.
Currently, Northeast's capital spending primarily focuses on the
development of its transmission and distribution infrastructure.
The company's capital expenditure is expected to be roughly $7
billion for 4 years till 2015. Northeast plans to deploy $3.5
billion for its electric and natural gas distribution assets and
$3.2 billion for the electric transmission purposes.
We expect Northeast to file for a distribution rate hike with the
Connecticut PURA in the near term. It is a regular practice for
the regulated utility companies to recover its invested funds
from the consumers through rate increase.
We consider Northeast's merger with NSTAR as a positive catalyst
for future growth and it will continue to enjoy the benefit out
of that in the near term. In addition, the company's numerous
projects will provide attractive financial growth over the
However, we are skeptical about the stringent regulations and
risks associated with the delay and cancellation of several
important projects. We expect Northeast's fourth-quarter and
full-year 2012 financial and operating results to be negatively
impacted by Hurricane Sandy. The company currently has a Zacks
Rank #3 (Hold).
Hartford, Connecticut and Boston, Massachusetts-based Northeast
Utilities provides energy delivery services to residential,
commercial and industrial customers in Connecticut, New Hampshire