Eversource Energy Q2 2021 Earnings Call Transcript

Key Takeaways

  • In Q2 Eversource earned $0.79 per share excluding transition costs and reaffirmed full-year EPS guidance of $3.81 to $3.93, targeting long-term growth in the upper half of 5–7%.
  • The company secured an agreement for a U.S.‐built Jones Act–compliant turbine installation vessel and expects Revolution Wind and Sunrise Wind projects to achieve commercial operation in 2025, with key staging infrastructure in New London underway.
  • In Connecticut, Eversource faces a finalized $28.6 million storm performance penalty and a 90 basis point distribution ROE reduction, both under appeal, creating ongoing regulatory uncertainty through at least October.
  • Moody’s and S&P have placed Eversource parent and CL&P on negative outlooks over regulatory concerns in Connecticut, though current ratings remain affirmed with no additional covenant triggers expected.
  • Eversource proposed to Massachusetts regulators new EV infrastructure and advanced metering (AMI) plans totaling up to $800 million to support state greenhouse gas targets, with final decisions anticipated in 2022 and 2023.
AI Generated. May Contain Errors.
Earnings Conference Call
Eversource Energy Q2 2021
00:00 / 00:00

There are 13 speakers on the call.

Operator

Good morning, and welcome to the Eversource Energy Second Quarter 2021 Results Conference. My name is Brandon, and I'll be your operator for today. Please note this conference is being recorded. I will now turn the call over to Jeffrey Kotkin. You may begin, sir.

Speaker 1

Thank you, Brandon. Good morning and thank you for joining us. I'm Jeff Kotkin, Eversource Energy's Vice President for Investor Relations. During this call, we'll be referencing slides that we posted last night on our website. And as you can see on Slide 1, Some of the statements made during this investor call may be forward looking as defined within the meaning of the Safe Harbor provisions subject to risks and uncertainties, which may cause the actual results to differ materially from forecasts and projections.

Speaker 1

These factors are set forth in the news release issued yesterday. Additional information about the various factors That may cause actual results to differ can be found in our annual report on Form 10 ks for the year ended December 31, 2020 and on our Form 10 Q for the 3 months ended March 31, 2021. Additionally, our explanation of how and why we use certain non GAAP measures and how those measures reconcile to GAAP results Speaking today will be Joe Nolan, our President and Chief Executive Officer and Phil Lembo, our Executive Vice President and CFO. Also joining us today are John Moreira, our Treasurer and Senior VP for Finance and Regulatory and Jay Booth, our VP and Controller. Now I will turn to Slide 2 and turn over the call to Joe.

Speaker 2

Thank you, Jeff. We hope that all New In New England, with that increased level of thunderstorm activity, topped off by a glancing blow from tropical storm Elsa. While our implementation of new technology and vegetation management has limited the scope of many of the resulting power outages, Our dedicated crews continue to be on the frontline completing a large amount of emergency restoration work in hot We continue to receive notes of appreciation for both our customers and municipal leaders. I was out all day in Connecticut The day also passed through, and I cannot say enough about our team in preparing for and responding to storm damage We greatly appreciate the recognition of those efforts that we received from Connecticut PRA Commissioners At the July 14 meeting. As I mentioned during our Q1 earnings call, improving our relationship with Connecticut policymakers End customers is my top priority as CEO.

Speaker 2

Earlier this week, a number of Connecticut legislators joined several state, community, education and labor leaders at our Berlin, Connecticut campus to celebrate the 1st class of students who are completing our new line worker certification program in partnership with the Hartford based Capital Community College. We continue to see steady monthly improvements in our customer favorability ratings and we appreciate the positive feedback We are receiving from municipal leaders, but we have to prove ourselves during the next major storm. I strongly believe that the changes we are implementing Our communication systems and processes will put us in a much better place the next time a multi day storm cleanup effort occurs. Next, I want to provide an update on the offshore wind partnership with Over the past few months, we have continued to make significant progress On the 3 projects that are noted on Slide 3, perhaps the most significant development was the agreement we reached With Dominion Energy, to chart at a U. S.-built Jones Act compliant wind turbine installation vessel currently under construction in Brownsville, Texas.

Speaker 2

Once construction of the vessel was complete in late 2023, it will sail to New London, Connecticut, Where it will be used to install wind turbines for Revolution Wind and Sunrise Wind. The vessel will be one of the largest, Work has recently begun in New London at the state owned ocean facing deepwater pier And be completed before the end of 2023. During hearings this spring that resulted In Rhode Island Coastal Resource Management Council approval of the project, we indicated that we would install 12 11 Megawatt turbines in connection with for Revolution Wind and in New York for Sunrise Wind were filed last December. In April, The Rhode Island Energy Facilities Citing Board issued a preliminary decision in order on Revolution Wind Schedule with advisory opinions for local and state The Sunrise Wind application was deemed complete by New York officials on July 1, initiating the formal review process for the project. As we noted in May, BOEM is targeting the completion of the review of Revolution Wind for the Q3 of 2023.

Speaker 2

Based on that review schedule, we now expect to be able to achieve commercial operation in 2025. We have not yet received the schedule for BOEM's review of the Sunrise project, but we are in a good position with our new London staging area, Our turbine installationship and our suppliers. So depending on the volume review schedule that we expect to receive within the next few months, We expect Sunrise will reach commercial operation in 2025 as well. These dates are consistent With the vision of the Biden administration, which continues to accelerate the review of offshore wind projects proposed for the Atlantic Coast, it is also consistent With the administration's target of having 30,000 megawatts of offshore wind operating in the United States by 2,030. Offshore wind is one of several initiatives underway to help our states achieve their greenhouse gas reduction targets.

Speaker 2

On July 14, PURA took a major step forward in furthering the state's clean energy goals 5,000 emission vehicles on the road by the end of 2025. The order is described on Slide 4. We appreciate a number of the changes that PURA made to the draft decision to enhance the program's expected success. We will submit an implementation plan based on the PURE order by October 15. Also on that slide is a description of a proposal that Massachusetts Utilities submitted on July 14 to further develop the infrastructure That is needed to support rapid conversion of the state's vehicles to 0 emissions.

Speaker 2

As you can see on the slide, by the end of this year, However, since transportation is responsible for more than 40% of the state's greenhouse gas emissions, Significantly more support is needed to help the state meet its targets of reducing greenhouse gas emissions by 50% by 2,030 And 75% by 2,040. Massachusetts had only 36,000 electric vehicles registered as of January And in 2020, only 3% of the light duty vehicles sold in the state were EVs. While that percentage is above average for the country as a whole, it needs to be enhanced significantly going forward Since at the current pace, we will have fewer than 500,000 EVs in Massachusetts as of 2,030. We need more than 1,000,000 EVs by then for the state to reach its targets. We have proposed spending more than $190,000,000 I described on the slide and included expanded charger infrastructure investment, some REIT incentives and new opportunities to add Our support for our state's greenhouse gas Reduction efforts is discussed at length in our 2020 Sustainability Report, which was posted on our Web 20 Greenhouse Gas Footprint.

Speaker 2

We have a number of teams within Eversource tasked with making our 2,030 goal a reality. They include a team focusing on reducing emissions in 5 principal areas, another team working on developing a strategy to offset emissions that cannot be eliminated by 2,030 and another team that is encouraging all 9,000

Speaker 3

Thank This morning, I'm going to cover 3 areas: 2nd quarter results, the status on several of the regulatory dockets pending And some exciting opportunities ahead for us in terms of grid modernization and AMI that Joe alluded to. I'll start with our results for the quarter in Slide 6. We earned $0.77 per share for the quarter, including $0.02 per share of cost, Primarily relating to the transitioning of Eversource Gas Company of Massachusetts into the Eversource Systems. Excluding these costs, we earned $0.79 per share in the 2nd quarter and $1.87 per share in the first half of twenty twenty one. So let's take a look at each of the segments performance in the quarter.

Speaker 3

Our electric transmission business earned $0.40 per share in the Q2 of Our investment in our transmission facilities was partially offset by higher share count there. Our electric distribution business earned Higher distribution revenues were partially offset by higher O and M, depreciation and property taxes. The higher O and M was largely driven by increased storm activity in the Q2 of 2021 and higher employee medical expenses. The higher medical expenses was mostly due to the fact that in the Q2 of 2020, in the midst of the worst COVID In New England, the worst of COVID in New England, many routine medical appointments were being canceled, As you know, natural gas utilities in New England tend to have relatively neutral results in the second quarter. Our water distribution business Aquarion earned $0.03 per share in the 2nd quarters of both 2021 2020.

Speaker 3

Beginning next year, we expect Aquarion revenues to be bolstered by a previously announced acquisition that serve approximately 10,000 customers in Connecticut, Massachusetts and New Hampshire. We continue to expect to close the transaction Our parent and other company segment had modest second quarter losses in both years. Turning to Slide 7, you can see that we have reiterated our amended earnings guidance that we issued in May. We continue to expect ongoing earnings towards the lower end of our $3.81 to $3.93 per share guidance. This incorporates a $28,600,000 pretax charge relating to our Performance in Connecticut following the devastating impact of tropical storm, Isaias last summer.

Speaker 3

We recorded the charge in the Q1 of this year. We also continue to project long term EPS growth in the upper half of the range of the 5% to From our financial results, I'll turn to the status of various regulatory initiatives. And I'll start in Connecticut. We have David, a summary of various proceedings in the appendix of our slides. I mentioned earlier that the Public Utilities Regulatory Authority or PURA had finalized the $28,600,000 civil penalty associated with our storm performance last summer.

Speaker 3

That followed the April 28 release of a final storm performance decision that we discussed on our Q1 call. As you know, we have appealed that April 28 decision in Connecticut Superior Court. We do not have

Speaker 4

a full

Speaker 3

schedule for those court proceedings, but expect the case to take many months before the court renders a decision. A scheduling conference will be held later reduction in Connecticut Light and Power's distribution ROE on top of the $28,600,000 penalty. That pancaking of penalty forms 1 of the principal basis of our appeal since we believe it violates the state law that was in effect at the time of the storm. Additionally, hearings in the temporary rate reduction docket commenced in May will continue next month. A supplemental hearing is scheduled for August 9, at which time additional testimonial evidence may be presented on certain issues, including the applicability and term of the 90 basis point penalty.

Speaker 3

PURA just this week notified parties that written testimony on the applicability and term of that penalty may be filed in the end of the August 9 hearing no later than August 4. CL and P's distribution ROE for the The schedule for this proceeding currently indicates a decision date of October 13. We will continue to update you as this docket proceeds. Regardless of the status of this rate review, We and our regulators share a common goal of providing nearly 1,300,000 Connecticut Electric customers with safe, reliable service And to help the state meet its aggressive carbon reduction and clean energy goals. Turning to Massachusetts, Joe mentioned our electric vehicle initiative earlier.

Speaker 3

On July 1, we submitted 2 other proposals to the Department of Public Utilities. As you can see on Slide 8, the first was an extension of the grid modernization plan that we began implementing with initial throughout the Massachusetts service territory. The program we submitted to the Massachusetts DPU earlier this month Call for the investment of another $200,000,000 from 2022 through 2025 Including reducing peak demand and line losses. Reducing line losses is an important element in achieving our 2,030 carbon In the same docket, we're asking the DPU to take the first steps to allow us to embark on a the Texas Electric customers, along with a new communications network, meter data management system and customer information system. We project capital investment associated with the full program to be in the $500,000,000 to $600,000,000 range over the period of 2023 through 2028.

Speaker 3

These technologies are critical enabling investment That support the state's 2,050 Clean Energy goals. And as I've mentioned previously, Connecticut is looking at how AMI should be introduced for CL and P customers. Although PURA has acknowledged Finally, I just want to cover recent financings and rating agency actions. In recent months, both Moody's and Standard and Poor's have changed CLNP's outlook to negative. Moody's Change Eversource parent outlook to negative as well.

Speaker 3

While we're not happy with these developments, we understand these changes are primarily related to the ongoing We are pleased that Moody's recently affirmed PSNH Public Service in New Hampshire's rating and outlook, recognizing the constructive outcome to issue up to $725,000,000 of long term debt at Eversource Gas Company in Massachusetts. Since we purchased the former Columbia Gas assets last year, Eversource Gas of Massachusetts has been borrowing long term exclusively through the We believe that borrowing at the subsidiary level ultimately will be less costly for customers And we expect a DPU decision on this application later this year. Like NSTAR Gas and Yankee Gas, we would expect Thank you very much for joining us this morning, and I'll turn call over to Jeff for Q

Speaker 1

and A. Thank you, Phil. And I'm going to turn the call back to Brandon just to remind you how to answer your questions.

Operator

Thanks, Seth. And we'll now begin the question and answer

Speaker 1

Thank you, Brandon. Our first question this morning is from Shar Pourreza from Guggenheim.

Speaker 5

Just starting with And sort of the 90 basis points ROE reduction, it sounds like one of the more recent notices Open the door for parties to petition for a defined penalty period versus something more perpetual. How should we sort of think about kind of this opening, if you will, to a fixed length reduction versus indefinite? And then just remind us again what we should be watching for here going forward?

Speaker 3

Sure. Sharad, this is Phil. As I mentioned, The docket is open and recently PURA did notify the parties that they could testimony on the applicability of the term of the penalty. So to me that indicates there There's a consideration of what a term would be. As you know, the initial language was using the word indefinite.

Speaker 3

So I think that's positive development in terms of setting a specific term for the penalty. So In the docket, the information that came out last week sort of indicates that we could file information there. So what we should be looking for there is there is a process that will continue On that docket, there's an expectation that an order would be issued in October With any changes out of there effective November 1 is the current timeline.

Speaker 6

Got it. Thank you for that.

Speaker 5

And then just lastly, and maybe just shifting to offshore wind and starting with the logistics side. Redevelopment of the Connecticut State Pier in New London has had some cost increases, right, from 90 $3,000,000 to roughly $235,000,000 obviously paid by the state. But it sounds like everything else is kind of proceeding. Is there kind of any Supply chain issues you're kind of keeping an eye on or logistics that remain kind of unknown unknowns? Yes.

Speaker 2

Thanks, Shar. This is Joe. I will take that. So a lot of work is underway at the New London port. We were just out there for Some inspections, we do have all our onshore permits.

Speaker 2

It's going very, very well. Last week, the state finalized That are impacting any of our 3 projects. All of the projects have everything locked down. So we feel good about that.

Speaker 6

This is actually Ryan on for Jeremy. Just wanted to start on the offshore and maybe, John, some of the kind of the siting process you guys are kind of talking about during the Thinking about the progress you guys have been making with some of the fishermen, I know this is kind of an issue with South Fork and in Rhode Island specifically, but kind of Just kind of get a latest on kind of progress you're making in terms of other stakeholder kind of agreements and kind of the process you're making with those relationships.

Speaker 2

So thank you for the question, Ryan. We've had a lot of dialogue down there. And I think we've got some A good path forward, and we've got obviously a positive decision we received in July from the CRMC down there and positive in New York as well as it's in Massachusetts. So when we think a lot of the concerns or at least The path is pretty clear and we feel good about it.

Speaker 6

And then maybe just one on Connecticut. We saw UI kind of get their settlement over the finish line there. Just kind of wondering prospects you're kind of seeing in the state of some stakeholders in terms of Maybe potentially settling some of these issues and what kind of timeline we might be thinking about in terms of something coming out on that front?

Speaker 2

Yes, sure. So generally speaking, a broad multiparty settlement is something that's obviously attractive to us. We have a long history of settlements, whether it's the NUNSTAR merger in 2012 or the CLMP rate case or the Yankee rate case. We feel good about that. I have been spending most of my time in Connecticut.

Speaker 2

We've been out with multiple parties, and I think that the temperature certainly has reduced and folks are in a good place. I think we need to prove ourselves We know that. I think, Tropical to Storm, the recent one with Elsa, which passed through, was really a good exercise for us To show that a lot of things have changed for our business. So by and large, a settlement is something that's attractive to us. We were pleased to see that United Moving Inc.

Speaker 2

Settlement was approved. So we see some possibilities there.

Speaker 1

Next question is from Durgesh Chopra from Evercore. Good morning, Durgesh.

Speaker 7

Hey, good morning, Durgesh. Thank you. Just going back to the Connecticut I know it's impressive when you're on the equity layer. I'm just wondering where that stands and would you guys expect This final opening up for the reduction, if I can remember that, that's addressed as well or that's finalized as well?

Speaker 1

Durgesh, you broke up a little bit on the questions. Are you talking about the testimony from the intervener That went in?

Speaker 7

That's correct. The equity layer, Jeff. That is exactly right.

Speaker 3

Okay. Yes. This is Phil. During the course of that proceeding, there was testimony and certainly we provided our own input to that testimony and as well as question the witness. So by the nature of it being Part of the questioning, I would expect that somehow it could be considered in that proceeding going forward.

Speaker 3

So there's no Specific area that is to be decided there. I think it was just a testimony that was filed by the EOE, that's a EOE witness. That's a section of the Connecticut PURA.

Speaker 7

Got it. Thank you. That's helpful. And then maybe just quick clarification, Phil. The AMI filing in Massachusetts, What portion of that $500,000,000 to $600,000,000 that you mentioned would be incremental to the current CapEx plans?

Speaker 3

We have currently no CapEx in our 5 year forecast for AMI in Connecticut or in Massachusetts. So any spending in either state would be incremental.

Speaker 6

Got it. And do

Speaker 7

you do we see a final decision in mid-twenty 22 or is that just sort of like what are the response means like is this a Formal sort of yes or no or just feedback from the Massachusetts TPU?

Speaker 3

So we expect a decision in 2022. Mid year is as good an estimate as any at this stage. So this has been a long standing sort of desire, I I think of the commission, we certainly have a need to make a decision on our metering infrastructure. So the timing It is good. So we fully expect a decision in mid year 2022.

Speaker 7

Okay, perfect. Thanks guys. Much appreciate the time.

Speaker 1

Thanks, Durgesh. Next question is from Julian from Bank of America. Good morning, Julian.

Speaker 8

Hey, good morning, team. Thanks for the opportunity to connect. Maybe to pick up a little bit off the last question and flip it a little bit. When you think about the Scenario, so you have a history of executing well. You talked about upper half of 5% to 7%.

Speaker 8

There's a variety of different pieces that are moving here, puts and takes. How do you think about your confidence level under various scenarios in the upper And I'll let you answer that accordingly because there's a lot of probably too many scenarios to talk about and point out here. But I'd be curious as you think about The sort of the decision tree here or pathway potential.

Speaker 3

Thanks, Julian. As we See our 5 year, our long term forecast, I'm very confident in our ability to achieve our growth expectations. As you mentioned, There are always puts and takes. That's what we do as a management team and that's what any company would do Managed that process and address issues that don't go your way and look for other opportunities. So There are various puts and takes that can occur over the course of any forecast period, but I am confident in our ability to achieve our target.

Speaker 8

Got it. Excellent. I'll leave that subject there. Maybe coming back to this offshore wind subject, I suppose the Highest level observation or question back to you after Shar's question would be, given the more coincident Construction of these projects here, any considerations around logistics that we should be focused on here? I suppose Just given that they're now increasingly lining up against each other.

Speaker 8

And Carol?

Speaker 2

Yes. Thank you. Good morning, Julien, Joe Nolan. We feel great about the Our projects are really scheduled in a perfect formation. So we do think there's a lot of opportunity there on Mobilization, demobilization to allow these projects to be able to be constructed in a very orderly fashion, and that's what really Excites us.

Speaker 2

So yes, definitely opportunities there. The timing is perfect for actually all three of them.

Speaker 8

Right. Excellent. And then lastly, just coming back to this question on settlement. And I know I appreciate your comments from earlier. Curious to the extent to which you can resolve perhaps in a comprehensive manner, all variety, including potential rate case filing next year in the context of some sort of settlement here.

Speaker 8

Just want

Speaker 3

to push on that subject

Speaker 8

just a tad more, if you don't mind.

Speaker 2

Yes. Julian, we've I think you've had an opportunity to see our success in the past. We can do settlements that are quite comprehensive. We feel confident that if we get to And it's something that obviously would be attractive to not only to us, but I think to a number of the parties. So obviously very, very busy I'm down in Connecticut right now.

Speaker 2

And so I'm optimistic.

Speaker 8

All right. Excellent. Well, thank you very much

Speaker 9

and best of luck on those efforts.

Speaker 1

Thank you. Thank you, Julian. Thanks, Julian. Next

Speaker 9

Good, Paul.

Speaker 10

How are you? All right. So just to sort of pick up on Julian's question there on the and Joe, you said you were optimistic about Connecticut and the potential for settlement. Could you give us a feeling for what the key sticking points are? Because As you know, we haven't been through this a month ago, and I'm just wondering how should we think about what Parties are the might be the key issue or what specific issues are the ones that probably are the ones for us to focus

Speaker 2

Yes, sure. I mean, it's the same parties that we've dealt with. You've got the Attorney General's Office. You've got the OCC. You have DEEP.

Speaker 2

I mean, these are the Obviously that we've dealt with in the past and that would be the same folks that we would see if we did

Speaker 10

Okay. And is there any key points or key issues that are the sticking points That are the key things that people are focused on that's causing more of an issue than others?

Speaker 2

No, no, I wouldn't say there's any staking points. There's no specific issues.

Speaker 10

Okay. And then in terms of timing, you guys You have a very detailed sort of rate case regulatory proceeding outlook and stuff, but how should we think about, would you expect to be for the hearing or How should we think about that?

Speaker 2

Well, settlements can occur at any point as you know in the process. It's hard for me to say we need to let certain things run there kind of regulatory course.

Speaker 10

Okay. And then Phil, you called out the ratings downgrade potential. If you guys are downgraded, other than obviously Obviously, it impacts the cost of borrowing. But other than that, is there anything else we should be thinking about? Is there any other sort of Potential trigger on covenants or anything we should be thinking about or anything else?

Speaker 3

No, Paul. There are no other triggers that come into play here. And Just for clarification, I think we all know that being on negative outlook doesn't necessarily mean that you're going to be downgraded. I think The agencies like to see certain progress in particular areas. So in the area that they sort of highlighted in terms of Lowering the outlook was sort of a Connecticut regulatory area.

Speaker 3

So there are a lot of dockets going on there. And If those move in a direction that the rating agencies view as credit positive, then That doesn't mean you're going to get the downgrade, right? They could put you back onto a stable outlook. So, but nonetheless, If something were to happen, there are no other triggers that would be in effect.

Speaker 10

Okay, great. Most of my questions have been answered. Thanks so much guys. Have a good weekend.

Speaker 1

Next question is from Andrew Weisel from Scotia. Good morning, Andrew.

Speaker 9

Hey, good morning, everyone. Maybe I'll start by following up on that last question about the ratings agencies. I don't expect specific numbers, but I know there The agency's concern is the regulatory risk, not exactly the balance sheet. But if they were to downgrade, how would that affect your plans for the mix

Speaker 3

Well, there's a lot of hypotheticals there. I mean, if If that happened, I'd have to see what was there something in a regulatory decision, what the impact of that would be. So I'd say we don't have any plans at this stage to make any really adjustments in our approach to Our capital structure or what we're looking to do in terms of our debt financings, as you know, we identified that we had $700,000,000 of additional equity financing that we had identified a couple of years ago that It's still out there that we plan to do over some longer term period on a periodic ATM or something basis. And then we're issuing about $500,000,000 about $100,000,000 a year is a better way of saying it, Out of our dividend reinvestment plan. So we are continuing to do some dribbling out of equity and then we're doing long term Financings, but don't have any specific changes that I would highlight at this stage of the capital structure.

Speaker 3

Okay.

Speaker 9

The next question, Joe, you opened your prepared remarks talking about the positive feedback to

Speaker 8

your preparation cohort response to the storms.

Speaker 9

That you are planning to roll out

Speaker 8

to help minimize storm driven outages?

Speaker 2

Yes, sure. Thank you, Andrew. 1 of the, I think, The most impactful kind of system we've rolled out is a community based portal that allows communities to put their priorities in, in terms of public safety, block roads, those types of items are in there. We also have crews in each of the communities that allow communities to have Their priorities addressed. So those are just some of the ones.

Speaker 2

I will tell you the other piece that Really, it was back to what we had done prior to Isaias because of the pandemic is, we have folks that are located in each of these cities and That's something we were not able to do with ECAES. As you know, at that point in time, everybody was in lockdown. It was a very complex recovery effort because we needed double of everything. We had to have single workers in vehicles. We had to have single workers in hotel rooms.

Speaker 2

And It was a very, very challenging matter. So when we had this last event there, Elsa, things were a little more back to normal, and we had a lot of kind of technology portals that we had deployed, which were very, very well received. I mean, I was out on the system. I had an opportunity to talk to several The cities and towns and all the feedback I received was very, very positive.

Speaker 9

Okay, great. That's helpful. Best of luck going through the next one. Hopefully, you won't be tested anytime soon, but hopefully, it won't be too bad. Thank you.

Speaker 1

Thank you, Andrew. Next question is from Sophie Karp from KeyBanc. Good morning, Sophie.

Speaker 4

Hey, good morning guys. Thank you for taking my question. I wanted to take a stab at Connecticut again, but from maybe from a slightly different angle. Not to sound like a doomer, but With the storm is becoming more frequent and some may even say a new normal, is there a room for a dialogue there that goes Beyond just kind of sorting through the penalties and the past performance and establishing a regulatory framework for dealing with consecutive storms As a new normal line of what they've seen in states in the hurricane belt where it's been an occurrence for a while, Right. Is there a rule to legislature on the commission level where you have Deteriorizations or trackers for that type of stuff.

Speaker 4

So any really like mechanisms that are predictable where you don't have to sort through each storm

Speaker 3

Thanks, Sophie. Some of those items has been discussed. Securitization certainly was a topic that's come up from time to time in Connecticut in terms of storm cost, but usually in a rate proceeding where You're looking at all your costs and what's in your cost of service, etcetera. In our last settled rate At CL and P, we spent a lot of time on storms and what the right level of storm activity was to collect What appropriate deferral mechanisms might be there. So there's long been a recognition that these Still an opportunity for collecting these costs going forward.

Speaker 3

So those kinds of discussions We'll continue and the dialogue will continue. There's nothing specifically on the table Per se in terms of storm cost recovery at this stage, but we've had discussions on various topics. We spend so before you get to storm recovery, one of the areas we do is try to Not have to recover, right? So that means we try to do an effective job on our vegetation management and the capital spending that we do on technologies So in the we spent $200,000,000 a year on vegetation management Just to across our system to remove trees and open up rights of way, etcetera. So The best outage to have is not to have it.

Speaker 3

I guess that's the best possibility. So we do things The commission has been receptive to our request for additional funding, but there's still a lot of Tree work that can be done in Connecticut, as in other states, but that's an area that we continue we'd like to continue to have a dialogue on. Thank

Speaker 4

you.

Speaker 1

Next question is from David

Speaker 11

A quick follow-up just on that last line of thinking. Is there CapEx opportunity to look for more reliability, kind of system hardening investments in Connecticut. You mentioned vegetation management and tree which seems more on the O and M side of things, but wondering if there's more capital to deploy to lower The impact of storms going forward in Connecticut.

Speaker 3

Well, we do have an approved capital tracking sort of safety reliability program that we have in Connecticut right now that we operate under. So as we do in other states too. So there is That would not be new. We do spend money on technologies to again enhance our ability to prevent outages or in the event that you do have an outage to recover quickly. So there is an opportunity and we Currently have a mechanism in place to do that.

Speaker 11

Okay, got it. Thanks. Shifting to offshore wind, I was just Wanted to clarify, what gave you the comfort this quarter to put specific years, specific dates out there for Revolution and Sunrise? Was it the progress that you on the schedule that let you kind of crystallize those years?

Speaker 3

Yes. I'd I'd say that that's the primary driver. We've said, when we first moved off the date, we said as soon as we get more clarification, we would go back and with our partners with and develop a schedule. So in the case of Revolution Wind, we certainly we have that in place. For Sunrise, it's soon to get in place.

Speaker 3

So we're, I guess, cautiously optimistic on that date and we'll The way that we see more information out of BOEM to be more certain, but that is it. We've seen movement and we have much more clarity Now on dates than we did a year ago.

Speaker 11

Got it. That makes sense. And then just kind of last quick one. Just wondering if there's any thoughts You might have on the Massachusetts RFP and your competitive positioning there for the next offshore wind project. Are there advantages you might be able to to the table as especially some of the infrastructure comes online for your other projects that you could potentially lean on?

Speaker 2

Sure. Like all state RFPs, for when we're evaluating it right now, look at how it fits into our plan there, we expect Other states as well to have it. So it's under consideration.

Speaker 1

Next question is from Steve Fleishman from Wolfe.

Speaker 12

Hey, good morning. Thanks. I apologize if this was asked. But just There's a lot of different issues in Connecticut that you might be able settle on, I guess, if you get to that point of a settlement. Just curious if there's a way to deal with Kind of the need to file a rate case every 4 years, could that be part of this or Is that something that has to happen no matter what?

Speaker 2

Yes, Steve. Good morning, Steve. It's Joe. Absolutely, that could be part of type of a comprehensive settlement, if that was something that was important to the parties, that's something we would definitely put on the table.

Speaker 3

And I'll add to that. That's really more of a legislative mandate, Steve, and it requires It's pure to review the rates. So if the settlement if there's information there that would be deemed as a review, That could take care of that requirement, but that 4 year sort of review is more of a in the legislative space. Looks like we're all set. We don't

Speaker 1

have any more folks in

Speaker 3

the queue. So we want to

Speaker 1

thank everybody for joining us today. If you've got any follow-up, please