10-K: Eversource Energy Navigates Offshore Wind Sale, Focuses on Core Utility Operations in 2024

Sentiment:

Annual Report (Form 10-K) 14 February 2025 2:26 PM

Eversource Energy reports a mixed year in 2024, marked by strategic shifts including the sale of offshore wind assets and a pending sale of its water business, alongside steady performance in its core utility segments.

Delay expectedThe purchase price reduction of approximately $150 million resulted from the delay of the commercial operations date of Revolution Wind.

Better than expectedThe company's net income rebounded to $811.7 million in 2024, a significant turnaround from the $442.2 million loss in 2023.Non-GAAP earnings, excluding losses from offshore wind and the pending Aquarion sale, reached $1.63 billion, or $4.57 per share, in 2024.

Summary

Eversource Energy reported net income of $811.7 million, or $2.27 per share, in 2024, a significant improvement from a net loss of $442.2 million, or $1.26 per share, in 2023.
2024 earnings were impacted by a $524.0 million after-tax loss on the sale of offshore wind investments and a $298.3 million after-tax loss on the pending sale of Aquarion.
Excluding these items, non-GAAP earnings for 2024 were $1.63 billion, or $4.57 per share, compared to $1.52 billion, or $4.34 per share, in 2023.
The company projects 2025 earnings per share to be in the range of $4.67 to $4.82 and a long-term EPS growth rate of 5% to 7% through 2029, using a 2024 non-GAAP EPS base of $4.57.
Eversource completed the sale of its offshore wind investments in the third quarter of 2024, resulting in adjusted gross proceeds of $745 million from the sale to GIP and $152 million from the sale to rsted.
A contingent liability of $365 million was recorded, reflecting estimated future obligations under the GIP sale terms.
A definitive agreement was reached to sell Aquarion for approximately $2.4 billion in cash, expected to close in late 2025.
Capital expenditures for 2024 totaled $4.48 billion, with projected capital expenditures of $24.17 billion from 2025 through 2029.
The company issued $4.50 billion of new long-term debt and repaid $1.95 billion of long-term debt in 2024.
Dividends paid in 2024 totaled $2.86 per common share, compared to $2.70 per common share in 2023.

Sentiment

Score: 7

Explanation: The sentiment is cautiously positive. While the company has shown improved earnings and is focusing on core operations, there are still risks and uncertainties related to regulatory matters and the completion of the Aquarion sale.

Positives

Significant rebound in net income in 2024 compared to 2023.
Strong non-GAAP earnings performance, indicating solid core business operations.
Projected long-term EPS growth rate of 5-7%.
Completion of offshore wind asset sales, generating significant proceeds.
Agreement to sell Aquarion, further streamlining the business.
Continued investment in infrastructure with $4.48 billion in capital expenditures in 2024.

Negatives

Losses on the sale of offshore wind investments negatively impacted 2024 earnings.
Loss on the pending sale of Aquarion also negatively impacted 2024 earnings.
Contingent liability of $365 million related to the offshore wind sale terms.

Risks

Uncertainty regarding the ultimate cost of construction and potential cost overruns for Revolution Wind.
Potential delays in the construction of Revolution Wind, impacting the economics of the purchase price adjustment.
Risk that Revolution Wind may not meet the qualifications for federal investment tax credits at the assumed value.
Challenges related to the regulatory environment in Connecticut.
Potential for adverse decisions in FERC ROE complaints.
Impacts of climate change, including severe storms, on facilities and operations.
Cybersecurity threats and attacks.
Limits on access to, or increases in, the cost of capital.

Future Outlook

Eversource projects 2025 earnings per share to be in the range of $4.67 to $4.82 and a long-term EPS growth rate of 5% to 7% through 2029, using a 2024 non-GAAP EPS base of $4.57.

Industry Context

The announcement reflects a broader trend in the utility industry of companies re-evaluating their investment strategies, particularly in renewable energy projects, to focus on core regulated operations and improve financial stability. The sale of offshore wind assets aligns with this trend, as companies seek to reduce risk and capital intensity.

Comparison to Industry Standards

Comparable companies like NextEra Energy (NEE) and Duke Energy (DUK) also operate regulated utilities and have made strategic decisions regarding renewable energy investments.
NextEra Energy, while heavily invested in renewables, maintains a strong focus on regulated operations through its Florida Power & Light subsidiary.
Duke Energy has also been divesting certain international assets to focus on its regulated utilities in the United States.
The projected long-term EPS growth rate of 5-7% is competitive with industry standards for regulated utilities, which typically offer stable but moderate growth.

Legal Proceedings

Four separate complaints were filed at the FERC by combinations of New England state attorneys general, state regulatory commissions, consumer advocates, consumer groups, municipal parties and other parties (collectively, the Complainants) challenging the NETOs' base ROE.

Related Party Transactions

Eversource made contributions to the Eversource Energy Foundation of $20.0 million in 2023, and $8.0 million in 2022.
There were intercompany loans from Eversource parent to CL&P of $280.0 million and to PSNH of $131.1 million as of December 31, 2024.

Stakeholder Impact

Shareholders will benefit from the increased focus on core utility operations and the projected long-term EPS growth.
Customers may see changes in rates as a result of regulatory proceedings and the implementation of new programs.
Employees may experience changes in job roles and skill requirements as the company transitions to new technologies and clean energy solutions.

Next Steps

Obtain regulatory approvals for the sale of Aquarion, expected to close in late 2025.
Continue construction and development of electric transmission and distribution projects.
Monitor and manage the contingent liability related to the offshore wind sale terms.
Address and resolve the pending FERC ROE complaints.
Implement the Electric Sector Modernization Plan (ESMP) in Massachusetts.

Key Dates

Date	Description
2005	NETOs' base ROE of 11.14 percent utilized since 2005.
October 1, 2011	First FERC ROE complaint filed.
December 27, 2012	Second FERC ROE complaint filed.
July 31, 2014	Third FERC ROE complaint filed.
April 29, 2016	Fourth FERC ROE complaint filed.
April 14, 2017	U.S. Court of Appeals vacates FERC's decision in the first complaint.
October 16, 2018	FERC issues an order on all four complaints describing how it intends to address the issues that were remanded by the Court.
November 21, 2019	FERC issues Opinion No. 569 affecting the two pending transmission ROE complaints against the Midcontinent ISO (MISO) transmission owners.
October 9, 2020	Eversource purchased the assets of Columbia Gas of Massachusetts (CMA).
October 7, 2020	EGMAs distribution rates were established in a DPU-approved rate settlement agreement.
November 1, 2020	NSTAR Gas distribution rates were established in an October 2020 DPU-approved rate case.
January 1, 2021	PSNH's distribution rates were established in a 2020 NHPUC-approved rate case settlement agreement.
May 26, 2021	PURA opened a proceeding to begin to evaluate and eventually implement performance-based regulation (PBR) for electric distribution companies.
August 9, 2022	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.
August 29, 2022	Aquarion Water Company of Connecticut (AWC-CT) filed an application with PURA to amend its existing rate schedules.
November 2022	NSTAR Electric distribution rates were established in a November 2022 DPU-approved rate case.
March 15, 2023	PURA issued a final decision that rejected AWC-CTs application with PURA.
May 25, 2023	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.
September 7, 2023	Eversource completed the sale of its 50 percent interest in an uncommitted lease area to rsted.
January 3, 2024	PURA issued a final decision regarding CL&Ps Advanced Metering Infrastructure (AMI) investment and implementation plan.
January 24, 2024	Eversource entered into an agreement with rsted to sell Eversources 50 percent share of Sunrise Wind.
March 25, 2024	The State of Connecticut Superior Court issued a decision on the appeal of AWC-CTs rate case.
March 28, 2024	PURA established a prudency review proceeding for the purpose of receiving and reviewing evidence of the costs reported by CL&P in response to catastrophic storms and pre-staging events.
April 18, 2024	Eversource and rsted executed an equity and asset purchase agreement.
June 11, 2024	PSNH filed an application with the NHPUC for approval of a temporary annual base distribution rate increase.
July 9, 2024	Eversource completed the sale of its 50 percent ownership share of Sunrise Wind to rsted.
July 31, 2024	PURA issued a final decision and increased AWC-CTs approved revenue requirement by $0.1 million above the amount authorized in the March 15, 2023 decision.
August 1, 2024	PSNH implemented a temporary annual base distribution rate increase of $61.2 million.
August 29, 2024	The DPU approved the overall ESMP for a five-year period commencing July 1, 2025.
September 30, 2024	Eversource completed the sale of its 50 percent ownership share in the South Fork Wind and Revolution Wind projects to GIP.
October 17, 2024	FERC issued an order on the remand of the MISO ROE proceedings.
November 12, 2024	Yankee Gas filed an application with PURA to amend its existing distribution rates for effect on November 1, 2025.
November 13, 2024	The NETOs filed a supplemental brief in their four pending ROE proceedings.
January 27, 2025	Eversource entered into a definitive agreement to sell Aquarion.
February 4, 2025	The MISO transmission owners submitted a petition for review with the Court requesting review of the October 17, 2024 MISO ROE order on remand and a December 19, 2024 notice of denial of rehearing.

Keywords

Eversource Energy, offshore wind, Aquarion, financial results, capital expenditures, regulatory, earnings, dividends, transmission, distribution, utilities

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