ES

Business Context and Reporting Period

This Form 10-Q covers the quarterly period ended June 30, 2026, 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 and natural gas delivery services to approximately 4.4 million customers in Connecticut, Massachusetts, and New Hampshire. A significant corporate development during the period was the completion of the sale of its Aquarion water distribution business on June 30, 2026.

Key Financial Metrics (Six Months Ended June 30, 2026)

Material Changes Versus Prior Period

• Revenue Growth: Operating revenues increased by $451.2 million (6.5%) year-over-year, driven primarily by base distribution rate increases at NSTAR Electric and PSNH, higher natural gas distribution revenues, and increased wholesale market sales.
• Earnings Decline: Net income attributable to common shareholders decreased by $243.0 million (26.9%). This decline is primarily attributable to three non-recurring or unusual charges:
  • Sale of Aquarion: A non-cash, after-tax charge of $111.4 million ($0.30 per share) recognized upon the sale of the water distribution business.
  • Offshore Wind Contingent Liability: A pre-tax charge of $194.0 million ($164.0 million after-tax, or $0.43 per share) to increase the liability for purchase price adjustments related to the Revolution Wind project.
  • FERC ROE Refund Charge: An after-tax charge of $43.9 million ($0.12 per share) resulting from a FERC decision lowering the allowed Return on Equity (ROE) for transmission assets and requiring refunds for a historical period.
• Liquidity Improvement: Cash and cash equivalents surged to $1.82 billion, largely due to approximately $1.7 billion in net proceeds from the Aquarion sale, which the company intends to use to reduce parent company debt.
• Interest Expense: Interest expense increased by $126.7 million year-over-year due to higher long-term debt balances and regulatory deferrals related to the FERC ROE liability.

Guidance, Outlook, and Risks

• 2026 Guidance: Management reaffirmed its non-GAAP recurring earnings guidance for 2026 of $4.57 to $4.72 per share. This guidance incorporates the prospective reduction in transmission ROE and the absence of Aquarion earnings in the second half of the year.
• Long-Term Outlook: The company reaffirmed a cumulative long-term earnings per share growth rate of 5% to 7% through 2030, using the adjusted 2026 non-GAAP earnings guidance mid-point of $4.65 per share as the base year.
• Regulatory Risks:
  • FERC ROE Complaints: While a liability of $62.0 million (pre-tax) has been recorded for the first complaint period, the company estimates a range of reasonably possible refunds between $62.0 million and $968.4 million. The company is appealing the FERC decision regarding the retroactive refund period.
  • Offshore Wind: The contingent liability for the Revolution Wind project remains subject to reassessment based on construction costs, delays, and tax credit eligibility. Additional losses could be material if cost overruns materialize.
• Rate Cases: CL&P filed a base distribution rate case in July 2026 seeking approximately $451 million in annual revenue increases. PSNH and NSTAR Gas also have approved rate increases effective in late 2025 and 2026.

Investor Verification Checklist

• Aquarion Sale Proceeds: Verify the deployment of the ~$1.7 billion in net proceeds to reduce Eversource parent debt as planned.
• Offshore Wind Liability: Monitor updates on the Revolution Wind project construction costs and the potential for further increases to the $409.2 million contingent liability.
• FERC ROE Appeal Outcome: Track the status of the appeal regarding the retroactive refund period, as the ultimate liability could significantly exceed the currently accrued $62.0 million.
• Non-GAAP Reconciliation: Review the reconciliation of GAAP earnings to non-GAAP recurring earnings to understand the impact of the $319.3 million in total charges (Aquarion, Offshore Wind, FERC) on reported performance.
• Capital Expenditures: Confirm that capital spending remains aligned with the ~$2.0 billion annual run rate required for infrastructure reliability and modernization.