10-Q: Eversource Q1 2026 Earnings and FERC ROE Update

Eversource Energy reported Q1 2026 net income of $606.8 million, impacted by a $60.4 million pre-tax charge related to a FERC ROE complaint decision.

Summary

• Reported Q1 2026 net income of $606.8 million ($1.61 per share) compared to $550.8 million ($1.50 per share) in Q1 2025.
• Results include a $43.9 million after-tax charge ($0.12 per share) due to a March 2026 FERC order on transmission ROE.
• Non-GAAP earnings for Q1 2026 were $650.7 million ($1.73 per share).
• Operating revenues increased to $4.50 billion from $4.12 billion in the prior year period.
• Revised 2026 non-GAAP earnings guidance to a range of $4.57 to $4.72 per share.

Sentiment

Score: 4

Explanation: StockSavvy.ai views this as cautious due to the material financial impact of the FERC ROE decision and ongoing regulatory/construction uncertainties.

Positives

• Strong operating cash flow of $1.32 billion for the first quarter of 2026.
• Successful issuance of $1.50 billion in new long-term debt during the quarter.
• Base distribution rate increases at NSTAR Electric and PSNH contributed to earnings growth.
• Natural gas distribution segment earnings increased by $76.9 million year-over-year.

Negatives

• FERC decision on ROE complaints resulted in a $60.4 million pre-tax charge and reduced future earnings expectations.
• Increased interest expense of $365.3 million compared to $300.8 million in Q1 2025.
• Higher operations and maintenance expenses across several segments.
• Significant uncertainty remains regarding the timing and consummation of the Aquarion sale.

Risks

• Potential for additional losses related to the FERC ROE complaint, with a reasonably possible pre-tax loss range up to $932 million.
• Construction cost overruns and delays associated with the Revolution Wind project.
• Regulatory and legal uncertainty regarding the sale of the Aquarion water business.
• Exposure to interest rate volatility and potential changes in capital market conditions.

Future Outlook

Eversource revised its 2026 non-GAAP earnings guidance to $4.57-$4.72 per share, reflecting the impact of the FERC ROE order and the potential Aquarion sale. The company targets a 5-7% long-term EPS growth rate through 2030.

Management Comments

• Management views the FERC ROE refund charge as not directly related to ongoing operations and not an indicator of baseline performance.
• Management believes the deferred storm restoration costs were prudently incurred and are probable of recovery.
• Management does not believe that refunds at the high end of the estimated range for the retroactive period are probable.

Industry Context

StockSavvy.ai notes that Eversource's regulatory challenges, particularly the FERC ROE decision, mirror broader industry pressures on utilities to balance infrastructure investment with affordability and regulatory scrutiny.

Comparison to Industry Standards

• The company's capital-intensive nature is consistent with major regulated utilities like Consolidated Edison and Duke Energy.
• The FERC ROE complaint proceedings are a recurring industry issue affecting New England Transmission Owners (NETOs) including National Grid and Avangrid.

Legal Proceedings

• Ongoing FERC ROE complaint proceedings.
• Appeals related to the Aquarion water business sale.
• DOE spent nuclear fuel litigation (Phase V and VI).

Related Party Transactions

• Intercompany loans from Eversource parent to subsidiaries.
• Affiliate transaction costs with Enbridge, Inc. natural gas pipeline.

Stakeholder Impact

• Shareholders face potential earnings volatility from FERC-related refund obligations.
• Customers in Massachusetts received winter bill relief credits.
• Aquarion customers may be impacted by the potential sale to AWA.

Next Steps

• Await FERC action on the Section 205 filing regarding the proposed 11.39% ROE.
• Continue legal challenges and rehearing requests regarding the March 19, 2026 FERC decision.
• Monitor progress of the Aquarion sale and potential appeals.
• Continue construction of the Greater Cambridge Energy Program.

Key Dates

Recommendation

The stock is a hold due to the regulatory overhang from the FERC ROE decision and the uncertainty surrounding the Aquarion divestiture, despite the company's solid long-term growth targets.

Keywords

Eversource, Utility, FERC, ROE, Transmission, Energy, 10-Q, Financial Results