Company: CNLHP
Filing Date: 2025-02-14
Form Type: 10-K
Source: 0000072741-25-000007
Chunk: 38

Company: CONNECTICUT LIGHT & POWER CO
Filing Date: 2025-02-14
Form: 10-K
Item: Item 1A
Chunk 38
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 under the terms of the sale agreement with Global Infrastructure Partners (GIP) for these projects.  Our future obligations under the sale terms primarily include a capital expenditure overrun sharing obligation, an obligation to maintain GIP’s internal rate of return through the construction period for each project, and obligation for other future costs.  Post-closing purchase price adjustment payments will be made following the commercial operation of Revolution Wind.  Factors that could increase the post-closing adjustment payments owed to GIP include the ultimate cost of construction and extent of cost overruns for Revolution Wind, delays in construction, which would impact the economics associated with the purchase price adjustment, and Revolution Wind’s eligibility for federal investment tax credits (ITCs) at a lower value than assumed and included in the purchase price.  New information that becomes available or future developments that arise as construction progresses and as cost estimates are reviewed and revised could result in increased costs of the project that would ultimately be owed to GIP.  Adverse changes in facts and circumstances could increase the obligation under the sale agreement above the amount accrued and result in additional losses, which could have a material adverse effect on our financial position, results of operations, and cash flows.

The purchase price included the sales value related to a 40 percent level of federal ITCs, 10 percent of which is the energy community ITC adder included in the Inflation Reduction Act related to Revolution Wind.  If the project does not meet the qualifications under federal tax law for the full value of the ITC or there are changes to tax law, it could have a material adverse effect on our financial position, results of operations, and cash flows.

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Additionally, we hold a tax equity investment in South Fork Wind that is expected to result in cash flow benefits from ITCs at a 30 percent level.  The tax deductibility of the ITCs could be challenged.  If the project does not meet the qualifications under federal tax law, we may be unable to monetize the ITCs that support this investment, which could have a material adverse effect on our financial position, results of operations, and cash flows. 

Risks Related to the Environment and Catastrophic Events:

The effects of climate change, including severe storms, could cause significant damage to any of our facilities requiring extensive expenditures, the recovery for which is subject to approval by regulators.

Climate change creates physical and financial risks to our operations. Physical risks from climate change may include an increase in sea levels and changes in weather conditions, such as changes in