Q2 2024 Eversource Energy Earnings Call
Ladies and gentlemen, please remain holding. The conference will begin momentarily. Again, please remain holding. The conference will begin momentarily.
Unknown Executive: Good morning and good afternoon, ladies and gentlemen. Welcome to the Eversource Energy Q2. .
Jaquita: Good morning and good afternoon, ladies and gentlemen. Welcome to the Eversource Energy Q2 2024 earnings call. My name is Jaquita.
Speaker Change: Good morning and good afternoon, ladies and gentlemen. Welcome to the Eversource Energy Q2 2024 earnings call.
Jaquita: I will be your moderator for today's call. Our lines will be muted during the presentation portion of the call with the opportunity for questions and answers at the end. If you would like to ask a question, please press star one on your telephone keypad. I would now like to pass the conference over to your host, Matthew Fallon, with Eversource Energy's Director of Industrial Relations. Matt, please go ahead.
Jaquita: My name is Jaquita. I will be your moderator for today's call.
Our links will be needed in the presentation portion of the call with the opportunity for questions and answers at the end.
I would now like to pass the conference over to your host, Matthew Fallon, with Eversource Energy, Director for Industrial Relations. Matt, please go ahead. Good morning, and thank you for joining us. I am Matt Fallon, Eversource Energy's Director for Industrial Relations.
Matthew Fallon: During this call, we'll be referencing slides that we posted yesterday on our website. Also joining us today is Jay Booth, our Vice President and Controller. I am very pleased to report that we have closed the Seal of the Sunrise Wind project to Orsted and that we anticipate closing the seal of our South Park and Revolution Wind projects to global infrastructure partners in the third quarter. These increasing demands on the electric system.
Speaker Change: These statements are based on management's current expectations and are subject to risk and uncertainty, which may cause the actual results to differ materially from forecasts and projections. We undertake no obligation to update or revise any of these statements.
is contained within our news release, the slides that we posted last night, and in our most recent 10Q.
Speaker Change: I am very pleased to report that we have closed the Seal of Sunrise Wind project to Orsted and that we anticipate closing the seal of our South Park and Revolution Wind projects to global infrastructure partners in the third quarter.
Unknown Executive: Optimist. Turning to slide three, we continue to be a leader on delivering energy solutions for our customers with our focus on resiliency investments to address aging infrastructure in minimize customer outages on blue sky days and during storm events. We are also very busy preparing for the future of electrification to achieve our region's greenhouse gas reduction goals. Moving to slide four, shown here, our state's near-term and long-term greenhouse gas reduction goals. To achieve these goals, we are planning investments to our grid to meet the demand growth from electrification of transportation and residential and commercial heating sectors.
Speaker Change: to enable the clean energy transition for customers.
Speaker Change: We are also very busy preparing for the future of electrification to achieve our region's greenhouse gas reduction goals.
Speaker Change: Moving to slide four.
Speaker Change: Shown here are our state's near-term and long-term greenhouse gas reduction goals.
Unknown Executive: This effort requires us to upgrade and expand the electric system to handle the new demands that we will face, including more EV charging, more customers turning to heat pumps to warm and cool their homes, and expanded capacity needs to accommodate additional renewable energy resources. In addition, we must make our system smarter and stronger to withstand Mother Nature and the forces of climate change, which are resulting in more frequent and intense storms. We are continuing to invest in our electric system with smart technologies to help the grid automatically adjust to disturbances on the system and empower customers with more information to control their energy use.
Speaker Change: This effort requires us to upgrade and expand the electric system.
Unknown Executive: These increasing demands on the electric system make it critical for us to work together with our regulators to obtain timely cost recovery and maintain a solid financial position for the company. A strong financial position enables EVA Source to plan for and need these increasing demands while continuing to provide high levels of safe, reliable service to our customers. Turning to slide five, our nearly $6 billion in transmission investments over the next five years is the largest program in our company's history. It is key to achieving our collective greenhouse gas reduction goals. Based on system needs, our transmission investment program is moving from overhead line rebuilds in smaller reliability projects to much needed new substations to meet electrification demands and work toward a carbon-free future.
Speaker Change: A strong financial position enables Eversource to plan for and meet these increasing demands while continuing to provide high levels of safe, reliable service to our customers.
Matthew Fallon: Our nearly $6 billion in transmission investments over the next five years is the largest program in our company's history and is key to achieving our collective greenhouse gas reduction goals. In our five-year plan, these new substations and substation upgrades will equal approximately $1 billion of investment in over 600 million in transmission projects are planned to enable clean energy resources that will drive transmission infrastructure investment for years to come. In Massachusetts, our current electric distribution investment plan is nearly double the previous five-year plan.
Speaker Change: Turning to slide five, our nearly $6 billion in transmission investments over the next five years is the largest program in our company's history and is key to achieving our collective greenhouse gas reduction goals.
Unknown Executive: In our five-year plan, these new substations and substation upgrades will equal approximately $1 billion of investment in over 600 million of transmission projects that are planned to enable clean energy resources. Our five-year transmission investment program also includes over $3 billion for investments to replace aging infrastructure. Lecture: We are also evaluating additional infrastructure requirements that could materialize during this forecast. And we expect incremental projects will be needed as we move forward. As we plan ahead, there are many areas of focus, such as advancing the electric sector of modernization plan and Massachusetts, increasing input capacity into Boston, and enabling offshore wind and other renewables to advance regional decarbonization efforts that will drive transmission infrastructure investment for years to come.
Speaker Change: In our five-year plan, these new substations and substation upgrades will equal approximately $1 billion of investment in over 600 million of transmission projects are planned to enable clean energy resources.
Speaker Change: Our five-year transmission investment program also includes over $3 billion for investments to replace aging infrastructure.
Speaker Change: We are also evaluating additional infrastructure requirements that could materialize during this forecast and we expect incremental projects will be needed as we move forward.
Speaker Change: As we plan ahead, there are many areas of focus, such as advancing the electric sector modernization plan in Massachusetts.
Speaker Change: increasing import capacity into Boston and enabling offshore wind and other renewables to advance regional decarbonization efforts that will drive transmission infrastructure investment for years to come.
Unknown Executive: To give you an example of the magnitude of the incremental transmission investments, we are seeing over the next 10 years, we are planning for over a dozen new substations in eastern Massachusetts along to meet demand compared to just four new substations constructed in that service area in the past decade. Moving to electric distribution on slide six, we are preparing for substantial growth in distribution investment. In Massachusetts, our current electric distribution investment plan is nearly double the previous five-year plan, as we move forward to prepare for significant electric demand growth in Massachusetts to meet the state's clean energy goals.
Speaker Change: To give you an example of the magnitude of the incremental transmission investments we are seeing over the next 10 years, we are planning for over a dozen new substations in eastern Massachusetts alone to meet demand.
Speaker Change: compared to just four new substations constructed in that service area in the past decade.
Speaker Change: Moving to electric distribution on slide six, we are preparing for substantial growth in distribution investment. In Massachusetts, our current electric distribution investment plan is nearly double the previous five-year plan.
Matthew Fallon: As we move forward to prepare for significant electric demand growth in Massachusetts to meet the state's clean energy goals, we are constantly evaluating solutions that will provide the right balance of outcomes for our customers that drive the needs in each specific area, allowing us to plan efficiently and cost effectively for future system needs. Our progress with our Massachusetts AMI program, which we and other stakeholders know is critical for enabling a clean energy future, will start early next year, including improved grid management to Also, you may have heard that Governor Lamont has nominated David Arcante as the new PURA Commissioner to take the place of Vice Chairman Bukowski, who is retiring this coming January.
Speaker Change: As we move forward to prepare for significant electric demand growth in Massachusetts to meet the state's clean energy goals, we are constantly evaluating solutions that will provide the right balance in outcomes for our customers.
Unknown Executive: We are constantly evaluating solutions that will provide the right balance in outcomes for our customers. In order to determine our distribution system investment needs in Massachusetts, we have carefully evaluated the factors that drive the needs in each specific area, allowing us to plan efficiently and cost-effectively for future system needs. Turning to slide seven, we are very pleased with our progress of our Massachusetts AMI program, which we and other stakeholders know is critical for enabling a clean energy future. As part of the Massachusetts AMI program, we recently completed successful implementation of a new customer billing and information system, replacing a nearly 40-year-old system.
Unknown Executive: This new customer system will provide a critical foundation for our AMI deployment. We are currently working on system design, building and testing of our meet and management and communication applications, which we expect to conclude this summer. Network construction is anticipated to start early next year, with smart meter installation beginning in the third quarter next year. Our Massachusetts AMI program will deliver numerous day-one benefits to customers, including improved grid management to enhance reliability and customer access to monitor electric consumption and control energy use. Further customer benefits include greater visibility on outages to enhance storm restoration response and dynamic rate design to enable customers to adjust electric use and lower their bills.
Speaker Change: Further customer benefits include greater visibility on outages to enhance storm restoration response and dynamic rate design to enable customers to adjust electric use and lower their bills.
Unknown Executive: Although we're very excited about the future transition to electrification, we are deeply committed to keeping the customer journey front and center. Affordability in fear and balance rate design along with a focus on environmental justice communities is top of mind forever source. A good example of Eversource's exploration of creative solutions to enable an equitable transition to clean energy is our first-of-its-kind network geothermal pilot and framing in Massachusetts, which came online in June. We look forward to continuing our productive partnership with the State of Massachusetts as we deploy innovative technologies and pursue our carbon emission reduction goals.
Speaker Change: A good example of Eversource's exploration of creative solutions to enable an equitable transition to clean energy is our first-of-its-kind networked geothermal pilot.
Speaker Change: and Framingham, Massachusetts, which came online in June . We look forward to continuing our productive partnership with the state of Massachusetts as we deploy innovative technologies and pursue our carbon emission reduction goals.
Unknown Executive: Turning to Connecticut, I want to thank the Lamont administration for its collaboration with utilities to provide regulatory clarity to continue the electric vehicle charging program. The solution that Pure is now preparing to put in place benefits our Connecticut customers while ensuring timely and adequate recovery of program costs. As I've said before, it is critical to ensure that our customers receive safe, reliable, and affordable service in a balanced regulatory environment. It is the best way to get there. Also, you may have heard that Governor Lamont has nominated David Arconte as the new purer commissioner to take the place of Vice Chairman Bikowski, who is retiring this coming January.
Matthew Fallon: We are encouraged that David is a nominee with a keen interest in energy policy and valuable experience as a former member of the Connecticut General Assembly. We are hopeful that this is a step forward in bringing Connecticut closer to its state policy goals, with recognition that investment is needed to support the. file integrated distribution plans with the Public Utilities Commission every five years, focused on delivering long-term value to our customers and our investors. Both items are included in our GAP earnings results for 2023. The earnings decrease was due primarily to higher O&M expenses.
Speaker Change: Also, you may have heard that Governor Lamont has nominated David Arcante.
Speaker Change: as the new Pure Commissioner to take the place of Vice Chairman Bukowski, who is retiring this coming January . We are encouraged that David is a nominee with keen interest in energy policy and valuable experience as a former member of the Connecticut General Assembly.
Unknown Executive: We are encouraged that David is a nominee with keen interest in energy policy and valuable experience as a former member of the Connecticut General Assembly. We are hopeful that this is a step forward and bringing Connecticut closer to its state policy goals, with recognition that investment is needed to support these goals.
Speaker Change: We are hopeful that this is a step forward in bringing Connecticut closer to its state policy goals, with recognition that investment is needed to support these goals.
Unknown Executive: Touching on New Hampshire, we continue to see positive momentum on the collaborative approach to plan for long-term energy needs with the signing of House Bill 1431 by Governor Sunino in July. This bill requires utilities to file integrated distribution plans with the Public Utilities Commission every five years. A 10 year forecast of electric demand and an assessment of the distribution infrastructure needed to meet projected energy demands.
Speaker Change: with the signing of House Bill 1431 by Governor Sununu in July .
Speaker Change: A 10-year forecast of electric demand and an assessment of the distribution infrastructure needed to meet projected energy demands.
Unknown Executive: Moving to ever sources focused on our company's specific emission goals in employee development. I want to highlight the release of our 2023 Sustainability Report in our Diversity, Equity and Inclusion Report as shown on slide 8. Ever source has been a leader in these areas for many years, and it's a pod of our DNA. In this year's Sustainability Report, we have submitted our specific greenhouse gas reduction targets to the Science-Based Target Initiative. We also highlight the progress made towards reaching our goals of carbon neutrality from our operations by 2030. with over 30% reduction in emissions from the 2018 baseline year.
Speaker Change: Moving to Eversource's focus on our company's specific emission goals in employee development, I want to highlight the release of our 2023 Sustainability Report and our Diversity, Equity and Inclusion Report as shown on slide 8.
Speaker Change: Eversource has been a leader in these areas for many years and it's a part of our DNA.
Speaker Change: In this year's Sustainability Report, we've submitted our specific greenhouse gas reduction targets to the Science-Based Target Initiative. We also highlight the progress made towards reaching our goals of carbon neutrality from our operations by 2030.
Speaker Change: with over 30% reduction in emissions from the 2018 baseline year.
Unknown Executive: We are excited about the future. Eversource is uniquely positioned to leverage its skills, expertise, and skills to build utility infrastructure that will enhance system resiliency and transition to a clean energy future for our customers. We have a long-run way of low risk, regulated investment opportunities, and earnings growth potential, focused on delivering long-term value to our customers and our investors.
Speaker Change: Eversource is uniquely positioned to leverage its skills, expertise, and scale to build utility infrastructure.
Unknown Executive: Thank you for your interest in Eversource.
John Moreira: I will now turn the call over to John Moreira to walk you through our financial results and progress made to a strengthening up balance sheet. Thank you, Joe, and good morning, everyone. This morning, I will discuss our second quarter earnings results. Provide a regulatory update and review our finance and activity. As shown on slide nine, our gap and recurring earnings for the second quarter were 95 cents per share as compared with gap earnings of four cents per share in the second quarter of 2023, and recurring earnings of $1 per share in the second quarter of last year.
Speaker Change: and Progress Made to Strengthen Our Balance Sheet.
Speaker Change: As shown on slide 9, our gap and recurring earnings for the second quarter were $0.95 per share.
John Moreira: You'll recall, in the second quarter of 2023, we recorded the first of two impairment changes associated with our offshore wind investment of $331 million, or $0.95 per share. We also had other non-recurring charges of $6.2 million, or $1.10 per share, in the second quarter of 2023. Both items are included in our gap earnings results for 2023. Breaking down the second quarter earnings results by segment, starting with electric transmission, which earned $0.54 per share, compared with earnings of $0.46 per share in 2023. Electric transmission earnings increased due to rate-based growth. Our electric distribution earnings were $0.42 per share for the quarter compared with earnings of $0.47 per share in 2023.
Speaker Change: Both items are included in our GAAP earnings results for 2023.
John Moreira: The earnings decrease was due primarily to higher O&M expense driven by highest storm restoration costs and the absence of a favorable prior year regulatory adjustment in New Hampshire, partially offset by higher revenues driven by install electric's base distribution rate increase effective January 1st of this year. Electric distribution earnings are expected to be higher in the second half of the year, driven by capital cost recovery and New Hampshire's $61 million interim rate increase effective August 1st. Our natural gas distribution business earned $0.8 per share for the quarter compared with $0.3 per share last year. The earnings increase was due primarily to higher revenues, firm, and stock ounces.
Speaker Change: The earnings decrease was due primarily to higher O&M expense.
Matthew Fallon: Electric distribution earnings are expected to be higher in the second half of the year, driven by capital cost recovery and New Hampshire's $61 million interim rate increase effective August 1st. The main driver of this decrease was higher interest. Overall, our second quarter earnings results were in line with our expectations, and we are reaffirming our 2024 EPS guidance range of $4.50 to $4.67 for the Interconnection of Clean Energy Resources and Resiliency Initiatives through 2028. This $600 million is incremental to our $23.1 billion five-year capital forecast we announced back in February. Next, I'm pleased to report that in early June, the DPU approved four additional capital investment projects.
John Moreira: November 1st, 2023 rate increase and lower O&M. Program, partially offset by higher appreciation, interest, and property tax expenses. The water distribution segment contribute two cents per share for the quarter, compared with three cents per share last year. The decrease in earnings was primarily due to higher O&M and interest costs. Eversource parent and other companies lost 11 cents per share in the quarter, compared with recurring earnings of one cent per share last year. The main driver of this decrease was higher interest expense.
Speaker Change: The water distribution segment contributed $0.02 per share for the quarter compared with $0.03 per share last year. The decrease in earnings was primarily due to higher O&M and interest costs.
John Moreira: Overall, our second quarter earnings results were in line with our expectations, and we are reaffirming our 2024 EPS guidance range of $4.50 to $4.67, as well as our longer term, 5 to 7 percent EPS growth rate.
Speaker Change: as well as our longer term 5-7% EPS growth rate.
John Moreira: Turn into our regulatory update on slide 10, starting with Massachusetts. As you may recall, we filed our electric sector modernization plan with the DPU in January, which is a roadmap to address growth from electrification needs. We expect a decision on our plan later this month. As a reminder, our electric sector modernization plan calls for 600 million of distribution capital investments for interconnection of clean energy resources and resiliency initiatives through 2028. This 600 million is incremental to our 23.1 billion five-year capital forecast we announced back in February. Next, I’m pleased to report that in early June, the DPU approved four additional capital investment projects to enable the interconnection of large-scale distributed generation resources on our system.
Speaker Change: Turning to our regulatory update on slide 10, starting with Massachusetts, as you may recall, we filed our electric sector modernization plan with the DPU in January , which is a roadmap to address growth from electrification needs.
Speaker Change: We expect a decision on our plan later this month.
Speaker Change: As a reminder, our Electric Sector Modernization Plan calls for $600 million of distribution capital investments.
Speaker Change: for interconnection of clean energy resources and resiliency initiatives through 2028. This $600 million is incremental to our $23.1 billion five-year capital forecast we announced back in February .
Speaker Change: Next, I'm pleased to report that in early June , the DPU approved four additional capital investment projects to enable the interconnection of large-scale distributed generation resources on our system.
John Moreira: Combined with the first project approved in December of 2022, these projects represent approximately 1 billion of total capital investment, with 600 million of distribution investment and approximately 400 million of transmission investment. This 1 billion of investment is included in our five-year capital plan. In May, as per our settlement agreement related to the acquisition of EGMA, we filed our first rate-based reset for rates to be effective November 1 of 2024. This filing reconciled our rate base, which has increased from 770 million to approximately 1.7 billion as of the end of 2023. This rate-based reset is subject to a cap on the revenue change.
Speaker Change: Combined with the first project approved in December of 2022, these projects represent approximately $1 billion of total capital investment, with $600 million of distribution investment and approximately $400 million of transmission investment.
Speaker Change: This $1 billion of investment is included in our five-year capital plan.
Matthew Fallon: In May, as per our settlement agreement related to the acquisition of EGMA, we filed our first rate base reset for rates to be effective November 1 of 2024. This filing reconciles our rate base, which has increased from $770 million to approximately $1.7 billion as of the end of 2023. This rate base reset is subject to a cap on the revenue chain.
Speaker Change: In May, as per our settlement agreement related to the acquisition of EGMA, we filed our first rate base reset for rates to be effective November 1 of 2024.
Speaker Change: This rate base reset is subject to a cap on the revenue change.
John Moreira: With the application of this revenue cap, the proposed revenue increases are $78.7 million this year and $67.5 million effective November 1 of 2025. Live. Closing out the Massachusetts regulatory items, we were pleased to receive final approval from the Massachusetts Energy Facility Siting Board for the Cambridge Substation Project. This is a $1.6 billion investment, of which $1 billion of investment is included in our five-year capital plan and the remaining balance in 2029 and 2030. This project consists of a new underground substation that will address the growing electricity needs of the city of Cambridge and the surrounding area.
Matthew Fallon: With the application of this revenue cap, the proposed revenue increases are $78.7 million this year and $67.5 million effective November 1st, 2025. We were pleased to receive, and the remaining balance of, This project consists of a new underground substation that will address the growing electricity needs of the city of Cambridge and the surrounding area since our last rate case in 2019. The filing requests a rate change of $182 million in base distribution rates that will take effect in two parts. The first rate adjustment will go into effect today, reflecting an increase of $61 million, with the remainder to go into effect on August 1st of next year.
Speaker Change: This project consists of a new underground substation that will address the growing electricity needs of the City of Cambridge and the surrounding area.
John Moreira: Turn in to New Hampshire, PSNH filed a rate case in early June to recover more than $765 million of investment since our last rate case in 2019. The filing requests a rate change of 182 million in base distribution rates. That will take effect in two steps. The first rate adjustment will go into rates today, reflect an increase of $61 million, with the remainder to go into effect on August 1st of next year. In term rate will provide enhanced cash flows to the company until we receive a final rate decision next year. The filing proposes to recover investments made to improve reliability and includes recovery of increased costs associated with storm response and vegetation management due to the more frequent and more intense storm events.
Speaker Change: that will take effect in two steps.
Matthew Fallon: Interim rates will provide enhanced cash flows to the company until we receive a final rate decision next year. On blue sky days, the company's reliability investments in New Hampshire have certainly paid off for our customers. In addition, the company has rigorously controlled O&M costs since our last rate. This mechanism enhances cash flow and supports resiliency investors. In Connecticut, Discovery is underway on the Storm Cost Prudency Review for $634 million. We anticipate receiving gross proceeds of approximately $1.1 billion, subject to adjustments for capital expenditures.
John Moreira: On Blue Sky days, the company's reliability investments in New Hampshire have certainly paid off for our customers. For example, thanks in large part to investments in distribution automation technology, the percentage of New Hampshire customers restored in non-storm events in less than five minutes has improved from 30% in 2018 to over 50% in 2023. In addition, the company has rigorously controlled ONM cross since our last rate case. We have also proposed to implement a four-year performance-based rate-making plan, including a capital support mechanism that would adjust rates annually to be approved by the commission. This mechanism enhances cash flow, supports resiliency investments, replacement of agent infrastructure, and investments for the integration of customer distributed generation while maintaining the additional transparency that comes with PBR.
Speaker Change: In addition, the company has rigorously controlled O&M costs since our last rate case.
John Moreira: We anticipated final decision in this case in 2025.
John Moreira: In Connecticut, discovery is underway on the storm cross-prodency review for $634 million. We are also preparing to file for storm-providence review later this year for storm restoration costs related to events in 2022 and early 2023. As Joe mentioned, we received a decision from Pure, allowing us to continue supporting the electric vehicle charging program for customers under a constructive cost recovery framework that will enhance our cash flow position.
Speaker Change: We are also preparing to file for storm prudency review later this year for storm restoration costs related to events in 2022 and early 2023.
Speaker Change: As Joe mentioned, we received a decision from Pura allowing us to continue supporting the electric vehicle charging program for customers under a constructive cost recovery framework that will enhance our cash flow position.
John Moreira: I'll now provide an update on some of the items shown on slide 11 that will enhance our FFOTA deck ratio from 2023 to 2025. First, the 2024 annual rate adjustment in Connecticut became effective July 1 of this year, recovering approximately 900 million of several costs, including public benefits-related costs. The July first rate adjustment is recovering under collections from 2023 and has reset rates to a level matching incurred costs that we expect in 2024. Public benefit costs include the cost of energy supply contracts with the Millstone and Seedbrook nuclear power plants and uncollectable hardship costs. Second, with the closing of our sale, Sunrise, when to Austin, we received net proceeds of $152 million that will be used to pay down debt.
Joe: The 2024 Annual Rate Adjustment in Connecticut became effective July 1 of this year, recovering approximately $900 million of several costs, including public benefits-related costs.
Speaker Change: and Uncollectible Hardship Costs.
Speaker Change: With the closing of our sale of SunriseWin to Austin, we received net proceeds of $152 million that will be used to pay down debt. Third, the closing of our sale of Revolution and SouthwarkWin to global infrastructure partners.
John Moreira: Third, the closing of our sale of Revolution in South Fork, when to Global Infrastructure Partners, we anticipate receiving gross proceeds of approximately 1.1 billion, subject to adjustments for capital expenditures. These proceeds will also be used to pay down debt. As a reminder, there is no impact to our finance and plan from these capital expenditure adjustments. In addition, the filings for distribution rate increases at PSNH and EGMA will provide additional cash flow and answer. And lastly, regarding our equity issuances, we have raised approximately 250 million of equity through our ATM program and issued approximately 819,000 treasury shares in the first half of this year.
Speaker Change: We anticipate receiving gross proceeds of approximately $1.1 billion, subject to adjustments for capital expenditures.
Speaker Change: These proceeds will also be used to pay down debt. As a reminder, there is no impact to our financing plan from these capital expenditure adjustments.
Speaker Change: In addition, the filings for distribution rate increases at PSNH and at EGMA will provide additional cash flow enhancement. And lastly, regarding our equity issuances.
Joe: We have raised approximately $250 million of equity through our ATM program and issued approximately 819,000 Treasury shares in the first half of this year.
John Moreira: We continue to anticipate equity means up to 1.3 billion over the next several years, as shown on slide 12.
John Moreira: We are making progress on our effort to sell aquarium water companies. I'm happy to report that we have recently launched the initial phase of this process. All of the above actions give us a clear roadmap for improvement of our FFOTA debt ratio in 2024 and give us confidence in achieving our 14-15% FFOTA debt target at S&P in 2025.
Matthew Fallon: We are making progress on our effort to sell Aquarium Water Company. The summary, as you can see on slide 13. We have a proven track record of earnings and dividend growth, and we are confident that our robust $23.1 billion five-year capital forecast and our forecasted financing plan will enable us to drive our 5% to 7% EPS growth rate through 2028, based off of our 2023 recurring EPS of $4.34. The first question concerns a line of Shahriar Pourreza with Guggenheim Partners. The line is now open. Morning, Shahriar.
Speaker Change: We are making progress on our effort to sell Aquarian Water Company.
John Moreira: In summary, as you can see on slide 13, we have a proven track record of earnings and dividend growth. And we are confident that our robust $23.1 billion five-year capital forecast and our forecasted finance and plan will enable us to drive our five to seven percent EPS growth rate through 2028 based off of our 2023 recurring EPS of $4.3 billion in 2014.
Speaker Change: In summary, as you can see on slide 13,
Speaker Change: And we are confident that our robust $23.1 billion five-year capital forecast and our forecasted financing plan will enable us to drive our 5 to 7% EPS growth rate through 2028.
Unknown Executive: I'll now turn the call back to Math for Q&A. Thank you, Jacquita. We are now ready for Q&A. Absolutely.
Speaker Change: Thank you, Chiquita. We are now ready for Q&A.
Unknown Executive: We will now begin the question and answer session. If you would like to ask a question, please press star one on your telephone keypad. If, for any reason, you would like to remove that question, please press star two. Again, to ask a question, press star one.
Speaker Change: Absolutely.
Speaker Change: We will now begin the question and answer session. If you would like to ask a question, please press star 1 on your telephone keypad. If for any reason you would like to remove that question, please press star 2.
Unknown Executive: If you're using a speaker phone, please remember to pick up your hands that they were asking your question. We will also briefly to allow questions to register.
Speaker Change: Again, to ask a question, press star 1. If you're using a speakerphone, please remember to pick up your handset before asking your question. We will pause it briefly to allow questions to register.
Shahriar Pourreza: The first question is going to line up Shah Parava with Dugan Han partners. The line is now open.
Speaker Change: The first question concerns a line of Shahriar Pourreza with Guggenheim Partners. The line is now open.
Unknown Executive: Hey guys, good morning. Morning, Shah. Morning.
Shahriar Pourreza: Hey guys, good morning.
Unknown Executive: So, just maybe starting with Connecticut. I mean, some constructive outcomes on the EV side. It sounds like the governor brought everyone together there. You're still kind of working through how to recover AMI. Are these the kind of green shoots, in your view? Could we see some of that 500 million capital you allocated, else for a flow back into the state? Yeah, well, thank you. As you know, I had committed to folks that we will work diligently on our relationships in Connecticut. This is one of the areas of focus. As you know, we talked about our exit from wind.
Speaker Change: Morning, Shahriar. Morning.
Shahriar Pourreza: Morning, morning. Joe, just maybe starting with Connecticut. I mean, some constructive outcomes on the EV side. Sounds like the governor brought everyone together there. You're still kind of working through how to recover AMI. Are these like kind of green shoots in your We see some of that $500 million in capital.
Shahriar Pourreza: Morning. Yeah, well, thank you. As you know, I committed to folks that we would work diligently on our relationships in Connecticut. This is one of the areas of focus; as you know, we talked about our exit from wind. I think you're seeing that we're successfully executing that strategy, working on Connecticut, and the sale of Aquarium. With regard to Connecticut, I wish I could say that I had a high degree of comfort right now. The jury is still out.
Speaker Change: You allocate it elsewhere, it flows back into the state.
Joe: Yeah, well, thank you. As you know, I had committed to folks that we will work diligently on our relationships in Connecticut. This is one of the...
Unknown Executive: I think you're seeing that was successfully executing that strategy.
Speaker Change: One of the areas of focus, as you know, we talked about our exit from wind. I think you're seeing that we're successfully executing that strategy, working on Connecticut, the sale of aquarium. You know, with regard to Connecticut, you know, I wish I could say that I had.
Unknown Executive: Working on Connecticut, the sale of aquarium, you know, with regard to Connecticut, you know, I wish I could say that I had a high degree of comfort right now. The jury is still out. You know, we are grateful for Governor Lamont's leadership. I think he's done a good job and will continue to work at that. I have your commitment that I will continue to work on that relationship so that we get a stable regulatory environment for us to make any investments down there, especially on AMI. Because I've got to tell you, you know, what's taking place in the energy markets AMI today is more important than ever that we have a system that allows customers to make informed decisions around their use of energy.
Shahriar Pourreza: You know, we are grateful for Governor Lamont's leadership. I think he's done a good job and will continue to work on that. You have my commitment that I will continue to work on that relationship so that we get a stable regulatory environment for us to make any investments down there, especially in AMI. Because I've got to tell you what's taking place in the energy markets. It is more important than ever that we have a system that allows customers to make informed decisions around their use of energy.
Speaker Change: A high degree of comfort right now, the jury is still out. We are grateful for Governor Lamont's leadership.
Speaker Change: I think he's done a good job and.
Speaker Change: We'll continue to work at that. You have my commitment that I will continue to work on that relationship so that we get a stable regulatory environment for us to make any investments down there, especially on AMI, because
Speaker Change: I've got to tell you, you know, with what's taking place in the energy markets, AMI today is more important than ever.
Unknown Executive: I think it's all what took place in the PJM markets. And this is the type of technology that we're going to need to deploy in our states in order to allow our customers to make those decisions around spending their dollars on energy.
Shahriar Pourreza: I think you saw what took place in the PJM markets, and this is the type of technology that we're going to need to deploy in our states in order to allow our customers to make those decisions around spending their dollars on energy. Yeah, sure. You know, the governor is now at four, but you know, we'll go down to three in January. I think the governor is committed. I mean, certainly any discussions I've had with him.
Speaker Change: I think you saw what took place in the PJM markets, and this is the type of technology that we're going to need to deploy in our states in order to allow our customers to make those decisions around spending their dollars on energy.
Unknown Executive: And sorry, just the pure size of some noise there, like it's three of the magic number, or we see the governor sort of expand, you know, to five. Yeah, sure, you know, so the governor is now at four, but you know, we'll go down to three in January. I think the governor is committed. I mean, I certainly any discussions I've had with him. You know, he wants to strike a balance, and that's what he has told me that he wants to strike a balance in Connecticut. So yeah, he may go to five. I think he's going to continue to work at it.
Shahriar Pourreza: You know, he wants to strike a balance. And that's what he has told me he wants to do in Connecticut. So yeah, he may go to five. I think he's going to continue to work at it.
Speaker Change: Yes, sure, you know, so the governor is now at four, but you know, we'll go down to three in January . I think the governor is committed. I mean, I certainly any discussions I've had with him, you know, he wants to strike a balance and that's what he has told me that he wants to strike a balance.
Unknown Executive: It's a work in progress to make sure that he brings stability and regulatory certainty to the state of Connecticut. But again, you know, it's we're taking away and see approach. Got it. Okay. Got it.
Unknown Executive: And then just lastly, the aquarium. I mean, some data points around the muni legislation this spring and trade press on the process. I guess any finer points you can put on, you know, the sale timeline. Is it kind of your goal at this point to roll forward the plan next February without anything for aquarium in it? Thanks. Disguise. Yeah well you know I got to tell you first you know in terms of the legislative process and there was a lot of discussion on that you know that one particular piece of legislation was designed to allow a bit of that in the absence of that legislation would not have been able to participate in our seal process so it doesn't give them any more of a leg up than anybody else we have a you know a very robust group so that you know that that that was encouraging that this is a player that wanted to be there there are no entity in Connecticut so the process will move forward and you know we we John if you want to talk about with respect to timing, Shahriar as I mentioned in my formal remarks we recently have launched the process actually was still working our way through finalizing some NDAs in our forecast is finance and plan we assume that that transaction would wrap up by the by 25 by the end of 25 so so that's our change in that time frame.
Speaker Change: I guess any finer points you can put on, you know, the sale timeline, is it kind of your goal at this point to roll forward the plan next February without anything for Aquarian in it? Thanks, guys.
Shahriar Pourreza: It's a work in progress to make sure that he brings stability and regulatory certainty to the state of Connecticut. But again, you know, we're taking a wait and see approach. Yeah, well, you know, first, you know, in terms of the legislative process, and there was a lot of discussion about that, you know, that one particular piece of legislation was designed to allow a bit of debt, but without that legislation, they would not have been able to participate in our seal process. So it doesn't give them any more of a leg up than anybody else.
Shahriar Pourreza: We have a, you know, a very robust group. So the fact that that was encouraging that this is a player that wanted to be there is a known entity in Connecticut. So the process will move forward. And, you know, we, John, if you want to talk about timing, sure, as I mentioned in my formal remarks, we recently launched the process, actually, we're still working our way through finalizing.
John: So, you know, that was encouraging, that this is a player that wanted to be there, they're a known entity in Connecticut. So the process will move forward and, you know, we, John , if you want to talk about the timing. Sure. As I mentioned in my formal remarks, we recently have launched.
John: The process, actually, we're still working our way through finalizing some NDAs. In our forecasted financing plan, we assume that that transaction would wrap up by the end of 2025.
John: So, that's our, no change in that time frame.
Jeremy Tonet: Okay guys excellent thank you so much we'll see you soon appreciate it thank you. Thank you. The next question you guys can align with Jeremy Tonant with JP Morgan. Your lawn is not open. Hi, good morning, Jeremy. Hi, Jeremy. I just, I just want to go back to the episode of that slide, if I could. Just want to make sure that I have seen that right. Specifically on the under recovery in the bridge, it looks like the 600 million is listed twice, so just want to kind of clarify what's happening there.
Speaker Change: Okay, guys. Excellent. Thank you so much. We'll see you soon. Appreciate it. Thank you.
Speaker Change: Thank you. The next question comes from a line of Jeremy Tonet with JPMorgan. Your line is now open.
Speaker Change: Hi, good morning, Jeremy. Hi, Jeremy.
Jeremy Tonet: I just want to go back to the FFO to debt slide if I could just want to make sure that I've seen that right specifically on the under recoveries in the bridge. It looked like the 600 million is listed twice. So just want to kind of clarify what's happening there.
Shahriar Pourreza: It looks like the $600 million is listed twice, so I just want to kind of clarify what's happening. Hey, so yeah, so I just wanted to follow up on Jeremy's question on the offshore wind project. Well, I would say the construction activities progressed very, very well. As of a week ago, when we connected with AUSTED, the monopiles, or the foundations, they're probably at 50% installed, which is a remarkable task, knowing that we had the time of year restrictions. From a capital deployment standpoint, Jeremy, obviously, that is sensitive information. I'm sorry, Nick.
John Moreira: Well the the 6th if you look at the table Jeremy the way this was designed is to is to highlight where it'll end up in the FFO to death calculation. So the 600 million is will be impacting the enhanced numerator of the of the math there and the 2.6 will offset death. So that's that that was the purpose of this of that table in there so sorry if it added any confusion but that was the kind of the design.
Speaker Change: Well, if you look at the table, Jeremy, the way this was designed is to highlight where it'll end up in the FFO to debt calculation, so the 600 million will be impacting the enhanced numerator of the math there, and the 2.6 will offset debt, so that was the purpose of that table in there, so sorry if it added any confusion, but that was kind of the design.
John Moreira: And keep in mind that Jeremy just I think it's important to keep in mind that these numbers only reflect 24 and 25. Obviously, there's certain recoveries that will continue well beyond 25.
Speaker Change: Transcribed by https://otter.ai
Speaker Change: And keep in mind that, Jeremy, I think it's important to keep in mind that these numbers only reflect 24 and 25. Obviously, there are certain recoveries that will continue well beyond 25.
John Moreira: Got it. That's helpful there, and then just want to go back to the offshore wind tail timing. Could you just update us there on, I guess, when everything would close? And I guess the time on shifted a little bit. Just wondering if there's anything to note there.
Jeremy: Got it. That's helpful there. And then just want to go back to the offshore wind sail timing. Could you just update us there on, I guess, when everything would close? And I guess that time line shifted a little bit. Just wondering if there's anything to note there.
Unknown Executive: Well, Jeremy, I don't know; the timeline has not shifted. We were all guiding that this potentially will close late Q2 or early Q3, and what we've said is we've already closed Sunrise when we did that on July 9th, and we expect to close the GIP deal in this quarter. Okay, I just said I'll leave it there. Thank you. Thank you.
Speaker Change: Well, Jeremy, the timeline has not shifted. We were all guiding that this potentially would close late Q2 or early Q3. And what we've said is we've already closed Sunrise Wind. We did that on July 9th.
Speaker Change: And we expect to close the GIP deal in this quarter.
Speaker Change: Okay, understood. I'll leave it there. Thank you.
Unknown Executive: The next question comes from a line of make cap and all are with our place. Your lawn is now open. Hey, good morning. Hope you're having a great summer.
Speaker Change: Thank you.
Speaker Change: Thank you. The next question comes from the line of Nick Campanella with Barclays. Your line is now open.
Unknown Executive: Hey, so yeah, so I just wanted to just to follow up on Jeremy's question on the offshore wind. Just can you just maybe give us a state of the construction status on Revolution, you know, where you stand on those costs and capital expenditures, and then just how much does Eversource actually incur in offshore wind capex for this year before you sell the assets to GIP? Thank you. Well, I would say the product the construction activities progress in very, very well, where, you know, as of a week ago when we connected with Austin, the monopile for the foundations, they're probably a 50% installed, which is a remarkable task knowing that we had the time of year restrictions from a capital deployment standpoint, Jeremy, obviously, that is sense and information as you I'm sorry, Nick, as you know, we we haven't really disclosed that.
Nick Campanella: Hey, good morning. Hope you're having a great summer.
Nick Campanella: Can you just maybe give us the state of the construction status on Revolution, you know, where you stand on on those costs and capital expenditures, and then just how much does Eversource actually incur in offshore wind capex for this year before you sell the assets to GIP? Thank you.
Speaker Change: You know, as of a week ago when we connected with AUSDET, the monopiles, or the foundations, they're probably at 50% installed, which is a remarkable task.
Shahriar Pourreza: As you know, we haven't really disclosed that. But knowing that the seal process is imminent and it's going to happen in the third quarter, so you'll have line of sight. So that really would align with expectations.
Unknown Executive: Okay, no problem. Knowing that that the seal process is is imminent, it can happen in the third water, so you'll have you'll have line of sight. And you guys still feel good about, you know, that underlying IRR that you have to kind of deliver to GIP as per the contract. Yes, yes, we do. I mean, it's as I just stated, Nick; the construction activities are going very well thus far. I appreciate that. Thank you. I appreciate it.
Speaker Change: Robert Becker, Joseph Nolan, Unknown Executive, Joseph Nolan, Unknown Executive, Joseph Nolan,
Speaker Change: And you guys still feel good about, you know, that underlying IRR that you have to kind of deliver to GIP as part of the contract?
Unknown Executive: Jeremy and I are friends, so that's totally okay.
Speaker Change: I appreciate that. Thank you. I appreciate it.
John Moreira: Hey, so just so just on on on storm cost recovery, the 200 million that you have in the at the photo, that enhancements, I know you're in the discovery phase right now and there's been some shift in that proceeding over the last year, but just mechanically, do you have to file a rate case to get that cash recovery of ultimately back and get that regulatory asset wind down or you know, what's the rate case outlook in Connecticut for you currently? Just maybe you could walk us through that. Thank you. Yeah, sure, sure. Let me start with the 200 million, Nick.
Speaker Change: Jeremy and I are friends, so that's totally okay.
Speaker Change: Mechanically, do you have to file a rate case to get that cash recovery and ultimately back and get that regulatory asset wind down or, you know, what's the rate case outlook in Connecticut for you currently? Just maybe you could walk us through that.
John Moreira: The 200 million does not reflect any recovery of Connecticut storm. Okay, the 200 million is more is all related to mass and New Hampshire, and keep in mind, this is only two year recovery in both of those jurisdictions; the recovery period is five years. As it pertains to the 634 million dollar request that we have in front of Pura from Repudency Review, as the schedule currently is laid out, which we're hoping to have a bit more of an acceleration there. We'll take us through September-ish timeframe of 2025. So that really would align with the expectation of potentially we could file a rate case around that time.
Speaker Change: Yeah, sure, sure. Let me start with the $200 million, Nick. The $200 million, it does not reflect any recovery of Connecticut storms.
Speaker Change: Okay, the $200 million is more, it's all related to Mass and New Hampshire, and keep in mind this is only a two-year recovery. In both of those jurisdictions, the recovery period is five years.
Speaker Change: as it pertains to the 630...
Speaker Change: $4 million request that we have in front of Pura from a prudency review. As this schedule currently is laid out, which we're hoping to have a bit more of an acceleration there, will take us through September-ish timeframe of 2025.
Speaker Change: So that really would align with the expectation of potentially we could file a rate case around that time.
John Moreira: The historical process is you do the prudence in Connecticut; you do the once the rate case has been buttoned up and that new rate goes into effect. That's when we would roll. and the storm cost. That's super helpful. I appreciate the clarification, and thanks for the talk. Thanks, Nick.
Speaker Change: The historical process is you do the prudence in Connecticut, you do the prudency review.
Speaker Change: And then you file a rate case, and then once the rate case has been buttoned up and that new rate goes into effect, that's when we would roll in the storm costs.
Unknown Executive: Thank you.
Steven Fleishman: The next question comes in a line of Steve Fleishman with research.
Steve Fleishman: The next question comes from the line of Steve Fleishman with WOOP Research. Your line is now open, plan. That's correct. That's correct. I just, I guess maybe like to get more color on how that plays into the up to 1.3 billion, and obviously you still have other things in flux. Sure, sure. I think you just nailed the answer to that question.
Nick: Thanks, Nick.
Speaker Change: Thank you. The next question comes from a line of Steve Fleishman, Woodwork Research. Your line is now open.
Unknown Executive: Your line is not open. Morning Steve. Morning. Hey, good morning. Thank you.
Speaker Change: Morning Steve. Morning.
Unknown Executive: The just kind of maybe close the loop on a prior question. Just whatever the latest cost estimate on revolution is, that's still a good cost estimate. As of right now, I mean, we always continue to work with us on further updates. But as of right now, yes. Okay.
Steve Fleishman: Hey, good morning. Thank you. Just to kind of maybe close the loop on a prior question, just whatever the latest cost estimate on revolution, is that still a good cost estimate?
Speaker Change: As of right now, I mean, we, you know, we always continue to work with Austin on further updates but as of right now, yes.
John Moreira: And then on just on the equity plan. So, back at the beginning of the year, I think that was before you had the go-ahead on sunrise. And I think not only did you get this 230 million, but you avoided potential breakage costs. If I recall, when you kind of came up with the current plan. That's correct. I don't have other things in flux. But maybe just a little more color since we now have that specific update. Sure. I think you just nailed the answers to that question. We do have a lot of things in flux.
Steve Fleishman: Okay.
Speaker Change: And then on, just on the...
Speaker Change: If I recall when you kind of came up with the current...
Speaker Change: Plan? That's correct. That's correct, Steve.
Steve Fleishman: and so kind of given that is now
Don: Don and
Steve Fleishman: We do have a lot of things in flux. Our forecast, our financing forecast, when we pulled it together and disseminated it as part of our guidance in February, had a lot of puts and takes, had a lot of assumptions, and we're still navigating our way through that. So I think it's a bit too early to give further guidance on our equity needs. Where we are today, as we stand here, $1.3 billion is the right number until certain things reach closure.
Speaker Change: Sure, I think you just nailed the answer to that question. We do have a lot of things in flux.
John Moreira: Our forecast, our finance and forecast, when we pulled it together and disseminated it as part of our guidance in February, had a lot of puts and takes, had a lot of assumptions, and we're still navigating our way through that. So I think it's a bit too early to give further guidance on our equity needs. Where we are today, as we stand here, the 1.3 billion is the right number until certain things reach closure. And can you just remind me the 1.3 billion, like what the time frame was for that? Was that over the whole four-year period or?
Speaker Change: Our financing forecast, when we pulled it together and disseminated it as part of our guidance in February , had a lot of puts and takes, had a lot of assumptions, and we're still navigating our way through that.
Steve Fleishman: So, I think it's a bit too early to give further guidance on our equity needs. Where we are today, as we stand here, $1.3 billion is the right number until certain things reach closure.
Unknown Executive: What would the guys have said over the next several years? Several years. Okay.
Speaker Change: What was the guidance that we've said over the next several years?
Unknown Executive: And I think that's it for now. Thank you.
Unknown Executive: Thank you, Steve. Thank you.
Speaker Change: And yeah, I think that's it for now. Thank you.
David Arcaro: Thank you, Steve. Thank you. The next question comes from the line of David Arcaro with Morgan Stanley. Your line is now open. Hey, thanks so much for taking the time to talk to me. I was wondering if, like, have there been any changes in the underlying, breaking them out, or has anything changed to the upside? So that, you know, for 2024 alone, we had an inflow of. The other thing that's noted that has not been quantified, but in my formal remarks, I did give you a lot of intel, is the rating.
David Arcaro: The next question comes from a lot of data, Akara with Morgan Stanley. Their lot is now open. Morning, David. Morning. Hey, thanks so much for taking my questions. I wanted to circle back on the FFO to debt enhancement slide. I was just wondering if, like, have there been any changes in the underlying enhancements there? Or is this mostly just pulling in some of the known items, breaking them out more specifically here? Or has anything changed to the upside or downside? Yeah, these are the major, I would say, headlines. However, things always change. One of the items that's not included in this slide that has materially developed is some of the tax benefits that we've been able to harvest, has generated some cash refunds.
Speaker Change: Thank you, Steven and Steve.
Speaker Change: Thank you. The next question comes from the line of David Arcaro with Morgan Stanley . Your line is now open.
David Acara: Thanks so much for taking my questions. I wanted to circle back on the FFO to debt enhancement slide.
David Arcaro: Wondering if like have there been any changes in the underlying enhancements there or is this mostly just pulling in some of the known items breaking them out more specifically here or has anything changed to the upside or downside?
Speaker Change: Yeah, these are the major, I would say, headlines, right? However, you know, things always, you know, change. One of the items that's not included in this slide that has materially developed is some of the tax benefits that we've been able to harvest has generated some cash refunds.
John Moreira: So that, you know, the 2024 alone, we had an inflow of tax refunds of about a hundred and twenty million. And then the other thing that's noted that has not been quantified, but in my formal remarks, I did give you a lot of intel, is the rate increases. You know, we have EGMA going in with a very sizable increase. Do we start recovering the significant level of investments that we've made to that utility. And then we have the normal PBR rate mechanisms kicking in. And just yesterday we got the approval to increase rates at PSNH: $61 million of interim rates.
Speaker Change: Bye.
Speaker Change: So that, you know, the 2024 alone, we had an inflow of tax refunds of about $120 million.
Speaker Change: All right.
Steve Fleishman: Oh, and then the other thing is going on.
Speaker Change: The other thing that's noted that has not been quantified, but in my formal remarks, I did give you a lot of intel, is the rate increases.
David Arcaro: And then we have the normal PBR rate mechanisms kicking in. And just yesterday, we got, correct, that would enhance the numerator, enhance our operating. Thanks for that. I was just wondering about EGMA, you know, any issues that you would... wondering what your expectations would be with how challenging this case might be and then subsequent, you know, to the extent you hit the cap.
Speaker Change: and then we have the normal PBR rate mechanisms kicking in and just yesterday we got the approval to increase rates at PSNH, 61 million dollars of interim rates and within the next 12 months we hope to have the final decision.
John Moreira: And within the next 12 months, we hope to have the final decision with another rate change, effective August for us of 2025. So that quantification would be further upside to this table that's shown, David.
John Moreira: Oh great, that's helpful color. Thanks. And the one twenty million that's not included in here currently, so that would be an upside. Correct. That would enhance the numerator and enhance our operating cash flows. Okay, awesome. Thanks for that.
Speaker Change: Oh, great, that's helpful color. Thanks. And the 120 million that's not included in here currently, so that would be an upside.
Speaker Change: Correct. That would enhance the numerator, enhance our operating cash flows.
John Moreira: And then I was just wondering on EGMA, you know, to any issues that you would anticipate with this rate-based step up. It's a pretty big increase, obviously, given all the investment that you've made in that system. I'm just wondering what your expectations would be. Without challenging this case might be. And then, subsequent, you know, to the extent you hit the cap, subsequent increases. Yes, we do expect the cap. And I would say what gives us confidence is the fact that this was all assumed as part of our settlement agreement when we acquired the company. We worked through with, you know, the regulators, the key stakeholders asked to what the investments that that entity needed.
Speaker Change: I was just wondering on EGMA, you know, any issues that you would anticipate with this rate-based step-up? It's a pretty big increase, obviously, given all the investment that you've made in that system. I'm just wondering what your expectations would be with how challenging this case might be, and then subsequent, you know, to the extent you hit the cap, subsequent increases.
John Moreira: And that's why we needed this rate-based roll-in. This is the first of two rate-based roll-ins that will kick in. The first one, as I just announced on the call this morning, kicks in November 1st of this year. And then the second one will kick in November 1st of 2027.
Speaker Change: November 1st of 2027.
Unknown Executive: Okay, great. Thanks so much. I appreciate it.
Unknown Executive: Thanks, David. Thank you.
Unknown Executive: The next question. I think that's an aligner.
Paul Patterson: Julian, Dublin Smith with Jeffries. Your line is now open.
Unknown Executive: Julian, welcome back. Welcome back to Prodigal Sun. What a pleasant surprise. Thank you guys very much. I appreciate it. Thanks for chatting with you guys again.
Speaker Change: Julien. Welcome back. Welcome back. The prodigal son. What a pleasant surprise.
Unknown Executive: Let me follow up on a couple of things that have been applied here, speaking of returns here. Now, how do you think about the green shoots in Connecticut? I want to talk a little bit more on that thesis for a quick second. I suppose there's a Yankee gas filing at some point here, maybe late this year in December. How do you think about that foreshadowing any elements of that call it 4Q25 CLNP case? Anything that you'd be watching, any items there again, I get an electric versus gas. But curious on that front and then related.
Julien: It's a...
Speaker Change: I suppose there's a Yankee gas filing at some point here, maybe late this year in December . How do you think about that foreshadowing any elements of that, call it 4Q25 CL&P case? Anything that you'd be watching? Any items there? Again, I get it, electric versus gas, but curious on that front and then related.
Unknown Executive: Any items that you'd be watching on the PBR front, given that that's been kicked out here a little bit, presumably a year or so. How do you think about the items that you'd be looking there for those presumed green shoots as well? Thank you guys very much. Nice to chat. Well, listen, I just will tell you that we have been spending a lot of time significant outreach to over a hundred communities that we served there, which spent a lot of time down there. We continue to work it; I think it's important, and I think folks are beginning to understand just the type of impact Eversource has in Connecticut.
Speaker Change: Any items that you'd be watching on the PBR front, right, given that that's been kicked out here a little bit, presumably a year or so, how do you think about the items that you'd be looking there for those presumed green shoots as well? So, thank you guys very much. Nice to chat.
Speaker Change: Well, listen, I just will tell you that we have been spending a lot of time, significant outreach.
Speaker Change: to over a hundred communities that we served there, we spent a lot of time down there.
Unknown Executive: I mean, we employ over 5,000 people in that state, pay over $300,000 in taxes, and our reliability numbers are extraordinary. When we first did that merger, our months between interruptions was in 12. Now we're over 24 months between interruptions.
Speaker Change: And, you know, our reliability numbers are extraordinary. You know, when we first did that merger, you know, our month between interruptions was in 12. Now we're over 24 months between interruptions.
Unknown Executive: We're probably best in class down there in terms of reliability, so I feel very good about that, but I wish I could tell you which certainty that everything is sanitary, but it's not. We are taking away and see approach on it, but I will commit to you that my efforts as we have access to the wind business, it's narrowing down to my focus in Connecticut. I spent a lot of time; I was there last week, had an opportunity to spend some time with key decision makers. I will continue to do that until such time as those relationships improve, and that we can get some regulatory certainty on behalf of our customers and also our investors.
Speaker Change: We're probably best in class down there in terms of reliability. So I feel very good about that, but I wish I could...
Speaker Change: Robert Becker, Joseph Nolan, Unknown Executive, Joseph Nolan, Unknown Executive, Joseph Nolan,
David Arcaro: Great, thanks so much. Excellent. All right, fair enough. I hear you on that one. And then maybe related here, how do you think about just the amortization period to the extent to which you get that 600 and change in Connecticut here, you know, you know, presumably in that X-ray case, how do you think about the time period that that recovery would entail? Again, I'm thinking with the FFOTA debt hat on as you roll out of that case. Sure, so the historical amortization period in Connecticut has been six years.
Unknown Executive: Excellent, all right, fair enough, I hear you on that one, and then maybe related here, how do you think about just the amortization period, because when you get that 600 and change in Connecticut here, presumably in that x-ray case, how do you think about the time period that recovery wouldn't tell? Again, I'm thinking with the effort of debt to add on as you roll in out of that case. Sure, so the historical amortization period in Connecticut has been six years. Okay, so about 100 million a year of uplift after you get that approved here. As I mentioned in my follow-up remarks, we're also preparing to file our second prudency request for incremental storms that we incur, that's not part of the 634.
Speaker Change: Excellent. All right, fair enough. I hear you on that one. And then maybe related here, how do you think about...
Speaker Change: Just the the amortization period to the extent which you get that 600 and change in Connecticut here You know, you know presumably in that x-ray case How do you think about the the time period that would that recovery would entail again? I'm thinking with the FFOTA debt to hat on as you roll and out of that case
Speaker Change: Sure, so the historical immunization period in Connecticut has been six years.
Speaker Change: Okay, so about $100 million a year of uplift after you get that approved here.
David Arcaro: Correct. And Julien, as I mentioned in my formal remarks, we're also preparing to file our second prudency request for incremental storms that we've incurred. That's not part of the 634.
Speaker Change: Correct, and Julien, as I mentioned in my formal remarks, we're also preparing to file our second prudency request for incremental storms that we've incurred that's not part of the 634.
Unknown Executive: So that we hope that goes in later this year. Exactly, and presumably that would be also trueed up in the next case, such that that would be incremental for kind of a 26 run rate. That is correct. Okay, excellent. Thank you.
Speaker Change: So we hope that goes in later this year.
Speaker Change: exactly and presumably that would be also trued up in the next case such that that would be incremental for a kind of a 26 run rate
David Arcaro: Okay, excellent. Thank you. Hey, see you guys soon. All right. Cheers.
Unknown Executive: Hey, see you guys soon, all right? Yeah, hope so. Thank you.
Speaker Change: That is correct.
Speaker Change: Okay, excellent. Thank you. Hey, see you guys soon, all right?
Speaker Change: Yeah, hope so. Take care.
Paul Patterson: The next question comes along to Paul Patterson with Glen Rock. Your lawn is now open. Morning, Paul. Good morning, how are you? Great.
Paul Patterson: Thank you. The next question comes from Alana Paul Patterson. Good morning, Paul. Hey. Good morning. How are you? Great. I wanted to... I wanted to follow up on the prodigal son, Julien's, question about Connecticut. Dr. Ray in the TBR case.
Speaker Change: Thank you.
Speaker Change: The next question comes from Alana Paul Patterson with Glenrock. Your line is now open.
Speaker Change: Morning, Paul. Hey, good morning. How are you? Great. I wanted to follow up on the prodigal son, Julien's, question on Connecticut.
John Moreira: I wanted to file it on the particles from Julian's question on Connecticut. The where in the PBR case, what do you attribute that to? Is that just simply the complexity of the case, or is there something else we should be thinking about? Yeah, I think the farmer, and we're glad that it did get pushed out. It allows, and we've been pushing for this. It allows for us to bring in key stakeholders and collaborate with these key stakeholders in Connecticut to reach a very constructive PBR structure.
Speaker Change: The delay in the TBR case...
Speaker Change: What do you attribute that to?
Speaker Change: Is that just simply the complexity of the case, or is there something else we should be thinking about?
Paul Patterson: Yeah, I think, and we're glad that it did get pushed out. It allows, and we've been pushing for this, it allows for us to bring in key stakeholders and collaborate with these key stakeholders in Connecticut to reach a very constructive PBR structure. We are very familiar with the PBR, what we have in Massachusetts, and recently, as I mentioned in my previous remarks, we're looking to introduce the same type of structure in New Hampshire.
Speaker Change: Yeah, I think, and we're glad that it did get pushed out. It allows, and we've been pushing for this, it allows for us to bring in key stakeholders and collaborate with these key stakeholders in Connecticut to reach a very constructive PBR structure.
Unknown Executive: We are very familiar with the PBR, what we have in Massachusetts, and recently, as I mentioned in the formal remarks, we're looking to introduce the same type of structure in New Hampshire. Richard. Okay.
Speaker Change: We are very familiar with the PBR, what we have in Massachusetts, and recently, as I mentioned on my former remarks, we're looking to introduce the same type of structure in New Hampshire.
Unknown Executive: And then with respect to the transmission and everything, there's, as you know, at FERC, the White House, et cetera, there's a lot of talk about the implementation of agreed-and-answer technologies, and a lot of lawmakers from New England would have you see, pushing for this as well, you know, DOR, what have you. And I'm just sort of wondering how you think about that technology, you know, those technologies, I guess. And what kind of opportunities do you see there, or issues, or any color that you might give, with respect to that, giving your build-out and everything that you're looking at doing?
Speaker Change: Okay.
Speaker Change: And then, with respect to the transmission and everything, there's, as you know, at FERC,
Speaker Change: The White House, etc. There's a lot of talk about the implementation of grid-enhancing technologies, and a lot of lawmakers from New England and what have you seem to be pushing for this as well.
Speaker Change: DLR, what have you. And I'm just sort of wondering how you think about those technologies, I guess.
Speaker Change: And what kind of opportunities you see there, or issues, or any color that you might give with respect to that, given your build-out and everything that you're looking at doing?
Unknown Executive: Sure. I mean, we've been active participants in these forums. And as you know, the one attractive piece of Eversource is that over 40% of our businesses work related and transmission. So we're very good at it. I think we probably have the best engineering talent in the industry and any type of technology or deployment of technology or opportunities. I can promise you that Eversource will be at the forefront of them. Okay. But you don't see, okay. Okay. I appreciate it. Thanks so much. Rest of my questions and answers. Thank you.
Speaker Change: Sure, I mean, we've been active participants.
Speaker Change: In these forums, and I think, as you know,
Speaker Change: The one attractive piece of Eversource is that over 40% of our business is FERC related.
Speaker Change: Transmission. So we're very good at it. I think we probably have the best engineering talent in the industry and any type of technology or deployment of technology or opportunities. I can promise you that Eversource will be at the forefront of them.
Speaker Change: Okay, I appreciate it. Thanks so much. Most of my questions have been answered. Thank you. Thank you. Thanks, Paul.
Anthony Crowdell: Next question. Can I try to line up Anthony Fardwell with Mizzouro. Your line is now open.
Speaker Change: Thank you.
Speaker Change: Next question comes from the line of Anthony Crowdell with Mizzou Health. Your line is now open.
Unknown Executive: Morning, Anthony. Good morning, Joe. Good morning, John. Good.
Travis Miller: Thank you. Good morning, Anthony. Hey, good morning, Joe. Good morning, John. The next question comes from the line of Travis Miller with Morningstar. Your line is now open. No, those, the prudence review, there are multiple things happening in math, so we do have a prudence review happening in math. These are what, these costs have already been approved and in rates. Okay, great. And as I mentioned, Travis, our New Hampshire customers have experienced the benefit from those investments.
Unknown Executive: I feel like the product was an older brother that I got nothing.
Speaker Change: Morning, Anthony. Hey, good morning, Joe. Good morning, John .
John Moreira: I guess just quickly apologize for just keep going back to slide 11 and just for clarification. If the right way to look at this, the 600 at the top, 4 plus 2, you're saying goes into numerator on FFO and what's on the bottom below that green line or the green table there. The 2.6 goes on the denominator. Correct. Which is what to be permanent because we offload our debt with that. And then on the numerator sign that once again, as I previously mentioned, those numbers only reflect cash inflows to 24 and 25. Obviously, these deferrals will continue beyond that period.
Anthony Crowdell: I feel like the prodigal son older brother that I got nothing. I guess just quickly apologize for just keep going back to slide 11 and just for clarification. It's the right way to look at this the 600 at the top 4 plus 2 you're saying goes in the numerator on FFO and what's on the bottom below that green line or the green.
Speaker Change: Table there, the 2.6 goes on the denominator.
Speaker Change: Correct, which would be permanent because we offload our debt with that. And then on the numerator side, once again, as I previously mentioned, those numbers only reflect
Speaker Change: Cook, cash inflows for 24 and 25. Obviously, these deferrals will continue beyond that period.
Unknown Executive: Great. That's all I had. Thanks for taking my questions.
Unknown Executive: Thank you.
Speaker Change: Robert Becker, Unknown Executive, Joseph Nolan
Unknown Executive: Thanks, Anthony. Thank you.
Robert Becker: Great. That's all I had. Thanks for taking my questions.
Speaker Change: Thank you. Thanks Anthony.
Travis Miller: The next question comes from a line of Travis Miller with Morning Star. Your line is now open. Good morning, everyone. Thank you. There. Yeah, I'm just going to go one quick clarification here on slide 11 again to the 200 for the storm cost recovery. That primarily is the New Hampshire number, right? Or is it something else? New Hampshire. No, it's both. That's being debated. That's part of the prudence review right now. No, those are the prudence review, and this multiple things have to mask. So we do have a prudence review happening in math. These are what these costs have already been approved and in rates.
Speaker Change: Thank you.
Speaker Change: The next question comes from the line of Travis Miller with Morningstar. Your line is now open.
Travis Miller: Good morning, everyone. Thank you. Hi, Travis. Hi, there. Yeah, I'm just going to go one quick clarification here on slide 11 again to the $200 for the storm cost recovery, that primarily is the New Hampshire number, right? Or is it something else?
Speaker Change: No, it's both Matt and Andrew. Okay, that's being debated. That's part of the prudence review right now.
Speaker Change: No, those, the prudence review, there's multiple things happening in math, so we do have a prudence review happening in math. These are what, these costs have already been approved and in rates.
John Moreira: So any any for Massachusetts, the one in New Hampshire. Yes, a good chunk of that we file for $240 million. That's going through the prudence review there. That will kick in right around the time that permanent rates go into effect, which will be in 2025. So there is a piece of that in here. And as I mentioned, both Massachusetts and New Hampshire have a five-year recovery. When... Yeah. Got it. Okay. So that kind of goes into that bucket of the filed rate increases to come on by. Yeah. Okay. Very good.
Speaker Change: So any, any, from Massachusetts.
Speaker Change: The one in New Hampshire, yes, a good chunk of that we filed for $240 million. That's going through the prudency review there. That will kick in right around the time that permanent rates goes into effect.
Speaker Change: which will be in 2025. So there is a piece of that in here. And as I mentioned, both Massachusetts and New Hampshire has a five-year recovery window.
Speaker Change: Got it. Okay. So that kind of goes into that bucket of the filed rate increases.
Speaker Change: to come. Only right.
John Moreira: And then just high level, the, the New Hampshire legislation, the IDP, what's your thought on how that changes your planning? How that might enhance growth catbacks to just some high level thoughts on how that could benefit either, either your, your financing plan or your, or your catbacks growth over the next five plus years? Yeah. We were very pleased. I mean, that, that legislation goes hand in glove with our entire operation. I mean, the integrated planning and the type of clarity that's needed as we begin to advance our investments. I think that that was really a very, very positive step for us.
Speaker Change: Correct. Yeah. Okay. Okay. Very good. And then just high-level, the New Hampshire legislation, the IDP. Okay. Okay. Very good.
Speaker Change: What's your thought on how that changes your planning?
Speaker Change: How that might enhance
Speaker Change: Growth CapEx. Here are some high-level thoughts on how that could...
Speaker Change: Benefit either your financing plan or your CapEx growth over the next...
Speaker Change: Five plus years.
Speaker Change: Yeah, yeah, we were very pleased. I mean that that legislation goes hand-in-glove with our entire operation. I mean the integrated planning and the type of clarity that's needed as we begin to Advance our investments. I think that that was really a very very positive step for us
John Moreira: And it's, it's something that, you know, it's what we're all about. We're about collaboration. And that's what so refreshing. The air in New Hampshire, as well as Massachusetts, or on collaboration that, you know, we understand what's important to those administrations. And that's what we're delivering on. Okay. Great. I appreciate. As I mentioned, Travis, our New Hampshire customers have experienced the benefit from those investments that we've made. Sure. Okay. Thank you.
Speaker Change: And it's something that, you know, it's what we're all about. We're about collaboration. And that's what's so refreshing there in New Hampshire, as well as Massachusetts, around collaboration, that, you know, we understand what's important to those administrations, and that's what we're delivering on.
Speaker Change: As I mentioned, Travis, our New Hampshire customers have experienced the benefit from those investments that we've made.
Travis Miller: Sure, sure.
Travis Miller: Okay, thank you.
Ryan Levine: The final question comes from a line, Orion, Irina with city. Your line is now open. Morning, Ryan. I'm up to say good morning. Thank you.
Speaker Change: Take care.
Speaker Change: Thank you. The final question comes from the line of Ryan Avena with Citi. Your line is now open.
Ryan: Awning Ryan, they must have saved the best for last.
John Moreira: Just to quick clarifying questions in terms of the GIP deal in your comments, or should we assume that there's no earn out or clawback, they'll be triggered based on the cost estimates that you laid out. And then in terms of the free cash flow metrics, a lot of the disclosure talks about Crow three gross proceeds. Is there any material adjustments that we should be looking at to get to a net number that would actually reflect the, you know, the actual FFO. Did that metric. Yeah. No. As I mentioned, my phone marks Ryan, as we saw with the, with the sunrise. We have to reconcile to the capex that was embedded in the, in the, in the original purchase price, but that in and of itself will not have any impact on our finance and plan.
Ryan Avena: Thank you.
Ryan Avena: Just two quick clarifying questions. In terms of the GIP deal, in your comments, should we assume that there's no earn out or call back that will be triggered based on the cost estimates that you laid out? And then in terms of the free cash flow metrics, a lot of the disclosure talks about gross proceeds.
Speaker Change: Is there any material adjustments that we should be looking at to get to a net number that would actually reflect the actual FFO to debt metrics?
Speaker Change: As I mentioned in my former remarks, Ryan, as we saw with the sunrise,
Speaker Change: We have to reconcile to the CapEx that was embedded in the original purchase price. But that in and of itself will not have any impact on our finance and plan. We spend less.
John Moreira: We spend less than what we thought; the purchase price comes down. We spend more than what we had agreed to; the purchase price increases. So really no, no impact whatsoever.
Speaker Change: In what we thought the purchase price comes down we spend more than what we had agreed to the purchase price increases So really no no impact whatsoever
John Moreira: Now that relates to the revolution, as we've been saying right along, there is a potential contingency that we would be subject to from a construction standpoint that we have to be mindful. But, as I mentioned so far, the construction activity has gone pretty well.
Ryan Avena: Um...
Ryan Avena: As it relates to the revolution, as we've been saying right along, there is a potential contingency that we would be subject to from a construction standpoint.
Speaker Change: That we have to be mindful, but as I mentioned so far, the construction activity has gone pretty well.
John Moreira: Okay, and then in terms of the gross first net receipt disclosure in your FFO to debt targets for the next three years or three-year window there. Is there any material adjustment to the gross proceeds that could be. Not at the right now, we don't see that. No, no, nothing. There's once we close the transaction, the funding obligation flips to GIP. Okay, so there's no taxes, taxes, or anything on the planet. Appreciate it. Okay, thank you. Thank you.
Speaker Change: Okay, and then in terms of the gross versus net receipt disclosure in your FFO to debt targets for the next three years or three-year window there, is there any material adjustment to the gross proceeds that could be reflected?
Speaker Change: Not as of right now, we don't see that. No, no, no, nothing. Once we close the transaction, the funding obligation flips to GIP.
Ryan Avena: Okay, so there's no tax taxes or anything along those lines.
Speaker Change: Appreciate it.
Unknown Executive: There are no additional questions waiting at this time. So I don't know how to pass a comment. Thank you.
Speaker Change: Okay, thank you.
Speaker Change: Thank you. There are no additional questions waiting at this time, so I would now like to pass the conference back over to Matthew for closing remarks.
Unknown Executive: Thank you, everybody, for joining us this morning. And I know you had a lot of opportunities for the earnings call, and I'm grateful you joined the Eversource earnings call, and I hope you all get a chance to recharge the batteries, and I get a chance to see all of you at E.I. in the fall. Have a great day.
Matthew Fallon: Yeah, thank you everybody for joining us this morning and I know you had a lot of opportunities for the earnings call and I'm grateful you joined the Eversource earnings call and I hope you all get a chance to recharge the batteries and I get a chance to see all of you at EEI in the fall. Have a great day.
Unknown Executive: That concludes today's conference call. Thank you for your participation. You may now disconnect your line.
Travis Miller: Sure, sure. Awning, Ryan, they must've saved the best for last. Spend Less. Okay, and then in terms of the gross first net receipt disclosure in your FFO to debt targets for the next three years or three-year window there, is there any material adjustment to the gross proceeds that could be reflected? That concludes today's conference call. Thank you for your participation. You may now disconnect your line.
Speaker Change: That concludes today's conference call. Thank you for your participation. You may now disconnect your lines.