Eversource Energy 2024 Q3 Filing Summary
Business Context and Reporting Period
This Form 10-Q covers the quarterly period ended September 30, 2024, for Eversource Energy and its wholly-owned regulated utility subsidiaries: The Connecticut Light and Power Company (CL&P), NSTAR Electric Company, and Public Service Company of New Hampshire (PSNH). Eversource operates as a public utility holding company providing electric, natural gas, and water distribution services to approximately 4.4 million customers in Connecticut, Massachusetts, and New Hampshire.
Key Financial Metrics (Nine Months Ended Sept 30, 2024)
- Operating Revenues: $8.93 billion (Decreased $287 million vs. prior year).
- Net Income Attributable to Common Shareholders: $739.1 million ($2.08 per share diluted).
- Operating Income: $2.06 billion (Increased $220 million vs. prior year).
- Cash Flows from Operating Activities: $1.52 billion (Increased $348 million vs. prior year).
- Capital Expenditures (Investing Activities): $3.29 billion used for property, plant, and equipment.
- Debt and Liquidity:
- Total Long-Term Debt: $25.97 billion.
- Cash and Cash Equivalents: $97.9 million.
- Available Commercial Paper Capacity: $1.79 billion.
Material Changes vs. Prior Period
The most significant material change was a net loss of $118.1 million ($0.33 per share) for the third quarter of 2024, compared to net income of $339.7 million in Q3 2023. This decline was driven primarily by a $464.0 million pre-tax loss on offshore wind investments recorded in the third quarter. This loss resulted from the sale of Eversource's 50% interests in the Sunrise Wind, South Fork Wind, and Revolution Wind projects. Proceeds from these sales were approximately $897 million in total, but the carrying value and estimated post-closing obligations resulted in an aggregate after-tax loss of $524 million for the nine-month period.
Excluding the offshore wind losses, non-GAAP earnings for the nine months ended September 30, 2024, were $1.26 billion ($3.56 per share), compared to $1.18 billion ($3.38 per share) in the prior year period.
Regulated utility segments (Electric Distribution, Transmission, Natural Gas, and Water) reported increased earnings due to base rate increases, higher transmission rate bases, and lower storm-related costs, partially offset by higher interest and depreciation expenses.
Guidance, Outlook, and Risks
- Guidance Update: Eversource updated its 2024 non-GAAP earnings guidance to a range of $4.52 to $4.60 per share, excluding the impact of offshore wind sales. The company reaffirmed its long-term EPS growth rate projection of 5% to 7% through 2028.
- Capital Investment: Forecasted capital investments for 2024–2028 were increased to $23.7 billion (from $23.1 billion) following the approval of the Electric Sector Modernization Plan (ESMP) in Massachusetts.
- Offshore Wind Contingencies: Eversource recorded a $365 million liability for post-closing purchase price adjustments related to the sale of Revolution Wind and South Fork Wind to Global Infrastructure Partners (GIP). This includes cost-sharing obligations for capital overruns and maintaining GIP's internal rate of return. Management notes that incremental exposure remains possible but cannot reasonably estimate a range of loss beyond the recorded amount.
- Regulatory Risks: Ongoing FERC complaints regarding Return on Equity (ROE) for transmission assets remain unresolved. A reserve of $39.1 million is maintained for the second complaint period. The company cannot currently estimate a range of loss for the four pending complaint proceedings.
- Dividends: The Board approved a quarterly common share dividend of $0.715 per share, paid on September 30, 2024.
Investor Verification Checklist
- Verify the final settlement terms and potential additional liabilities associated with the post-closing adjustments for the Revolution Wind and South Fork Wind sales to GIP.
- Monitor the status of the FERC ROE complaints and any potential changes to the $39.1 million reserve or future rate base calculations.
- Review the progress and cost recovery mechanisms for the newly approved Massachusetts Electric Sector Modernization Plan (ESMP).
- Assess the impact of the pending Aquarion Water Company of Connecticut rate case appeal on future water segment revenues.
- Confirm the timeline for the remaining $34 million proceeds from the Sunrise Wind sale to Ørsted, contingent on construction milestones.