On May 22, 2009, the Federal Energy Regulatory Commission (“FERC” or “Commission”) approved the funding arrangement for the construction of a 1,200 MW high-voltage direct current transmission line that will connect Hydro-Québec with ISO New England’s backbone 345 kV transmission system. Northeast Utilities Service Company (“Northeast”), NSTAR Electric Company (“NSTAR”), and Hydro-Québec TransÉnergie are negotiating the joint development agreement for the design, planning, and construction of the international transmission line. H.Q. Energy Services (U.S.) Inc. is taking responsibility for project risks and has agreed to participant funding for the project.

Currently, Hydro-Québec is developing more than 4,000 MW of hydro-electric generation in the Province of Québec. The proposed transmission line will make significant amounts of surplus hydro-electric power available for export to the United States.

The project is expected to reduce dependence on fossil fuels, increase fuel diversity, and minimize price volatility in New England. In addition, the project is anticipated to reduce greenhouse gas emissions by four to six million tons of carbon dioxide per year by displacing fossil fuel generation. FERC Chairman Jon Wellinghoff stated that “this project provides access to clean, low-cost energy for consumers in a region of the country that has tight constraints on electricity supplies.”

Under a participant funding plan, the project will be subject to cost-based regulation and thus will not be included in the rates for transmission service under ISO New England’s Open Access Transmission Tariff. Northeast and NSTAR argued that the additional power will likely reduce the Locational Marginal Price of power in New England at a time when prices are rising in the region.

A copy of the Commission’s Order is available at: http://www.ferc.gov/whats-new/comm-meet/2009/052109/E-33.pdf.