Eversource Energy Eyes $1B+ Cash Recovery, New Connecticut Growth Path

Key Points

• Eversource expects more than $1 billion in storm-cost cash recoveries from Connecticut and New Hampshire, including $960 million already approved in Connecticut and roughly $500 million anticipated from New Hampshire.
• Connecticut offers a potentially significant growth path as Eversource pursues a $1 billion advanced-metering investment and awaits a rate-case decision, while citing a more stable regulatory environment.
• The utility’s $26.5 billion five-year capital plan is supported by transmission, electrification and grid projects, including Eversource’s $700 million share of a new Canada transmission line and major Massachusetts substations.

Eversource Energy NYSE: ES President and CEO Joe Nolan said the utility has made progress in simplifying its business, strengthening its balance sheet and improving regulatory visibility, particularly in Connecticut.

Speaking at an investor event, Nolan described Eversource as a “pure-play pipes and wires company” following its exit from offshore wind development and the sale of its water business. He said the company’s service territory extends from the Canadian border to the New York border and includes hospitals, universities and defense contractors.

Nolan said the final turbine has been installed at the company’s offshore wind project, with all 65 turbines now in place. Construction partner Ørsted has stated that commercial operations are expected by the end of the year, according to Nolan.

Asset sales and storm-cost recovery

The company completed the sale of Aquarion Water for $2.4 billion, with $1.7 billion of cash proceeds received, Nolan said. He added that all three rating agencies upgraded Eversource following the transaction.

In Connecticut, Eversource recovered $960 million, or 96%, of its requested storm costs, Nolan said. The company filed a securitization plan for those costs and expects the related cash to be received. He said Eversource may still seek the remaining approximately $40 million.

Nolan also said the company is owed about $500 million in storm costs in New Hampshire and expects to receive that money in roughly a year. Combined, the Connecticut and New Hampshire recoveries represent more than $1 billion of anticipated cash proceeds, he said.

While an analyst noted that Connecticut’s storm-cost ruling did not include carrying costs, Nolan said Eversource continues to receive carrying charges until securitization is completed and believes the issue is not fully resolved.

Connecticut regulatory outlook

Nolan said Connecticut’s regulatory environment has become more stable after the appointment of five new commissioners. He said the full commission is participating in proceedings and characterized the group as experienced in energy, regulatory and financial matters.

“We’re not going to get the types of surprises that we’ve gotten in the past,” Nolan said, calling the new commission “a stable regulatory body that’s engaged.”

Eversource has a pending rate case for Connecticut Light and Power. Hearings are scheduled to begin in February, with a draft decision expected in May, according to Nolan. He said the company is optimistic about the outcome, citing a recent Yankee Gas case in which the final decision improved from a $70 million draft outcome to $104 million, with a 9.47% return on equity.

The company is also discussing a potential advanced metering infrastructure program in Connecticut. Nolan said the project could represent a $1 billion, five-year investment opportunity that is not included in Eversource’s current capital plan. The estimated cost had previously been about $750 million to $800 million, he said, but increased amid delays.

Eversource wants to ensure timely cost recovery before advancing further investments, Nolan said. Potential projects include the AMI deployment, a substation that could support renewable generation and a clean-energy hub, as well as incremental reliability and tree-trimming spending.

Capital plan and transmission opportunities

Eversource’s five-year capital plan totals $26.5 billion, Nolan said. The company recently won a regulated transmission project with Iberdrola involving a line to Canada. The overall project is valued at $2.2 billion, of which Eversource’s share is approximately $700 million, Nolan said, adding that it will be added to the capital plan.

Nolan also pointed to electrification-related load growth in Massachusetts. He cited a planned $1.8 billion, 120-foot underground substation in Cambridge intended to support the area’s transition away from fossil fuels. Eversource is also pursuing additional substations in Boston and the suburbs, he said.

The company has 900 megawatts of solar projects that it could develop in Massachusetts if other investments do not materialize, Nolan said. He also cited smaller grid investments intended to relieve congestion and connect rural renewable generation to load centers.

FERC rates and New England power supply

Nolan said Eversource expects the Federal Energy Regulatory Commission to establish a new rate by Nov. 30, effective for billing on Dec. 1. The company has filed for an 11.37% return on equity using what Nolan described as the same formula FERC previously used to establish a 9.57% rate.

He said Eversource believes the prior FERC proceeding was flawed and expects a court decision as soon as Aug. 27. The company is open to a settlement, Nolan said, though he indicated that the initial focus will be on the new rate determination.

On regional power supply, Nolan said New England has added 1,100 megawatts from Hydro-Québec, 800 megawatts from Vineyard Wind and 704 megawatts from the Revolution project. He said the additional supply has helped limit price spikes, particularly during winter months.

Nolan said Eversource is not pursuing data-center load, arguing that the company’s region already has substantial electrification-driven growth opportunities and limited generation resources. He said the company is focused on maintaining a stable energy environment and reducing dependence on liquefied natural gas through additional pipeline supply and existing LNG storage facilities.

About Eversource Energy (NYSE:ES)

Eversource Energy NYSE: ES is a diversified energy delivery company that operates regulated electric and natural gas utilities in the northeastern United States. Its businesses provide electricity and natural gas distribution, electric transmission, and related energy infrastructure services to residential, commercial, and industrial customers.

Eversource's electric operations serve customers across Connecticut, Massachusetts, and New Hampshire, while its natural gas distribution businesses operate primarily in Connecticut and Massachusetts.

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