Release Date: August 01, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Eversource Energy (ES, Financial) successfully closed the sale of the Sunrise Wind project to Ørsted and anticipates closing the sale of South Fork and Revolution Wind projects to Global Infrastructure Partners in Q3 2024.
- The company is focusing on being a pure-play regulated utility with significant low-risk regulated growth opportunities.
- Eversource Energy (ES) is planning nearly $6 billion in transmission investments over the next five years, the largest program in the company's history.
- The Massachusetts AMI program is progressing well, with smart meter installation expected to begin in Q3 2025.
- Eversource Energy (ES) reaffirmed its 2024 EPS guidance range of $4.50 to $4.67 and its longer-term 5% to 7% EPS growth rate.
Negative Points
- Eversource Energy (ES) reported a decrease in electric distribution earnings due to higher O&M expenses and storm restoration costs.
- The company faces regulatory uncertainty in Connecticut, impacting its ability to make investments, particularly in AMI.
- Higher interest expenses negatively impacted the earnings of Eversource parent and other companies.
- The sale of Aquarion Water Company is still in the initial phase, with completion expected by the end of 2025.
- The company anticipates equity needs of up to $1.3 billion over the next several years, which could dilute existing shareholders.
Q & A Highlights
Q: Just maybe starting with Connecticut, I mean, some constructive outcomes on the EV side. Sounds like the governor brought everyone together there. You're still kind of working through how to recover and why are these the kind of green shoots in your view? Could we see some of that 500 million in capital allocated elsewhere or flow back into the state?
A: Yes. Well, thank you. I as you know, I am committed to folks that we will work diligently on our relationships in Connecticut. This is one of the one of the areas of focus. As you know, we talked about our exit from wind. I think you're seeing that was successfully executing that strategy working on Connecticut, the sale of Aquarion Neil, with regard to Connecticut, and I wish I could say that I had a high degree of comfort right now. The jury is still out. We are grateful for Governor Lamont leadership that he's done a good job and we'll continue to work at that. You have my commitment that I will continue to work on that relationship so that we get a stable regulatory environment for us to make any investments down there, especially on AMI. because I got to tell you what's taking place in the energy markets, AMI. today is more important than ever that we have a system that allows customers to make informed decisions around their use of energy. I think it shows what took place in the PJM markets. And this is the type of technologies that we're going to need to deploy in our states in order to allow our customers to make those decisions around spending and spending their dollars on energy.
Q: And sorry, just the pure size of some noise there, like is three the magic number or can we see the governor sort of expand to five?
A: Yes, showing also the governor is now at four, but will go down to three in January. I think the governor is committed. I mean, I certainly any discussions I've had with him, he wants to strike a balance, and that's what he's told me that he wants to strike a balance in Connecticut. So yes, he may go to five. I think he is going to continue to work at it. It's a work in progress to make sure that you bring stability and regulatory certainty to the state of Connecticut but again, you know, it's we're taking a wait-and-see approach.
Q: Just wanted to go back to the FFO-to-debt slide, if I could just want to make sure that I have seen that right specifically on the under-recoveries in the bridge, it will take the $600 million of which it twice. So just wanted to kind of clarify what's happening there?
A: Well, the six, if you look at the table, Jeremy, the way this was designed is to is to highlight where it'll end up in the FFO-to-debt calculation. So the $600 million will be impact and the enhanced numerator of the of the math there and the 2.6 will offset debt. So so that's that was the purpose of this of that table in there so sorry for that on and any confusion. But that was the kind of the design. I'm going to keep in mind that that Jeremy, just I think it's important to keep in mind that these numbers only reflect 24 and 25. Obviously, there's certain recoveries that will continue well beyond 25.
Q: Just wanted to go back to the offshore wind, but tail timing, could you just update us there on, I guess when everything was closed and I guess the time line shifted a little bit. Just wondering if there's anything to note there.
A: Well, Jeremy, I know the time line has not shifted. We were we were all our guidance that this potentially will close late Q2 to early Q2, the rate and what we've said is we've already closed Sunrise when we did that on July ninth, and we expect to close on the GIA. deal in this quarter.
Q: Just follow up on Jeremy's question on the offshore wind. Just the can you just maybe give us a state of the construction status on resolution where you stand on on those costs and capital expenditures? And then just how much does Eversource actually incur an offshore wind CapEx for this year before you sell the assets to GIT.? Thank you.
A: Well, I would say the product, the construction activity is progressing very, very well well. And as of a week ago when we connected with us that the monopiles are the foundations, the probably at 50% installed, which is a remarkable on task, knowing that we had a time of year restrictions from a capital deployment standpoint, Jeremy, obviously that is sensitive information that June I'm sorry, Nick, as you know, we haven't really disclosed that, but.
Q: Wanted to circle back on the FFO-to-debt enhancement slide. I was just a wondering if like, have there been any changes in the underlying enhancements there or is this mostly just pulling in some of the known items and breaking them out more specifically here or has yet changed to the upside or downside on?
A: Yes, these are the major, I would say headlines, right. However, you know, things always some change. One of the items that's not included in this slide that has material materially developed is on some of the tax benefits that we've been able to harvest has generated some cash refunds so that on the 2024 alone, we had an influx of tax refunds was about 120 million.
Q: How do you think about the green shoots in Connecticut? I want to talk a little bit more on that thesis for a quick second. I suppose of the Yankee Gas filing at some point here, maybe late this year in December. How do you think about that foreshadowing? Any elements of that, call it, 4Q 25 CLP. case, anything that you'd be watching any items there again, I guess electric versus gas, but curious on that front and the related and any any items that I'll be watching on the PBR front, right. Given that that's been kicked out here a little bit on your presumably a year or so. How do you think about the idea that you'd be looking there for those presumed green shoots as well. So thank you guys, very much. Nice suggest.
A: Yes, well, listen, I just will tell you that we have been spending a lot of time, significant outreach to over 100 communities that we serve there. We've spent a lot of time down there. We continue to work at. I think it's important and I think folks are beginning to understand just the type of impact Eversource has in Connecticut. I mean, we employ over 5,000 people in that state deal with 3.8 million in taxes and our reliability numbers are extraordinary know when we first did that merger deal, our months between interruptions was in 12
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
