Detailed Narrative
Connecticut Regulatory Environment
Eversource noted a constructive shift in Connecticut's regulatory landscape with the appointment of four new commissioners at PURA, completing the five-member requirement. This presents an opportunity for collaborative regulatory outcomes. The company submitted an alternative resolution proposal for the Yankee rate case, which would increase revenues by approximately $104 million compared to PURA's draft decision of $55 million, and provide customer relief. A final decision on the Yankee rate case was expected on the day of the call. The final decision for the sale of Aquarion Water is expected on November 19, with closing anticipated by year-end.
Offshore Wind Project Progress and Liability
Construction of the onshore substation for the Revolution Wind project is substantially complete, with back-feed energization to offshore facilities expected by the end of November to support testing and commissioning. Orsted has stated that Revolution Wind is substantially complete, with 52 of 65 turbines installed. Despite progress, Eversource recognized a net after-tax nonrecurring charge of $75 million in Q3 related to its offshore wind liability, largely offset by $210 million in tax benefits due to a change in estimated tax attributes.
Robust Load Growth and Infrastructure Investment
The company is experiencing robust load growth, driven by electrification of transportation and heating, decarbonization initiatives, and economic expansion. Year-to-date weather-normalized load growth was 2%, and peak demand reached over 12 gigawatts this summer, the highest since 2013. This evolving demand necessitates numerous transmission projects, including upgrades for offshore wind, interconnections for regional reliability, and addressing congestion. Eversource is pursuing projects like the Cambridge underground substation and strategic land acquisitions, with opportunities potentially adding billions to future investment plans.
Financial Strength and Capital Plan Execution
Eversource reaffirmed its 5-year capital plan of $24.2 billion through 2029, with $3.3 billion executed through September, keeping the company on track to meet its $4.7 billion target for the year. The Moody's FFO to debt ratio improved to 12.7% as of Q2 FY25, up over 300 basis points from December 2024, and is expected to exceed 13% by Q3 FY25. Operating cash flows increased over $1.7 billion year-over-year through Q3, reflecting a focus on improving cash flow and strengthening the balance sheet.
Customer Affordability Initiatives
The company is actively working with regulators to offer various options to address customer affordability. Examples include a 10% discount for gas customers during winter peak months in Massachusetts, a new seasonal heat pump rate, and expanded energy efficiency programs that have generated $1.4 billion in savings. Low-income discount rates have also been implemented. Eversource is supporting new generation totaling over 2,500 megawatts coming into the region over the next 12 months, aiming to alleviate supply cost pressure on customer bills.
Financing Activities and Storm Cost Recovery
Eversource issued $600 million of parent company debt to prefund an early 2026 maturity and strengthen liquidity. Under its ATM program, $465 million of equity has been issued to date, expected to cover near-term equity needs. The company continues to pursue recovery of deferred storm costs, with 98% of Q3 deferred storm costs either under review or already in rates. A decision on Connecticut storm cost securitization is anticipated in Q2/Q3, with hopes for an earlier resolution.