CNTHP.OIDConnecticut Light & Power CO
10-Q: Eversource Energy Reports Q2 2024 Earnings, Reaffirms Full-Year Guidance Amid Offshore Wind Divestiture
Sentiment:
Quarterly Report
Eversource Energy announces Q2 2024 earnings of $0.95 per share, reaffirming its full-year non-GAAP earnings guidance and long-term EPS growth rate, while progressing with the sale of its offshore wind investments.
Capital raiseEversource issued 4,206,649 common shares in the first six months of 2024, resulting in proceeds of $248.2 million, net of issuance costs.CL&P, NSTAR Electric and PSNH have uncommitted line of credit agreements totaling $375 million and $250 million, respectively, all of which will expire in either October 2024, May 2025 or September 2025.On February 8, 2024, the NHPUC approved PSNHs request for authorization to issue up to $300 million in long-term debt through December 31, 2024.On May 1, 2024, the DPU approved NSTAR Electrics request for authorization to issue up to $2.4 billion in long-term debt through December 31, 2026.On July 24, 2024, PURA approved CL&Ps request for authorization to issue up to $1.0 billion in long-term debt through December 31, 2025.
Better than expectedThe company's Q2 2024 earnings per share of $0.95 is better than the $0.04 reported in Q2 2023.The company's H1 2024 earnings per share of $2.43 is better than the $1.45 reported in H1 2023.
Summary
- Eversource Energy reported Q2 2024 earnings of $335.3 million, or $0.95 per share, a significant increase from $15.4 million, or $0.04 per share, in Q2 2023.
- First-half 2024 earnings reached $857.2 million, or $2.43 per share, compared to $506.6 million, or $1.45 per share, in the first half of 2023.
- The company reaffirmed its 2024 non-GAAP earnings guidance range of $4.50 to $4.67 per share, excluding impacts from offshore wind project sales and related costs.
- Eversource also reaffirmed its long-term EPS growth rate projection of 5% to 7% through 2028.
- Operating cash flows for the first half of 2024 were $962.0 million, up from $647.3 million in the same period last year.
- Investments in property, plant, and equipment totaled $2.22 billion in the first half of 2024.
- The company completed the sale of its 50% ownership share of Sunrise Wind to rsted on July 9, 2024, for $118 million at closing, with $34 million to be paid upon completion of certain construction milestones.
- An agreement to sell the 50% interests in South Fork Wind and Revolution Wind to Global Infrastructure Partners (GIP) for $1.1 billion is expected to close in Q3 2024.
- Proceeds from the offshore wind sales will be used to pay off parent company debt.
Sentiment
Score: 8
Explanation: The sentiment is positive due to strong earnings growth, reaffirmation of guidance, and progress on strategic asset sales. However, the ongoing regulatory challenges and potential risks associated with the offshore wind divestiture temper the overall outlook.
Positives
- Significant increase in Q2 2024 earnings per share compared to Q2 2023.
- Reaffirmation of full-year earnings guidance and long-term EPS growth rate.
- Increased operating cash flows.
- Completion of the sale of Sunrise Wind.
- Expected closing of the sale of South Fork Wind and Revolution Wind in Q3 2024.
- Proceeds from asset sales will be used to reduce debt.
Negatives
- Electric distribution segment earnings decreased due to higher operations and maintenance expense.
- Water distribution segment earnings decreased due to higher operations and maintenance expense, higher interest expense, and higher depreciation expense.
Risks
- The sale of South Fork Wind and Revolution Wind to GIP is subject to customary conditions, including certain regulatory approvals, as well as other conditions, among which is the completion and execution of the partnership agreements between GIP and rsted that will govern GIPs new ownership interest in those projects following Eversources divestiture.
- Factors that could result in Eversources total net proceeds from the transaction to be lower, resulting in post-closing adjustment payments owed to GIP, include the ultimate cost of construction and extent of cost overruns for Revolution Wind, delays in constructing Revolution Wind, which would impact the economics associated with the purchase price adjustment, and Revolution Winds eligibility for federal investment tax credits at less than the value included in the purchase price.
- Total net proceeds could also be adjusted for a benefit due to Eversource if there are lower operation costs or higher availability of the projects through the period that is four years following the commercial operation date of the Revolution Wind project.
Future Outlook
Eversource reaffirmed its 2024 non-GAAP earnings guidance range of $4.50 to $4.67 per share and its long-term EPS growth rate projection of 5% to 7% through 2028.
Industry Context
The announcement reflects a strategic shift for Eversource, focusing on its core regulated utility operations and divesting its offshore wind investments amid growing industry interest in renewable energy projects.
Comparison to Industry Standards
- The sale of offshore wind assets aligns with a broader trend of utility companies re-evaluating their renewable energy portfolios, similar to recent moves by Ørsted and Avangrid.
- The reaffirmed EPS growth rate of 5-7% is comparable to that of other large regulated utilities like NextEra Energy and Duke Energy.
- The strategic decision to focus on regulated operations mirrors the approach of companies like American Electric Power, which prioritize stable earnings from regulated assets.
Stakeholder Impact
- Shareholders will benefit from the increased earnings and the use of proceeds from asset sales to reduce debt.
- Customers may see changes in their rates due to the various regulatory filings and rate adjustments.
- Employees may be affected by the strategic shift and the sale of the offshore wind business.
Next Steps
- Closing the sale of South Fork Wind and Revolution Wind to GIP is expected in Q3 2024.
- PURA is expected to issue a final decision in CL&Ps RAM filing on August 14, 2024.
- The NHPUC is expected to make a decision on PSNH's permanent rate increase request by August 1, 2025.
- The DOE Phase V trial is scheduled for October 28, 2024 through November 8, 2024.
Key Dates
| Date | Description |
|---|---|
| 2005 | NETOs' base ROE of 11.14 percent utilized since this date. |
| 2011-10-01 | Date of first FERC ROE complaint. |
| 2012-12-27 | Date of second FERC ROE complaint. |
| 2014-07-31 | Date of third FERC ROE complaint. |
| 2014-10-16 | FERC issued Opinion No. 531-A, setting base ROE at 10.57% and incentive cap at 11.74% for the first complaint period. |
| 2016-04-29 | Date of fourth FERC ROE complaint. |
| 2017-04-14 | U.S. Court of Appeals vacated FERC order. |
| 2018-05 | PSNH Funding issued $635.7 million of securitized RRBs. |
| 2018-10-16 | FERC issued an order on all four complaints describing how it intends to address the issues that were remanded by the Court. |
| 2019-11-21 | FERC issued Opinion No. 569 affecting the two pending transmission ROE complaints against the Midcontinent ISO (MISO) transmission owners, in which FERC adopted a new methodology for determining base ROEs. |
| 2019-12-23 | The NETOs filed supplementary materials in the NETOs' four pending cases to respond to this new methodology because of the uncertainty of the applicability to the NETOs' cases. |
| 2020-03-20 | FERC issued a Notice of Proposed Rulemaking (NOPR) on transmission incentives. |
| 2020-05-21 | The FERC issued its order in Opinion No. 569-A on the rehearing of the MISO transmission owners' cases, in which FERC again changed its methodology for determining the MISO transmission owners' base ROEs. |
| 2020-11-19 | The FERC issued Opinion No. 569-B denying rehearing of Opinion No. 569-A and reaffirmed the methodology previously adopted in Opinion No. 569-A. |
| 2021-03-25 | Each of the Yankee Companies filed a fifth set of lawsuits against the DOE in the Court of Federal Claims resulting from the DOE's failure to begin accepting spent nuclear fuel for disposal covering the years from 2017 to 2020. |
| 2022-05-11 | Eversource entered into an equity distribution agreement pursuant to which it may offer and sell up to $1.2 billion of its common shares from time to time through an at-the-market (ATM) equity offering program. |
| 2022-06-08 | Pursuant to a June 2, 2022 court order, the Yankee Companies were subsequently permitted to include monetary damages relating to the year 2021 in the DOE Phase V complaint. |
| 2022-08-09 | The Court issued its decision vacating MISO ROE FERC Opinion Nos. 569, 569-A and 569-B and remanded to FERC to reopen the proceedings. |
| 2022-08-29 | Aquarion Water Company of Connecticut (AWC-CT) filed an application with PURA to amend its existing rate schedules to address an operating revenue deficiency. |
| 2023-01-01 | NSTAR Electric base distribution rate increase effective. |
| 2023-03-15 | PURA issued a final decision that rejected AWC-CTs rate application. |
| 2023-03-21 | Eversources equity method investment in a renewable energy investment fund was liquidated by the funds general partner in accordance with the partnership agreement. |
| 2023-03-25 | The State of Connecticut Superior Court issued a decision on the rate case appeal. |
| 2023-03-30 | AWC-CT filed an appeal on the decision and requested a stay of the decision with the State of Connecticut Superior Court. |
| 2023-05-01 | PSNHs pole purchase agreement. |
| 2023-05-25 | Eversource announced that it had completed a strategic review of its offshore wind investments and determined that it would pursue the sale of its offshore wind investments. |
| 2023-05-31 | The contract for Sunrise Wind was finalized and completed. |
| 2023-09-07 | Eversource completed the sale of its 50 percent interest in an uncommitted lease area to rsted. |
| 2023-11-01 | NSTAR Gas base distribution rate increase effective. |
| 2023-12-26 | The DPU approved a $104.9 million increase to NSTAR Electric base distribution rates effective January 1, 2024. |
| 2024-01-24 | rsted signed an agreement with Eversource to acquire Eversources 50 percent share of Sunrise Wind. |
| 2024-02-08 | The NHPUC approved PSNHs request for authorization to issue up to $300 million in long-term debt through December 31, 2024. |
| 2024-02-13 | Eversource executed an agreement to sell its existing 50 percent interests in the South Fork Wind and Revolution Wind projects to Global Infrastructure Partners (GIP). |
| 2024-02-29 | Sunrise Wind was selected for contract negotiation in the offshore wind solicitation by NYSERDA. |
| 2024-03-25 | The State of Connecticut Superior Court issued a decision on the rate case appeal. |
| 2024-03-28 | AWC-CT filed an appeal of the Connecticut Superior Court decision to the Connecticut Appellate Court. |
| 2024-04-17 | PURA issued an interim decision in CL&Ps Rate Adjustment Mechanisms (RAM) filing and approved rates for six RAM components, with rates effective July 1, 2024 through April 30, 2025. |
| 2024-04-18 | Eversource and rsted executed the equity and asset purchase agreement to sell Eversources 50 percent interest in Sunrise Wind to rsted for a gross purchase price of $230 million. |
| 2024-05-01 | The DPU approved NSTAR Electrics request for authorization to issue up to $2.4 billion in long-term debt through December 31, 2026. |
| 2024-05-01 | Eversource's Board of Trustees approved a common share dividend payment of $0.715 per share. |
| 2024-05-29 | EGMA filed for its first rate base reset for rates to be effective November 1, 2024. |
| 2024-06 | Sunrise Wind received final approval by BOEM of its COP and all remaining regulatory approvals. |
| 2024-06-04 | The DPU approved four of the remaining five CIPs that were originally submitted by NSTAR Electric. |
| 2024-06-11 | PSNH filed an application with the NHPUC for approval of a temporary annual base distribution rate increase, proposed to take effect August 1, 2024. |
| 2024-06 | The court set dates for the DOE Phase V trial of October 28, 2024 through November 8, 2024. |
| 2024-07-09 | Eversource completed the sale of its 50 percent ownership share of Sunrise Wind to rsted. |
| 2024-07-23 | PURA issued a draft final decision that approved a further adjustment to the NBFMCC rate to include the recovery of incurred and deferred electric vehicle program costs from 2021 through May 31, 2024 of $44.4 million and expected electric vehicle program costs from June 1, 2024 through December 31, 2024 of $24.3 million. |
| 2024-07-24 | PURA approved CL&Ps request for authorization to issue up to $1.0 billion in long-term debt through December 31, 2025. |
| 2024-07-31 | The NHPUC approved a settlement agreement that was reached by PSNH, New Hampshire Department of Energy, and the Office of the Consumer Advocate to implement a temporary annual base distribution rate increase of $61.2 million to take effect August 1, 2024. |
| 2025-08-01 | A decision by the NHPUC on permanent rates is expected by August 1, 2025. |
Keywords
Eversource Energy, earnings, offshore wind, financial results, Q2 2024, guidance, divestiture, EPS, GIP, rsted
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