10-Q: Eversource Q3 Earnings Surge Amid Offshore Wind Charges

Eversource Energy reports a significant increase in Q3 2025 net income and EPS, driven by strong regulated utility performance, despite a substantial charge related to offshore wind projects.

Summary

• Net income attributable to common shareholders for Q3 2025 was $367.5 million ($0.99 EPS), a substantial improvement from a loss of $118.1 million ($(0.33) EPS) in Q3 2024.
• Year-to-date 2025 net income attributable to common shareholders reached $1.27 billion ($3.44 EPS), up from $739.1 million ($2.08 EPS) in the same period of 2024.
• Excluding offshore wind impacts, non-GAAP earnings for Q3 2025 were $442.5 million ($1.19 EPS) and $1.35 billion ($3.64 EPS) for the first nine months of 2025.
• A pre-tax charge of $284 million was recognized in Q3 2025 to increase the offshore wind contingent liability, partially offset by $209 million in tax benefits, resulting in a net after-tax charge of $75 million ($0.20 EPS).
• Operating revenues increased by $157.4 million to $3,220.6 million in Q3 2025 and by $1,247.7 million to $10,177.0 million year-to-date 2025.
• Cash flows provided by operating activities totaled $3.20 billion in the first nine months of 2025, a significant increase from $1.52 billion in the same period of 2024.
• The company narrowed its 2025 non-GAAP earnings guidance range to $4.72 to $4.80 per share, from the previous range of $4.67 to $4.82 per share, excluding offshore wind impacts.
• The sale of the Aquarion water distribution business for approximately $2.4 billion in cash is expected to close in late 2025, with proceeds intended to pay down parent company debt.

Sentiment

Score: 6

Explanation: The company shows strong operational performance in its core regulated utility segments with approved rate increases and robust cash flows. However, significant negative impacts from offshore wind liabilities, a credit outlook downgrade, and regulatory setbacks for NSTAR Gas temper the overall positive sentiment, indicating a mixed outlook with notable risks.

Positives

• Net income attributable to common shareholders significantly improved to $367.5 million in Q3 2025 from a loss of $118.1 million in Q3 2024.
• Year-to-date 2025 net income increased by $532.0 million to $1.27 billion compared to the same period in 2024.
• Operating cash flows were robust, totaling $3.20 billion in the first nine months of 2025, nearly double the $1.52 billion from the prior year.
• Electric Distribution segment earnings increased by $50.3 million year-to-date 2025, driven by base rate increases at PSNH and NSTAR Electric, and CL&P's capital tracking mechanism.
• Electric Transmission segment earnings increased by $52.4 million year-to-date 2025 due to a higher transmission rate base from continued infrastructure investments.
• Natural Gas Distribution segment earnings increased by $49.5 million year-to-date 2025, benefiting from base rate increases at EGMA and NSTAR Gas.
• PSNH received NHPUC approval for a permanent rate increase of $100.7 million, effective August 1, 2025, and an authorized regulatory ROE of 9.5%.
• CL&P received $107.8 million in general obligation bond proceeds from the State of Connecticut for hardship costs and electric vehicle charging programs.
• Yankee Gas received PURA approval for a distribution rate increase of $95.7 million, effective November 1, 2025, with an authorized regulatory ROE of 9.32%.
• The Connecticut Supreme Court overturned PURA's disallowance of $1.5 million in Aquarion Water Company of Connecticut's water conservation program expenses, affirming the prudence standard for cost recovery.

Negatives

• A pre-tax charge of $284 million was recognized in Q3 2025 to increase the offshore wind contingent liability, reflecting higher construction costs and impacts from a stop-work order on Revolution Wind.
• The offshore wind contingent liability increased to $507.7 million as of September 30, 2025, from $365 million at December 31, 2024.
• Fitch revised the outlook for Eversource parent, CL&P, NSTAR Electric, and PSNH from stable to watch negative due to the Revolution Wind stop-work order.
• NSTAR Gas was denied a $45.0 million rate-base reset for non-GSEP plant additions by the DPU due to not achieving certain performance metrics under its PBR plan.
• The OBBBA law phases out federal tax credits for wind and solar projects that begin construction after July 4, 2026, potentially impacting future renewable energy investments.
• Higher interest expense, depreciation expense, and property tax expense partially offset earnings growth in various segments.

Risks

• Variability in costs and final investment returns of the Revolution Wind and South Fork Wind offshore wind projects due to post-closing adjustments under the sale agreement.
• Potential for additional losses and increases to the offshore wind contingent liability if further cost overruns materialize or adverse changes in facts, regulations, and circumstances occur.
• Uncertainty regarding the eligibility for federal investment tax credits for Revolution Wind at a lower value than assumed, which could result in a significant loss.
• Significant uncertainty regarding the applicability of FERC orders in MISO transmission owner cases to the NETOs' pending four complaint cases, with potential material impact on financial condition, results of operations, and cash flows.
• The resolution of CL&P's storm prudency review proceedings for approximately $980 million in deferred storm costs and carrying charges could have a material impact.
• The NSTAR Gas motion for reconsideration of the DPU's decision denying the rate base reset could be unsuccessful, impacting future cost recovery.
• Environmental liabilities related to former Manufactured Gas Plant (MGP) sites, with reserves increasing to $136.9 million as of September 30, 2025, subject to changes in cost estimates and regulatory requirements.
• Cyberattacks or breaches that could compromise proprietary information and customer data.
• Disruptions in capital markets making access to necessary capital more difficult or costly.
• Changes in economic conditions, including interest rates, tax policies, tariffs, and customer demand/payment ability.
• Fluctuations in weather patterns, including extreme weather due to climate change, impacting sales volumes and operational costs.

Future Outlook

Eversource narrowed its 2025 non-GAAP earnings guidance range to $4.72 to $4.80 per share, excluding the impact of offshore wind investments. The company reaffirmed its expected long-term EPS growth rate through 2029 to be in a 5% to 7% range, using 2024 non-GAAP EPS of $4.57 per share as the base year. The sale of the Aquarion water distribution business is expected to close in late 2025, with proceeds used to pay down parent company debt. Future regulatory proceedings are anticipated for CL&P regarding securitization, renewable portfolio standard obligations, and other provisions of the Connecticut Act. The construction of Revolution Wind is expected to be completed in the second half of 2026.

Management Comments

• Our 2025 results include an aggregate net after-tax charge resulting from our previous offshore wind investments of $75.0 million, or $0.20 per share.
• We narrowed our projection to earn within a 2025 non-GAAP earnings guidance range of between $4.72 per share and $4.80 per share excluding the impact of the net charge resulting from our previous offshore wind investments.
• We also reaffirmed our projection that our expected long-term EPS growth rate through 2029 will be in a 5 to 7 percent range, using 2024 non-GAAP EPS of $4.57 per share as the base year.
• We expect the future operating cash flows of Eversource, CL&P, NSTAR Electric and PSNH, along with existing borrowing availability and access to both debt and equity markets, will be sufficient to meet any working capital and future operating requirements, and capital investment forecasted opportunities.
• We continue to believe these deferred storm restoration costs were prudently incurred and are probable of recovery.

Industry Context

The utility sector continues to navigate a complex regulatory environment, with Eversource's results reflecting the impact of state-specific rate cases and the ongoing transition to clean energy. The company's significant capital investments in transmission and distribution infrastructure align with broader industry trends focused on grid modernization, reliability, and resilience against extreme weather. The challenges faced in offshore wind development, including cost overruns and regulatory delays, are indicative of the broader difficulties in scaling large-scale renewable energy projects, particularly in the U.S. market. The focus on performance-based regulation (PBR) and alternative regulatory frameworks by state commissions (e.g., PURA, NHPUC) signals a shift towards incentivizing efficiency and specific outcomes, while also introducing new complexities and potential for earnings volatility based on performance metrics. The sale of the water distribution business reflects a strategic focus on core electric and natural gas utility operations.

Comparison to Industry Standards

• The authorized regulatory ROE of 9.5% for PSNH and 9.32% for Yankee Gas are within the typical range for regulated utilities, though specific comparisons would require detailed analysis of peer group ROEs in similar jurisdictions and risk profiles.
• The FERC ROE complaints, challenging the NETOs' base ROE of 11.14% (and later 10.57%), highlight ongoing industry-wide disputes over appropriate returns for transmission investments, with the MISO ROE case serving as a precedent for methodology changes.
• The Greater Cambridge Energy Program, with an estimated cost of $1.84 billion, represents a significant infrastructure investment comparable to other major urban grid modernization projects undertaken by large utilities to address load growth and enhance resiliency.
• The challenges and contingent liabilities associated with the Revolution Wind project, including vessel damage and stop-work orders, are consistent with the high-risk, high-capital nature of offshore wind development, which has seen similar issues with projects like Vineyard Wind and South Fork Wind in the U.S. market, often leading to project delays and cost revisions.

Corporate Governance

Legal Proceedings

• Four separate FERC ROE complaints are ongoing, challenging the NETOs' base ROE. Eversource has recorded a reserve of $39.1 million for the second complaint period. The applicability of recent MISO ROE orders to the NETOs' cases remains uncertain, with final briefs due January 26, 2026. The resolution could have a material impact on financial condition, results of operations, and cash flows.
• CL&P is undergoing a prudency review proceeding by PURA for approximately $980 million in storm restoration costs and carrying charges incurred between January 1, 2018, and December 31, 2023. The ultimate approval and recovery of these costs are subject to the NHPUC's order.
• Aquarion Water Company of Connecticut has ongoing appeals related to a PURA decision from March 15, 2023, which ordered a decrease in authorized revenues. The Connecticut Supreme Court overturned PURA's disallowance of $1.5 million in water conservation program expenses but affirmed other portions of the decision. A ruling on a separate appeal to the Connecticut Superior Court is pending.
• NSTAR Gas filed a motion requesting the DPU to reconsider its decision denying a $45.0 million rate base reset, citing legal concerns and potential higher costs for customers.

Related Party Transactions

• Eversource parent uses its available capital resources to provide loans to its subsidiaries (e.g., PSNH, CL&P) to assist in meeting their short-term borrowing needs. These intercompany loans are eliminated in consolidation on Eversource's balance sheets.
• Yankee Gas, NSTAR Gas, and EGMA purchase natural gas transmission services from the Enbridge, Inc. natural gas pipeline project, in which Eversource previously held an equity ownership interest. These affiliate transaction costs total $77.7 million annually.

Stakeholder Impact

• Shareholders: Positive earnings growth and reaffirmed long-term EPS growth rate are favorable, but the offshore wind contingent liability and regulatory uncertainties pose risks to future returns. The ATM equity offering could dilute existing shareholders.
• Customers: Rate increases approved for PSNH and Yankee Gas will lead to higher customer bills. However, CL&P's receipt of state bond proceeds will reduce hardship and EV program costs charged to retail customers. The NSTAR Gas GSEAF reduction aims to mitigate bill impacts.
• Employees: The establishment of a Cash Balance Pension Plan effective January 1, 2025, replaces employer K-Vantage contributions for most employees, representing a change in retirement benefits.
• Creditors: Fitch's revision of the credit outlook to 'watch negative' due to the Revolution Wind stop-work order could impact the cost of future borrowings.
• Regulators: Ongoing legal and regulatory proceedings, including FERC ROE complaints and state rate cases, require significant engagement and compliance, shaping the company's operational and financial parameters.

Next Steps

• Monitor the progress of Revolution Wind construction, expected to be completed in the second half of 2026, and any further reassessments of the offshore wind contingent liability.
• Track the closing of the Aquarion water distribution business sale, expected in late 2025, and the use of proceeds for debt reduction.
• Observe the outcome of the FERC ROE complaints, with final briefs due January 26, 2026, and the potential material impact on financial condition.
• Follow the NSTAR Gas motion for reconsideration regarding the denied rate base reset and its implications for future cost recovery.
• Monitor PURA's final decisions on CL&P's PBR reopener dockets and the initiation of proceedings related to securitization and renewable portfolio standard obligations.
• Track the separate prudency review for PSNH's unrecovered storm costs of $247 million.
• Evaluate the impact of the One Big Beautiful Bill Act (OBBBA) on future tax policy and clean energy incentives, especially for projects commencing after July 4, 2026.
• PSNH will have formulaic annual revenue adjustments on August 1st of 2026, 2027, and 2028, and is required to file its next base distribution rate case for effect in June 2029.
• NSTAR Electric's annual PBR Adjustment filing for a $55.1 million increase to base distribution rates is expected to be approved by December 31, 2025, for effect on January 1, 2026.

Key Dates

Recommendation

Eversource's core regulated utility businesses demonstrate solid performance, supported by approved rate increases and substantial capital investments in infrastructure, which are typically stable and predictable. The significant increase in operating cash flows and positive GAAP earnings growth are encouraging. However, the company faces material uncertainties and financial headwinds from its offshore wind divestiture, specifically the increased contingent liability for Revolution Wind, which has also led to a negative outlook revision from Fitch. The ongoing FERC ROE complaints and the recent adverse regulatory decision for NSTAR Gas add further regulatory risk. While the Aquarion sale provides a clear path to debt reduction, the overall picture is mixed. A 'hold' recommendation is appropriate as investors should monitor the resolution of these significant offshore wind and regulatory issues before making further investment decisions, balancing the strength of the core business against these considerable risks.

Keywords

Eversource Energy, Utility, Electric Distribution, Natural Gas Distribution, Electric Transmission, Water Distribution, SEC Filing, 10-Q, Quarterly Report, Earnings, EPS, Offshore Wind, Revolution Wind, South Fork Wind, Aquarion Sale, Regulatory Assets, Regulatory Liabilities, Rate Case, FERC ROE, Contingent Liability, Capital Expenditures, Connecticut Light and Power, NSTAR Electric, Public Service Company of New Hampshire, Yankee Gas, NSTAR Gas, Energy Efficiency, Environmental Liabilities, Credit Rating