NSARO.OIDNstar Electric CO
10-Q: Eversource Energy Reports First Quarter 2024 Results, Reaffirms Guidance
Sentiment:
Quarterly Report
Eversource Energy announced its first quarter 2024 financial results, reporting earnings of $1.49 per share and reaffirming its full-year earnings guidance and long-term growth rate.
Capital raiseEversource issued 1,292,892 common shares in the first quarter of 2024, resulting in proceeds of $75.4 million, net of issuance costs.Eversource parent has a $2.00 billion commercial paper program allowing Eversource parent to issue commercial paper as a form of short-term debt.NSTAR Electric has a $650 million commercial paper program allowing NSTAR Electric to issue commercial paper as a form of short-term debt.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.
Summary
- Eversource Energy reported net income attributable to common shareholders of $521.8 million, or $1.49 per share, for the first quarter of 2024, compared to $491.2 million, or $1.41 per share, for the same period in 2023.
- The company reaffirmed its 2024 non-GAAP earnings guidance range of $4.50 to $4.67 per share, excluding the impact of expected offshore wind asset sales and related transaction costs.
- Eversource also reaffirmed its long-term EPS growth rate projection of 5 to 7 percent through 2028.
- Cash flows from operating activities were $291.3 million, up from $69.2 million in the first quarter of 2023.
- Investments in property, plant, and equipment totaled $1.15 billion, compared to $977.1 million in the prior year's quarter.
- The company issued $1.35 billion in new long-term debt during the quarter.
- Eversource is progressing with the planned sale of its offshore wind investments, with agreements in place to sell its interests in the South Fork Wind, Revolution Wind, and Sunrise Wind projects.
- The sale of its 50 percent interest in an uncommitted lease area to rsted was completed in September 2023 for $625 million.
- The company expects to receive approximately $1.1 billion from the sale of South Fork Wind and Revolution Wind to Global Infrastructure Partners (GIP).
- Eversource and rsted executed an agreement to sell Eversource's 50 percent interest in Sunrise Wind to rsted, with the sale expected to be completed later this year.
- The company is also conducting an exploratory assessment of a potential sale of its water distribution business.
Sentiment
Score: 7
Explanation: The sentiment is moderately positive. While revenue is down, earnings are up, and the company is executing a strategic shift to de-risk its portfolio. The reaffirmation of guidance provides stability.
Positives
- Earnings per share increased from $1.41 to $1.49 year-over-year.
- Cash flows from operating activities significantly improved.
- The company is progressing with the sale of its offshore wind assets, which is expected to generate significant cash proceeds.
- The company reaffirmed its earnings guidance and long-term growth rate projection.
Negatives
- Operating revenues decreased from $3,795.6 million to $3,332.6 million year-over-year.
- Eversource parent and other companies losses increased $17.8 million in the first quarter of 2024, as compared to the first quarter of 2023, due primarily to higher interest expense and the absence of a benefit in the first quarter of 2023 from the liquidation of Eversource parents equity method investment in a renewable energy fund, partially offset by the absence of a charitable contribution made with a portion of the proceeds from the liquidation in the first quarter of 2023.
Risks
- The company's ability to complete the offshore wind investments sales process on the timelines, terms and pricing it expects is subject to various closing conditions and regulatory approvals.
- Variability in the projected construction costs of the offshore wind projects could impact the economics of the sales.
- Delays in constructing Revolution Wind could impact the economics associated with the purchase price adjustment.
- The company is subject to risks related to cyberattacks, economic conditions, regulatory actions, weather patterns, and other unforeseen factors.
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 percent through 2028.
Industry Context
The announcement reflects a strategic shift in Eversource's focus, moving away from direct ownership of offshore wind projects towards a regulated utility model. This aligns with a broader industry trend of utilities de-risking their portfolios and focusing on core operations.
Comparison to Industry Standards
- Comparing Eversource's Q1 2024 EPS of $1.49 to peers like NextEra Energy (NEE) and Duke Energy (DUK) provides a benchmark for performance within the utility sector.
- The reaffirmed long-term EPS growth rate of 5-7% is a key metric for investors, and comparing this to the projected growth rates of similar utilities helps assess Eversource's competitive positioning.
- The strategic decision to sell offshore wind assets mirrors moves by other utilities to reduce exposure to development risks and focus on regulated earnings, such as Ørsted's (ORSTED.CO) recent restructuring.
Legal Proceedings
- The Yankee Companies have filed complaints against the DOE in the Court of Federal Claims seeking monetary damages resulting from the DOE's failure to accept delivery of, and provide for a permanent facility to store, spent nuclear fuel pursuant to the terms of the 1983 spent fuel and high-level waste disposal contracts between the Yankee Companies and the DOE.
- 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).
Stakeholder Impact
- Customers will see changes in their rates due to the base distribution rate increase at NSTAR Electric and the rate adjustments at CL&P.
- Shareholders will benefit from the company's strategic shift and reaffirmed earnings guidance.
- Employees may be affected by the company's restructuring and asset sales.
Next Steps
- Complete the sale of offshore wind assets.
- Obtain regulatory approvals for the sale of South Fork Wind and Revolution Wind to GIP.
- Finalize the OREC contract with NYSERDA for Sunrise Wind.
- Continue construction of Revolution Wind and Sunrise Wind projects.
- Obtain BOEM final approval of the Sunrise Wind Construction and Operations Plan (COP).
- Address the Courts findings on the remand of the MISO FERC opinions or any potential associated impact on the NETOs four pending ROE complaint cases.
- Continue to monitor developments in the PBR proceeding, and at this time, we cannot predict the ultimate outcome of this proceeding and the resulting impact to CL&P.
- Continue to monitor developments in the PURA proceeding, and at this time, we cannot predict the ultimate outcome of this proceeding and the resulting impact to CL&P.
- Continue to monitor developments in the FERC Notice of Proposed Rulemaking on Transmission Incentives, and at this time, Eversource cannot predict the ultimate outcome of these proceedings, including possible appellate review, and the resulting impact on its transmission incentives.
Key Dates
| Date | Description |
|---|---|
| 2005 | NETOs' base ROE of 11.14 percent that had been utilized since 2005 |
| 2011-10-01 | First FERC ROE complaint filed |
| 2012-12-27 | Second FERC ROE complaint filed |
| 2014-07-31 | Third FERC ROE complaint filed |
| 2014-10-16 | FERC issued Opinion No. 531-A, setting base ROE at 10.57 percent and incentive cap at 11.74 percent for the first complaint period |
| 2016-04-29 | Fourth FERC ROE complaint filed |
| 2017-04-14 | FERC order vacated by U.S. Court of Appeals for the D.C. Circuit |
| 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 |
| 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. |
| 2020-07-01 | Eversource filed comments generally supporting the NOPR. |
| 2020-07-31 | CL&P submitted to PURA its proposed $512 million Advanced Metering Infrastructure (AMI) investment and implementation plan. |
| 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. |
| 2021-04-15 | FERC issued a Supplemental NOPR that proposes to eliminate the existing 50 basis point return on equity for utilities that have been participating in a regional transmission organization (RTO ROE incentive) for more than three years. |
| 2021-05-26 | PURA opened a proceeding to begin to evaluate and eventually implement performance-based regulation (PBR) for electric distribution companies. |
| 2021-06-25 | The NETOs jointly filed comments strongly opposing FERCs proposal. |
| 2021-07-26 | The NETOs filed Supplemental NOPR reply comments responding to various parties advocating for the elimination of the RTO Adder. |
| 2021-08-17 | PURA issued a Notice of Request for an Amended EDC Advanced Metering Infrastructure Proposal. |
| 2021-11-08 | CL&P submitted an Amended Proposal in response to this request with an updated schedule for the years 2022 through 2028, which included additional information as required by PURA. |
| 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. |
| 2022-08-09 | 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. |
| 2022-12-16 | For the Sunrise Wind project, BOEM released its Draft EIS |
| 2023-01-25 | PURA staff issued a proposal outlining a suggested portfolio of PBR elements for further exploration and potential implementation in the second phase of the proceeding. |
| 2023-03-15 | PURA issued a final decision that rejected this request. In this decision, PURA ordered a decrease to total authorized revenues of $4.0 million effective March 15, 2023. |
| 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. |
| 2023-04-05 | The Court temporarily granted AWC-CTs request to stay |
| 2023-04-26 | PURA issued a final decision on the first phase and identified various objectives to guide PBR development and evaluate adoption of a PBR framework. |
| 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. |
| 2023-05-26 | the Court granted a permanent stay of certain orders affecting base rates, which will keep existing rates in place until the appeal is completed. |
| 2023-07-01 | Effective July 1, 2023, the average NBFMCC rate changed to $0.00000 per kWh. |
| 2023-09-07 | Eversource completed the sale of its 50 percent interest in an uncommitted lease area consisting of approximately 175,000 developable acres located 25 miles off the south coast of Massachusetts to rsted for $625 million in an all-cash transaction. |
| 2023-09-15 | NSTAR Gas submitted its third annual PBR Adjustment filing |
| 2023-10-30 | the DPU approved a $25.4 million increase to base distribution rates, of which, $15.5 million was associated with a base rate adjustment and the remainder for a prior period exogenous cost adjustment, for effect on November 1, 2023. |
| 2023-10-31 | For Revolution Wind, the joint venture made its final investment decision to advance to full onshore and offshore construction and installation |
| 2023-11-01 | NSTAR Gas base distribution rate increase effective |
| 2023-11-16 | PURA issued a straw proposal in the first reopener that focused on revenue adjustment mechanisms. |
| 2023-12-15 | For the Sunrise Wind project, BOEM released its Final EIS |
| 2023-12-22 | CL&P initiated a docket seeking a prudency review of approximately $634 million of catastrophic storm costs for twenty-four weather events from January 1, 2018 to December 31, 2021. |
| 2023-12-26 | the DPU approved a $104.9 million increase to base distribution rates effective January 1, 2024. |
| 2023-12-29 | Eversource and other LDCs sought formal clarity from the DPU to fully understand the resulting impact to their natural gas businesses and the associated timing of any impacts. |
| 2024-01-01 | Four of South Fork Winds twelve turbines were placed into service and met the project commercial operation date requirements under the power purchase agreement with LIPA. |
| 2024-01-01 | NSTAR Electric base distribution rate increase effective |
| 2024-01-03 | PURA issued a final decision regarding CL&Ps Advanced Metering Infrastructure investment and implementation plan |
| 2024-01-18 | CL&P submitted a motion for reconsideration to PURA asking that the agency modify these aspects of the decision |
| 2024-01-24 | rsted signed an agreement with Eversource to acquire Eversources 50 percent share of Sunrise Wind |
| 2024-01-25 | Sunrise Wind submitted a proposal in the New York fourth offshore wind solicitation |
| 2024-01-31 | Our Board of Trustees approved a common share dividend payment of $0.715 per share, paid on March 29, 2024 to shareholders of record as of March 5, 2024. |
| 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 announced that it executed an agreement to sell its existing 50 percent interests in the South Fork Wind and Revolution Wind projects to Global Infrastructure Partners (GIP). |
| 2024-02-14 | PURA denied CL&Ps motion for reconsideration |
| 2024-02-29 | Sunrise Wind was selected by NYSERDA for contract negotiation |
| 2024-03-01 | PURA declined CL&Ps request stating that a rate amendment should be conducted as part of a rate case. |
| 2024-03-05 | S&P revised the outlook from watch negative to negative for Eversource parent, CL&P, NSTAR Electric, and PSNH. |
| 2024-03-06 | CL&P filed written comments citing four major problems associated with PURAs guidelines for recovery of the costs of AMI implementation |
| 2024-03-13 | the court issued an order establishing a schedule to resolve pending discovery issues by June 10, 2024, after which the court will set dates for further proceedings in the DOE Phase V trial. |
| 2024-03-14 | PURA issued a straw proposal in the second reopener docket which concentrates on performance mechanisms in a PBR framework. |
| 2024-03-25 | the State of Connecticut Superior Court issued a decision on the appeal which dismissed nine, remanded back to PURA two, and partially remanded one of AWC-CTs twelve claims of error in its appeal. |
| 2024-03-26 | For Sunrise Wind, the joint venture made its final investment decision to proceed with the project. |
| 2024-03-28 | AWC-CT filed an appeal of the Connecticut Superior Court decision to the Connecticut Appellate Court and on April 8, 2024, requested the appeal move directly to the Connecticut Supreme Court for review. |
| 2024-03-28 | PURA established a 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 occurring between 2018 and 2021. |
| 2024-04-02 | the DPU issued an order responding to the request for clarification indicating that the LDCs shall implement the inclusion of a Non-Gas Pipeline Alternatives (NPA) analysis on all project authorizations effective immediately. |
| 2024-04-10 | the U.S. Environmental Protection Agency announced the final regulation setting drinking water standards for six perand polyfluoroalkyl substances (PFAS) compounds. |
| 2024-04-16 | PURA issued a procedural order directing Eversource and inviting all parties and intervenors to submit pre-filed testimony pertaining to AMI by May 14, 2024, and rebuttal testimony by May 29, 2024. |
| 2024-04-17 | PURA issued an interim decision in CL&Ps Rate Adjustment Mechanisms (RAM) filing and approved rates for the 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 |
| 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 | Our Board of Trustees approved a common share dividend payment of $0.715 per share, payable on June 28, 2024 to shareholders of record as of May 16, 2024. |
| 2024-05-14 | PURA will receive pre-filed testimony pertaining to AMI |
| 2024-05-29 | PURA will receive rebuttal testimony pertaining to AMI |
| 2024-06-10 | schedule to resolve pending discovery issues |
| 2024-07-31 | PURA's final decision is scheduled for July 31, 2024. |
| 2024-Q4 | A final decision is expected in the fourth quarter of 2024. |
| 2025 | final decisions expected in 2025 |
| 2025 | We expect the Revolution Wind project to be in-service in late 2025. |
| 2026 | For Sunrise Wind, based on the current expected timing of BOEMs final approval and the start of offshore construction, we currently expect an in-service date in 2026. |
Keywords
Eversource Energy, Financial Results, Offshore Wind, Earnings, Guidance, Debt, Capital Expenditures, Regulatory, Transmission, Distribution
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