Q1 2023 Eversource Energy Earnings Call

Two the integration and transition of the of the acquisition of the assets of Columbia, Massachusetts, now known as ever saw us gas company of Massachusetts.

So the $1 41 per share in the first quarter of 2023 is best compared with $1 30 per share excluding those costs in the first quarter of last year.

Have the effect of moving about <unk> <unk> per share of after tax revenues out of expected third quarter results and into the first quarter and the fourth quarters of this year.

In roughly equal <unk> <unk> per share split.

Core business, our core business capital expenditures totaled approximately $790 million in the first quarter of 2023.

The process as I have talked about in the past when you don't own a 100% of an asset.

Things take a little longer to transact I will tell you that.

This is very our transaction will evolve to parties.

It is very far along in the process and Thats why we can tell you with a high degree of confidence that you will have an answer or youll have an announcement in the second quarter.

I will tell you that certainly the lease areas are highly coveted Lee serious I think I think we saw what has happened in the marketplace. So.

That I don't think is any impact obviously on the project side. These are very mature projects. These are not.

These are not just.

Concepts on paper. These are projects that are very mature and in the process. So for that I think.

We will recognize good value for those projects.

Obviously, that's about the extent of what I can share with you, but I will tell you that we've been pleased with the process. We're pleased with what we're seeing we're pleased with the results in.

I think that at the end of the day it will be a very good outcome for ever sourcing that resources shareholders.

Okay, Perfect and then lastly, Joe there's obviously been a good deal of attention in the investment community on the backdrop in Connecticut, and and the prospects really for lawmakers to tie in sort of the regulatory guardrails around things like settlements.

Seven I guess, how do you see that process evolving as the session enters its final earnings to you and other utilities do you even have a seat at the table in those conversations.

Some aspects of the state have become somewhat very adversarial, so I'd love to maybe get some thoughts there. Thanks.

Yes, Thank you and valid question I mean, when you look at the aquarium auto obviously very disappointing.

Tell you on the Legislative front, we have a seat at the table.

In terms of the Governor I do speak with unregulated.

Regulate spoke with them last week, we talked about a host of issues, but one of the pieces that he highlights and I think it is important for this community to understand is number one. He is just that we have a seat at the table and you want us to participate in.

You basically share that with.

With folks that who is better equipped around performance based ratemaking, then the utilities and we do very well in that environment. I mean, we do incredibly well here in Massachusetts, we have a PBR model in place with how does in place for some time and I think when you look at our track record of outperformance.

That just it speaks for itself, how well, we do with regard to the Legislative front, great relations with the legislature with them, we talk with them. This happens every year I grew up in this part of the business.

And it's unfortunately, it's.

It's like making sausage very.

<unk> process, and sometimes just not too attractive but at the end of the day you can be assured that we do have a seat at the table and that we are communicating I think the last piece that you should take away is that event that the governor spoke yet.

Around performance based rates.

He highlighted by name both myself as well as Pedro about our ability to invest dollars and we have choices, where we can invest dollars and if it's not attractive and obviously we've got all the places we can go and so I think that he was stressing that point just to kind of get the message across to our regulators that it is.

As important that we have a seat at the table that they collaborate with us.

And that in fact that it's a fair and equitable place to do business. So I am confident as I have been in the past that we will get to a resolution.

<unk> that is.

That is workable and good for all Sean.

Got it perfect and then Jeff Congrats on phase two youre going to be really missed and.

Shrinks unlimited drinks on Mr. Nolan and I appreciate it guys.

Every IR professional.

The country is sharing because they might have a shot at the number one slot. This year. So that's what's going on here.

Okay, great. Thanks, guys.

Thank you. Thank you Shar. Thanks. Our next question comes from the line of <unk> <unk> at Evercore Good morning, Josh.

Okay.

The gasoline.

I think they dropped their question.

Alright. Our next question comes from the line of Paul Patterson Good morning, Paul.

Alright.

Hey, Paul.

Hey, good you can hear me okay.

<unk>.

Just to follow up on the future first of all congratulations Jeff again.

Just to follow up on a couple of things.

You mentioned that you've got.

Hope you are.

Curious with PV or what have you, but one of the things that I think.

But you guys were.

Focusing on our own as well.

<unk>.

With regarding the Capex opex sort of.

Of course.

Of the order.

Whether it was the draft order and it stayed in the order.

Wondering how you guys see that.

It also.

You mentioned.

Press conference that happened afterwards, how should we think about.

How do you think about I guess.

<unk>.

This element of the.

The performance based ratemaking order.

Hey, Paul it's John So first of all I think the order that came out was really more of a framework.

The details is still out.

We'll be picking this up in in April of next year to finalize and work on the specifics. So I think it's too early to make that determination.

Clearly the U K model is is significant.

Difference from how we have been operating through the traditional cost of service and then and if we were to change to something that drastic it would have significant ramifications.

Financially and otherwise.

The utilities in the country.

So I think it's too early for us to for us to indicate one way or the other as to where things ultimately will all shake out.

Okay.

Yes.

With respect to.

15th Aquila.

Hearing what should we think about.

Hi.

<unk>.

What do you guys expect to happen at that hearing I guess.

I mean, our expectation is that the the stay would be a permanent state from where it currently stands today, we feel very.

Based on our assessment, we feel very comfortable with our position in the commentary that we've made in our filing and we will make in our filing on Monday.

Briefs are due on Monday.

So.

So more to come on that front, but.

Hopefully that that permanent it'll it'll move from a temporary to permanent stay and until until we see the appeal process work its way through.

Okay, Great and then in the prepared remarks on the offshore wind.

Just sort of wondering.

With respect to the potential for retaining some ownership.

B.

The JV.

<unk>.

How should we think about that is that.

We've got a strong possibility or.

No no it's not it's not a strong profitability, we see we see a path for a clean exit from this so that's not that's definitely not the case.

Okay, great. Thanks, so much growth.

Once again congratulations.

Thank you Paul Thank you Paul Thanks, Paul Our next question comes from the line of Steve Fleishman of Wolfe Research Good morning, Steve.

Yes, Hey, good morning.

Really happy to kick this call on all the other ones at this time.

Yes.

Yes.

<unk>.

I think maybe one of the few people that remembers IR before Jonathan northeast utilities.

Yes congrats.

Thank you so.

Just.

Just to follow up on I guess the question on couple of questions on the offshore wind sale.

So in the past you've talked about two separate transactions for the leases for the contracts and wanted to clarify if that's still the case.

Do you expect them to be announced at different times and do you expect each of those to be announced during the second quarter.

Yes, yes, so thanks, Steve.

Hey, Chad.

Talking about two announcements to bias in the second quarter and there might be a space of short period of time between announcements, but both in the second quarter, yes.

Okay great.

Just on you mentioned.

And Joe the clean exit.

Which is great I just wanted to ask if there is any chance there need to be any like.

Contingencies or stuff related to the projects that you need to.

Commit to as part of this other than just supporting them.

Locally just any any financial contingencies.

Yes, Steve This is John Yes, we're going through the negotiations right now so it's sort of premature for us to indicate ultimately where that will shake out.

Okay.

Okay.

Just.

On the.

Alright.

Connecticut.

So you are.

Youre basically expecting too.

Kind of argue this.

Through the courts.

Basically.

Address it that way or do you sounded like almost do you think it could be like settled at some point.

So I just wanted to kind of clarify that.

Yes, I mean, obviously I think I think you know our track record around settlement.

And if there is an opportunity there we certainly will work with any parties around settlement.

The aquarium asset.

Finish very very well, we have very low rates, we've been making significant investments as you know that.

I think it's one of the best from a water company. So we do see an opportunity. We think we have allies in the state down there to kind of work through that but.

As you know it takes two to tangle and the settlement space and we need to have some.

Willing participants so we will always work towards settlement, we think settlement is the way to go in.

We are optimistic that we can probably have some type of an outcome that would benefit both parties.

Okay, great. Thank you for the update.

Thank you Steve. Thank you Steve Thanks, Steve. Our next question comes from Jeremy Tonet at Jpmorgan Good morning, Jeremy.

Hi, Good morning, it's actually rich Sunderland on for Jeremy Thanks for the time today.

I wanted to hear I, just on a higher level topic.

Incremental investment opportunities over the balance of the decade.

Well I mean, I think that's that was one of the.

One of the points that had us.

Make the make the pivot because we think there is so much opportunity in both the land aspect of it and the investment around not only the projects that we were involved in but the projects that everybody else is involved with we are very well positioned in this region.

Load centers and people want to get to those so because they want to get to them.

Youre going to go and spend time with us So we see tremendous opportunity for investment in offshore wind as it relates to our regulated businesses and Thats really what our focus our focus has been around de risking.

Focusing on the regulated assets so.

So we do see Richard Great opportunity.

Not only with <unk>, but with these other wind partners. It is already playing out right now with other wind patents that were that we don't have any ownership one to build to build wind and transmission related assets to help them.

Inject clean energy into the new.

And New York grid.

Got it thanks for the color there and then you touched on this already around customer bills, but curious now that we're coming out of winter how do you see the overall regional backdrop into next winter really thinking around the supply concerns that you highlighted into this past winter.

Yes, I mean, I just a great question and we've been talking about that as you know it was front and center for me and the company lost.

Late summer fall and it's still on my on my radar right I'm concerned about it I'm concerned about.

Esa fuel fuel supply for generators, we're very interested in.

You saw it happen in PJM, where folks didn't show up we had a similar situation on a smaller scale take place in the ISO new England market, where folks Didnt show up when they were expected to show up.

It was a shocker the number the penalty if they were talking about in PJM I mean up here there were pretty significant. So we are focused everyday on what we can do to help minimize the risk to our customers.

Although we could line up.

Significant supply for our customers at the end of the day, if people don't perform and the lights go out they're going to come knocking on our door and he only.

Obviously.

Not it's not our fault, but you get you get blamed because the lights go out so.

We are focused everyday in our energy supply area in our transmission area in our engineering area as to what we can do to facilitate solutions.

Fully enable this grid to operate during.

Very challenging conditions, but in doing that it's going to also do is it's going to drive the price of energy down in the region, which is what our goal we want to lower.

The clearing price in the region. So that our customers are not getting the type of shock that theyre getting.

<unk>, which has been devastating to them and we know that.

Got it very clear thank you for the time today and to Jeff Congrats on all the best Thank you.

Thank you. Thank you. Thanks, Richard our next question comes from Paul Zimbardo at Bofa Good morning, Paul.

Hi, good morning, Thank you.

I know, it's been said many times, but the formal news, Jeff and update congrats here one of the few hours of work with my entire career, so well deserved retirement.

Thank you Paul.

Thank you and to dive into the actual quarter for a second.

I know that you had the monetization of the clean energy investment was that the full investment.

Theres typically that mark to market in the second quarter. So just wanted to confirm if he sold the full position there.

Yes, Paul we did.

Okay great.

Great.

And then thanks for all the context on Connecticut, I wanted to check do you have any revised expectations on timing for any Yankee gas rate case in the future.

No at this point, we do not we continue to assess the timing of that right.

Yes.

Okay, great. Thank you all appreciate it.

Thank you Paul Thanks, Paul Thanks, Paul Our next question comes from Ryan Levine at Citi. Good morning, Ryan.

I'm going to follow up on the offshore wind process. So to the extent that you do move forward with announcing two transactions this quarter, what regulatory or other closing procedures would be needed or any sense around timing of any cash received for the company.

Sure sure Ryan.

So.

It's different for the two pieces right. So it is different for the uncommitted lease area as it is for the the contracted projects speaking of the contracted project, that's probably one that has a bit longer timeframe for regulatory approval.

On that one there because we just.

Our our subsidiary <unk> the joint venture that holds.

Projects are considered a public utility company. So we would now need to obtain a FERC approval and that's probably a three month process other than that it's more it's the traditional hotspot.

Ladino.

But once again I think thats very.

That's weeks not months.

And keep in mind that this is there is a process in place that took place when we acquired the deepwater assets. So it is not.

It's not.

An uncharted waters.

Depreciation.

Great that color so given that timeline I'm curious, how you're thinking about your financing plan I noticed you issued some parent debt at 545 basis points.

Year to date are you considering the convert market.

Given that it seems to be open to a lot of utilities.

This environment.

Very good question and right now.

Looking at the converts we feel it is not the timing is not right for us just given.

Kind of.

Where were currently trading and kind of.

Are valuations right now and does it make sense for us to do that until we have a little bit more certainty and.

And get some announcements made so we don't see that in the near term as being the right option for us.

But we just given the timing we could be in the market.

For another holding company debt.

Offering.

Okay.

I mean, you mentioned in your slide deck may 1st maturity.

Was there any update on what happened there.

Yes, so that one that one the dollars to $750 million offering that we did in March kind of took care of that.

Okay.

I appreciate the color. Thank you.

No problem.

Thanks, Ryan Our next question comes from Travis Miller at Morningstar, Good morning Travis.

Yeah.

Public congratulations to Jeff.

If you ever mistakenly find yourself in Chicago, Let me know.

Drinks et cetera, et cetera, all the help over the years, but I tried to avoid the wintertime here.

Yes.

Wind again.

Thinking about the you mentioned the payment shift there the $500 million.

Thinking about the timing in terms of the close of any deal.

That payment shift save you.

The $500 million of cash that you had previously planned to finance or allow you more capacity to invest in other places this year thinking through the timing of that how that effects the plant.

Well, that's $500 million was more towards the tail end of this year as I mentioned in my comments so.

So that just gets pushed out obviously, it's we avoid further construction cost commitments. This year and then obviously the pricing would be adjusted accordingly by the by the buyer.

Okay. Okay.

And then.

No. This isn't your project, but theres another transmission line proposal out of your way from Canada any thoughts on differences between say northern pass or in any other.

Proposal, that's been made over the decades.

Sure enough.

Well I mean, we are not where the offtake or taking that power.

1100 megawatts into a <unk>.

And to the ISO or into the grid. That's good for all customers, let's clean energy that will be coming down from there. So.

It's a lot of the same players that are involved in that <unk>.

Our position, we will leave it at that but I will tell you that any type of injection of clean resources into our into our marketplace is has a good day for us it's a good day for our customers.

Sure Okay.

Very good Thats, all I had thanks so much.

Thanks.

Thanks, Travis that was the last question we have this morning's we want to thank you all for joining us and if you have any follow up questions. Please reach out to Investor relations. Thank you.

That concludes the conference call. Thank you for your participation you may now disconnect your lines.