10-Q: Eversource Q2 Earnings Rise, Aquarion Sale Progresses

Eversource Energy reports increased Q2 2025 earnings and reaffirms full-year guidance, driven by regulated utility growth and progress on the Aquarion water business sale.

Summary

• Net Income Attributable to Common Shareholders for Q2 2025 was $352.7 million ($0.96 per share), up from $335.3 million ($0.95 per share) in Q2 2024.
• For the first half of 2025, Net Income Attributable to Common Shareholders reached $903.5 million ($2.45 per share), compared to $857.2 million ($2.43 per share) in the first half of 2024.
• The 2025 earnings guidance range of $4.67 to $4.82 per share was reaffirmed, along with a long-term EPS growth rate of 5% to 7% through 2029, using a 2024 non-GAAP EPS base of $4.57 per share.
• Operating cash flows provided $2.10 billion in the first half of 2025, a significant increase from $962.0 million in the first half of 2024.
• Investments in property, plant, and equipment totaled $2.05 billion in the first half of 2025, a decrease from $2.22 billion in the first half of 2024.
• Cash and Cash Equivalents stood at $343.7 million as of June 30, 2025, up from $26.7 million at December 31, 2024.
• The company issued $1.73 billion in new long-term debt and repaid $375 million of long-term debt in the first half of 2025.
• A definitive agreement was signed on January 27, 2025, to sell the Aquarion water distribution business for approximately $2.4 billion in cash, expected to close in late 2025, with proceeds intended for debt reduction.
• The NHPUC approved a permanent rate increase of $100.7 million for Public Service Company of New Hampshire (PSNH), effective August 1, 2025, and an alternative regulatory framework for future annual revenue adjustments.
• Connecticut enacted Public Act No. 25-173 on July 1, 2025, aiming to reduce electric rates by up to $300 million over two years and authorizing securitization of storm-related expenses and advanced metering infrastructure (AMI) investments.

Sentiment

Score: 7

Explanation: The company reported solid earnings growth and reaffirmed its financial guidance, indicating stability and predictable performance in its regulated utility segments. Strong operating cash flow and successful debt issuances demonstrate financial health. The strategic sale of the Aquarion business is a positive step for debt reduction. However, persistent regulatory challenges (FERC ROE complaints) and the contingent liability related to offshore wind projects introduce notable uncertainties and potential future financial impacts. The credit rating downgrade for CL&P, while outlook is stable, is a minor negative.

Positives

• Net Income Attributable to Common Shareholders increased by $17.4 million in Q2 2025 and $46.3 million in H1 2025 compared to the prior year periods.
• Operating cash flows significantly improved to $2.10 billion in H1 2025, driven by favorable regulatory recoveries and timing of collections.
• Reaffirmed 2025 EPS guidance and long-term EPS growth rate of 5-7% through 2029, signaling stable future performance.
• The pending sale of the Aquarion water distribution business for $2.4 billion is expected to reduce Eversource parent debt.
• PSNH received approval for a permanent rate increase of $100.7 million and an alternative regulatory framework allowing annual revenue adjustments.
• Connecticut's new Public Act No. 25-173 authorizes securitization of storm-related expenses and AMI investments, mitigating short-term rate impacts for customers and ensuring cost recovery for the utility.
• Electric transmission segment earnings increased due to continued investment in infrastructure and lower interest expense.
• Natural gas distribution segment earnings grew due to base distribution rate increases and capital tracking mechanisms.
• Water distribution segment earnings increased due to a revenue adjustment mechanism and lower interest expense.
• Successful issuance of $1.73 billion in new long-term debt, demonstrating access to capital markets.

Negatives

• Higher shares outstanding resulted in EPS dilution of $0.04 in Q2 2025 and $0.11 in H1 2025.
• Losses in the Eversource Parent and Other Companies segment increased by $28.0 million in Q2 2025 and $68.2 million in H1 2025, primarily due to higher interest expense and the absence of capitalized interest from offshore wind projects.
• Moody's revised The Connecticut Light and Power Company's (CL&P) corporate credit rating from A3 to Baa1 and its senior secured debt credit rating from A1 to A2, citing the Connecticut regulatory environment.
• A contingent liability of $296 million remains as of June 30, 2025, related to the Revolution Wind offshore wind project, with potential for additional losses due to construction cost overruns or lower investment tax credit values.
• A $69 million construction cost post-close purchase price adjustment payment related to the South Fork Wind project was made in June 2025, with a significant portion disputed.
• The FERC ROE complaints remain unresolved, with significant uncertainty regarding their ultimate financial impact, and the company cannot reasonably estimate a potential range of loss beyond the recorded reserve.
• Connecticut's new Public Act No. 25-173 aims to reduce electric rates for retail customers by up to $300 million over two years, which may impact future rate design and recovery mechanisms.

Risks

• Cyberattacks or breaches that could compromise proprietary information and personal data of customers.
• Uncertainty in qualifying for investment tax credits and investment tax credit adders.
• Variability in costs and final investment returns of the Revolution Wind offshore wind project, including potential for incremental capital expenditure overruns beyond the $240 million cap and the eligibility/value of federal investment tax credits.
• Disruptions in capital markets or other events that could make access to necessary capital more difficult or costly.
• Changes in economic conditions, including impacts on interest rates, tax policies, tariffs, and customer demand and payment ability.
• Ability or inability to commence and complete major strategic development projects and opportunities.
• Acts of war or terrorism, physical attacks, or grid disturbances that may damage and disrupt electric transmission and distribution systems.
• Actions or inaction of local, state, and federal regulatory, public policy, and taxing bodies, including potential adverse regulatory decisions.
• Substandard performance of third-party suppliers and service providers.
• Fluctuations in weather patterns, including extreme weather due to climate change, affecting energy usage and water consumption.
• Changes in business conditions, including disruptive technology or development of alternative energy sources.
• Contamination of, or disruption in, water supplies for the Aquarion business (pending sale).
• Changes in levels or timing of capital expenditures.
• Changes in laws, regulations, Presidential executive orders, or regulatory policy, including compliance with environmental laws.
• Changes in accounting standards and financial reporting regulations.
• Actions of rating agencies, such as credit rating downgrades, which could increase borrowing costs.
• The resolution of FERC ROE complaints could have a material impact on financial condition, results of operations, and cash flows, with a 10 basis point change to the base ROE impacting future annual after-tax earnings by approximately $6 million per year.

Future Outlook

Eversource reaffirmed its 2025 earnings guidance range of $4.67 to $4.82 per share and its long-term EPS growth rate of 5% to 7% through 2029, using a 2024 non-GAAP EPS base of $4.57 per share. The company expects its future operating cash flows, existing borrowing availability, and access to debt and equity markets to be sufficient to meet working capital, future operating requirements, and capital investment opportunities. The sale of the Aquarion water distribution business is anticipated to close in late 2025, with net proceeds earmarked for parent debt reduction. Regulatory proceedings are ongoing for various rate cases and performance-based regulation frameworks, with decisions expected in 2025 and implementation extending into future years. The Greater Cambridge Energy Program is projected to have an initial in-service date in June 2029, with full completion by 2031. The company is evaluating the impacts of the recently enacted One Big Beautiful Bill Act on its financial statements, particularly regarding tax policy and clean energy tax incentives.

Management Comments

• Reaffirmed projection to earn within a 2025 earnings guidance range of between $4.67 per share and $4.82 per share.
• Reaffirmed projection that 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.
• 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.
• Although we cannot predict the ultimate outcome of this matter, we continue to believe these deferred storm restoration costs were prudently incurred and are probable of recovery.
• Given the significant uncertainty regarding the applicability of the FERC order in the MISO transmission owners two complaint cases to the NETOs pending four complaint cases due to the complex differences between the cases, Eversource concluded that there is no reasonable basis for a change to the reserve or recognized ROEs for any of the complaints or subsequent periods at this time and Eversource cannot reasonably estimate any potential range of loss for any of the four complaint proceedings at this time.
• The Company has factored known cost overruns into the existing liability estimate. Based on the status of construction and latest cost projections, management has determined that the information currently available does not necessitate a change to the Company's existing liability estimate.
• The Company believes it is reasonably possible that there could be an additional loss in excess of the liability recorded, but management cannot reasonably estimate a range of loss beyond the amount recorded at this time.
• Do not anticipate any significant impact to our operating revenues or earnings as a result of the Act's enactment (Connecticut Public Act No. 25-173).

Industry Context

The utility sector is characterized by its capital-intensive nature and reliance on rate regulation for cost recovery and return on investment. Eversource's performance, driven by its regulated electric, natural gas, and water distribution and transmission segments, aligns with the industry's focus on infrastructure modernization, reliability enhancements, and resilience against extreme weather. The company's strategic divestiture of the Aquarion water business reflects a potential trend among diversified utilities to streamline portfolios and focus on core energy delivery. Ongoing regulatory proceedings, such as the FERC ROE complaints and state-level rate cases, are typical for the industry, highlighting the continuous interplay between utilities and regulatory bodies in setting rates and ensuring cost recovery. Investments in clean energy initiatives and grid modernization, like the Greater Cambridge Energy Program, are consistent with broader industry efforts towards decarbonization and electrification goals.

Comparison to Industry Standards

• The company's chief operating decision maker uses net income of each reportable segment to evaluate return generated from assets and decide how to reinvest profits and allocate resources, to monitor budget-to-actual results, in the planning and forecasting process, in determining compensation achievement, and in benchmarking to Eversource's peers.
• The FERC ROE complaints reference 'Midcontinent ISO (MISO) transmission owners' as a comparable group for regulatory decisions, but the filing explicitly states that the MISO case's reasoning and methodologies cannot be directly applied due to 'entirely different set of facts' and legal standards.
• The authorized regulatory ROE for PSNH of 9.5% with a 50% common equity ratio is within the typical range for regulated utilities, which often falls between 9% and 10.5%, depending on the specific jurisdiction and prevailing economic conditions.
• The Greater Cambridge Energy Program, with an estimated total cost of approximately $1.84 billion, represents a significant infrastructure investment comparable in scale to major urban utility modernization projects undertaken by other large utilities to enhance grid resiliency and support clean energy transitions.

Legal Proceedings

• FERC ROE Complaints: Four separate complaints filed by various New England parties challenging the New England Transmission Owners' (NETOs) base Return on Equity (ROE). The first three complaints (filed Oct 1, 2011; Dec 27, 2012; Jul 31, 2014) challenged an 11.14% base ROE. The fourth complaint (filed Apr 29, 2016) challenged a 10.57% base ROE and an 11.74% incentive cap. A FERC order (Oct 16, 2014) setting the base ROE at 10.57% and incentive cap at 11.74% for the first period was later vacated (Apr 14, 2017). Eversource has refunded $38.9 million (pre-tax, excluding interest) for the first complaint period and recorded a $39.1 million reserve for the second period. Ongoing proceedings, including appeals and remands related to Midcontinent ISO (MISO) ROE cases, continue to create significant uncertainty regarding the applicability of new methodologies to the NETOs' cases. Eversource cannot reasonably estimate a potential range of loss beyond the recorded reserve, but a 10 basis point change to the base ROE would impact after-tax earnings by approximately $3 million for each 15-month complaint period and approximately $6 million annually going forward.
• CL&P Storm Filings: PURA established a prudency review proceeding (Mar 28, 2024) for approximately $634 million in storm costs incurred between January 1, 2018, and December 31, 2021. CL&P filed supplements for an additional $173 million (Jan 1, 2022 Jan 31, 2023) on December 31, 2024, and $171 million (Feb 1, 2023 Dec 31, 2023) on July 10, 2025. A third supplement was filed on July 25, 2025, for $246 million in carrying charges on deferred storm costs. The company believes these costs were prudently incurred and are probable of recovery, with briefs due in Q1 2026.
• Aquarion Water Company of Connecticut (AWC-CT) Distribution Rate Case Appeal: AWC-CT appealed PURA's decision (Mar 15, 2023) that rejected rate increases and ordered a $4.0 million revenue decrease. The Connecticut Superior Court's decision (Mar 25, 2024) was partially remanded, and AWC-CT appealed to the Connecticut Supreme Court. The Connecticut Supreme Court's decision (July 9, 2025) overturned PURA's disallowance of $1.5 million in water conservation program expenses but affirmed other parts, with no financial impact on Eversource's statements. The decision also validated the prudence standard for cost recovery.
• PFAS Settlements: Aquarion opted into class-action settlements with 3M Company, E.I. DuPont de Nemours and Company, Tyco Fire Products LP, and BASF Corporation for PFAS contamination. Aquarion received $3.2 million in proceeds in Q2 2025, which will be used to fund capital expenditures. The final total recovery and specific schedules for all defendants are unknown.

Related Party Transactions

• Eversource Energy holds all of the common stock of its wholly-owned regulated utility subsidiaries: The Connecticut Light and Power Company (CL&P), NSTAR Electric Company, and Public Service Company of New Hampshire (PSNH).
• Intercompany transactions between Eversource parent and its subsidiaries are eliminated in consolidation.
• Eversource parent provides loans to its subsidiaries, such as PSNH and CL&P, to meet short-term borrowing needs, charging interest at the same weighted-average interest rate as its commercial paper program.
• Yankee Gas, NSTAR Gas, and Eversource Gas Company of Massachusetts (EGMA) purchase natural gas transmission services from an Enbridge, Inc. natural gas pipeline project, in which Eversource has an equity ownership interest. These affiliate transaction costs total $77.7 million annually.
• Eversource's electric transmission revenues are derived from ISO-NE regional transmission charges to the distribution businesses of CL&P, NSTAR Electric, and PSNH, which are eliminated in consolidation.

Stakeholder Impact

• Shareholders: Benefited from increased earnings and reaffirmed financial guidance, indicating stable performance. The ATM equity offering could lead to some dilution, but the Aquarion sale proceeds are intended for debt reduction, which could be positive for financial health.
• Customers: Will experience increased rates due to approved base distribution rate increases for PSNH, NSTAR Electric, NSTAR Gas, and EGMA. However, Connecticut's new Public Act No. 25-173 aims to reduce electric rates for retail customers by up to $300 million over two years and allows for securitization of certain costs, potentially mitigating short-term bill impacts.
• Employees: The establishment of a Cash Balance Pension Plan effective January 1, 2025, replacing K-Vantage contributions for most employees, represents a change in employee benefits.
• Creditors: The issuance of $1.73 billion in new long-term debt and the planned use of Aquarion sale proceeds for debt reduction impact the company's debt profile. Moody's revision of CL&P's credit rating from A3 to Baa1 (though with a stable outlook) is a relevant factor for creditors.
• Suppliers and Contractors: Continued significant capital expenditures, totaling $2.05 billion in the first half of 2025, for infrastructure improvements provide ongoing business opportunities. However, the contingent liability and potential cost overruns related to the Revolution Wind project could affect contractors involved.

Next Steps

• PSNH to file recoupment calculation with the NHPUC by August 11, 2025.
• Initial briefs for the MISO ROE appeal are due August 14, 2025, with final briefs due January 26, 2026.
• PURA is expected to issue a final decision on the Yankee Gas Distribution Rate Case in October 2025.
• DPU approval is expected by October 31, 2025, for NSTAR Gas's annual PBR Adjustment filing.
• CL&P will submit an Interim Performance Mechanism Filing with PURA by November 1, 2025.
• Final decisions on CL&P's PBR reopener dockets are expected in 2025.
• The sale of the Aquarion water distribution business is expected to close in late 2025.
• Additional required environmental permits for the Greater Cambridge Energy Program are expected by the end of 2025.
• A MA DEP license for the Greater Cambridge Energy Program is expected by the end of Q2 2026.
• Results of CL&P's scorecards and reported metrics are proposed to be reported annually beginning March 1, 2026.
• NSTAR Gas is scheduled to begin recovering the remaining 2025 GSEP revenue requirement on May 1, 2026.
• PSNH's alternative regulatory framework authorizes annual revenue adjustments on August 1st of 2026, 2027, and 2028.
• Revolution Wind purchase price adjustment payments are expected to be completed no later than late 2026.
• PSNH is required to file for its next base distribution rate increase for effect in June 2029.
• The initial in-service date for the Greater Cambridge Energy Program is June 2029, with remaining circuits placed in-service throughout 2030 and into 2031.
• Aquarion anticipates receiving PFAS settlement recovery from 3M Company over the next nine years and from E.I. DuPont de Nemours and Company over the next two years.

Key Dates

Recommendation

Eversource's Q2 2025 results show consistent performance within its regulated utility segments, supported by rate increases and ongoing infrastructure investments. The reaffirmation of 2025 EPS guidance and long-term growth targets provides a degree of predictability and stability, which is attractive for income-focused investors. The planned sale of the Aquarion water business is a positive step towards debt reduction and streamlining the portfolio. However, the unresolved FERC ROE complaints and the significant contingent liability associated with the Revolution Wind project introduce material uncertainties and potential downside risks that warrant caution. The recent credit rating downgrade for CL&P, while outlook is stable, also adds a layer of concern. Given the balance of stable regulated earnings growth against these notable regulatory and project-specific risks, a 'Hold' recommendation is appropriate, suggesting investors monitor developments closely before making further commitments.

Keywords

Utility, Electric Distribution, Natural Gas Distribution, Electric Transmission, Water Distribution, SEC Filing, 10-Q, Earnings, Revenue, Capital Expenditures, Regulatory, Rate Case, Connecticut, Massachusetts, New Hampshire, Offshore Wind, Aquarion, FERC, ROE, Infrastructure, Cash Flow, Debt Management