By Michael Kuser
Avangrid on Monday said its first quarter earnings rose slightly on new rate plans and increasing output from its wind fleet, and the company highlighted its growing opportunities in renewable energy — particularly offshore wind.
The company posted net income of $244 million for the quarter ($0.79/share), up 2% from the same period a year ago.
CEO James P. Torgerson said in an analyst call that “earnings improved primarily due to the implementation of our multiyear rate plans [and] increased wind production, mainly from the 534 MW of capacity that came on line in 2017.”
Torgerson noted Avangrid subsidiary Central Maine Power (CMP) is set to sign a contract with Massachusetts by the end of this month for the state’s 9.45-TWh clean energy solicitation, which was awarded to CMP’s New England Clean Energy Connect (NECEC) transmission project after the original winner was rejected by siting officials in New Hampshire. (See Mass. Picks Avangrid Project as Northern Pass Backup.)
CMP partnered on the project with Hydro-Québec, which will deliver up to 1,200 MW of Canadian hydropower to the New England grid via a 145-mile transmission line. The partners estimate the project will cost $950 million and will soon file with the Massachusetts Department of Public Utilities, said Torgerson.
Avangrid also completed the sale of its gas trading business last quarter and expects to sell off its gas storage business in May.
The company said it has 497 MW of onshore wind and solar under construction, to be operational by the end of 2019. Avangrid’s Vineyard Wind partnership with Copenhagen Infrastructure Partners bid 400-MW and 800-MW projects into Massachusetts’ offshore wind solicitation, the winners of which will be announced in May. (See Mass. Receives Three OSW Proposals, Including Storage, Tx.)
Vineyard Wind in the first quarter also submitted a bid for 190 MW of offshore wind in Connecticut, with selection scheduled for June.
Regulatory Update
Torgerson expressed muted optimism about a FERC administrative law judge’s March ruling that municipal utilities and commission staff failed to prove the New England Transmission Owners’ base return on equity of 10.57% (11.74% with incentives) is unjust and unreasonable, rebuffing requests to reduce it. (See ALJ Rules New England Tx Owners’ ROEs not Unjust.)
“We feel that’s positive, but the commission will still ultimately need to decide, and there’s really no time frame at this point to make that decision,” said Torgerson.
The corporate tax cuts passed by the Trump administration in December created benefits for the company, and Avangrid is working with state regulators in New York and New England to offset major storm recovery and advanced metering infrastructure (AMI) costs through the windfall before passing benefits to customers.
The AMI discussions are ongoing in New York and the company anticipates approval later in 2018. “The earnings adjustment mechanism discussions have been impacted by the ongoing storm activity and the AMI discussions and other things, so that’s been delayed somewhat,” said Torgerson.
Offshore Potential
After establishing its offshore wind business last year, Avangrid quickly won a Bureau of Ocean Energy Management (BOEM) lease auction off Kitty Hawk, N.C., an area that could produce up to 2.5 GW of energy. The company also last year acquired its 50% partnership in Vineyard Wind.
Torgerson also highlighted upcoming opportunities in offshore wind.
“In New York, they are looking for 800 MW in the fall and 2,400 MW by 2030,” he said. “Rhode Island is evaluating or looking to evaluate the implications from the Massachusetts RFP and want information on that, how it could impact Rhode Island. So, there is an expectation that Rhode Island may be looking for some offshore wind as well.”
Offshore wind got a boost on two fronts earlier this month when U.S. Interior Secretary Ryan Zinke announced two new proposed offshore wind leases for Massachusetts, while the Interior Department’s BOEM issued a call for commercial interest in four wind energy areas in the New York Bight. (See Interior Plans Would Boost Mass., NY Offshore Wind.)
“We will be looking at those very closely,” said Torgerson. “And Governor Phil Murphy in New Jersey is said to be looking for about 3,500 MW offshore of New Jersey.”