Q4 2024 Eversource Energy Earnings Call
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Speaker Change: Good day and thank you for standing by. Welcome to the Eversource Energy Q4 and year-end 2024 earnings call.
Speaker Change: At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 1-1 on your telephone. You will then hear an automated message advising your hand is raised.
Speaker Change: To withdraw your question, please press star one one again. Please be advised that today's conference is being recorded I would now like to turn the conference over to your speaker for today Rima Hyder, Vice President of Investor Relations. Please go ahead
Rima Hyder: Good morning and thank you for joining us today on the fourth quarter and year-end 2024 earnings call for Eversource Energy.
Speaker Change: During this call we'll be referencing slides that we posted this morning on our website. As you can see on slide 1, some of the statements made during this investor call may be forward-looking.
Rima Hyder: 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.
Rima Hyder: We undertake no obligation to update or revise any of these statements.
Rima Hyder: Additional information about the various factors that may cause actual results to differ and our explanation of non-gap measures and how they reconcile the gap results is contained within our news release and the slides we posted this morning and in our most recent 10Q and 10K.
Speaker Change: Speaking today will be Joe Nolan, our Chairman, President and Chief Executive Officer, and John Moreira, our Executive Vice President and Chief Financial Officer and Treasurer. Also joining us today is Jay Booth, our Vice President and Controller. I will now turn the call over to Joe.
Joe Nolan: Thank you, Rima, and good morning, everyone. Thank you for joining us today for our year-end earnings call.
Joe Nolan: It is my great pleasure to report on another year of success and growth at Eversource.
Joe Nolan: Our fiscal year 2024 closed with strong results in three main areas of focus.
Joe Nolan: First, providing top-tier electric, gas, and water service to our valued customers.
Joe Nolan: Second, delivering steady and stable financial results with earnings per share up 5.3% year over year, exceeding the midpoint of our revised guidance.
Joe Nolan: And third, strengthening our balance sheet, all reflecting our commitment and dedication to delivering exceptional value to our customers and shareholders.
Joe Nolan: Starting with slide four, let me take you through some of our 2024 accomplishments.
Joe Nolan: Throughout the year we've faced numerous challenges but our unwavering focus on customers remains at the forefront of everything we do.
Joe Nolan: Customer trust and satisfaction are paramount to us and we've implemented several initiatives to enhance their experience and ensure we meet their needs.
Joe Nolan: From hardening infrastructure to withstand severe weather conditions to introducing innovative customer service solutions, we've made significant progress in strengthening our relationship with our customers and key stakeholders.
Joe Nolan: and will remain a key focus area for us in 2025.
Joe Nolan: We made progress toward improving our FFO to debt ratio through constructive rate outcomes.
successfully issuing $1 billion of equity through our ATM program.
exiting the offshore wind business.
Joe Nolan: and, as you recently saw, entering into an agreement to sell Aquarian Water at an attractive multiple of 1.7 times rate base.
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Joe Nolan: We were thrilled to announce the seal of this truly exceptional business.
Joe Nolan: Its unique value and strategic importance made it a key asset in our portfolio.
Joe Nolan: Under Eversource's ownership, we built on Aquarion's long-standing track record of superior customer service, reliability, and operational success, adding nearly 30,000 customers across six acquisitions.
Joe Nolan: But this isn't just any transaction. It's a milestone that marks an exciting new chapter in our growth journey.
Joe Nolan: We are pleased that the Aquarian Organization will find a good home with the Aquarian Water Authority, a newly created authority alongside the RWA.
Joe Nolan: Proceeds from the seal will be used to reduce debt, allowing us to reinvest capital into our regulated utilities.
Joe Nolan: enhancing reliability for customers while further strengthening our company's financial position.
Joe Nolan: This seal also reinforces our commitment to our core electric and natural gas operations.
Joe Nolan: Another one of our proud accomplishments for the sixth year in a row was that Newsweek recognized Eversource as one of America's most responsible companies.
Joe Nolan: This recognition highlights our excellence in environmental, social, and corporate governance areas.
Joe Nolan: Also, Time named Eversource to its annual list of the world's best companies.
Joe Nolan: We were distinguished, particularly for our commitments to reduce greenhouse gas emissions.
Joe Nolan: Consideration of Workforce Diversity and Transparent Disclosure through the Global Reporting Initiative Standards.
Joe Nolan: As shown on slide 5, a few of our accomplishments in 2024 targeted at advancing energy diversification are all in Massachusetts.
These include implementing AMI,
Joe Nolan: and receiving approval for Electric Sector Modernization Plan or ESMP and constructing a geothermal pilot.
Joe Nolan: With its strategic location, flexibility, and existing infrastructure, this facility stands out as one of the most promising multi-use interconnection points for large-scale energy resources in New England.
Joe Nolan: spur economic development and create jobs. Purchasing this site will allow us to transform it into a premier energy interconnection hub that enhances reliability and energy supply diversity for the entire New England region.
Joe Nolan: Another great example of our successful collaboration in Massachusetts is the Greater Cambridge Energy Project that recently broke ground in Kendall Square marking the start of an innovative 1.8 billion dollar energy initiative.
Joe Nolan: This project, which is mostly a transmission investment led by Eversource, includes the construction of the first fully underground electrical substation in the United States.
Joe Nolan: This 35,000 square foot substation will be located over 100 feet underground beneath a newly designed public park.
Joe Nolan: The project is a collaboration between Eversource, Boston Properties, the Cambridge Redevelopment Authority, and the City of Cambridge. It's an exciting development for the community and a significant step towards a more sustainable and resilient energy future.
Joe Nolan: In southeastern Connecticut, working together with the six New England states, we were pleased to qualify for federal funding for a clean energy hub.
Joe Nolan: The Huntsbrook Offshore Wind Hub will support New England's clean energy transition while improving grid reliability across the region.
Joe Nolan: With all this innovation and investment to meet state energy goals, customer affordability is always top of mind for us.
Joe Nolan: We are working alongside policy makers to develop and implement strategies to mitigate customer electric grids.
By leveraging advancements in technology.
Speaker Change: Enhancing Energy Efficiency Programs and Advocating for Fair Regulations. These partnerships aim to reduce the financial burden on consumers while ensuring a reliable and diverse energy supply.
and by enabling more supply to come into New England.
Our customers will benefit from lower rates over time.
Turning to our financial performance on slide 6.
Speaker Change: We have continued to grow our earnings in dividend over the last three years on an average of 6%. We ended 2024 with over 5% growth.
Speaker Change: and we have recently increased our first quarter 2025 dividend by 5.2% on an annualized basis.
Speaker Change: John will discuss in greater detail our new five-year capital investment plan in a few minutes.
This new plan increases our investment.
Speaker Change: Over the next five years, by nearly 10%, with the majority of that increase aimed at transmission investments to address aging infrastructure needs.
Speaker Change: We have tremendous growth opportunities ahead of us, both in replacing this aging infrastructure to make our system more resilient, as well as building new substations and other infrastructure needs under the ESMP to address increasing load demand.
Speaker Change: Moving to our operational results on slide seven, we've not only achieved our financial goals, but also have made good strides in reliability to enhance our operational performance for customers.
Speaker Change: Our electric reliability metrics once again achieved top decile performance among industry peers.
Speaker Change: More importantly, our safety metrics for the year exceeded not only the industry average, but also improvement over last year's by 6%.
Speaker Change: These results reflect the Eversource brand to provide reliable and extraordinary service to our customers.
Speaker Change: For example, in Connecticut, 12 years ago, the average time between interruptions was 12 months.
Speaker Change: Now, it's nearly two years. This success is a testament to the investments Eversource has made in the past, along with the hard work and dedication of our entire team. And I couldn't be prouder of what we've accomplished together.
Speaker Change: Investing in our infrastructure to improve reliability has been a decade-long process and has paid huge dividends for our customers.
Speaker Change: When there is a degradation in our investment levels, we know that reliability will likely be adversely impacted.
Speaker Change: With a stable regulatory environment, we can maintain and even increase infrastructure investments.
Turning to slide 8.
Speaker Change: As we look ahead to 2025, we remain committed to maintaining our momentum and continuing to prioritize our strong focus on customers in every decision we make.
Speaker Change: Additionally, we are also laser focused on enhancing our ability to finance utility operations by achieving earnings growth during this period.
John will cover our 2025 guidance.
Speaker Change: We will continue to engage with our regulators across our footprint to drive regulatory relationships that are mutually productive for customers, policy makers, and our investors, which starts with the ability to achieve top performance and reasonable rates for our customers.
Speaker Change: In particular, we've undertaken extensive efforts to improve our regulatory paradigm in Connecticut, seeking to identify areas for education, collaboration, and consensus, while seeking transparency in the regulatory environment.
Speaker Change: In conclusion, let me reaffirm our commitment to driving consistent growth in earnings and dividends.
Speaker Change: Investing in sustainable energy future, maintaining a solid financial position, and continuing our strong customer focus.
Speaker Change: Our continued effort to expand our diverse energy initiatives has positioned us as a leader in the energy transition landscape.
through strategic planning and key reliability investments.
Speaker Change: such as the ESMP and the innovative projects such as the geothermal pilot and the underground substation in Cambridge, we are delivering long-term value to our stakeholders and contributing to our stronger and more resilient tomorrow for our customers.
Speaker Change: I want to extend my sincere thanks to our dedicated team of over 10,000 employees and our union partners for their unwavering support.
Speaker Change: By fostering a culture of excellence and innovation, we will ensure that we remain a trusted and reliable partner for the 4 million plus customers we serve. Together we are powering a sustainable and more prosperous future.
Speaker Change: I will now turn the call over to John to discuss our full year financial results.
Financial Guidance, and Capital Investment Plan.
and also provide an update on regulatory matters. Thank you.
Thank you, Joe, and good morning, everyone.
The Five-Year Financing Plan and our Long-Term Earnings Growth Expectation.
Speaker Change: Let me stop on slide 10 with a discussion of the details of the pending sale of Aquarion. As Joe mentioned, we are very pleased to have signed an agreement to sell this valuable asset.
Speaker Change: As we stated in the press release at the end of January, the aggregate enterprise value of the sale is approximately $2.4 billion.
Speaker Change: This includes approximately $1.6 billion in cash and approximately $800 million of net debt that we will extinguish at the closing.
Speaker Change: The aggregate value represents a multiple of 1.7 times 2024 rate base and is approximately 35 times expected 2025 earnings.
Speaker Change: This strong valuation will enable us to reduce parent company debt and thereby further strengthen the balance sheet.
Speaker Change: We expect to file change of control applications in all three states within the next 30 to 45 days and anticipate a closing in late 2025.
Speaker Change: Now, I'll review the 2024 results as shown on slide 11.
Speaker Change: Our GAAP results for 2024 earnings of $2.27 per share compared with a GAAP loss of $1.26 per share in 2023.
Speaker Change: Results for 2024 include an aggregate net after-tax loss of $2.30 per share related to closing the sales of our offshore wind investment.
Speaker Change: recognized in the third quarter, as well as the expected loss on the pending sale of Aquarion.
Speaker Change: As a reminder, results for 2023 included an aggregate after-tax loss of $5.60 per share that primarily related to losses on offshore wind investments.
Speaker Change: Excluding those after-tax losses, our non-GAAP earnings were $4.57 per share in 2024 as compared to $4.34 per share in 2023, a year-over-year growth rate of 5.3%.
Speaker Change: As a reminder, our revised earnings guidance for 2024 was in the range of $4.52 to $4.60 per share.
Breaking down the 2024 full-year earnings by segments.
Electric transmission earned $2.00
Speaker Change: and three cents per share in 2024 as compared with earnings of $1.84 per share in 2023. The improved results were driven by continued investments in our electric transmission system to address service reliability.
Speaker Change: Our electric distribution earnings were $1.77 per share in 2024 as compared with earnings of $1.74 per share in 2023.
Speaker Change: The higher results were due primarily to increased revenues from base distribution rate increases for Eversource's Massachusetts and New Hampshire electric businesses.
Speaker Change: partially offset by higher O&M, interest expense, depreciation, and property taxes.
Speaker Change: The natural gas distribution business segment earned $0.81 per share in 2024 as compared to $0.64 per share in 2023.
Speaker Change: Improved results were due to higher base distribution rate increases at Eversource's Massachusetts natural gas businesses and continued investments in our gas system to replace aging infrastructure, partially offset by higher depreciation.
Interest and Property Tax Expenses.
Speaker Change: Excluding the loss on the pending sale of Aquarion of $0.83 per share, the water distribution segment earned $0.12 per share in 2024 compared with a $0.09 per share last year.
Speaker Change: The increase in earnings was due primarily to lowered appreciation expense as a result of final rate case decision.
partially offset by lower authorized revenues.
Speaker Change: Eversource parent and other company gap losses were $1.63 per share in 2024, as compared to gap losses of $5.57 per share in 2023.
Speaker Change: Lower non-GAAP results for the year were due to higher interest expense.
Speaker Change: and the absence of a prior year net benefit from the sale of Eversource's interest in a clean energy fund, which was partially offset by lower effective tax rates.
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Speaker Change: That wraps up 2024, a very transformative year for us despite the headwinds we faced. We delivered another year of earnings growth and innovative solutions for our customers.
Speaker Change: Moving on to the regulatory front, we had another very busy year with positive results.
Our key 2024 regulatory items are highlighted on slide 12.
Speaker Change: Starting with Massachusetts, we received approval of our first rate-based reset request
for EGMA.
Speaker Change: Implementing a revenue increase of $77 million effective November 1st of 2024.
Speaker Change: with an additional $62 million of revenue increase that will be effective later this year.
Speaker Change: As a reminder, this adjustment was a key component of our 2020 settlement agreement when we acquired EGMA. We will have a second rate-based roll-in in 2027.
Speaker Change: Also effective November 1 of 2024 was the approval of $12.7 million increase in revenues for NSTAR Gas under the annual PBR adjustment mechanism.
Speaker Change: Again, in Massachusetts, under the annual PBR plan, we received approval of $56 million revenue increase for NSTAR Electric, effective January 1 of 2025.
Speaker Change: Turning to New Hampshire, we continued to work through the rate review filing made last summer where we requested an increase in distribution rates of $182 million.
Effective August 1 of 2025.
Speaker Change: As part of this proceeding, the New Hampshire PUC approved a settlement agreement for an interim rate increase of $61 million, effective August 1, 2024.
Speaker Change: Also included in this request is recovery of $247 million of deferred storm costs over a five-year period.
Speaker Change: A decision on the New Hampshire rate case is expected in July for rates to be effective August 1 of 2025. As a reminder, the final rate decision will also provide a reconciling adjustment back to August 1 of 2024.
Speaker Change: In Connecticut, the Anki Gas Rate Review Application to Recover a Revenue Deficiency
Speaker Change: of $209 million reflecting critical investments and cost increases since our previous rate review in 2018 continues to move along.
Speaker Change: We are in the discovery phase of the proceeding, with a schedule calling for hearings in May, and a final decision expected in October.
Speaker Change: Next, let me discuss our updated five-year capital plan. As you can see on slide 13, our new plan reflects a $1.9 billion increase in utility infrastructure investments
Speaker Change: For the years 2025 through 2028, the period that overlaps with our prior plan.
Speaker Change: Please note that throughout this presentation, due to the pending sale of Aquarion, we have excluded those investments from our capital plan.
Speaker Change: The 1.9 billion dollar increase is primarily driven by higher electric transmission and higher electric distribution investments in Massachusetts reflecting greater visibility into work needed to serve our customers over the next four years.
Speaker Change: Turning to our updated five-year capital plan that runs from 2025 through 2029, as shown on slide 14, which reflects our five-year utility infrastructure investments by segment.
Speaker Change: Over this five-year period that runs from 2025 through 2029, we expect to invest approximately $24.2 billion in our regulated electric and natural gas businesses.
Speaker Change: These investments will allow us to continue to provide customers with safe and reliable service, meet ongoing load growth, and achieve progress on our state's clean energy objectives.
Speaker Change: Exclude an aquarium from both time frames, the 2025 through 2029 plan is an increase of $2.1 billion or a 10% increase.
from our previous five-year plan of $22.1 billion.
Speaker Change: From a segment standpoint, starting with transmission, the plan includes nearly $7 billion of transmission infrastructure investments over the next five years.
Speaker Change: and to increase resiliency during extreme weather events, as well as innovative substation and other infrastructure projects.
Speaker Change: undertaken for reliability and electrification purposes, and interconnection projects adding diversified energy resources to the grid.
Speaker Change: This five-year transmission plan is greatly enabled by efforts in Massachusetts last year, including the state's Clean Energy Bill.
Speaker Change: which reformed siting and permitting of energy facilities as well as the Department of Public Utilities approval of the Electric Sector Modernization Plan or ESMP.
Our Transmission Capital Plan now includes engineering and development.
Speaker Change: for future ESMP substations as well as significant ESMP substation investments towards the end of the five-year forecasted period.
Speaker Change: In fact, the ESMP gives us more visibility for transmission capital, allowing us to rate the back end of our transmission capital forecast.
We expect this trend to continue beyond the forecast period.
Speaker Change: Turning to electric distribution, our updated capital forecast now reflects over $10 billion of planned utility infrastructure investments.
Speaker Change: with a continued focus on system resiliency and top-tier electric reliability for our customers.
Speaker Change: Our planned electric distribution investments include eight hundred and fifty million dollars for AMI program in Massachusetts.
Speaker Change: This technology will enable near real-time communications and includes an operating system and application environment for distributed intelligence at the meter.
Speaker Change: These enhancements will allow customers to increasingly participate in the transformation of energy usage.
Speaker Change: On the natural gas side, the plan reflects nearly $6 billion of investments centered around reliability and safety. This plan is highlighted by the bare steel and cast iron pipe replacement programs in Massachusetts and Connecticut.
Speaker Change: Across the natural gas system, we'll continue to thoughtfully engage with our states to ensure investments enable an affordable transition to a clean energy future.
Speaker Change: Rounding out our capital plan, our investments in technology and facilities forecasted at $1.2 billion, including AI and cybersecurity investments.
Speaker Change: and tools to enable our employees to work more efficiently to serve customers.
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Speaker Change: We are excited about the regulated opportunities this plan brings to Eversource and the positive impact it can have for our customers.
Speaker Change: We do see opportunities that could provide additional investment in the range of $1.5 to $2 billion within this forecast period. These opportunities include Connecticut AMI, solar generation,
increased usage of EVs and LNG facility upgrades.
Speaker Change: As we have in the past, we will update our plan as these opportunities materialize.
The resultant impact to rate-based growth
Speaker Change: from the updated capital plan is shown on slide 15. The customer focused core business investments included in the capital plan results in an 8% growth in rate base from 2023 through 2029.
will be nominated for the award wanted for 2025.
Speaker Change: Positive drivers this year include transmission investment for system resiliency and to address increased electric demand.
Gas and Electric Distribution Rate Increases
Speaker Change: Rate case outcomes in New Hampshire and Connecticut, and a strong focus on reducing O&M expenses from 2024 level.
Speaker Change: These positive drivers are expected to be partially offset by higher depreciation and property taxes from increased investment.
Speaker Change: Higher interest costs, impact of shared dilution, and higher effective tax rate.
Speaker Change: As Joe stated, we continue to be lathe-focused on improving our balance sheet.
Speaker Change: As you can see on slide 17, we executed on all our cash flow enhancing commitments for 2024 and 2025.
Speaker Change: As a result, we expect to see a significant improvement in our cash flows from operations of nearly 50% in 2025 as compared to 2024.
Speaker Change: primarily driven by timely recovery of regulatory deferrals and distribution rate increases that I previously discussed.
Speaker Change: With the recent announcement of our sale of Aquarion, the $1 billion of equity that we issued in 2024, along with the projection of minimal cash tax payments through 2028 and a higher level of storm cost recoveries,
Speaker Change: Our forecasted equity needs for 2025 through 2029 are expected to be approximately $1.2 billion.
Speaker Change: This $1.2 billion includes the remaining $300 million left on our previous equity issuance plan, or said differently, incremental equity needs of $900 million from our previous equity guidance.
Speaker Change: This equity forecast is driven by the growth in our updated capital plan.
Given our solid execution on our cash flow enhancement commitments.
Speaker Change: including the expected proceeds from the aquarium sale later this year, we expect to issue the majority of this 1.2 billion dollars of equity towards the back half of our five-year forecast period.
Speaker Change: This financing plan supports our FFO-to-debt ratio target well above the Moody's downgrade threshold of 13% during the forecast period. Additionally,
Speaker Change: This financing plan assumes no incremental holding company debt issuances in 2025 and assumes paying off $600 million of maturities in 2025 with internally generated cash.
and the expected proceeds from the acquiring on sale.
Speaker Change: Turning to slide 18, we are projecting the five-year long-term earnings per share growth rate to be in the range of 5 to 7 percent based off of 2024 non-GAAP recurring EPS of $4.57 per share.
Speaker Change: Given the headwinds in 2025, we expect the results to be a bit muted. However,
Speaker Change: Our EPS growth profile will continue to strengthen as we execute on our strategic plan, which includes growth in transmission and distribution infrastructure investments.
Speaker Change: that we are able to recover through constructive mechanisms, as well as significant progress with the recovery of deferred storm costs throughout the system and continued O&M cost discipline.
Joe Nolan: Before we get to your questions, I'll turn the call back over to Joe for his closing remarks.
Speaker Change: Thank you, John. I am immensely proud of our team's dedication and commitment to excellence, which has yielded a strong performance this past year. As we look ahead, we remain focused on our strategic priorities.
Joe Nolan: Enhancing Operational Efficiency, Investing in Regulated Opportunities, and Delivering Value to our Shareholders and Customers.
Rima Hyder: I'll now turn it back over to Rima to begin the question and answer session.
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Rima Hyder: Thank you, Joe. Lisa, we're ready now for the Q&A session.
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Speaker Change: Thank you. And as a reminder, if you would like to ask a question, please press star one one on your telephone You will hear that audit manager message advising your hand is raised We also ask that you limit yourself to one question and one follow-up one moment while we compile the Q&A roster
Speaker Change: Our first question today will be coming from Char Pereza of Guggenheim. Your line is open.
Hey guys, good morning.
Morning Sharp!
Morning, Joe. Morning, John.
Joe, let me just start off with.
Speaker Change: Connecticut if it's okay. There's obviously a lot of back and forth to kick off the legislative session. Seems to be some bipartisan support at this point for an expansion of Pura.
Speaker Change: Do you support three or five commissioners and what do you see as the pathway forward from here for the broader set of reforms like making Pura independent of DEEP, tweaking the public benefits, etc.?
Speaker Change: Yeah, so the current law, as you know, Shara, calls for five commissions. We don't have a position either way, whether it's three or five. From our perspective, we just want a fair, transparent, and lawful process. That's all we've ever asked for.
Speaker Change: You know, right now, what we know is similar to what you know, to date, that the governor has nominated the chair Marissa Gillette and David Arconti to serve as peer commissioners through March of 2028.
Speaker Change: Okay, under the Connecticut law, nominees must appear before the Joint Executive Nominations Committee for a hearing, and their executive nomination reports out to the House and the Senate, where there's typically a 4-4 vote. As of today, the process is pending, and no date has been set for that exec nominations hearing.
Speaker Change: So we are awaiting the same news as as everyone else in terms of what the schedule looks like But again, we are indifferent on whether it's three or five. We just want to be treated fairly
Speaker Change: Got it. Hopefully we get some positive changes there. John, just I know just a quick one for you I know we're getting this credit question this morning It's putting a little bit of pressure on the shares But I guess what's the FFO to debt target for 25 to 29 sounds like there's a change Versus the previous 14 to 50 percent target What are you embedding in that 1.2 billion of equity for CT storm recovery all of it? None of it. Thanks
Speaker Change: Sure, sure. First, let me start by saying, really, nothing has changed. As I shared with you in slide 17 of my presentation, you can see that all of those major cash flow enhancements are still intact from what we previously did.
Unknown Executive, Rima Hyder, Matthew Fallon, John Moreira
Speaker Change: solid FFO to debt over the Moody's downgrade threshold. Right now as you know Moody's is the only one that has us on negative outlook. So my focus is going to continue to improve that and hopefully get that outlook to a more stable setting than where we are right now. So continue to be very laser focused on maintaining a very healthy FFO to debt ratio.
Speaker Change: Okay, perfect. Appreciate it, guys. Thanks so much. I'll see you soon.
Thank you.
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Speaker Change: The next question will be coming from the line of Carly Davenport. Your line is open.
from Goldman Sachs.
Carly Davenport: Hey, good morning. Thanks so much for taking the questions. Morning, Carly.
Speaker Change: Maybe just to stick on the sort of balance sheet and financing point, appreciate the comments on the equity financing. Just as you think about the timing and methodology, I know you said back half of the plan, but would you expect that to be, put a new ATM program in place as you kind of work through the initial 1.3? Or do you see potential to execute more from a block sale perspective as you reach the latter parts of the plan?
Joe Nolan: Thank you, Carly. Very, very good question. We've been very, very pleased with the ATM program. I love the fact that we can control our destiny as to when we go to the market. You should expect us to use that vehicle to accommodate our future equity needs.
Joe Nolan: Got it. Great. That's helpful. Thank you. And then maybe just as you think about, you know, the potential for that $1.5 to $2 billion of incremental investments on top of the new five-year plan, how should we think about the potential timing of some of those buckets coming into play here?
Joe Nolan: Well, the biggest component of that incremental investment opportunity is Connecticut AMI.
Joe Nolan: and we continue to await PURE's action as they reconsider the final decision.
Joe Nolan: So I don't we don't have a date as to when that proceeding is going to happen So but I would say that certainly, you know, you can expect something hopefully later this year some
Speaker Change: and John B. Weiss. And then I think the bulk of the remainder piece of that, we should see more transparency in the coming 12 to 18 months.
Great, thanks so much for the color.
Thank you, Colin.
Thank you. One moment for the next question, please.
Speaker Change: The next question will be coming from the line of Steve.
Freshman of Wolf-Your-Line-is-Open.
Hey, good morning. Thanks. Thanks for the update.
Speaker Change: I did not give a target and I'm not going to give a target other than to say that we are trying to get to a better position, change the negative outlook at Moody's.
Speaker Change: to more stable in the coming months, and right now our downgrade threshold at Moody's is 13%. And Steve, what I said is our financing plan provides with the $1.2 billion of equity over the five-year period. We are very solidly above that 13%.
Speaker Change: Okay, and where did it end up for end of 24?
Speaker Change: Yeah, we landed in, I would say, in the lowest single digits between like 10 and a half, 11.
I'm sorry, well, double digit. And then.
Well dabbled yeah
Yeah. Okay. And then on
Could you, you didn't really...
Talk it all about revolution.
Speaker Change: and you know there was like nuance on Orsted's call where they had said it was
Speaker Change: that previously said it would be on by 2026 and then they said second half of 2026. Did anything really change there or is it still on the same timeline?
Speaker Change: That it was yeah, yeah Steve, you know, nothing has changed on revolution, you know, we continue to make great progress
Speaker Change: They just defined that second half of 2026, but I will tell you that the 20th turbine is being loaded now at New London. We're making great progress. We feel very good about executing there.
Speaker Change: and you don't see anything like in your K or anything where you'd have to take another.
Right off there. I need to get that.
Speaker Change: No, no, we're filing our 10k. We issued, we released earnings as you know, and we're filing our 10k hopefully by Friday.
Jay Breidt
Speaker Change: And then, I know you filed a lawsuit recently in Connecticut about the actions of Pura. Just a zero I got.
Timeline on that.
on that lawsuit to be decided or, you know.
There's no timeline and
Speaker Change: Unknown Executive, Rima Hyder, Matthew Fallon, John Moreira, Unknown Executive, Rima Hyder,
Speaker Change: Any timeline as to when the court will make a decision around that
Thank you and one moment for the next question.
Speaker Change: And our next question will be coming from the line of Bill Apicelli of UPS. Your line is open.
Speaker Change: Morning, Bill. Good morning, Bill. Just a follow-up question there on some of the cash flow items. So you mentioned the minimal cash tax payments through 2028. Can you just maybe expand upon that and on what's driving that?
Sure, as you, as I've
Speaker Change: We took advantage of that in 23, took advantage of that in 24, and there is a bit more that we will take advantage of 2025. So we really haven't tapped into the South Fork ITC.
Speaker Change: bucket yet. So when you look at what we've taken and what is yet to be taken, that probably puts us at a very minimal, minimal tax cash pair between now and between now and 2028.
Speaker Change: Thank you for watching. If you liked this video, please subscribe. I'll see you in the next video. Until then, take care.
What are they?
Speaker Change: R&D related tax credits and Bill the way you should think about it on a normal basis are tax
Speaker Change: 50 to 170 million annually, so you can see that if you take that divided by the 500 million that we have available for ITC, that would likely get us through certainly 27, and we think that there's opportunity to continue to harvest that into 2028.
So that's the primary drive.
Speaker Change: Okay, and then when we think about the 5-7 growth rate, obviously the guidance for this year is, you know, somewhat below that, but
Speaker Change: Can you just sort of outline the drivers of some of the acceleration to get you back into that five to seven as we think of, you know, into 26 and 27 and 28?
Speaker Change: Sure, one I've already spoken to and that is thinking of the recovery of the first storm class.
Speaker Change: Substantially all of that in the door and that's part of our financing plan And then as I also mentioned my formal remarks, you know recovery of our increment our investments through constructive rate mechanisms
Speaker Change: place as we continue to expand to help the states meet their energy objectives.
Speaker Change: So it's timely recovery and our O&M, you know, 2024 was, you know, a pretty healthy O&M.
Speaker Change: Owen Amier, and the last one, which we continue to be extremely focused on, and that's offload and death.
Speaker Change: Offloading our holding company debt. I mentioned that my expectation is we're not, we will not be in the debt capital markets this year for the holding company. They have 600 million of maturities that are coming due this year. Actually, half of that has already happened and the remaining 300 will happen in August. So the use of the cash proceeds from the equipment sale is
will significantly drive that.
Speaker Change: So that's our growth in our CapEx plan that we just rolled out this morning. All of those components will help gain momentum to continue to build upon that 5 to 7 percent growth rate.
https://www.youtube.com
All right. Thank you very much.
Thanks, Bill.
Thank you. One moment for the next question.
http://TheBusinessProfessor.com
Speaker Change: Our next question will be coming from the line of Gurdish Chopra.
Of course, your line is open.
Gurdish Chopra: Good morning, Joe and John. Thank you for taking my questions. I have to just as I think about 2025, John, right, this is, you know, year over year is 4% growth below the target.
Speaker Change: and I do the math on your equity issuance. It's about 10 cents, the amount of equity issued in 2024. Is that really the driver? I guess what I'm asking you is if you...
Speaker Change: because you front run that equity, you're below that five to seven apps and that you would have been in that five to seven percentage. Is that the right way to think about it? Or there were other everything he says like this.
Speaker Change: You're absolutely right. I mean, as I mentioned in my former remarks, you know, the equity that we issued is...
Speaker Change: is diluted to our 2025 earnings. And you're in the zip code in that quantification. But I think, you know, one of the things I want to highlight to you all is
Unknown Executive, Rima Hyder, Matthew Fallon, John Moreira
Speaker Change: So it's a combination of the dilution, and I'm not able to offload 1.6 billion of debt and enhance my interest expense
Speaker Change: Got it. Okay. And then just on that interest expense topic, just as you think about your long term growth rate, what are you modeling for interest rates? Are you modeling, you know, the current rate levels? Or do you see interest rates going up? Maybe just help us with the top process there?
Speaker Change: You know, I think, as we always do, we look at multiple consensus that's in the market and I'm very comfortable with what we have assumed in 2025 and beyond.
Speaker Change: It does assume that the Feds won't move in the right direction.
Well, let's hope they do. Okay. Thank you.
Thank you. One moment for the next question.
Speaker Change: And our next question will come from the line of Ross Fowler of Bank of America. Your line is open.
Speaker Change: Morning, Ross. Morning, Joe. Morning, John. So just a couple questions on a couple things at the state level that are happening.
Speaker Change: has put out this proposal to end most gas line extensions. Does that...
Speaker Change: Shift your capital plan sort of under the surface away from gas and more towards electric Are you kind of already doing that in anticipation of things like this coming as you go through the full electrification?
Speaker Change: Yeah you know this is so it literally just came out and we're actually going to provide comments to it so I think it'd be premature right now to kind of have any discussion around that as we formulate our response to the to the DPU.
Speaker Change: Okay, fair enough, Joe. And then I guess there's some some legislative efforts in Connecticut to talk through or at least think about the statutory changes that were made around the aquarium sale. How do you how do you like contextualize the risks?
Speaker Change: related to that or, you know, have they actually moved forward with legislation there?
Speaker Change: Yeah, you know like every legislative arena there are there are hundreds and hundreds of bills that are filed This happens to be one there. Obviously we will
Speaker Change: Be active in that proceeding, but you know, keep in mind that this legislative body is the one that enacted the
the law not even, you know, seven months ago...
You know, we feel confident.
Speaker Change: That things are on track there and the governor did sign that so You know, we'll obviously play an active role, but I don't I'm not I'm not concerned about that at this point
Speaker Change: Okay, Joe, fair enough. And then, John, maybe if I can squeeze in one for you. Taking out some earlier questions and just trying to fine-tune the detail on slide 17 on the cash flow. So, if I think about that green box to the right of beyond 2025,
Speaker Change: Would it be fair to say, you know, equity, we know kind of what you've given us, that's the 1.2 billion towards the end of the plan plus the drip and employee programs. And then I can kind of
Speaker Change: get my head into an assumption of what deferred storm cost recovery looks like and what, you know, distribution investment incremental looks like. So if I take sort of your 13% FFO to debt, I can sort of back into what you're assuming from rate increases, would that be, would that be fair? Unknown Speaker
That's a fair assumption, correct. Okay, perfect. Thank you guys.
Thanks a lot. Have a good day.
YouTube.
One moment for the next question.
Speaker Change: And the next question is coming from the line of Jeremy Tonek of JP Morgan. Your line is open.
Morning, Jeremy. Hi.
and Jeremy Goldsmith
Speaker Change: Just wanted to dive into 2025 EPS a little bit more if I could, and just headwinds and tailwinds there, what you see for headwinds, and how do you think about, I guess, filling the 12 cents of aquarium earnings and kind of growth within the plan?
Speaker Change: Well, for 2025, let me be clear, we are assuming the aquarium earnings up to the expected closing date. So which is a good portion of the year.
Speaker Change: Okay, got it. I didn't know if that was moving to disk ops. No, it's not moving to discontinued ops. No.
Speaker Change: Got it, okay. I guess in the subsequent year, thinking about offsetting that headwind, just everything as you laid in the plan, anything else explicitly, just trying to get a feeling for the shape of the earnings trajectory as Aquarian rolls off.
Joe Nolan: Yeah, I mean, I think it's important to keep in mind that when Joe and I made a decision to sell Aquarion that that represented a very accretive transaction for us
Joe Nolan: So having the $1.6 million to offload some of the interest, that should more than replace the earnings from Aquarion.
And as I said, that benefit will happen in 2026.
Got it. Okay. Thank you. I'll leave it there. Thanks.
Thanks, Chairman.
Thank you. One moment for the next question.
Speaker Change: And the next question will come from the line of Andrew Wessel of Scotiabank. Please go ahead.
Morning, Andrew.
Hi, good morning. Thank you for taking my question.
Speaker Change: First one, Mystic. It seems like a great opportunity with a lot of flexibility, a lot of optionality.
and Robert Becker. Thank you. Thank you.
And is that included in your CapEx plan?
No, it's not.
Okay, and it's too premature.
Speaker Change: Yeah, just just let me be perfectly. I mean, we just acquired the the property in December
Speaker Change: So our planning organization is going through and looking at the opportunities, seeing what RFPs potentially can materialize, so it's really broad, we're very excited about that prop because it gives us tremendous flexibility from a strategic location, not just from Massachusetts but from New England.
Speaker Change: Unknown Executive, Rima Hyder, Matthew Fallon, John Moreira, Unknown Executive, Rima Hyder,
Speaker Change: So still too early in the process to put anything in our in our plan
Speaker Change: Okay, would you be comfortable making a billion dollar plus investment there?
For more information visit www.FEMA.gov
Well, we certainly would feel...
Speaker Change: Very comfortable here not only for the FERC regulated assets as well as the regulatory climate we enjoy here in Massachusetts, so
Speaker Change: Both of those are the proper formula for us to make investment decisions of that nature.
Unknown Speaker 05.
Speaker Change: Okay, great. And then just to clarify one other financing one.
Speaker Change: The Dividend Reinvestment and Employee Compensation Programs, I see 1.3 million shares in 2024. Can you just give round numbers what we should expect for 2025 and beyond, whether in shares or dollars or both?
Okay, very good. Thank you so much. All right, Andrew.
Thank you.
One moment, please.
Speaker Change: And our last question for the day will be coming from the line of Angie Chorowczynski of Seaport. Your line is open.
Thank you for inviting me in.
Rima
Speaker Change: Hello, so I just one question about Aquarian, so clearly a very strong outcome of the sale process, just wondering
Speaker Change: Given that this transaction needs to be approved by PORA, if you are anticipating any roadblocks there, especially as far as the customer benefit is concerned.
Speaker Change: You know, when I think about it for a municipal utility, it's hard to see any, you know, meaningful cost efficiencies or, you know, there's obviously that issue of taxes as well, which I understand can be replaced by the payments in lieu of taxes. But I'm just again wondering.
The regulatory standard for approvals of deals like that.
Speaker Change: Sure, I mean we feel very good about the regulatory process, you know, it's
Okay, thank you. Thanks. Thank you, Angie.
Speaker Change: Thank you. And I would like to now turn the call back over to Joe Nolan for closing remarks. Please go ahead. Yeah. Thanks, everybody, for taking the time this morning for our year-end earnings call, and we hope you have a great day.