Eversource Energy (ES) Q2 FY26 earnings call: guidance and Q&A

How does the denial of carrying costs impact the financing plan, what are the offsets, and what are the components of the $1.8 billion storm cost securitization?

John Moreira stated that while disappointed with the denial of carrying charges and deferred amounts, the overall decision is constructive as it provides a firm number for securitization ($670 million). He clarified that the financing plan did not assume retroactive carrying charges due to lack of conviction, but they will assess options for recovery. The $1.8 billion total includes $700 million from CT securitization, $450 million from NH storm costs, and the remainder from CT storm carrying charges.

“we have not recognized $1 of these retroactive carrying charges. So in -- one would conclude that in our financing plan because we don't have a high level of degree of conviction that we have not assumed that we would get the retroactive piece.”

asked by Shar Pourreza · answered by John Moreira

Given the sizable ask in Connecticut and PURA's recent posture, what gives management confidence in a fair outcome, especially in an election year?

Joe Nolan acknowledged it's a large ask but emphasized it's the first distribution rate change since 2017. He highlighted strong reliability metrics and investments, with 90% of the deficiency tied to non-optional capital expenditures. He expressed optimism due to PURA's recent engagement and constructive decisions, believing the facts will support their prudent investments despite election-year dynamics.

“I am very optimistic. It's encouraging what's been happening at PURA. If you look at the past 6 months of decisions, whether it's around Yankee, whether it's around storm cost recovery, they are a very, very engaged regulatory body.”

asked by Shar Pourreza · answered by Joseph Nolan

What are the next milestones to watch for the ISO-NE transmission project to be rolled into the base plan, and when will more clarity be available?

Joe Nolan indicated that stakeholder comments are due August 14, with ISO New England reviewing and responding in August/September. A final recommendation is anticipated in September, providing good insight for the Q3 call. John Moreira added that approximately half of Eversource's $700 million share of the project's CapEx would fall within the current 5-year forecast through 2030.

“We're expecting stakeholder comments on August 14 on the preliminary recommendations... we should be in a good position for the third quarter call to give you more updates and that will allow us to roll that into the plan.”

asked by Carly Davenport · answered by Joseph Nolan

What were the drivers for the incremental Revolution Wind charge this quarter, and are there any remaining risks for further cost increases?

Joe Nolan explained the charge was due to revised cost projections stemming from two stop-work orders that led to vessel remobilization. He stated the project is over 97% complete, has all necessary components, and is on track for commercial operation. He expressed confidence that the current charge captures the remaining costs and does not foresee further significant risks.

“the project is over 95%, now actually 97% complete. So we are really in the final -- we're on the 5-yard line to get over the goal.”

asked by Carly Davenport · answered by Joseph Nolan

Given multiple parallel FERC ROE processes, has the company's view on seeking a global resolution changed, and what are the expectations?

John Moreira stated that the process is largely as expected, though no administrative judge was appointed. He noted that settlement is always an option and FERC's desire to accelerate the paper hearing for a new rate by November 30 could encourage parties to re-engage for a global settlement once the new rate is established.

“I think FERC is very -- what we like about it is FERC wants to accelerate this paper hearing to have a reasonable rate go into effect on November 30, which is very quickly.”

asked by Nicolas Woods · answered by John Moreira

With recent uncertainties resolved, has Eversource considered revising long-term growth targets or providing more detailed disclosures like rate base growth targets?

John Moreira explained that Eversource provides sufficient information, including annual CapEx and historical rate base growth (slightly over 8% CAGR), from which a rate base growth target can be derived. He mentioned a slide in their deck that shows expected rate base by 2030 based on CapEx, implying they believe current disclosures are adequate.

“our rate base growth, and we do give that number as to what historically it's been, it's grown slightly over an 8%, an 8% CAGR.”

asked by Sophie Karp · answered by John Moreira

Does Eversource have a targeted minimum credit cushion, and if the FERC refund is upheld, would they use other levers to maintain the cushion or balance sheet capacity?

John Moreira reaffirmed the priority to maintain FFO to debt 100 basis points above downgrade thresholds. He stated that if the incremental $880 million FERC refund is required, it would be handled in a balanced manner, implying a combination of balance sheet capacity and other levers to preserve credit metrics.

“we stand with our guidance that we want to be 100 basis points above the downgrade thresholds, and we've been very successful, as you can see on that slide. So that's our priority.”

asked by Anthony Crowdell · answered by John Moreira