Item 2.03 Creation of a Direct Financial Obligation or an Obligation under an
Off-Balance Sheet Arrangement of the Registrant.
On December 29, 2020, Central Maine Power Company ("CMP") and NECEC Transmission
LLC ("NECEC LLC"), each of which are subsidiaries of Avangrid, Inc. (the
"Corporation"), entered into a Support Agreement (the "Support Agreement") with
H.Q. Energy Services (U.S.) Inc. ("HQUS") in connection with the development of
the New England Clean Energy Connect ("NECEC") transmission line project, which
sets forth the terms and conditions pursuant to which HQUS will provide a
portion of the funding for the benefits contemplated by the stipulation dated
February 21, 2019 (the "Stipulation") approved by the Maine Public Utilities
Commission ("MPUC") by Order dated May 3, 2019 granting a Certificate of Public
Convenience and Necessity ("CPCN") for the NECEC transmission line project.
The NECEC transmission line is a 1,200 megawatt ("MW") +/-320 kilovolt ("kV")
high voltage direct current ("HVDC") transmission line to be constructed, owned,
operated and maintained by NECEC LLC extending from the U.S.-Canada border in
Maine to a direct current to alternating current converter station to be located
in the City of Lewiston, Maine. It will interconnect at the U.S.-Canada border
with a HVDC transmission line to be constructed, owned, operated and maintained
in Quebec by Hydro-Québec TransÉnergie, a division of Hydro-Québec and affiliate
of HQUS. The Stipulation included commitments by NECEC LLC and HQUS with respect
to certain funds providing additional benefits to the State of Maine, including,
without limitation, to Maine retail electricity customers, host communities
within which the NECEC transmission facilities will be located, and Maine
low-income energy customers.
Pursuant to the Support Agreement, in the event that (i) NECEC LLC breaches its
obligations under certain transmission service agreements entered into with
HQUS, such that HQUS is unable due to such breach to receive transmission
service over the NECEC transmission line as contemplated by such agreements, or
(ii) certain material failures to comply with the Stipulation or the CPCN occur
(subject to any applicable notice and cure period) which failure precludes the
operation of the NECEC transmission line, NECEC LLC and by way of a parent
guarantee, the Corporation, agrees to assume the obligation of HQUS under the
Support Agreement and the Stipulation to make quarterly benefits payments of
$875,000 when and as due up to an aggregate amount of $140,000,000 in benefit
payments until such time as transmission service is restored and NECEC LLC is
again in compliance with the HQUS transmission service agreements, the
Stipulation, the CPCN or the Support Agreement, as applicable, which shall
relieve the obligation of HQUS with respect to such payments.
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