Eversource Energy Q3 FY2024 earnings call

• Exited offshore wind development by selling Revolution Wind and South Fork Wind, remaining a pure-play regulated utility; still believe offshore wind is vital but now focus on regulated onshore infrastructure. - Have a robust capital plan through 2028 with ~$24B investment in electric, natural gas, and water businesses, including ~$6B in transmission and over $10B in electric distribution infrastructure. - Made progress in strengthening balance sheet via FFO-to-debt ratio improvement, sale of Aquarion, timely cost recovery, proceeds from offshore wind sales, and equity issuances. - Confident in 5%-7% EPS long-term growth rate through 2028. - Clean energy initiatives: Secured $90M federal funding for Southeastern Connecticut clean energy hub, $20M DOE funding for Cape Cod battery storage; Massachusetts Electric Sector Modernization Plan (ESMP) approved with $600M distribution investments; Massachusetts AMI program progressing with new billing system implemented and smart meter installation to begin next year; Cambridge underground substation project (first of its kind in US) with construction slated to start Q1 2025. - Recognized by Time magazine as top utility in US and one of the best companies to work for in the world.

In the third quarter, breaking down earnings by segment: Electric transmission earned $0.49 per share (up from $0.46 in 2023) due to continued infrastructure investment. Electric distribution earned $0.57 per share (up from $0.50 in 2023) driven by base distribution rate increases but offset by higher interest, depreciation, and property tax expenses. Natural gas distribution lost $0.09 per share (improved from $0.10 in 2023) due to higher revenues from natural gas infrastructure investments but offset by higher property taxes, depreciation, and interest expenses. Water distribution contributed $0.07 per share (up from $0.05 in 2023) primarily due to lower depreciation expense and higher revenues from a water company acquisition. Eversource parent and other companies excluding the offshore wind loss earned $0.09 per share (up from $0.06 in 2023) due to a lower effective tax rate partially offset by higher interest expense. Revenue contributions: Specific percentages weren't explicitly stated in the transcript but the segments' financial performances are detailed as above.

• Updated 2024 recurring EPS guidance to $4.52-$4.60 due to higher than anticipated interest expense. - Reaffirmed longer-term 5%-7% EPS growth rate. - Increased five-year capital investment forecast to $23.7B.

• Offshore wind divestiture resulted in a net loss of $524M, with obligations under the sale terms to GIP, including costs related to Revolution Wind's delay and higher construction costs. - Regulatory uncertainties in Connecticut regarding AMI cost recovery and Yankee Gas rate case, with challenges in obtaining clear regulatory certainty for investments. - Impact of higher interest rates and debt issuance on financials, affecting balance sheet and cash flow. - Uncertainties around Connecticut's regulatory treatment potentially delaying or reducing investment decisions in the state.

Q: About Millstone and pricing in New England A: Joe Nolan discussed the strong working relationship among Rhode Island, Connecticut, and Massachusetts regarding clean energy, mentioned tools like Massachusetts' Clean Energy Connect from Canada, Seabrook asset, and Dominion, and expressed confidence governors will find a beneficial solution for New England customers.

Q: About offshore wind obligations A: John Moreira stated they factored in pile issues highlighted by Ørsted and are monitoring progress with parties including GIP and Ørsted.

Q: About equity issuance cadence A: Joe Nolan said they will refresh their plan and provide more information on equity needs in the fourth quarter call.

Q: About Cambridge underground substation funding A: Joe Nolan said the project is incorporated in the current five-year plan.

Q: About Connecticut Yankee Gas rate case and PBR A: Joe Nolan discussed proposing performance-based rate making (PBR) similar to what worked in Massachusetts and New Hampshire, aiming to improve Yankee Gas' cash flow for needed investments.

Q: About Connecticut AMI docket A: Joe Nolan discussed the need for clear regulatory certainty on cost recovery and sound legal standards for the AMI investment in Connecticut.

Q: About Aquarion sale A: Joe Nolan said there's significant interest in the asset, the process is in the second phase, with an expected announcement on the winner in the first quarter and closure in 2025.

Q: About Massachusetts ESMP and electrification A: John Moreira discussed the collaborative process of ESMP, its support by key stakeholders, and that it's a starting point with more to come for electrification.

Q: About higher interest expense A: John Moreira said it's a combination of higher rates, volume, and higher debt outstanding due to the offshore wind delay.

Q: About ESMP and clean energy percentage A: John Moreira explained ESMP is a starting point with prior approved programs like the CIP program for interconnection of clean energy resources in Massachusetts, and there's more to come for electrification.

Q: About Connecticut capital investment A: Joe Nolan discussed monitoring Connecticut's regulatory treatment and potential redeployment of funds if regulatory certainty improves.

Q: About NECEC transmission line earnings benefit A: John Moreira discussed the remuneration from the PPA agreement for the NECEC transmission line project contributing to earnings.

Q: About AMI exceptions and O&M A: John Moreira mentioned investor relations can detail the exceptions related to O&M and rate increases.

Q: About offshore wind and regional discussions A: John Moreira discussed the constructive dialog among New England governors regarding clean energy resources and their efforts to find a beneficial solution for customers.

Q: About climate bill and environmental justice A: John Moreira discussed Eversource's active presence in environmental justice communities and how it contributed to the smooth citing of the Cambridge underground substation project