ES母公司和其他公司由Eversource母公司、Eversource Service和其他子公司組成，主要包括我們的非受監管業務、HWP公司、The Rocky River Realty Company (一個房地產子公司)、CYAPC和YAEC的合併運營，以及Eversource母公司未合併的股權投資
中康和光電
康潤能源
NSTAR 電力
NSTAR電力公司
PSNH
新罕布什爾公用事業公司
PSNH 資金
PSNH 資金有限責任公司 3號，PSNH 的破產遠程、專用、全資子公司
NSTAR 燃氣
NSTAR Gas Company
EGMA
Eversource Gas Company of Massachusetts
Yankee Gas
Yankee Gas Services Company
Aquarion
Aquarion Company and its subsidiaries
HEEC
Harbor Electric Energy公司，NSTAR Electric的全資子公司
eversource服務
eversource energy服務公司
CYAPC
Connecticut Yankee Atomic Power Company
MYAPC
Maine Yankee Atomic Power Company
YAEC
Yankee Atomic Electric 公司
Yankee 公司
CYAPC、YAEC 和 MYAPC
受監管公司
Eversource 受監管公司包括 CL&P、NSTAR Electric 和 PSNH 的電力配電和變速器業務，Yankee Gas、NSTAR Gas 和 EGMA 的天然氣配送業務，Aquarion 的供水業務，以及 NSTAR Electric 的太陽能發電設施
監管機構和政府機構：
深水
康潤能源和環保部門
DOE
美國能源部
DOER
馬薩諸塞州能源部
DPU
馬薩諸塞州公用事業部
美國環保署（EPA）
能源
聯邦能源監管機構（FERC）
聯邦能源監管委員會
ISO-NE
新英格蘭獨立系統運營商ISO New England, Inc.
馬薩諸塞州環保局 MA DEP
馬薩諸塞州環境保護局 Massachusetts Department of Environmental Protection
新罕布什爾州公共事業委員會 NHPUC
新罕布什爾州公用事業委員會 New Hampshire Public Utilities Commission
Accounting principles generally accepted in the United States of America
GSEP
Gas System Enhancement Program
GWh
Gigawatt-Hours
IPP
Independent Power Producers
ISO-NE Tariff
ISO-NE FERC Transmission, Markets and Services Tariff
kV
Kilovolt
kVa
Kilovolt-ampere
kW
Kilowatt (equal to one thousand watts)
LNG
Liquefied natural gas
LPG
Liquefied petroleum gas
LRS
Supplier of last resort service
MG
Million gallons
MGP
Manufactured Gas Plant
MMBtu
Million British thermal units
MMcf
Million cubic feet
Moody's
Moody's Investors Services, Inc.
MW
Megawatt
MWh
Megawatt-Hours
NETOs
New England Transmission Owners (including Eversource, National Grid and Avangrid)
OCI
Other Comprehensive Income/(Loss)
PAM
Pension and PBOP Rate Adjustment Mechanism
PBOP
Postretirement Benefits Other Than Pension
PBOP Plan
Postretirement Benefits Other Than Pension Plan
Pension Plan
Single uniform noncontributory defined benefit retirement plan
PPA
Power purchase agreement
PPAM
Pole Plant Adjustment Mechanism
RECs
Renewable Energy Certificates
Regulatory ROE
The average cost of capital method for calculating the return on equity related to the distribution business segment excluding the wholesale transmission segment
ROE
Return on Equity
RRBs
Rate Reduction Bonds or Rate Reduction Certificates
RSUs
Restricted share units
S&P
Standard & Poor's Financial Services LLC
SERP
Supplemental Executive Retirement Plans and non-qualified defined benefit retirement plans
SS
Standard service
UI
The United Illuminating Company
VIE
Variable Interest Entity
ii
EVERSOURCE ENERGY AND SUBSIDIARIES
THE CONNECTICUT LIGHT AND POWER COMPANY
NSTAR ELECTRIC COMPANY AND SUBSIDIARY
PUBLIC SERVICE COMPANY OF NEW HAMPSHIRE AND SUBSIDIARIES
Preferred Stock Not Subject to Mandatory Redemption
43,000
43,000
Common Stockholder's Equity:
Common Stock
—
—
Capital Surplus, Paid In
3,388,842
3,013,842
Retained Earnings
2,993,371
3,136,612
Accumulated Other Comprehensive (Loss)/Income
(8)
44
Common Stockholder's Equity
6,382,205
6,150,498
Commitments and Contingencies (Note 9)
Total Liabilities and Capitalization
$
17,467,502
$
16,271,513
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
10
NSTAR ELECTRIC COMPANY AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
For the Three Months Ended September 30,
For the Nine Months Ended September 30,
(Thousands of Dollars)
2024
2023
2024
2023
Operating Revenues
$
1,077,523
$
953,531
$
2,870,206
$
2,728,782
Operating Expenses:
Purchased Power and Transmission
335,335
308,999
817,988
936,484
Operations and Maintenance
189,012
174,091
526,263
487,026
Depreciation
104,623
94,103
301,831
277,396
Amortization of Regulatory Assets/(Liabilities), Net
51,187
(6,462)
120,814
14,923
Energy Efficiency Programs
73,255
95,351
222,218
252,255
Taxes Other Than Income Taxes
74,758
68,449
205,818
188,191
Total Operating Expenses
828,170
734,531
2,194,932
2,156,275
Operating Income
249,353
219,000
675,274
572,507
Interest Expense
60,783
48,178
164,896
139,804
Other Income, Net
47,489
39,908
143,024
120,690
Income Before Income Tax Expense
236,059
210,730
653,402
553,393
Income Tax Expense
51,510
46,019
151,273
120,126
Net Income
$
184,549
$
164,711
$
502,129
$
433,267
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Unaudited)
For the Three Months Ended September 30,
For the Nine Months Ended September 30,
(Thousands of Dollars)
2024
2023
2024
2023
Net Income
$
184,549
$
164,711
$
502,129
$
433,267
Other Comprehensive Loss, Net of Tax:
Changes in Funded Status of SERP Benefit Plan
(23)
(35)
(67)
(100)
Qualified Cash Flow Hedging Instruments
5
5
15
15
Changes in Unrealized Gains on Marketable Securities
—
—
—
12
Other Comprehensive Loss, Net of Tax
(18)
(30)
(52)
(73)
Comprehensive Income
$
184,531
$
164,681
$
502,077
$
433,194
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
11
NSTAR ELECTRIC COMPANY AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF COMMON STOCKHOLDER'S EQUITY
(Unaudited)
For the Nine Months Ended September 30, 2024
Common Stock
Capital Surplus, Paid In
Retained Earnings
Accumulated Other Comprehensive Income/(Loss)
Total Common Stockholder's Equity
(Thousands of Dollars, Except Stock Information)
Stock
Amount
Balance as of January 1, 2024
200
$
—
$
3,013,842
$
3,136,612
$
44
$
6,150,498
Net Income
159,977
159,977
Dividends on Preferred Stock
(490)
(490)
Dividends on Common Stock
(96,700)
(96,700)
Capital Contributions from Eversource Parent
300,000
300,000
Other Comprehensive Loss
(16)
(16)
Balance as of March 31, 2024
200
—
3,313,842
3,199,399
28
6,513,269
Net Income
157,603
157,603
Dividends on Preferred Stock
(490)
(490)
Dividends on Common Stock
(297,200)
(297,200)
Other Comprehensive Loss
(18)
(18)
Balance as of June 30, 2024
200
—
3,313,842
3,059,312
10
6,373,164
Net Income
184,549
184,549
Dividends on Preferred Stock
(490)
(490)
Dividends on Common Stock
(250,000)
(250,000)
Capital Contributions from Eversource Parent
75,000
75,000
Other Comprehensive Loss
(18)
(18)
Balance as of September 30, 2024
200
$
—
$
3,388,842
$
2,993,371
$
(8)
$
6,382,205
For the Nine Months Ended September 30, 2023
Common Stock
Capital Surplus, Paid In
Retained Earnings
Accumulated Other Comprehensive Income
Total Common Stockholder's Equity
(Thousands of Dollars, Except Stock Information)
Stock
Amount
Balance as of January 1, 2023
200
$
—
$
2,778,942
$
2,921,444
$
284
$
5,700,670
Net Income
133,813
133,813
Dividends on Preferred Stock
(490)
(490)
Dividends on Common Stock
(327,400)
(327,400)
Capital Contributions from Eversource Parent
31,300
31,300
Other Comprehensive Loss
(16)
(16)
Balance as of March 31, 2023
200
—
2,810,242
2,727,367
268
5,537,877
Net Income
134,743
134,743
Dividends on Preferred Stock
(490)
(490)
Capital Contributions from Eversource Parent
81,000
81,000
Other Comprehensive Loss
(27)
(27)
Balance as of June 30, 2023
200
—
2,891,242
2,861,620
241
5,753,103
Net Income
164,711
164,711
Dividends on Preferred Stock
(490)
(490)
Capital Contributions from Eversource Parent
11,300
11,300
Other Comprehensive Loss
(30)
(30)
Balance as of September 30, 2023
200
$
—
$
2,902,542
$
3,025,841
$
211
$
5,928,594
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
12
NSTAR ELECTRIC COMPANY AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
For the Nine Months Ended September 30,
(Thousands of Dollars)
2024
2023
Operating Activities:
Net Income
$
502,129
$
433,267
Adjustments to Reconcile Net Income to Net Cash Flows Provided by Operating Activities:
Depreciation
301,831
277,396
Deferred Income Taxes
55,795
72,220
Uncollectible Expense
27,746
12,988
Pension, SERP and PBOP Income, Net
(27,053)
(31,007)
Regulatory Under Recoveries, Net
(155,869)
(103,903)
Amortization of Regulatory Assets, Net
120,814
14,923
Cost of Removal Expenditures
(39,590)
(49,379)
Other
(25,224)
(11,174)
Changes in Current Assets and Liabilities:
Receivables and Unbilled Revenues, Net
(152,656)
(76,989)
Taxes Receivable/Accrued, Net
33,883
61,773
Accounts Payable
(83,599)
(60,363)
Other Current Assets and Liabilities, Net
14,030
(10,752)
Net Cash Flows Provided by Operating Activities
572,237
529,000
Investing Activities:
Investments in Property, Plant and Equipment
(1,074,260)
(1,012,357)
Other Investing Activities
—
48
Net Cash Flows Used in Investing Activities
(1,074,260)
(1,012,309)
Financing Activities:
Cash Dividends on Common Stock
(643,900)
(327,400)
Cash Dividends on Preferred Stock
(1,470)
(1,470)
Issuance of Long-Term Debt
600,000
150,000
Capital Contributions from Eversource Parent
375,000
123,600
Increase in Notes Payable
171,653
209,500
Other Financing Activities
(6,077)
(1,368)
Net Cash Flows Provided by Financing Activities
495,206
152,862
Net Decrease in Cash and Restricted Cash
(6,817)
(330,447)
Cash and Restricted Cash - Beginning of Period
22,785
345,293
Cash and Restricted Cash - End of Period
$
15,968
$
14,846
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
13
PUBLIC SERVICE COMPANY OF NEW HAMPSHIRE AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
(Thousands of Dollars)
As of September 30, 2024
As of December 31, 2023
ASSETS
Current Assets:
Cash
$
4,673
$
240
Receivables, Net (net of allowance for uncollectible accounts of $13,748 and $14,322
as of September 30, 2024 and December 31, 2023, respectively)
171,969
152,276
Accounts Receivable from Affiliated Companies
40,945
18,214
Unbilled Revenues
43,421
55,012
Materials, Supplies and REC Inventory
82,223
77,066
Regulatory Assets
170,501
189,450
Special Deposits
18,876
31,586
Prepayments and Other Current Assets
5,466
45,635
Total Current Assets
538,074
569,479
Property, Plant and Equipment, Net
4,958,890
4,574,652
Deferred Debits and Other Assets:
Regulatory Assets
904,717
773,783
Prepaid Pension and PBOP
69,420
58,979
Other Long-Term Assets
18,959
16,558
Total Deferred Debits and Other Assets
993,096
849,320
Total Assets
$
6,490,060
$
5,993,451
LIABILITIES AND CAPITALIZATION
Current Liabilities:
Notes Payable to Eversource Parent
$
89,300
$
233,000
Rate Reduction Bonds – Current Portion
43,210
43,210
Accounts Payable
210,478
205,744
Accounts Payable to Affiliated Companies
42,270
41,272
Regulatory Liabilities
106,761
117,515
Accrued Interest
28,681
25,783
Other Current Liabilities
50,269
46,545
Total Current Liabilities
570,969
713,069
Deferred Credits and Other Liabilities:
Accumulated Deferred Income Taxes
772,838
691,532
Regulatory Liabilities
393,847
393,574
Other Long-Term Liabilities
41,054
42,484
Total Deferred Credits and Other Liabilities
1,207,739
1,127,590
Long-Term Debt
1,731,764
1,431,591
Rate Reduction Bonds
324,072
367,282
Common Stockholder's Equity:
Common Stock
—
—
Capital Surplus, Paid In
1,898,134
1,698,134
Retained Earnings
757,382
655,785
Common Stockholder's Equity
2,655,516
2,353,919
Commitments and Contingencies (Note 9)
Total Liabilities and Capitalization
$
6,490,060
$
5,993,451
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
14
PUBLIC SERVICE COMPANY OF NEW HAMPSHIRE AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
For the Three Months Ended September 30,
For the Nine Months Ended September 30,
(Thousands of Dollars)
2024
2023
2024
2023
Operating Revenues
$
342,027
$
353,074
$
955,453
$
1,123,300
Operating Expenses:
Purchased Power and Transmission
44,828
128,040
169,761
499,553
Operations and Maintenance
68,981
85,230
207,336
217,529
Depreciation
38,865
35,517
114,401
104,307
Amortization of Regulatory Assets/(Liabilities), Net
51,881
(9,963)
101,874
(35,234)
Energy Efficiency Programs
12,155
11,097
33,026
30,473
Taxes Other Than Income Taxes
24,041
25,748
71,821
73,384
Total Operating Expenses
240,751
275,669
698,219
890,012
Operating Income
101,276
77,405
257,234
233,288
Interest Expense
23,223
19,252
62,676
55,901
Other Income, Net
8,097
7,180
22,919
19,199
Income Before Income Tax Expense
86,150
65,333
217,477
196,586
Income Tax Expense
22,353
13,995
53,880
44,590
Net Income
$
63,797
$
51,338
$
163,597
$
151,996
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Unaudited)
For the Three Months Ended September 30,
For the Nine Months Ended September 30,
(Thousands of Dollars)
2024
2023
2024
2023
Net Income
$
63,797
$
51,338
$
163,597
$
151,996
Other Comprehensive Income, Net of Tax:
Changes in Unrealized Gains on Marketable Securities
—
—
—
73
Other Comprehensive Income, Net of Tax
—
—
—
73
Comprehensive Income
$
63,797
$
51,338
$
163,597
$
152,069
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
15
PUBLIC SERVICE COMPANY OF NEW HAMPSHIRE AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF COMMON STOCKHOLDER'S EQUITY
(Unaudited)
For the Nine Months Ended September 30, 2024
Common Stock
Capital Surplus, Paid In
Retained Earnings
Accumulated Other Comprehensive Loss
Total Common Stockholder's Equity
(Thousands of Dollars, Except Stock Information)
Stock
Amount
Balance as of January 1, 2024
301
$
—
$
1,698,134
$
655,785
$
—
$
2,353,919
Net Income
48,356
48,356
Capital Contributions from Eversource Parent
100,000
100,000
Balance as of March 31, 2024
301
—
1,798,134
704,141
—
2,502,275
Net Income
51,444
51,444
Dividends on Common Stock
(62,000)
(62,000)
Balance as of June 30, 2024
301
—
1,798,134
693,585
—
2,491,719
Net Income
63,797
63,797
Capital Contributions from Eversource Parent
100,000
100,000
Balance as of September 30, 2024
301
$
—
$
1,898,134
$
757,382
$
—
$
2,655,516
For the Nine Months Ended September 30, 2023
Common Stock
Capital Surplus, Paid In
Retained Earnings
Accumulated Other Comprehensive Loss
Total Common Stockholder's Equity
(Thousands of Dollars, Except Stock Information)
Stock
Amount
Balance as of January 1, 2023
301
$
—
$
1,298,134
$
572,126
$
(73)
$
1,870,187
Net Income
40,296
40,296
Dividends on Common Stock
(28,000)
(28,000)
Other Comprehensive Income
73
73
Balance as of March 31, 2023
301
—
1,298,134
584,422
—
1,882,556
Net Income
60,362
60,362
Dividends on Common Stock
(28,000)
(28,000)
Capital Contributions from Eversource Parent
100,000
100,000
Balance as of June 30, 2023
301
—
1,398,134
616,784
—
2,014,918
Net Income
51,338
51,338
Dividends on Common Stock
(56,000)
(56,000)
Capital Contributions from Eversource Parent
100,000
—
100,000
Balance as of September 30, 2023
301
$
—
$
1,498,134
$
612,122
$
—
$
2,110,256
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
16
PUBLIC SERVICE COMPANY OF NEW HAMPSHIRE AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
For the Nine Months Ended September 30,
(Thousands of Dollars)
2024
2023
Operating Activities:
Net Income
$
163,597
$
151,996
Adjustments to Reconcile Net Income to Net Cash Flows Provided by/(Used In) Operating Activities:
Depreciation
114,401
104,307
Deferred Income Taxes
72,924
96,711
Uncollectible Expense
3,420
1,534
Pension, SERP and PBOP Income, Net
(6,614)
(7,841)
Regulatory Under Recoveries, Net
(198,781)
(251,048)
Amortization of Regulatory Assets/(Liabilities), Net
101,874
(35,234)
Cost of Removal Expenditures
(29,473)
(29,448)
Other
335
11,479
Changes in Current Assets and Liabilities:
Receivables and Unbilled Revenues, Net
(36,877)
4,011
Taxes Receivable/Accrued, Net
28,721
27,797
Accounts Payable
(21,273)
(70,102)
Other Current Assets and Liabilities, Net
12,912
(17,092)
Net Cash Flows Provided by/(Used In) Operating Activities
205,166
(12,930)
Investing Activities:
Investments in Property, Plant and Equipment
(461,427)
(431,937)
Other Investing Activities
—
296
Net Cash Flows Used in Investing Activities
(461,427)
(431,641)
Financing Activities:
Cash Dividends on Common Stock
(62,000)
(112,000)
Capital Contributions from Eversource Parent
200,000
200,000
Issuance of Long-Term Debt
300,000
600,000
Repayment of Rate Reduction Bonds
(43,210)
(43,210)
Decrease in Notes Payable to Eversource Parent
(143,700)
(173,200)
Other Financing Activities
(3,140)
(8,524)
Net Cash Flows Provided by Financing Activities
247,950
463,066
Net (Decrease)/Increase in Cash and Restricted Cash
(8,311)
18,495
Cash and Restricted Cash - Beginning of Period
35,004
36,812
Cash and Restricted Cash - End of Period
$
26,693
$
55,307
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
17
EVERSOURCE ENERGY AND SUBSIDIARIES
THE CONNECTICUT LIGHT AND POWER COMPANY
NSTAR ELECTRIC COMPANY AND SUBSIDIARY
PUBLIC SERVICE COMPANY OF NEW HAMPSHIRE AND SUBSIDIARIES
COMBINED NOTES TO CONDENSED FINANCIAL STATEMENTS (Unaudited)
Refer to the Glossary of Terms included in this combined Quarterly Report on Form 10-Q for abbreviations and acronyms used throughout the combined notes to the unaudited condensed financial statements.
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
A. Basis of Presentation
Eversource Energy is a public utility holding company primarily engaged, through its wholly-owned regulated utility subsidiaries, in the energy delivery business. Eversource Energy's wholly-owned regulated utility subsidiaries consist of CL&P, NSTAR Electric and PSNH (electric utilities), Yankee Gas, NSTAR Gas and EGMA (natural gas utilities), and Aquarion (water utilities). Eversource provides energy delivery and/or water service to approximately 4.4 million electric, natural gas and water customers through twelve regulated utilities in Connecticut, Massachusetts and New Hampshire.
The unaudited condensed consolidated financial statements of Eversource, NSTAR Electric and PSNH include the accounts of each of their respective subsidiaries. Intercompany transactions have been eliminated in consolidation. The accompanying unaudited condensed consolidated financial statements of Eversource, NSTAR Electric and PSNH and the unaudited condensed financial statements of CL&P are herein collectively referred to as the "financial statements."
The combined notes to the financial statements have been prepared pursuant to the rules and regulations of the SEC. Certain information and footnote disclosures included in annual financial statements prepared in accordance with GAAP have been omitted pursuant to such rules and regulations. The accompanying financial statements should be read in conjunction with the Combined Notes to Financial Statements included in Item 8, "Financial Statements and Supplementary Data," of the Eversource 2023 Form 10-K, which was filed with the SEC on February 14, 2024. The preparation of the financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent liabilities as of the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
The financial statements contain, in the opinion of management, all adjustments (including normal, recurring adjustments) necessary to present fairly Eversource's, CL&P's, NSTAR Electric's and PSNH's financial position as of September 30, 2024 and December 31, 2023, and the results of operations, comprehensive income and common shareholders' equity for the three and nine months ended September 30, 2024 and 2023, and the cash flows for the nine months ended September 30, 2024 and 2023. The results of operations and comprehensive income for the three and nine months ended September 30, 2024 and 2023 and the cash flows for the nine months ended September 30, 2024 and 2023 are not necessarily indicative of the results expected for a full year.
CYAPC and YAEC are inactive regional nuclear power companies engaged in the long-term storage of their spent nuclear fuel. Eversource consolidates the operations of CYAPC and YAEC because CL&P's, NSTAR Electric's and PSNH's combined ownership and voting interests in each of these entities is greater than 50 percent. Intercompany transactions between CL&P, NSTAR Electric, PSNH and the CYAPC and YAEC companies have been eliminated in consolidation of the Eversource financial statements.
In the third quarter of 2024, Eversource sold its 50 percent equity ownership interests in three offshore wind projects that had been accounted for under the equity method. See Note 1E, "Summary of Significant Accounting Policies – Investments in Unconsolidated Affiliates," for further information.
Eversource's utility subsidiaries' electric, natural gas and water distribution and transmission businesses are subject to rate-regulation that is based on cost recovery and meets the criteria for application of accounting guidance for entities with rate-regulated operations, which considers the effect of regulation on the differences in the timing of the recognition of certain revenues and expenses from those of other businesses and industries. See Note 2, "Regulatory Accounting," for further information.
Certain reclassifications of prior period data were made in the accompanying financial statements to conform to the current period presentation.
B. Allowance for Uncollectible Accounts
Receivables, Net on the balance sheets primarily includes trade receivables from retail customers and customers related to wholesale transmission contracts, wholesale market sales, sales of RECs, and property rentals. Receivables, Net also includes customer receivables for the purchase of electricity from a competitive third party supplier, the current portion of customer energy efficiency loans, property damage receivables and other miscellaneous receivables. There is no material concentration of receivables.
Receivables are recorded at amortized cost, net of a credit loss provision (or allowance for uncollectible accounts). The current expected credit loss (CECL) model is applied to receivables for purposes of calculating the allowance for uncollectible accounts. This model is based on expected losses and results in the recognition of estimated expected credit losses, including uncollectible amounts for both billed and unbilled revenues, over the life of the receivable at the time a receivable is recorded.
18
The allowance for uncollectible accounts is determined based upon a variety of judgments and factors, including an aging-based quantitative assessment that applies an estimated uncollectible percentage to each receivable aging category. Factors in determining credit loss include historical collection, write-off experience, analysis of delinquency statistics, and management's assessment of collectability from customers, including current economic conditions, customer payment trends, the impact on customer bills because of energy usage trends and changes in rates, flexible payment plans and financial hardship arrearage management programs offered to customers, reasonable forecasts, and expectations of future collectability and collection efforts. Management continuously assesses the collectability of receivables and adjusts estimates based on actual experience and future expectations based on economic conditions, collection efforts and other factors. Management also monitors the aging analysis of receivables to determine if there are changes in the collections of accounts receivable. Receivable balances are written off against the allowance for uncollectible accounts when the customer accounts are no longer in service and these balances are deemed to be uncollectible. Management concluded that the reserve balance as of September 30, 2024 adequately reflected the collection risk and net realizable value for its receivables.
The PURA allows CL&P and Yankee Gas to accelerate the recovery of accounts receivable balances attributable to qualified customers under financial or medical duress (uncollectible hardship accounts receivable) outstanding for greater than 180 days and 90 days, respectively. The DPU allows NSTAR Electric, NSTAR Gas and EGMA to recover in rates amounts associated with certain uncollectible hardship accounts receivable. These uncollectible hardship customer account balances are included in Regulatory Assets or Other Long-Term Assets on the balance sheets. Hardship customers are protected from shut-off in certain circumstances, and historical collection experience has reflected a higher default risk as compared to the rest of the receivable population. Management uses a higher credit risk profile for this pool of trade receivables as compared to non-hardship receivables. The allowance for uncollectible hardship accounts is included in the total uncollectible allowance balance.
The total allowance for uncollectible accounts is included in Receivables, Net on the balance sheets.The activity in the allowance for uncollectible accounts by portfolio segment as of September 30th is as follows:
Eversource
CL&P
NSTAR Electric
PSNH
(Millions of Dollars)
Hardship Accounts
Retail (Non-Hardship), Wholesale, and Other
Total Allowance
Hardship Accounts
Retail (Non-Hardship), Wholesale, and Other
Total Allowance
Hardship Accounts
Retail (Non-Hardship), Wholesale, and Other
Total Allowance
Total Allowance
Three Months Ended 2024
Beginning Balance
$
389.1
$
190.5
$
579.6
$
274.4
$
34.2
$
308.6
$
45.9
$
60.3
$
106.2
$
14.1
Uncollectible Expense
—
29.2
29.2
—
5.1
5.1
—
15.7
15.7
1.2
Uncollectible Costs Deferred (1)
5.4
16.0
21.4
(8.8)
3.4
(5.4)
10.1
8.2
18.3
1.4
Write-Offs
(16.8)
(41.3)
(58.1)
(12.2)
(7.4)
(19.6)
(1.9)
(20.3)
(22.2)
(3.2)
Recoveries Collected
0.1
2.5
2.6
0.1
1.0
1.1
—
0.3
0.3
0.2
Ending Balance
$
377.8
$
196.9
$
574.7
$
253.5
$
36.3
$
289.8
$
54.1
$
64.2
$
118.3
$
13.7
Nine Months Ended 2024
Beginning Balance
$
366.8
$
187.7
$
554.5
$
259.7
$
36.3
$
296.0
$
43.6
$
53.4
$
97.0
$
14.3
Uncollectible Expense
—
55.4
55.4
—
11.4
11.4
—
27.7
27.7
3.4
Uncollectible Costs Deferred (1)
58.9
37.5
96.4
29.3
8.7
38.0
13.6
17.3
30.9
3.8
Write-Offs
(48.5)
(93.1)
(141.6)
(36.0)
(23.4)
(59.4)
(3.1)
(36.6)
(39.7)
(8.4)
Recoveries Collected
0.6
9.4
10.0
0.5
3.3
3.8
—
2.4
2.4
0.6
Ending Balance
$
377.8
$
196.9
$
574.7
$
253.5
$
36.3
$
289.8
$
54.1
$
64.2
$
118.3
$
13.7
19
Eversource
CL&P
NSTAR Electric
PSNH
(Millions of Dollars)
Hardship Accounts
Retail (Non-Hardship), Wholesale, and Other
Total Allowance
Hardship Accounts
Retail (Non-Hardship), Wholesale, and Other
Total Allowance
Hardship Accounts
Retail (Non-Hardship), Wholesale, and Other
Total Allowance
Total Allowance (2)
Three Months Ended 2023
Beginning Balance
$
338.2
$
194.2
$
532.4
$
226.5
$
36.3
$
262.8
$
45.6
$
52.2
$
97.8
$
12.7
Uncollectible Expense
—
16.8
16.8
—
2.4
2.4
—
5.2
5.2
2.0
Uncollectible Costs Deferred (1)
33.9
14.0
47.9
29.4
3.1
32.5
3.4
4.5
7.9
1.1
Write-Offs
(17.5)
(40.4)
(57.9)
(14.9)
(7.6)
(22.5)
0.1
(11.5)
(11.4)
(3.6)
Recoveries Collected
0.2
3.3
3.5
0.2
0.9
1.1
—
1.3
1.3
0.2
Ending Balance
$
354.8
$
187.9
$
542.7
$
241.2
$
35.1
$
276.3
$
49.1
$
51.7
$
100.8
$
12.4
Nine Months Ended 2023
Beginning Balance
$
284.4
$
201.9
$
486.3
$
188.9
$
36.4
$
225.3
$
43.7
$
51.3
$
95.0
$
29.2
Uncollectible Expense
—
40.9
40.9
—
7.1
7.1
—
13.0
13.0
1.5
Uncollectible Costs Deferred (1)
104.7
22.8
127.5
80.3
9.3
89.6
5.8
13.8
19.6
(11.1)
Write-Offs
(35.3)
(88.5)
(123.8)
(29.0)
(21.3)
(50.3)
(0.4)
(30.4)
(30.8)
(7.8)
Recoveries Collected
1.0
10.8
11.8
1.0
3.6
4.6
—
4.0
4.0
0.6
Ending Balance
$
354.8
$
187.9
$
542.7
$
241.2
$
35.1
$
276.3
$
49.1
$
51.7
$
100.8
$
12.4
(1) These expected credit losses are deferred as regulatory costs on the balance sheets, as these amounts are ultimately recovered in rates. Amounts include uncollectible costs for hardship accounts and other customer receivables, including uncollectible amounts related to uncollectible energy supply costs. The increases in the allowance for uncollectible hardship accounts at Eversource and CL&P in 2023 primarily relate to increased customer enrollment in disconnection prevention programs in Connecticut.
(2) In connection with PSNH’s pole purchase agreement on May 1, 2023, the purchase price included the forgiveness of previously reserved receivables for reimbursement of operation and maintenance and vegetation management costs.
C. Fair Value Measurements
Fair value measurement guidance is applied to derivative contracts that are not elected or designated as "normal purchases" or "normal sales" (normal) and to marketable securities held in trusts. Fair value measurement guidance is also applied to valuations of the investments used to calculate the funded status of pension and PBOP plans, the nonrecurring fair value measurements of nonfinancial assets such as goodwill, long-lived assets, equity method investments, AROs, and in the valuation of business combinations and asset acquisitions. The fair value measurement guidance was also applied in estimating the fair value of preferred stock, long-term debt and RRBs.
Fair Value Hierarchy: In measuring fair value, Eversource uses observable market data when available in order to minimize the use of unobservable inputs. Inputs used in fair value measurements are categorized into three fair value hierarchy levels for disclosure purposes. The entire fair value measurement is categorized based on the lowest level of input that is significant to the fair value measurement. Eversource evaluates the classification of assets and liabilities measured at fair value on a quarterly basis.
The levels of the fair value hierarchy are described below:
Level 1 - Inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities as of the reporting date. Active markets are those in which transactions for the asset or liability occur in sufficient frequency and volume to provide pricing information on an ongoing basis.
Level 2 - Inputs are quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active, and model-derived valuations in which all significant inputs are observable.
Level 3 - Quoted market prices are not available. Fair value is derived from valuation techniques in which one or more significant inputs or assumptions are unobservable. Where possible, valuation techniques incorporate observable market inputs that can be validated to external sources such as industry exchanges, including prices of energy and energy-related products.
Uncategorized - Investments that are measured at net asset value are not categorized within the fair value hierarchy.
Determination of Fair Value: The valuation techniques and inputs used in Eversource's fair value measurements are described in Note 4, "Derivative Instruments," Note 5, "Marketable Securities," and Note 10, "Fair Value of Financial Instruments," to the financial statements.
20
D. Other Income, Net
The components of Other Income, Net on the statements of income were as follows:
For the Three Months Ended
September 30, 2024
September 30, 2023
(Millions of Dollars)
Eversource
CL&P
NSTAR Electric
PSNH
Eversource
CL&P
NSTAR Electric
PSNH
Pension, SERP and PBOP Non-Service Income Components, Net of Deferred Portion
$
31.6
$
7.7
$
13.9
$
3.9
$
28.5
$
7.0
$
12.9
$
3.7
AFUDC Equity
22.7
5.4
13.0
1.5
21.0
5.2
12.5
1.6
Equity in Earnings of Unconsolidated Affiliates
17.1
—
0.2
—
2.7
—
0.1
—
Investment (Loss)/Income
(2.1)
(0.9)
(0.2)
(0.3)
2.7
1.5
0.7
0.4
Interest Income
38.9
9.7
20.6
3.0
24.1
4.6
13.6
1.5
Other
4.4
—
—
—
0.1
—
0.1
—
Total Other Income, Net
$
112.6
$
21.9
$
47.5
$
8.1
$
79.1
$
18.3
$
39.9
$
7.2
For the Nine Months Ended
September 30, 2024
September 30, 2023
(Millions of Dollars)
Eversource
CL&P
NSTAR Electric
PSNH
Eversource
CL&P
NSTAR Electric
PSNH
Pension, SERP and PBOP Non-Service Income Components, Net of Deferred Portion
$
89.4
$
21.4
$
39.5
$
11.2
$
96.6
$
24.9
$
41.7
$
11.8
AFUDC Equity
73.2
16.9
44.4
5.1
55.5
13.9
34.0
3.4
Equity in Earnings of Unconsolidated Affiliates (1)
48.1
—
0.6
—
11.5
—
0.3
—
Investment (Loss)/Income
(1.8)
(1.7)
0.7
(0.5)
(0.4)
(0.2)
0.5
—
Interest Income
106.0
24.8
57.8
7.1
68.6
8.0
44.0
3.6
Other (2)
4.0
—
—
—
31.2
—
0.2
0.4
Total Other Income, Net
$
318.9
$
61.4
$
143.0
$
22.9
$
263.0
$
46.6
$
120.7
$
19.2
(1) Equity in Earnings of Unconsolidated Affiliates includes $23.4 million of pre-tax income recorded at Eversource in the second quarter of 2024 from Eversource’s wind equity method investment, North East Offshore, as a result of a vendor settlement agreement payment received by the joint venture.
(2) Eversource’s equity method investment in a renewable energy fund was liquidated in March 2023. Liquidation proceeds in excess of the carrying value were recorded in 2023 within Other in the tables above. See Note 1E, "Summary of Significant Accounting Policies - Investments in Unconsolidated Affiliates," for further information.
E. Investments in Unconsolidated Affiliates
Investments in entities that are not consolidated are included in long-term assets on the balance sheets and earnings impacts from these equity investments are included in Other Income, Net on the statements of income. Eversource's investments included the following:
Investment Balance
(Millions of Dollars)
Ownership Interest
As of September 30, 2024
As of December 31, 2023
Offshore Wind Business
50%
-
100%
$
22.2
$
515.5
Natural Gas Pipeline - Algonquin Gas Transmission, LLC
15%
113.5
116.0
Other
various
30.7
29.0
Total Investments in Unconsolidated Affiliates
$
166.4
$
660.5
Offshore Wind Business: Eversource’s offshore wind business included 50 percent ownership interests in each of North East Offshore and South Fork Class B Member, LLC. In the third quarter of 2024, Eversource sold its interest in these entities, and in doing so, sold its interests in the Revolution Wind project, the South Fork Wind project, and the Sunrise Wind project. Eversource’s offshore wind business continues to hold a noncontrolling tax equity investment in South Fork Wind through a 100 percent ownership in South Fork Wind Holdings, LLC Class A interests.
On 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. On September 7, 2023, 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 Ørsted for $625 million in an all-cash transaction.
21
In September of 2023, Eversource made a contribution of $528 million to invest in a tax equity interest for South Fork Wind. South Fork Wind was restructured as a tax equity investment, with Eversource purchasing 100 percent ownership of a new Class A tax equity membership interest. This investment will result in Eversource receiving cash flow benefits from investment tax credits (ITC) and other future cash flow benefits as well. As of September 30, 2024, $459 million of expected investment tax credits and other expected tax benefits were reclassified from the South Fork Wind tax equity investment balance reported in Investments in Unconsolidated Affiliates as a reduction in current taxes payable of $54 million and a decrease in Accumulated Deferred Income Taxes of $405 million on the Eversource balance sheet as of September 30, 2024. As a result of these investment tax credits, Eversource expects lower federal income tax payments between 2024 through 2026. As of September 30, 2024, the tax equity interest in South Fork Wind totaled $22.2 million.
On January 24, 2024, Eversource signed an agreement with Ørsted to sell Eversource’s 50 percent share of Sunrise Wind, subject to certain conditions and regulatory approvals. On April 18, 2024, Eversource and Ørsted executed an equity and asset purchase agreement for a gross purchase price of $230 million. The purchase price was subject to reduction for actual capital spending less than forecasted spending between signing the agreement in January and closing of the transaction. On July 9, 2024, Eversource completed the sale of its 50 percent ownership share of Sunrise Wind to Ørsted. In accordance with the equity and asset purchase agreement and after adjustment for the reduction in capital spending compared to forecasted amounts, adjusted proceeds totaled $152 million. Ørsted paid Eversource $118 million at the closing of the sale transaction, which was used to pay off parent company debt. Remaining proceeds of $34 million will be paid after onshore construction is completed and certain other construction milestones are achieved. The remaining expected proceeds have been recorded in Other Long-Term Assets on Eversource’s balance sheet as of September 30, 2024. Eversource recorded a pre-tax gain on the sale of Sunrise Wind of $377 million in the third quarter of 2024. With completion of the sale, Eversource will not have any ongoing financial obligations associated with Sunrise Wind.
On February 13, 2024, Eversource executed an agreement to sell its 50 percent interests in the South Fork Wind and Revolution Wind projects to Global Infrastructure Partners (GIP) for an initial gross purchase price of approximately $1.1 billion. The initial purchase price was subject to adjustments based on, among other things, the progress, timing and the construction cost of Revolution Wind, including changes in actual versus forecasted capital spending between signing the agreement and closing of the transaction. On September 30, 2024, Eversource completed the sale of its 50 percent ownership share in the South Fork Wind and Revolution Wind projects to GIP for adjusted gross proceeds of $745 million, which were received at closing. Adjusted gross proceeds from the sale were reduced by approximately $375 million as compared with the previously estimated purchase price. This reduction reflects approximately $150 million resulting from lower capital spending between announcing the transaction and closing, and approximately $225 million related to the final terms of the sale transaction, primarily due to the delay of the commercial operations date of Revolution Wind. Proceeds from the transaction were used to pay off parent company debt.
As part of the Revolution Wind and South Fork Wind sale, Eversource and GIP agreed to make certain post-closing purchase price adjustment payments, which could further impact the final purchase price. The post-closing purchase price adjustment payments include cost sharing obligations that provide Eversource will share equally with GIP in GIP’s funding obligations up to an effective cap of approximately $240 million of incremental capital expenditure overruns incurred during the construction phase for Revolution Wind, after which Eversource will have responsibility for GIP’s obligations for any additional capital expenditure overruns in excess of the capped amount. The purchase price is also subject to post-closing adjustments as a result of final project economics, which includes Eversource’s obligation to maintain GIP’s internal rate of return for each project as specified in the agreement. Post-closing purchase price adjustment payments will be made following the commercial operation of Revolution Wind.
Upon the completion of both sale transactions, the total proceeds were compared to the carrying value of the investments, including an estimate of liability for post-closing adjustment payments to GIP, and Eversource recognized an aggregate after-tax loss on the sale of its offshore wind investments of $524 million in the third quarter of 2024. The aggregate after-tax loss is comprised of (1) the lower proceeds related to final terms of the sale transaction to GIP of approximately $225 million related to non-construction costs for the Revolution Wind and South Fork Wind projects, primarily due to a purchase price reduction of $150 million resulting from the delay of the commercial operations date of Revolution Wind, (2) recently identified forecasted construction costs as a result of a delay in the anticipated commercial operation date related to Revolution Wind of approximately $350 million, which includes an estimate for the anticipated post-closing adjustment to GIP related to Eversource’s expected cost overrun sharing obligation, and (3) approximately $326 million, which includes an estimate for the anticipated post-closing adjustment related to Eversource’s expected obligations to GIP as a result of final economics of the Revolution Wind and South Fork Wind projects and other future costs as well as a net $60 million increase in income tax expense including an increase in the valuation allowance for unused capital losses. These losses were partially offset by the $377 million gain on the sale of Sunrise Wind.
Upon sale, Eversource recorded a liability of $365 million reflecting its best estimate of the future obligations under the GIP sale terms, which primarily include the expected cost overrun sharing obligation, expected obligation to maintain GIP’s internal rate of return for the Revolution Wind project, and obligation of other future costs. The majority of this liability is expected to be settled in 2026. The long-term portion of the liability of $350 million was recorded in Other Long-Term Liabilities, and the remainder was recorded in Other Current Liabilities on Eversource’s balance sheet as of September 30, 2024.
22
Factors that could increase the post-closing adjustment payments owed to GIP include the ultimate cost of construction and extent of cost overruns for Revolution Wind, delays in constructing Revolution Wind, which would impact the economics associated with the purchase price adjustment, and Revolution Wind’s eligibility for federal investment tax credits at less than the value included in the purchase price. The purchase price included the sales value related to a 40 percent level of federal investment tax credits, 10 percent of which is the energy community ITC adder of approximately $170 million related to Revolution Wind. It is possible that new information or future developments could require a reassessment of the potential exposure of the estimated liability for the post-closing adjustment payments. As this information becomes available, Eversource will continue to assess the potential exposure and adjust the liability if needed. Incremental exposure of this estimated liability remains possible, but management cannot reasonably estimate a range of loss beyond the amount recorded at this time. Total net proceeds could also be adjusted for a benefit due to Eversource if there are lower operation costs or higher availability of the projects through the period that is four years following the commercial operation of Revolution Wind. South Fork Wind has achieved commercial operation and, as a result, Eversource does not expect any material cost sharing or other purchase price adjustment payments related to this project.
Under the agreement with GIP, Eversource’s existing and certain additional credit support obligations for Revolution Wind are expected to roll off as the project completes construction. Under the agreement with Ørsted, Eversource’s existing credit support obligations for Sunrise Wind were either terminated or indemnified by Ørsted as a result of the sale. Eversource has entered into separate construction management agreements to manage Sunrise Wind’s and Revolution Wind’s onshore construction through completion. In this role, Eversource will be solely a service provider to Sunrise Wind and Revolution Wind.
Impairments: In the second quarter of 2023, in connection with the process to divest its offshore wind business, Eversource identified indicators for impairment. In the impairment assessment, Eversource evaluated its investments and determined that the carrying value of the equity method offshore wind investments exceeded the fair value of the investments and that the decline in fair value was other-than-temporary. The completion of the strategic review in the second quarter of 2023 resulted in Eversource recording a pre-tax other-than-temporary impairment charge of $401 million ($331 million after-tax) to reflect the investment at estimated fair value based on the expected purchase price at that time. In the fourth quarter of 2023, Eversource recognized an additional pre-tax other-than-temporary impairment charge of $1.77 billion ($1.62 billion after-tax) in its offshore wind investments and established a new cost basis in the investments as of December 31, 2023. The impairment charges were non-cash charges and did not impact Eversource’s cash position. In the third quarter of 2024, Eversource sold its interest in its offshore wind investments.
2023 Liquidation of Renewable Energy Investment Fund: On March 21, 2023, Eversource’s equity method investment in a renewable energy investment fund was liquidated by the fund’s general partner in accordance with the partnership agreement. Proceeds received from the liquidation of $147.0 million were included in Investments in Unconsolidated Affiliates within investing activities on the statement of cash flows for the nine months ended September 30, 2023. Of this amount, $123.4 million was received in the first quarter of 2023, and $23.6 million was received from escrow in the second quarter of 2023. A portion of the proceeds was used to make a charitable contribution to the Eversource Energy Foundation (a related party) of $20.0 million in the first quarter of 2023. The liquidation benefit received in excess of the investment’s carrying value and the charitable contribution are included in Other Income, Net on the statement of income.
F. Other Taxes
Eversource's companies that serve customers in Connecticut collect gross receipts taxes levied by the state of Connecticut from their customers. These gross receipts taxes are recorded separately with collections in Operating Revenues and with payments in Taxes Other Than Income Taxes on the statements of income as follows:
For the Three Months Ended
For the Nine Months Ended
(Millions of Dollars)
September 30, 2024
September 30, 2023
September 30, 2024
September 30, 2023
Eversource
$
59.3
$
53.7
$
157.2
$
153.4
CL&P
56.0
50.2
139.6
132.2
As agents for state and local governments, Eversource's companies that serve customers in Connecticut and Massachusetts collect certain sales taxes that are recorded on a net basis with no impact on the statements of income.
G. Supplemental Cash Flow Information
Non-cash investing activities include plant additions included in Accounts Payable as follows:
(Millions of Dollars)
As of September 30, 2024
As of September 30, 2023
Eversource
$
458.6
$
462.4
CL&P
73.0
86.3
NSTAR Electric
164.8
135.9
PSNH
67.5
71.9
23
The following table reconciles cash and cash equivalents as reported on the balance sheets to the cash, cash equivalents and restricted cash balance as reported on the statements of cash flows:
As of September 30, 2024
As of December 31, 2023
(Millions of Dollars)
Eversource
CL&P
NSTAR Electric
PSNH
Eversource
CL&P
NSTAR Electric
PSNH
Cash and Cash Equivalents as reported on the
Balance Sheets
$
97.9
$
10.1
$
4.5
$
4.7
$
53.9
$
10.2
$
6.7
$
0.2
Restricted cash included in:
Special Deposits
66.5
1.0
11.5
18.9
81.5
2.0
16.1
31.6
Marketable Securities
21.5
—
—
—
13.7
—
—
—
Other Long-Term Assets
16.9
—
—
3.1
17.3
—
—
3.2
Cash, Cash Equivalents and Restricted Cash as
reported on the Statements of Cash Flows
$
202.8
$
11.1
$
16.0
$
26.7
$
166.4
$
12.2
$
22.8
$
35.0
Special Deposits represent cash collections related to the PSNH RRB customer charges that are held in trust, required ISO-NE cash deposits, cash held in escrow accounts, and CYAPC and YAEC cash balances. Special Deposits are included in Current Assets on the balance sheets. Restricted cash included in Marketable Securities represents money market funds held in restricted trusts to fund CYAPC and YAEC's spent nuclear fuel storage obligations.
Eversource’s restricted cash includes an Energy Relief Fund for energy efficiency and clean energy measures in the Merrimack Valley established under the terms of the EGMA 2020 settlement agreement. This restricted cash held in escrow accounts included $20.0 million recorded as short-term in Special Deposits as of both September 30, 2024 and December 31, 2023, and $13.8 million and $14.1 million recorded in Other Long-Term Assets on the balance sheets as of September 30, 2024 and December 31, 2023, respectively.
2. REGULATORY ACCOUNTING
Eversource's utility companies are subject to rate regulation that is based on cost recovery and meets the criteria for application of accounting guidance for rate-regulated operations, which considers the effect of regulation on the timing of the recognition of certain revenues and expenses. The regulated companies' financial statements reflect the effects of the rate-making process. The rates charged to the customers of Eversource's regulated companies are designed to collect each company's costs to provide service, plus a return on investment.
The application of accounting guidance for rate-regulated enterprises results in recording regulatory assets and liabilities. Regulatory assets represent the deferral of incurred costs that are probable of future recovery in customer rates. Regulatory assets are amortized as the incurred costs are recovered through customer rates. Regulatory liabilities represent either revenues received from customers to fund expected costs that have not yet been incurred or probable future refunds to customers.
Management believes it is probable that each of the regulated companies will recover its respective investments in long-lived assets and the regulatory assets that have been recorded. If management were to determine that it could no longer apply the accounting guidance applicable to rate-regulated enterprises, or if management could not conclude it is probable that costs would be recovered from customers in future rates, the applicable costs would be charged to net income in the period in which the determination is made.
Regulatory Assets: The components of regulatory assets were as follows:
As of September 30, 2024
As of December 31, 2023
(Millions of Dollars)
Eversource
CL&P
NSTAR Electric
PSNH
Eversource
CL&P
NSTAR Electric
PSNH
Storm Costs, Net
$
2,077.2
$
998.3
$
626.3
$
452.6
$
1,785.9
$
896.6
$
609.1
$
280.2
Regulatory Tracking Mechanisms
1,638.1
529.3
572.6
153.9
1,319.2
354.5
482.9
182.2
Benefit Costs
1,096.0
198.2
313.8
79.7
1,117.3
197.4
336.7
79.3
Income Taxes, Net
944.9
522.7
141.6
19.1
912.4
512.6
128.6
16.4
Securitized Stranded Costs
360.1
—
—
360.1
392.5
—
—
392.5
Goodwill-related
251.5
—
215.9
—
264.1
—
226.7
—
Asset Retirement Obligations
147.0
40.5
76.8
5.0
137.9
38.5
72.3
4.7
Derivative Liabilities
72.6
72.6
—
—
120.9
120.9
—
—
Other Regulatory Assets
430.6
65.1
102.8
4.8
339.0
22.7
101.6
8.0
Total Regulatory Assets
7,018.0
2,426.7
2,049.8
1,075.2
6,389.2
2,143.2
1,957.9
963.3
Less: Current Portion
2,024.9
672.8
778.9
170.5
1,674.2
480.4
676.1
189.5
Total Long-Term Regulatory Assets
$
4,993.1
$
1,753.9
$
1,270.9
$
904.7
$
4,715.0
$
1,662.8
$
1,281.8
$
773.8
24
Regulatory Costs in Other Long-Term Assets: Eversource's regulated companies had $216.6 million (including $115.9 million for CL&P, $39.1 million for NSTAR Electric and $2.6 million for PSNH) and $241.7 million (including $166.7 million for CL&P, $21.9 million for NSTAR Electric and $1.2 million for PSNH) of additional regulatory costs not yet specifically approved as of September 30, 2024 and December 31, 2023, respectively, that were included in Other Long-Term Assets on the balance sheets. These amounts will be reclassified to Regulatory Assets upon approval by the applicable regulatory agency. Based on regulatory policies or past precedent on similar costs, management believes it is probable that these costs will ultimately be approved and recovered from customers in rates. As of September 30, 2024 and December 31, 2023, these regulatory costs included $86.3 million (including $46.7 million for CL&P and $21.5 million for NSTAR Electric) and $82.1 million (including $64.0 million for CL&P and $7.3 million for NSTAR Electric), respectively, of deferred uncollectible hardship costs.
Regulatory Liabilities: The components of regulatory liabilities were as follows:
As of September 30, 2024
As of December 31, 2023
(Millions of Dollars)
Eversource
CL&P
NSTAR Electric
PSNH
Eversource
CL&P
NSTAR Electric
PSNH
EDIT due to Tax Cuts and Jobs Act of 2017
$
2,512.2
$
960.1
$
885.2
$
333.7
$
2,548.6
$
969.2
$
905.1
$
339.3
Regulatory Tracking Mechanisms
789.8
188.2
446.9
99.8
668.3
154.0
347.2
114.4
Cost of Removal
740.4
197.5
448.1
21.1
666.6
157.9
420.9
16.2
Deferred Portion of Non-Service Income Components of Pension, SERP and PBOP
409.3
58.8
202.8
41.1
354.0
49.9
175.9
36.6
AFUDC - Transmission
148.4
63.2
85.2
—
124.3
56.1
68.2
—
Benefit Costs
34.9
0.4
10.4
—
51.0
0.6
22.2
—
Other Regulatory Liabilities
212.3
41.6
14.0
4.9
201.9
30.4
13.9
4.6
Total Regulatory Liabilities
4,847.3
1,509.8
2,092.6
500.6
4,614.7
1,418.1
1,953.4
511.1
Less: Current Portion
722.5
139.5
468.8
106.8
591.8
102.2
368.1
117.5
Total Long-Term Regulatory Liabilities
$
4,124.8
$
1,370.3
$
1,623.8
$
393.8
$
4,022.9
$
1,315.9
$
1,585.3
$
393.6
3. PROPERTY, PLANT AND EQUIPMENT AND ACCUMULATED DEPRECIATION
The following tables summarize property, plant and equipment by asset category:
Eversource
As of September 30, 2024
As of December 31, 2023
(Millions of Dollars)
Distribution - Electric
$
20,766.1
$
19,656.5
Distribution - Natural Gas
8,569.3
8,155.3
Transmission - Electric
15,679.1
14,666.8
Distribution - Water
2,319.2
2,280.1
Solar
201.1
201.1
Utility
47,534.8
44,959.8
Other (1)
2,233.9
2,006.8
Property, Plant and Equipment, Gross
49,768.7
46,966.6
Less: Accumulated Depreciation
Utility
(10,137.9)
(9,670.1)
Other
(1,003.5)
(869.6)
Total Accumulated Depreciation
(11,141.4)
(10,539.7)
Property, Plant and Equipment, Net
38,627.3
36,426.9
Construction Work in Progress
3,284.2
3,071.7
Total Property, Plant and Equipment, Net
$
41,911.5
$
39,498.6
As of September 30, 2024
As of December 31, 2023
(Millions of Dollars)
CL&P
NSTAR Electric
PSNH
CL&P
NSTAR Electric
PSNH
Distribution - Electric
$
8,336.4
$
9,558.1
$
2,911.9
$
7,897.1
$
9,000.5
$
2,799.2
Transmission - Electric
6,804.1
6,183.7
2,692.9
6,548.2
5,630.8
2,489.5
Solar
—
201.1
—
—
201.1
—
Property, Plant and Equipment, Gross
15,140.5
15,942.9
5,604.8
14,445.3
14,832.4
5,288.7
Less: Accumulated Depreciation
(2,874.1)
(3,719.7)
(1,014.2)
(2,670.5)
(3,585.9)
(984.0)
Property, Plant and Equipment, Net
12,266.4
12,223.2
4,590.6
11,774.8
11,246.5
4,304.7
Construction Work in Progress
563.4
1,404.0
368.3
565.4
1,507.3
270.0
Total Property, Plant and Equipment, Net
$
12,829.8
$
13,627.2
$
4,958.9
$
12,340.2
$
12,753.8
$
4,574.7
(1) These assets are primarily comprised of computer software, hardware and equipment at Eversource Service and buildings at The Rocky River Realty Company.
25
4. DERIVATIVE INSTRUMENTS
The electric and natural gas companies purchase and procure energy and energy-related products, which are subject to price volatility, for their customers. The costs associated with supplying energy to customers are recoverable from customers in future rates. These regulated companies manage the risks associated with the price volatility of energy and energy-related products through the use of derivative and non-derivative contracts. Many of the derivative contracts meet the definition of, and are designated as, normal and qualify for accrual accounting under the applicable accounting guidance. The costs and benefits of derivative contracts that meet the definition of normal are recognized in Operating Expenses on the statements of income as electricity or natural gas is delivered.
Derivative contracts that are not designated as normal are recorded at fair value as derivative assets or liabilities on the balance sheets. For the electric and natural gas companies, regulatory assets or regulatory liabilities are recorded to offset the fair values of derivatives, as contract settlement amounts are recovered from, or refunded to, customers in their respective energy supply rates.
The gross fair values of derivative assets and liabilities with the same counterparty are offset and reported as net Derivative Assets or Derivative Liabilities, with current and long-term portions, on the balance sheets. The following table presents the gross fair values of contracts, categorized by risk type, and the net amounts recorded as current or long-term derivative assets or liabilities:
As of September 30, 2024
As of December 31, 2023
CL&P
(Millions of Dollars)
Fair Value Hierarchy
Commodity Supply and Price Risk Management
Netting (1)
Net Amount Recorded as a Derivative
Commodity Supply and Price Risk Management
Netting (1)
Net Amount Recorded as a Derivative
Current Derivative Assets
Level 2
$
15.5
$
(0.4)
$
15.1
$
16.4
$
(0.5)
$
15.9
Long-Term Derivative Assets
Level 2
2.5
(0.2)
2.3
13.6
(0.5)
13.1
Current Derivative Liabilities
Level 2
(77.5)
—
(77.5)
(81.9)
—
(81.9)
Long-Term Derivative Liabilities
Level 2
(12.5)
—
(12.5)
(68.0)
—
(68.0)
(1) Amounts represent derivative assets and liabilities that Eversource elected to record net on the balance sheets. These amounts are subject to master netting agreements or similar agreements for which the right of offset exists.
Derivative Contracts at Fair Value with Offsetting Regulatory Amounts
Commodity Supply and Price Risk Management: As required by regulation, CL&P, along with UI, has capacity-related contracts with generation facilities. CL&P has a sharing agreement with UI, with 80 percent of the costs or benefits of each contract borne by or allocated to CL&P and 20 percent borne by or allocated to UI. The combined capacities of these contracts as of September 30, 2024 and December 31, 2023 were 615 MW and682 MW, respectively. The capacity contracts extend through 2026 and obligate both CL&P and UI to make or receive payments on a monthly basis to or from the generation facilities based on the difference between a set capacity price and the capacity market price received in the ISO-NE capacity markets.
For the three months ended September 30, 2024 and 2023, there were losses of $0.5 million and $1.5 million, respectively. For the nine months ended September 30, 2024 and 2023, there were losses of $3.4 million and $1.6 million, respectively. These changes in fair value associated with CL&P’s derivative contracts are deferred in Regulatory Assets on the balance sheet.
Fair Value Measurements of Derivative Instruments
The fair value of derivative contracts utilizes both observable and unobservable inputs. The fair value is modeled using income techniques, such as discounted cash flow valuations adjusted for assumptions related to exit price. Valuations of derivative contracts using a discounted cash flow methodology include assumptions regarding the timing and likelihood of scheduled capacity payments and also reflect non-performance risk, including credit, using the default probability approach based on the counterparty's credit rating for assets and the Company's credit rating for liabilities. Significant observable inputs for valuations of these contracts include energy-related product prices in future years for which quoted prices in an active market exist. Valuations incorporate estimates of premiums or discounts that would be required by a market participant to arrive at an exit price, using historical market transactions adjusted for the terms of the contract. Fair value measurements were prepared by individuals with expertise in valuation techniques, pricing of energy-related products, and accounting requirements. All derivative contracts were classified as Level 2 in the fair value hierarchy as of both September 30, 2024 and December 31, 2023.
The following table presents changes in the Level 3 category of derivative assets and derivative liabilities measured at fair value on a recurring basis. The derivative assets and liabilities are presented on a net basis.
CL&P
For the Three Months Ended September 30, 2023
For the Nine Months Ended September 30, 2023
(Millions of Dollars)
Derivatives, Net:
Fair Value as of Beginning of Period
$
(152.1)
$
(181.8)
Net Realized/Unrealized Losses Included in Regulatory Assets
(1.5)
(1.6)
Settlements
17.0
46.8
Fair Value as of End of Period
$
(136.6)
$
(136.6)
26
5. MARKETABLE SECURITIES
Eversource’s marketable securities include the CYAPC and YAEC legally restricted trusts that each hold equity and available-for-sale debt securities to fund the spent nuclear fuel removal obligations of their nuclear fuel storage facilities. Eversource also holds trusts that are not subject to regulatory oversight by state or federal agencies that are primarily used to fund certain non-qualified executive benefits. The marketable securities within the non-qualified executive benefit trusts were sold in 2023. Equity and available-for-sale debt marketable securities are recorded at fair value, with the current portion recorded in Prepayments and Other Current Assets and the long-term portion recorded in Marketable Securities on the balance sheets. CYAPC and YAEC’s spent nuclear fuel trusts are restricted and are classified in long-term Marketable Securities on the balance sheets.
Equity Securities: Eversource's equity securities include CYAPC's and YAEC's marketable securities held in spent nuclear fuel trusts, which had fair values of $166.3 million and $173.6 million as of September 30, 2024 and December 31, 2023, respectively. Unrealized gains and losses for these spent nuclear fuel trusts are subject to regulatory accounting treatment and are recorded in Marketable Securities with the corresponding offset to long-term liabilities on the balance sheets, with no impact on the statements of income.
Unrealized gains and losses on equity securities held in Eversource's trusts are recorded in Other Income, Net on the statements of income. The equity securities within Eversource’s non-qualified executive benefits trusts were sold during 2023 and resulted in a $1.1 million gain recorded in Other Income, Net for the nine months ended September 30, 2023. The fair value of equity securities held in Eversource’s trusts as of September 30, 2024 and December 31, 2023 were $4.0 million and $3.3 million, respectively. There were unrealized gains of $0.2 million for the three months ended September 30, 2024 and no unrealized gains or losses for the three months ended September 30, 2023 recorded in Other Income, Net, respectively, related to these equity securities. There were unrealized gains of $0.7 million and $0.3 million for the nine months ended September 30, 2024 and 2023 recorded in Other Income, Net, respectively, related to these equity securities.
Available-for-Sale Debt Securities:The following is a summary of available-for-sale debt securities, which are held in CYAPC’s and YAEC’s spent nuclear fuel trusts:
As of September 30, 2024
As of December 31, 2023
Eversource
(Millions of Dollars)
Amortized Cost
Pre-Tax Unrealized Gains
Pre-Tax Unrealized Losses
Fair Value
Amortized Cost
Pre-Tax Unrealized Gains
Pre-Tax Unrealized Losses
Fair Value
Debt Securities
$
176.9
$
1.1
$
(5.1)
$
172.9
$
169.5
$
1.4
$
(6.6)
$
164.3
Unrealized gains and losses for available-for-sale debt securities included in the CYAPC and YAEC spent nuclear fuel trusts are subject to regulatory accounting treatment and are recorded in Marketable Securities with the corresponding offset to long-term liabilities on the balance sheets, with no impact on the statements of income.
The debt securities within Eversource’s non-qualified executive benefits trusts were sold during 2023. Any unrealized gains and losses on available-for-sale debt securities held in Eversource's trusts are recorded in Accumulated Other Comprehensive Income, excluding amounts related to credit losses or losses on securities intended to be sold, which are recorded in Other Income, Net. There were $1.2 million of realized losses recorded on securities sold for the nine months ended September 30, 2023 that were reclassified out of Accumulated Other Comprehensive Income and recorded in Other Income, Net. There were no credit losses for the three and nine months ended September 30, 2024 and 2023, and no allowance for credit losses as of September 30, 2024. Factors considered in determining whether a credit loss exists include adverse conditions specifically affecting the issuer, the payment history, ratings and rating changes of the security, and the severity of the impairment. For asset-backed debt securities, underlying collateral and expected future cash flows are also evaluated.
As of September 30, 2024, the contractual maturities of available-for-sale debt securities were as follows:
Eversource
(Millions of Dollars)
Amortized Cost
Fair Value
Less than one year
$
24.7
$
24.7
One to five years
33.7
33.9
Six to ten years
41.0
41.2
Greater than ten years
77.5
73.1
Total Debt Securities
$
176.9
$
172.9
Realized Gains and Losses: Realized gains and losses are offset in long-term liabilities for CYAPC and YAEC and are recorded in Other Income, Net for Eversource's benefit trusts. Eversource utilizes the average cost basis method for the CYAPC and YAEC spent nuclear fuel trusts and the specific identification basis method for the Eversource non-qualified benefit trusts to compute the realized gains and losses on the sale of marketable securities.
27
Fair Value Measurements: The following table presents the marketable securities recorded at fair value on a recurring basis by the level in which they are classified within the fair value hierarchy:
Eversource
(Millions of Dollars)
As of September 30, 2024
As of December 31, 2023
Level 1:
Mutual Funds and Equities
$
170.3
$
176.9
Money Market Funds
21.5
13.7
Total Level 1
$
191.8
$
190.6
Level 2:
U.S. Government Issued Debt Securities (Agency and Treasury)
$
90.1
$
90.1
Corporate Debt Securities
35.9
34.0
Asset-Backed Debt Securities
8.2
5.6
Municipal Bonds
7.4
9.8
Other Fixed Income Securities
9.8
11.1
Total Level 2
$
151.4
$
150.6
Total Marketable Securities
$
343.2
$
341.2
U.S. government issued debt securities are valued using market approaches that incorporate transactions for the same or similar bonds and adjustments for yields and maturity dates. Corporate debt securities are valued using a market approach, utilizing recent trades of the same or similar instruments and also incorporating yield curves, credit spreads and specific bond terms and conditions. Asset-backed debt securities include collateralized mortgage obligations, commercial mortgage backed securities, and securities collateralized by auto loans, credit card loans or receivables. Asset-backed debt securities are valued using recent trades of similar instruments, prepayment assumptions, yield curves, issuance and maturity dates, and tranche information. Municipal bonds are valued using a market approach that incorporates reported trades and benchmark yields. Other fixed income securities are valued using pricing models, quoted prices of securities with similar characteristics, and discounted cash flows.
6. SHORT-TERM AND LONG-TERM DEBT
Short-Term Debt - Commercial Paper Programs and Credit Agreements: Eversource parent has a $2.00 billion commercial paper program allowing Eversource parent to issue commercial paper as a form of short-term debt. Eversource parent, CL&P, PSNH, NSTAR Gas, Yankee Gas, EGMA and Aquarion Water Company of Connecticut are parties to a five-year $2.00 billion revolving credit facility, which terminates on October 11, 2029. This revolving credit facility serves to backstop Eversource parent's $2.00 billion commercial paper program.
NSTAR Electric has a $650 million commercial paper program allowing NSTAR Electric to issue commercial paper as a form of short-term debt. NSTAR Electric is also a party to a five-year $650 million revolving credit facility, which terminates on October 11, 2029, that serves to backstop NSTAR Electric's $650 million commercial paper program.
The amount of borrowings outstanding and available under the commercial paper programs were as follows:
Borrowings Outstanding as of
Available Borrowing Capacity as of
Weighted-Average Interest Rate as of
September 30, 2024
December 31, 2023
September 30, 2024
December 31, 2023
September 30, 2024
December 31, 2023
(Millions of Dollars)
Eversource Parent Commercial Paper Program
$
322.0
$
1,771.9
$
1,678.0
$
228.1
5.12
%
5.60
%
NSTAR Electric Commercial Paper Program
537.5
365.8
112.5
284.2
4.94
%
5.40
%
There were no borrowings outstanding on the revolving credit facilities as of September 30, 2024 or December 31, 2023.
CL&P and PSNH have uncommitted line of credit agreements totaling $375 million and $250 million, respectively, all of which will expire in either May 2025, September 2025 or October 2025. There are no borrowings outstanding on either the CL&P or PSNH uncommitted line of credit agreements as of September 30, 2024.
Amounts outstanding under the commercial paper programs are included in Notes Payable and classified in current liabilities on the Eversource and NSTAR Electric balance sheets, as all borrowings are outstanding for no more than 364 days at one time. As a result of the CL&P long-term debt issuance in January 2024, $207.3 million of commercial paper borrowings under the Eversource parent commercial paper program were reclassified to Long-Term Debt on Eversource parent’s balance sheet as of December 31, 2023. As a result of the EGMA long-term debt issuance in October 2024, $100.0 million of commercial paper borrowings under the Eversource parent commercial paper program were reclassified to Long-Term Debt on Eversource parent’s balance sheet as of September 30, 2024.
Intercompany Borrowings: Eversource parent uses its available capital resources to provide loans to its subsidiaries to assist in meeting their short-term borrowing needs. Eversource parent records intercompany interest income from its loans to subsidiaries, which is eliminated in consolidation. Intercompany loans from Eversource parent to its subsidiaries are eliminated in consolidation on Eversource's balance sheets. As of September 30, 2024, there were intercompany loans from Eversource parent to CL&P of $135.0 million and to PSNH of $89.3 million. As of December 31, 2023, there were intercompany loans from Eversource parent to CL&P of $457.0 million and to PSNH of $233.0 million. Eversource parent charges interest on these intercompany loans at the same weighted-average interest rate as its commercial paper program. Intercompany loans from Eversource parent are included in Notes Payable to Eversource Parent and classified in current liabilities on the
28
respective subsidiary's balance sheets, as these intercompany borrowings are outstanding for no more than 364 days at one time. As a result of the CL&P long-term debt issuance in January 2024, $207.3 million of CL&P’s intercompany borrowings were reclassified to Long-Term Debt on CL&P’s balance sheet as of December 31, 2023.
Sources and Uses of Cash: The Company expects 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.
Long-Term Debt Issuance Authorizations: On February 8, 2024, the NHPUC approved PSNH’s 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 Electric’s request for authorization to issue up to $2.4 billion in long-term debt through December 31, 2026. On July 24, 2024, PURA approved CL&P’s request for authorization to issue up to $1.0 billion in long-term debt through December 31, 2025. On August 12, 2024 the DPU approved EGMA’s request for authorization to issue up to $325 million in long-term debt through December 31, 2026.
Long-Term Debt Issuances and Repayments:The following table summarizes long-term debt issuances and repayments:
(Millions of Dollars)
Interest Rate
Issuance/(Repayment)
Issue Date or Repayment Date
Maturity Date
Use of Proceeds for Issuance/ Repayment Information
CL&P Series A First Mortgage Bonds
4.65
%
$
350.0
January 2024
January 2029
Repaid short-term debt, paid capital expenditures and working capital
CL&P Series B First Mortgage Bonds
4.95
%
300.0
August 2024
August 2034
Repaid Series D Bonds, repaid short-term debt, and working capital
CL&P Series D First Mortgage Bonds
7.875
%
(139.8)
October 2024
October 2024
Paid at maturity
NSTAR Electric Debentures
5.40
%
600.0
May 2024
June 2034
Repaid short-term debt, paid capital expenditures and working capital
PSNH Series X First Mortgage Bonds
5.35
%
300.0
April 2024
October 2033
Repaid short-term debt, paid capital expenditures and working capital
Eversource Parent Series DD Senior Notes
5.00
%
350.0
January 2024
January 2027
Repaid short-term debt
Eversource Parent Series EE Senior Notes
5.50
%
650.0
January 2024
January 2034
Repaid short-term debt
Eversource Parent Series FF Senior Notes
5.85
%
700.0
April 2024
April 2031
Repaid Series X Senior Notes and Aquarion’s 2014 Senior Notes at maturity and short-term debt
Eversource Parent Series GG Senior Notes
5.95
%
700.0
April 2024
July 2034
Repaid Series X Senior Notes and Aquarion’s 2014 Senior Notes at maturity and short-term debt
Eversource Parent Series X Senior Notes
4.20
%
(900.0)
June 2024
June 2024
Paid at maturity
Eversource Parent Series L Senior Notes
2.90
%
(450.0)
October 2024
October 2024
Paid at maturity
NSTAR Gas Series W First Mortgage Bonds
5.29
%
160.0
June 2024
June 2029
Repaid short-term debt, paid capital expenditures and general corporate purchases
NSTAR Gas Series X First Mortgage Bonds
5.48
%
40.0
June 2024
June 2034
Repaid short-term debt, paid capital expenditures and general corporate purchases
Yankee Gas Series W First Mortgage Bonds
5.50
%
90.0
July 2024
July 2029
Repaid short-term debt, paid capital expenditures, working capital and repaid Series P bonds at maturity
Yankee Gas Series X First Mortgage Bonds
5.74
%
90.0
July 2024
July 2034
Repaid short-term debt, paid capital expenditures, working capital and repaid Series P bonds at maturity
Yankee Gas Series P First Mortgage Bonds
2.23
%
(100.0)
October 2024
October 2024
Paid at maturity
EGMA Series E First Mortgage Bonds
5.17
%
100.0
October 2024
November 2034
Refinanced existing indebtedness, paid capital expenditures and general corporate purchases
Aquarion Senior Notes
4.00
%
(360.0)
August 2024
August 2024
Paid at maturity
Aquarion Water Company of Connecticut Senior Notes
5.57
%
70.0
August 2024
September 2034
Repaid short-term debt, paid capital expenditures and general corporate purchases
7. RATE REDUCTION BONDS AND VARIABLE INTEREST ENTITIES
Rate Reduction Bonds: In May 2018, PSNH Funding, a wholly-owned subsidiary of PSNH, issued $635.7 million of securitized RRBs in multiple tranches with a weighted average interest rate of 3.66 percent, and final maturity dates ranging from 2026 to 2035. The RRBs are expected to be repaid by February 1, 2033. RRB payments consist of principal and interest and are paid semi-annually, beginning on February 1, 2019. The RRBs were issued pursuant to a finance orderissued by the NHPUC in January 2018 to recover remaining costs resulting from the divestiture of PSNH’s generation assets.
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PSNH Funding was formed solely to issue RRBs to finance PSNH's unrecovered remaining costs associated with the divestiture of its generation assets. PSNH Funding is considered a VIE primarily because the equity capitalization is insufficient to support its operations. PSNH has the power to direct the significant activities of the VIE and is most closely associated with the VIE as compared to other interest holders. Therefore, PSNH is considered the primary beneficiary and consolidates PSNH Funding in its consolidated financial statements.
The following tables summarize the impact of PSNH Funding on PSNH's balance sheets and income statements:
(Millions of Dollars)
PSNH Balance Sheets:
As of September 30, 2024
As of December 31, 2023
Restricted Cash - Current Portion (included in Special Deposits)
$
17.3
$
30.0
Restricted Cash - Long-Term Portion (included in Other Long-Term Assets)
3.1
3.2
Securitized Stranded Cost (included in Regulatory Assets)
360.1
392.5
Other Regulatory Liabilities (included in Regulatory Liabilities)
7.5
5.3
Accrued Interest (included in Other Current Liabilities)
2.3
6.3
Rate Reduction Bonds - Current Portion
43.2
43.2
Rate Reduction Bonds - Long-Term Portion
324.1
367.3
(Millions of Dollars)
PSNH Income Statements:
For the Three Months Ended
For the Nine Months Ended
September 30, 2024
September 30, 2023
September 30, 2024
September 30, 2023
Amortization of RRB Principal (included in Amortization of Regulatory Assets/(Liabilities), Net)
$
10.8
$
10.8
$
32.4
$
32.4
Interest Expense on RRB Principal (included in Interest Expense)
3.5
3.9
10.8
11.9
8. PENSION BENEFITS AND POSTRETIREMENT BENEFITS OTHER THAN PENSION
Eversource provides defined benefit retirement plans (Pension Plans) that cover eligible employees. In addition to the Pension Plans, Eversource maintains non-qualified defined benefit retirement plans (SERP Plans), which provide benefits in excess of Internal Revenue Code limitations to eligible participants consisting of current and retired employees. Eversource also provides defined benefit postretirement plans (PBOP Plans) that provide life insurance and a health reimbursement arrangement created for the purpose of reimbursing retirees and dependents for health insurance premiums and certain medical expenses to eligible employees that meet certain age and service eligibility requirements.
The components of net periodic benefit plan expense/(income) for the Pension, SERP and PBOP Plans, prior to amounts capitalized as Property, Plant and Equipment or deferred as regulatory assets/(liabilities) for future recovery or refund, are shown below. The service cost component of net periodic benefit plan expense/(income), less the capitalized portion, is included in Operations and Maintenance expense on the statements of income. The remaining components of net periodic benefit plan expense/(income), less the deferred portion, are included in Other Income, Net on the statements of income. Pension, SERP and PBOP expense reflected in the statements of cash flows for CL&P, NSTAR Electric and PSNH does not include intercompany allocations of net periodic benefit plan expense/(income), as these amounts are cash settled on a short-term basis.
Pension and SERP
PBOP
For the Three Months Ended September 30, 2024
For the Three Months Ended September 30, 2024
(Millions of Dollars)
Eversource
CL&P
NSTAR Electric
PSNH
Eversource
CL&P
NSTAR Electric
PSNH
Service Cost
$
11.2
$
3.3
$
1.9
$
1.1
$
1.7
$
0.3
$
0.3
$
0.1
Interest Cost
62.7
12.6
12.8
6.7
8.0
1.4
2.2
0.9
Expected Return on Plan Assets
(115.7)
(23.4)
(28.0)
(12.2)
(20.3)
(2.4)
(9.9)
(1.4)
Actuarial Loss/(Gain)
22.0
3.2
6.4
1.3
(0.1)
—
—
—
Prior Service Cost/(Credit)
0.3
—
0.1
—
(5.4)
0.3
(4.2)
0.1
Total Net Periodic Benefit Plan Income
$
(19.5)
$
(4.3)
$
(6.8)
$
(3.1)
$
(16.1)
$
(0.4)
$
(11.6)
$
(0.3)
Intercompany Income Allocations
N/A
$
(0.6)
$
(0.6)
$
(0.2)
N/A
$
(0.6)
$
(0.6)
$
(0.2)
Pension and SERP
PBOP
For the Nine Months Ended September 30, 2024
For the Nine Months Ended September 30, 2024
(Millions of Dollars)
Eversource
CL&P
NSTAR Electric
PSNH
Eversource
CL&P
NSTAR Electric
PSNH
Service Cost
$
33.2
$
9.5
$
5.9
$
3.2
$
5.2
$
0.9
$
0.9
$
0.4
Interest Cost
187.4
37.7
38.7
20.1
24.0
4.2
6.6
2.6
Expected Return on Plan Assets
(347.0)
(70.2)
(84.3)
(36.6)
(61.0)
(7.1)
(29.7)
(4.2)
Actuarial Loss/(Gain)
63.9
8.9
19.2
3.7
(0.3)
—
—
—
Prior Service Cost/(Credit)
0.9
—
0.3
—
(16.2)
0.8
(12.7)
0.3
Settlement Loss
4.3
—
—
—
—
—
—
—
Total Net Periodic Benefit Plan Income
$
(57.3)
$
(14.1)
$
(20.2)
$
(9.6)
$
(48.3)
$
(1.2)
$
(34.9)
$
(0.9)
Intercompany Income Allocations
N/A
$
(0.9)
$
(0.8)
$
(0.3)
N/A
$
(1.7)
$
(1.9)
$
(0.6)
30
Pension and SERP
PBOP
For the Three Months Ended September 30, 2023
For the Three Months Ended September 30, 2023
(Millions of Dollars)
Eversource
CL&P
NSTAR Electric
PSNH
Eversource
CL&P
NSTAR Electric
PSNH
Service Cost
$
10.7
$
3.1
$
1.9
$
1.0
$
1.9
$
0.4
$
0.3
$
0.2
Interest Cost
63.4
12.6
13.5
6.8
8.5
1.5
2.3
0.9
Expected Return on Plan Assets
(116.3)
(23.5)
(28.4)
(12.3)
(19.3)
(2.3)
(9.2)
(1.4)
Actuarial Loss
10.9
0.5
4.0
0.4
—
—
—
—
Prior Service Cost/(Credit)
0.3
—
0.1
—
(5.4)
0.2
(4.2)
0.1
Settlement Loss
8.7
—
—
—
—
—
—
—
Total Net Periodic Benefit Plan Income
$
(22.3)
$
(7.3)
$
(8.9)
$
(4.1)
$
(14.3)
$
(0.2)
$
(10.8)
$
(0.2)
Intercompany Expense/(Income) Allocations
N/A
$
0.8
$
0.9
$
0.3
N/A
$
(0.5)
$
(0.5)
$
(0.2)
Pension and SERP
PBOP
For the Nine Months Ended September 30, 2023
For the Nine Months Ended September 30, 2023
(Millions of Dollars)
Eversource
CL&P
NSTAR Electric
PSNH
Eversource
CL&P
NSTAR Electric
PSNH
Service Cost
$
32.4
$
9.2
$
5.9
$
3.2
$
5.7
$
1.0
$
0.9
$
0.6
Interest Cost
190.6
37.9
40.5
20.4
25.4
4.6
6.9
2.7
Expected Return on Plan Assets
(348.7)
(70.6)
(85.3)
(37.1)
(57.9)
(7.0)
(27.7)
(4.2)
Actuarial Loss
35.0
1.9
12.9
1.2
—
—
—
—
Prior Service Cost/(Credit)
0.9
—
0.3
—
(16.2)
0.8
(12.7)
0.3
Settlement Loss
12.4
—
—
—
—
—
—
—
Total Net Periodic Benefit Plan Income
$
(77.4)
$
(21.6)
$
(25.7)
$
(12.3)
$
(43.0)
$
(0.6)
$
(32.6)
$
(0.6)
Intercompany Income Allocations
N/A
$
(1.8)
$
(1.2)
$
(0.3)
N/A
$
(1.4)
$
(1.6)
$
(0.5)
In August 2024, Eversource communicated to its employees participating in the Eversource 401k Plan’s enhanced defined contribution feature (referred to as K-Vantage) that effective January 1, 2025 (subject to union negotiations), a Cash Balance Pension Plan will be established, which will replace employer K-Vantage contributions. Eversource will transfer into the Cash Balance Pension Plan employees who are currently participating in the K-Vantage plan and will credit employees a set percentage of an employee’s eligible pay based on age and years of service on the employee’s behalf. This benefit will be a new, additional obligation of the existing Pension Plan and will be funded through the existing assets of the Eversource Pension Plan. This plan amendment did not require a remeasurement in 2024 and the liability will begin to accrue benefits upon the effective date of January 1, 2025.
9. COMMITMENTS AND CONTINGENCIES
A. Environmental Matters
Eversource, CL&P, NSTAR Electric and PSNH are subject to environmental laws and regulations intended to mitigate or remove the effect of past operations and improve or maintain the quality of the environment. These laws and regulations require the removal or the remedy of the effect on the environment of the disposal or release of certain specified hazardous substances at current and former operating sites. Eversource, CL&P, NSTAR Electric and PSNH have an active environmental auditing and training program and each believes it is substantially in compliance with all enacted laws and regulations.
The number of environmental sites and related reserves for which remediation or long-term monitoring, preliminary site work or site assessment is being performed are as follows:
As of September 30, 2024
As of December 31, 2023
Number of Sites
Reserve (in millions)
Number of Sites
Reserve (in millions)
Eversource
65
$
130.5
65
$
128.2
CL&P
15
13.7
16
13.8
NSTAR Electric
13
6.7
12
5.4
PSNH
8
6.4
8
7.6
Included in the number of sites and reserve amounts above are former MGP sites that were operated several decades ago and manufactured natural gas from coal and other processes, which resulted in certain by-products remaining in the environment that may pose a potential risk to human health and the environment, for which Eversource may have potential liability. Eversource’s reserve balances related to these former MGP sites were $117.9 million and $117.1 million as of September 30, 2024 and December 31, 2023, respectively, and related primarily to the natural gas business segment.
31
These reserve estimates are subjective in nature as they take into consideration several different remediation options at each specific site. The reliability and precision of these estimates can be affected by several factors, including new information concerning either the level of contamination at the site, the extent of Eversource's, CL&P's, NSTAR Electric's and PSNH's responsibility for remediation or the extent of remediation required, recently enacted laws and regulations or changes in cost estimates due to certain economic factors. It is possible that new information or future developments could require a reassessment of the potential exposure to required environmental remediation. As this information becomes available, management will continue to assess the potential exposure and adjust the reserves accordingly.
B. Long-Term Contractual Arrangements
The following is an update to the current status of long-term contractual arrangements set forth in Note 13B of the Eversource 2023 Form 10-K.
Renewable Energy: Renewable energy contracts include non-cancelable commitments under contracts of CL&P for the purchase of energy and capacity from renewable energy facilities. The table now includes the long-term commitments of CL&P pertaining to renewable energy purchase contracts that have now commenced significant construction activities.
CL&P
(Millions of Dollars)
2024
2025
2026
2027
2028
Thereafter
Total
Renewable Energy
$
208.8
$
666.4
$
743.5
$
745.9
$
747.6
$
4,016.7
$
7,128.9
Additionally, Renewable Energy contract costs within long-term contractual arrangements at PSNH as of December 31, 2023 included renewable energy purchase contracts related to the purchase of capacity, energy and RECs from a New Hampshire generation plant totaling $503.2 million. The NHPUC approved the termination of the PPA related to this generation plant effective February 29, 2024. As of September 30, 2024, there are no remaining long-term renewable energy purchase contracts at PSNH.
C. Guarantees and Indemnifications
In the normal course of business, Eversource parent provides credit assurances on behalf of its subsidiaries, including CL&P, NSTAR Electric and PSNH, in the form of guarantees. Management does not anticipate a material impact to net income or cash flows as a result of these various guarantees and indemnifications.
Guarantees issued on behalf of unconsolidated entities, including equity method ownership interests, for which Eversource parent is the guarantor, are recorded at fair value as a liability on the balance sheet at the inception of the guarantee. The fair value of guarantees issued on behalf of unconsolidated entities are recorded within Other Long-Term Liabilities on the balance sheet, and were $1.1 million and $4.4 million as of September 30, 2024 and December 31, 2023, respectively. Eversource regularly reviews performance risk under these guarantee arrangements, and believes the likelihood of payments being required under the guarantees is remote. In the event it becomes probable that Eversource parent will be required to perform under the guarantee, the amount of probable payment will be recorded.
On September 30, 2024, Eversource completed the sale of its 50 percent ownership share in the South Fork Wind and Revolution Wind projects to GIP. Under the agreement with GIP, Eversource’s existing and certain additional credit support obligations for Revolution Wind are expected to roll off as the project completes construction. On July 9, 2024, Eversource completed the sale of its 50 percent ownership share of Sunrise Wind to Ørsted. Under the agreement with Ørsted, Eversource’s existing credit support obligations for Sunrise Wind were either terminated or indemnified by Ørsted as a result of the sale.
The following table summarizes Eversource parent's exposure to guarantees and indemnifications of its subsidiaries and affiliates to external parties, and primarily relates to its previously-owned offshore wind investments:
As of September 30, 2024
Company (Obligor)
Description
Maximum Exposure (in millions)
North East Offshore, LLC, Revolution Wind, LLC, and TurbineCo, LLC
Offshore wind construction-related purchase agreements with third-party contractors (1)
$
455.3
Eversource Investment LLC, Eversource Investment Service Company LLC and South Fork Class B Member, LLC
Offshore wind funding and indemnification obligations (2)
351.1
Eversource Investment LLC
Letters of Credit (3)
5.3
Eversource TEI LLC
South Fork Wind Tax Equity (4)
50.0
South Fork Wind, LLC
Power Purchase Agreement Security (5)
7.1
Various Eversource subsidiaries
Surety bonds (6)
31.1
(1) Eversource parent issued guarantees on behalf of its previously 50 percent-owned affiliate, Revolution Wind, LLC, and on behalf of TurbineCo, LLC (successor in interest to North East Offshore, LLC (NEO)), under which Eversource parent agreed to guarantee each entity’s performance of obligations under certain construction-related purchase agreements with third-party contractors, in an aggregate amount not to exceed $1.09 billion. Eversource parent’s obligations under the guarantees expire upon the earlier of (i) dates ranging between October 2024 and November 2027 and (ii) full performance of the guaranteed obligations. Eversource parent also issued a separate guarantee to Ørsted on behalf of NEO, under which Eversource parent agreed to guarantee 50 percent of NEO’s payment obligations under certain offshore wind project construction-related agreements with Ørsted in an aggregate amount not to exceed $62.5 million and expiring upon full performance of the guaranteed obligation.
32
(2) Eversource parent issued guarantees on behalf of its wholly-owned subsidiary Eversource Investment LLC (EI), which held Eversource's previous investments in offshore wind-related equity method investments until sale, and on behalf of its previously 50 percent-owned affiliate, South Fork Class B Member, LLC, whereby Eversource parent will guarantee each entity’s performance of certain funding obligations of the South Fork and Revolution Wind projects. Eversource parent also guaranteed certain indemnification obligations of EI associated with third party credit support for EI’s investment in NEO. On September 30, 2024, Eversource parent issued a guaranty on behalf of its wholly-owned subsidiary, Eversource Investment Service Company LLC, whereby Eversource parent will guarantee Eversource Investment Service Company LLC’s performance of certain indemnification obligations during the onshore construction phase of the Revolution Wind project, in an amount not to exceed $100.0 million. These guarantees will not exceed $1.62 billion and expire upon the full performance of the guaranteed obligations.
(3) Eversource parent entered into a guarantee on behalf of EI, under which Eversource parent would guarantee EI's obligations under a letter of credit facility with a financial institution that EI may request in an aggregate amount of up to approximately $25 million. As of September 30, 2024, EI has issued letters of credit on behalf of South Fork Wind, LLC and Revolution Wind, LLC totaling $5.3 million. The guarantee will remain in effect until full performance of the guaranteed obligations.
(4) Eversource parent issued a guarantee on behalf of its wholly-owned subsidiary, Eversource TEI LLC, whereby Eversource parent will guarantee Eversource TEI LLC’s performance of certain obligations, in an amount not to exceed $50.0 million, in connection with any remaining obligations under the LLC agreement. Eversource parent’s obligations expire upon the full performance of the guaranteed obligations.
(5) Eversource parent issued a guarantee on behalf of its previously 50 percent-owned affiliate, South Fork Wind, LLC, whereby Eversource parent will guarantee South Fork Wind, LLC's performance of certain obligations, in an amount not to exceed $7.1 million, under a Power Purchase Agreement between the Long Island Power Authority and South Fork Wind, LLC (the Agreement). The guarantee expires upon the later of (i) the end of the Agreement term and (ii) full performance of the guaranteed obligations.
(6) Surety bonds expire in 2024 and 2025. Expiration dates reflect termination dates, the majority of which will be renewed or extended. Certain surety bonds contain credit ratings triggers that would require Eversource parent to post collateral in the event that the unsecured debt credit ratings of Eversource parent are downgraded.
On September 30, 2024, Eversource entered into an agreement with GIP and Ørsted to contingently provide future credit support up to a maximum of $850 million in guarantees, if required, to support third party tax equity financing for Revolution Wind.
D. Spent Nuclear Fuel Obligations - Yankee Companies
CL&P, NSTAR Electric and PSNH have plant closure and fuel storage cost obligations to the Yankee Companies, which have each completed the physical decommissioning of their respective nuclear power facilities and are now engaged in the long-term storage of their spent fuel. The Yankee Companies fund these costs through litigation proceeds received from the DOE and, to the extent necessary, through wholesale, FERC-approved rates charged under power purchase agreements with several New England utilities, including CL&P, NSTAR Electric and PSNH. CL&P, NSTAR Electric and PSNH, in turn recover these costs from their customers through state regulatory commission-approved retail rates. The Yankee Companies collect amounts that management believes are adequate to recover the remaining plant closure and fuel storage cost estimates for the respective plants. Management believes CL&P and NSTAR Electric will recover their shares of these obligations from their customers. PSNH has recovered its total share of these costs from its customers.
Spent Nuclear Fuel Litigation:
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. The court previously awarded the Yankee Companies damages for Phases I, II, III and IV of litigation resulting from the DOE's failure to meet its contractual obligations. These Phases covered damages incurred in the years 1998 through 2016, and the awarded damages have been received by the Yankee Companies with certain amounts of the damages refunded to their customers.
DOE Phase V Damages - On March 25, 2021, 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. The Yankee Companies filed claims seeking monetary damages totaling $120.4 million for CYAPC, YAEC and MYAPC. Pursuant to a June 2, 2022 court order, the Yankee Companies were subsequently permitted to include monetary damages relating to the year 2021 in the DOE Phase V complaint. The Yankee Companies submitted a supplemental filing to include these costs of $33.1 million on June 8, 2022. In September 2024, the parties reached an agreement in principle to settle the Phase V complaint, subject to approval. As a result of the pending settlement agreement, the court delayed the scheduled start of the DOE Phase V trial from October 28, 2024 to until January 13, 2025, if necessary.
E. FERC ROE Complaints
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). In each of the first three complaints, filed on October 1, 2011, December 27, 2012, and July 31, 2014, respectively, the Complainants challenged the NETOs' base ROE of 11.14 percent that had been utilized since 2005 and sought an order to reduce it prospectively from the date of the final FERC order and for the separate 15-month complaint periods. In the fourth complaint, filed April 29, 2016, the Complainants challenged the NETOs' base ROE billed of 10.57 percent and the maximum ROE for transmission incentive (incentive cap) of 11.74 percent, asserting that these ROEs were unjust and unreasonable.
33
The ROE originally billed during the period October 1, 2011 (beginning of the first complaint period) through October 15, 2014 consisted of a base ROE of 11.14 percent and incentives up to 13.1 percent. On October 16, 2014, FERC issued Opinion No. 531-A and set the base ROE at 10.57 percent and the incentive cap at 11.74 percent for the first complaint period. This was also effective for all prospective billings to customers beginning October 16, 2014. This FERC order was vacated on April 14, 2017 by the U.S. Court of Appeals for the D.C. Circuit (the Court).
All amounts associated with the first complaint period have been refunded, which totaled $38.9 million (pre-tax and excluding interest) at Eversource and reflected both the base ROE and incentive cap prescribed by the FERC order. The refund consisted of $22.4 million for CL&P, $13.7 million for NSTAR Electric and $2.8 million for PSNH.
Eversource has recorded a reserve of $39.1 million (pre-tax and excluding interest) for the second complaint period as of both September 30, 2024 and December 31, 2023. This reserve represents the difference between the billed rates during the second complaint period and a 10.57 percent base ROE and 11.74 percent incentive cap. The reserve consisted of $21.4 million for CL&P, $14.6 million for NSTAR Electric and $3.1 million for PSNH as of both September 30, 2024 and December 31, 2023.
On October 16, 2018, FERC issued an order on all four complaints describing how it intends to address the issues that were remanded by the Court. FERC proposed a new framework to determine (1) whether an existing ROE is unjust and unreasonable and, if so, (2) how to calculate a replacement ROE. Initial briefs were filed by the NETOs, Complainants and FERC Trial Staff on January 11, 2019 and reply briefs were filed on March 8, 2019. The NETOs' brief was supportive of the overall ROE methodology determined in the October 16, 2018 order provided the FERC does not change the proposed methodology or alter its implementation in a manner that has a material impact on the results.
The FERC order included illustrative calculations for the first complaint using FERC's proposed frameworks with financial data from that complaint. Those illustrative calculations indicated that for the first complaint period, for the NETOs, which FERC concludes are of average financial risk, the preliminary just and reasonable base ROE is 10.41 percent and the preliminary incentive cap on total ROE is 13.08 percent.
If the results of the illustrative calculations were included in a final FERC order for each of the complaint periods, then a 10.41 percent base ROE and a 13.08 percent incentive cap would not have a significant impact on our financial statements for all of the complaint periods. These preliminary calculations are not binding and do not represent what we believe to be the most likely outcome of a final FERC order.
On November 21, 2019, FERC issued Opinion No. 569 affecting the two pending transmission ROE complaints against the Midcontinent ISO (MISO) transmission owners, in which FERC adopted a new methodology for determining base ROEs. Various parties sought rehearing. On December 23, 2019, 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. On May 21, 2020, 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. On November 19, 2020, 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. The new methodology differs significantly from the methodology proposed by FERC in its October 16, 2018 order to determine the NETOs' base ROEs in its four pending cases. FERC Opinion Nos. 569-A and 569-B were appealed to the Court. On 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. The Court found that FERC’s development of the new return methodology was arbitrary and capricious due to FERC’s failure to offer a reasonable explanation for its decision to reintroduce the risk-premium financial model in its new methodology for calculating a just and reasonable return.
On October 17, 2024, FERC issued an order on the remand of the MISO ROE proceedings. The order addressed the Court’s decision that the reintroduction of the risk-premium financial model in the ROE methodology was arbitrary and capricious by removing the risk-premium financial model from the ROE methodology. The removal of the risk-premium financial model was the only revision to FERC’s ROE methodology and resulted in a two-model approach utilizing the two-step discounted cash flow model and the capital asset pricing model. MISO was directed to provide refunds for the period November 12, 2013 to February 11, 2015 (the first MISO ROE complaint refund period) and for the period from September 28, 2016 (the date of FERC’s order on the first MISO ROE complaint) to October 17, 2024 by December 1, 2025. The order also stated that FERC does not preclude the use of the risk-premium financial model in future proceedings if the parties can demonstrate that FERC’s stated concerns around the inclusion of the model have been addressed.
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 a range of loss for any of the four complaint proceedings at this time. The resolution of these proceedings could have a material impact on the results of operations, financial condition and cash flows.
Eversource, CL&P, NSTAR Electric and PSNH currently record revenues at the 10.57 percent base ROE and incentive cap at 11.74 percent established in the October 16, 2014 FERC order.
A change of 10 basis points to the base ROE used to establish the reserves would impact Eversource’s after-tax earnings by an average of approximately $3 million for each of the four15-month complaint periods.
34
10. FAIR VALUE OF FINANCIAL INSTRUMENTS
The following methods and assumptions were used to estimate the fair value of each of the following financial instruments:
Preferred Stock, Long-Term Debt and Rate Reduction Bonds: The fair value of CL&P's and NSTAR Electric's preferred stock is based upon pricing models that incorporate interest rates and other market factors, valuations or trades of similar securities and cash flow projections. The fair value of long-term debt and RRB debt securities is based upon pricing models that incorporate quoted market prices for those issues or similar issues adjusted for market conditions, credit ratings of the respective companies and treasury benchmark yields. The fair values provided in the table below are classified as Level 2 within the fair value hierarchy. Carrying amounts and estimated fair values are as follows:
Eversource
CL&P
NSTAR Electric
PSNH
(Millions of Dollars)
Carrying Amount
Fair Value
Carrying Amount
Fair Value
Carrying Amount
Fair Value
Carrying Amount
Fair Value
As of September 30, 2024:
Preferred Stock Not Subject to Mandatory Redemption
$
155.6
$
131.5
$
116.2
$
96.9
$
43.0
$
34.6
$
—
$
—
Long-Term Debt
27,413.9
26,518.4
5,250.6
5,099.2
5,093.7
4,968.0
1,731.8
1,623.6
Rate Reduction Bonds
367.3
360.1
—
—
—
—
367.3
360.1
As of December 31, 2023:
Preferred Stock Not Subject to Mandatory Redemption
$
155.6
$
122.2
$
116.2
$
90.4
$
43.0
$
31.8
$
—
$
—
Long-Term Debt
24,413.5
22,855.2
4,814.4
4,572.0
4,496.9
4,273.7
1,431.6
1,292.6
Rate Reduction Bonds
410.5
395.0
—
—
—
—
410.5
395.0
Derivative Instruments and Marketable Securities: Derivative instruments and investments in marketable securities are carried at fair value. For further information, see Note 4, "Derivative Instruments," and Note 5, "Marketable Securities," to the financial statements.
See Note 1C, "Summary of Significant Accounting Policies – Fair Value Measurements," for the fair value measurement policy and the fair value hierarchy.
11. ACCUMULATED OTHER COMPREHENSIVE INCOME/(LOSS)
The changes in accumulated other comprehensive income/(loss) by component, net of tax, are as follows:
For the Nine Months Ended September 30, 2024
For the Nine Months Ended September 30, 2023
Eversource
(Millions of Dollars)
Qualified Cash Flow Hedging Instruments
Defined Benefit Plans
Total
Qualified Cash Flow Hedging Instruments
Unrealized Gains/(Losses) on Marketable Securities
Defined Benefit Plans
Total
Balance as of Beginning of Period
$
(0.4)
$
(33.3)
$
(33.7)
$
(0.4)
$
(1.2)
$
(37.8)
$
(39.4)
OCI Before Reclassifications
—
(0.9)
(0.9)
—
—
0.1
0.1
Amounts Reclassified from AOCI
—
6.4
6.4
—
1.2
14.1
15.3
Net OCI
—
5.5
5.5
—
1.2
14.2
15.4
Balance as of End of Period
$
(0.4)
$
(27.8)
$
(28.2)
$
(0.4)
$
—
$
(23.6)
$
(24.0)
Defined benefit plan OCI amounts before reclassifications relate to actuarial gains and losses that arose during the year and were recognized in AOCI. The unamortized actuarial gains and losses and prior service costs on the defined benefit plans are amortized from AOCI into Other Income, Net over the average future employee service period, and are reflected in amounts reclassified from AOCI. Defined benefit plan amounts reclassified from AOCI also include a settlement loss amortized into net periodic benefit plan expense/(income) for the nine months ended September 30, 2023. See Note 8, “Pension Benefits and Postretirement Benefits Other Than Pension,” for further information.
12. COMMON SHARES
The following table sets forth the Eversource parent common shares and the shares of common stock of CL&P, NSTAR Electric and PSNH that were authorized and issued, as well as the respective per share par values:
Shares
Authorized as of September 30, 2024 and December 31, 2023
Issued as of
Par Value
September 30, 2024
December 31, 2023
Eversource
$
5
410,000,000
373,276,991
359,984,073
CL&P
$
10
24,500,000
6,035,205
6,035,205
NSTAR Electric
$
1
100,000,000
200
200
PSNH
$
1
100,000,000
301
301
35
Common Share Issuances: Eversource has 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. Eversource may issue and sell its common shares through its sales agents during the term of this agreement. Shares may be offered in transactions on the New York Stock Exchange, in the over-the-counter market, through negotiated transactions or otherwise. Sales may be made at either market prices prevailing at the time of sale, at prices related to such prevailing market prices or at negotiated prices. In the first nine months of 2024, Eversource issued 13.3 million common shares, which resulted in proceeds of $830.2 million, net of issuance costs. Eversource used the net proceeds received for general corporate purposes. In 2023, no shares were issued under this agreement.
Treasury Shares: As of September 30, 2024 and December 31, 2023, there were9,385,018 and 10,443,807 Eversource common shares held as treasury shares, respectively. As of September 30, 2024 and December 31, 2023, there were 363,891,973 and 349,540,266 Eversource common shares outstanding, respectively.
Eversource issues treasury shares to satisfy awards under the Company's incentive plans, shares issued under the dividend reinvestment and share purchase plan, and matching contributions under the Eversource 401k Plan. The issuance of treasury shares represents a non-cash transaction, as the treasury shares were used to fulfill Eversource's obligations that require the issuance of common shares.
13. COMMON SHAREHOLDERS' EQUITY AND NONCONTROLLING INTERESTS
Dividends on the preferred stock of CL&P and NSTAR Electric totaled $1.9 million for each of the three months ended September 30, 2024 and 2023 and $5.6 million for each of the nine months ended September 30, 2024 and 2023. These dividends were presented as Net Income Attributable to Noncontrolling Interests on the Eversource statements of income. Noncontrolling Interest – Preferred Stock of Subsidiaries on the Eversource balance sheets totaled $155.6 million as of September 30, 2024 and December 31, 2023. On the Eversource balance sheets, Common Shareholders' Equity was fully attributable to Eversource parent and Noncontrolling Interest – Preferred Stock of Subsidiaries was fully attributable to the noncontrolling interest.
14. EARNINGS/(LOSS) PER SHARE
Basic earnings/(loss) per share is computed based upon the weighted average number of common shares outstanding during each period. Diluted earnings/(loss) per share is computed on the basis of the weighted average number of common shares outstanding plus the potential dilutive effect of certain share-based compensation awards as if they were converted into outstanding common shares. The dilutive effect of unvested RSU and performance share awards is calculated using the treasury stock method. RSU and performance share awards are included in basic weighted average common shares outstanding as of the date that all necessary vesting conditions have been satisfied. For the three and nine months ended September 30, 2024 and 2023, there were no antidilutive share awards excluded from the computation of diluted EPS.
The following table sets forth the components of basic and diluted earnings/(loss) per share:
Eversource
(Millions of Dollars, except share information)
For the Three Months Ended
For the Nine Months Ended
September 30, 2024
September 30, 2023
September 30, 2024
September 30, 2023
Net (Loss)/Income Attributable to Common Shareholders
$
(118.1)
$
339.7
$
739.1
$
846.2
Weighted Average Common Shares Outstanding:
Basic
359,520,518
349,704,155
354,483,338
349,461,219
Dilutive Effect
297,139
147,814
261,508
270,101
Diluted
359,817,657
349,851,969
354,744,846
349,731,320
Basic (Loss)/Earnings Per Common Share
$
(0.33)
$
0.97
$
2.09
$
2.42
Diluted (Loss)/Earnings Per Common Share
$
(0.33)
$
0.97
$
2.08
$
2.42
36
15. REVENUES
The following tables present operating revenues disaggregated by revenue source:
For the Three Months Ended September 30, 2024
Eversource (Millions of Dollars)
Electric Distribution
Natural Gas Distribution
Electric Transmission
Water Distribution
Other
Eliminations
Total
Revenues from Contracts with Customers
Retail Tariff Sales
Residential
$
1,465.5
$
86.7
$
—
$
43.7
$
—
$
—
$
1,595.9
Commercial
857.8
71.0
—
18.7
—
(2.5)
945.0
Industrial
111.4
31.6
—
1.3
—
(5.4)
138.9
Total Retail Tariff Sales Revenues
2,434.7
189.3
—
63.7
—
(7.9)
2,679.8
Wholesale Transmission Revenues
—
—
583.6
—
—
(431.1)
152.5
Wholesale Market Sales Revenues
173.8
29.0
—
1.2
—
—
204.0
Other Revenues from Contracts with Customers
22.4
1.9
3.5
1.2
414.7
(412.6)
31.1
Total Revenues from Contracts with Customers
2,630.9
220.2
587.1
66.1
414.7
(851.6)
3,067.4
Alternative Revenue Programs
(2.9)
(3.6)
(45.2)
0.6
—
41.0
(10.1)
Other Revenues
4.8
0.6
0.1
0.4
—
—
5.9
Total Operating Revenues
$
2,632.8
$
217.2
$
542.0
$
67.1
$
414.7
$
(810.6)
$
3,063.2
For the Nine Months Ended September 30, 2024
Eversource
(Millions of Dollars)
Electric Distribution
Natural Gas Distribution
Electric Transmission
Water Distribution
Other
Eliminations
Total
Revenues from Contracts with Customers
Retail Tariff Sales
Residential
$
3,747.1
$
798.3
$
—
$
111.8
$
—
$
—
$
4,657.2
Commercial
2,248.5
434.5
—
53.1
—
(5.7)
2,730.4
Industrial
289.0
127.0
—
3.5
—
(16.5)
403.0
Total Retail Tariff Sales Revenues
6,284.6
1,359.8
—
168.4
—
(22.2)
7,790.6
Wholesale Transmission Revenues
—
—
1,570.6
—
—
(1,188.8)
381.8
Wholesale Market Sales Revenues
471.1
122.2
—
3.1
—
—
596.4
Other Revenues from Contracts with Customers
66.8
4.5
11.0
2.5
1,253.6
(1,247.7)
90.7
Total Revenues from Contracts with Customers
6,822.5
1,486.5
1,581.6
174.0
1,253.6
(2,458.7)
8,859.5
Alternative Revenue Programs
24.4
28.1
1.9
(0.2)
—
(1.7)
52.5
Other Revenues
13.9
2.1
0.4
0.9
—
—
17.3
Total Operating Revenues
$
6,860.8
$
1,516.7
$
1,583.9
$
174.7
$
1,253.6
$
(2,460.4)
$
8,929.3
37
For the Three Months Ended September 30, 2023
Eversource
(Millions of Dollars)
Electric Distribution
Natural Gas Distribution
Electric Transmission
Water Distribution
Other
Eliminations
Total
Revenues from Contracts with Customers
Retail Tariff Sales
Residential
$
1,375.9
$
83.0
$
—
$
44.7
$
—
$
—
$
1,503.6
Commercial
764.1
33.7
—
19.6
—
(1.1)
816.3
Industrial
94.5
30.2
—
1.2
—
(4.8)
121.1
Total Retail Tariff Sales Revenues
2,234.5
146.9
—
65.5
—
(5.9)
2,441.0
Wholesale Transmission Revenues
—
—
520.2
—
—
(386.6)
133.6
Wholesale Market Sales Revenues
154.9
71.6
—
1.1
—
—
227.6
Other Revenues from Contracts with Customers
20.9
1.3
4.8
2.0
394.7
(392.4)
31.3
Total Revenues from Contracts with Customers
2,410.3
219.8
525.0
68.6
394.7
(784.9)
2,833.5
Alternative Revenue Programs
(43.8)
(2.4)
(33.6)
(0.3)
—
31.9
(48.2)
Other Revenues
4.8
0.9
0.2
0.3
—
—
6.2
Total Operating Revenues
$
2,371.3
$
218.3
$
491.6
$
68.6
$
394.7
$
(753.0)
$
2,791.5
For the Nine Months Ended September 30, 2023
Eversource
(Millions of Dollars)
Electric Distribution
Natural Gas Distribution
Electric Transmission
Water Distribution
Other
Eliminations
Total
Revenues from Contracts with Customers
Retail Tariff Sales
Residential
$
3,982.1
$
858.0
$
—
$
112.6
$
—
$
—
$
4,952.7
Commercial
2,244.7
483.6
—
53.2
—
(3.4)
2,778.1
Industrial
268.5
141.7
—
3.4
—
(14.6)
399.0
Total Retail Tariff Sales Revenues
6,495.3
1,483.3
—
169.2
—
(18.0)
8,129.8
Wholesale Transmission Revenues
—
—
1,358.2
—
—
(1,015.6)
342.6
Wholesale Market Sales Revenues
484.4
160.5
—
2.9
—
—
647.8
Other Revenues from Contracts with Customers
60.1
3.9
14.1
6.1
1,217.3
(1,210.7)
90.8
Total Revenues from Contracts with Customers
7,039.8
1,647.7
1,372.3
178.2
1,217.3
(2,244.3)
9,211.0
Alternative Revenue Programs
(40.7)
21.9
57.6
(2.0)
—
(50.8)
(14.0)
Other Revenues
15.2
3.0
0.5
0.8
—
—
19.5
Total Operating Revenues
$
7,014.3
$
1,672.6
$
1,430.4
$
177.0
$
1,217.3
$
(2,295.1)
$
9,216.5
For the Three Months Ended September 30, 2024
For the Three Months Ended September 30, 2023
(Millions of Dollars)
CL&P
NSTAR Electric
PSNH
CL&P
NSTAR Electric
PSNH
Revenues from Contracts with Customers
Retail Tariff Sales
Residential
$
757.1
$
530.8
$
177.6
$
703.9
$
480.5
$
191.5
Commercial
349.9
416.9
91.4
286.4
389.4
88.7
Industrial
51.2
32.9
27.3
39.0
31.9
23.6
Total Retail Tariff Sales Revenues
1,158.2
980.6
296.3
1,029.3
901.8
303.8
Wholesale Transmission Revenues
262.2
212.3
109.1
245.1
186.4
88.7
Wholesale Market Sales Revenues
134.1
31.8
7.9
112.8
28.6
13.5
Other Revenues from Contracts with Customers
9.1
12.1
5.2
9.0
12.4
5.0
Total Revenues from Contracts with Customers
1,563.6
1,236.8
418.5
1,396.2
1,129.2
411.0
Alternative Revenue Programs
(46.5)
8.1
(9.7)
(49.3)
(29.0)
0.9
Other Revenues
2.4
2.0
0.5
2.4
1.9
0.7
Eliminations
(174.2)
(169.4)
(67.3)
(159.2)
(148.6)
(59.5)
Total Operating Revenues
$
1,345.3
$
1,077.5
$
342.0
$
1,190.1
$
953.5
$
353.1
38
For the Nine Months Ended September 30, 2024
For the Nine Months Ended September 30, 2023
(Millions of Dollars)
CL&P
NSTAR Electric
PSNH
CL&P
NSTAR Electric
PSNH
Revenues from Contracts with Customers
Retail Tariff Sales
Residential
$
1,897.7
$
1,373.2
$
476.2
$
2,059.9
$
1,318.7
$
603.5
Commercial
850.2
1,144.8
254.6
836.7
1,121.0
287.5
Industrial
117.0
93.1
78.9
104.1
95.7
68.7
Total Retail Tariff Sales Revenues
2,864.9
2,611.1
809.7
3,000.7
2,535.4
959.7
Wholesale Transmission Revenues
681.7
602.0
286.9
613.3
521.0
223.9
Wholesale Market Sales Revenues
352.8
90.3
28.0
330.4
102.1
51.9
Other Revenues from Contracts with Customers
27.0
36.5
15.9
27.8
36.0
12.2
Total Revenues from Contracts with Customers
3,926.4
3,339.9
1,140.5
3,972.2
3,194.5
1,247.7
Alternative Revenue Programs
4.9
20.1
1.3
28.0
(43.5)
32.4
Other Revenues
6.7
5.6
2.0
7.1
6.3
2.3
Eliminations
(506.8)
(495.4)
(188.3)
(444.1)
(428.5)
(159.1)
Total Operating Revenues
$
3,431.2
$
2,870.2
$
955.5
$
3,563.2
$
2,728.8
$
1,123.3
16. SEGMENT INFORMATION
In November 2023, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2023-07, Segment Reporting (Topic 280): Improvement to Reportable Segment Disclosures, which requires entities to disclose significant segment expenses, other segment items, the title and position of the chief operating decision maker (CODM) and information related to how the CODM assesses segment performance and allocates resources, among certain other required disclosures. Additionally, current annual disclosures will be required in interim periods. The new standard is effective, on a retrospective basis, for annual periods beginning January 1, 2024, and interim periods beginning January 1, 2025.
Eversource is organized into the Electric Distribution, Electric Transmission, Natural Gas Distribution and Water Distribution reportable segments and Other based on a combination of factors, including the characteristics of each segments' services, the sources of operating revenues and expenses and the regulatory environment in which each segment operates. These reportable segments represent substantially all of Eversource's total consolidated revenues. Revenues from the sale of electricity, natural gas and water primarily are derived from residential, commercial and industrial customers and are not dependent on any single customer. The Electric Distribution reportable segment includes the results of NSTAR Electric's solar power facilities. Eversource's reportable segments are determined based upon the level at which Eversource's chief operating decision maker assesses performance and makes decisions about the allocation of company resources.
The remainder of Eversource's operations is presented as Other in the tables below and primarily consists of 1) the equity in earnings of Eversource parent from its subsidiaries and intercompany interest income, both of which are eliminated in consolidation, and interest expense related to the debt of Eversource parent, 2) the revenues and expenses of Eversource Service, most of which are eliminated in consolidation, 3) the operations of CYAPC and YAEC, 4) the results of other unregulated subsidiaries, which are not part of its core business, and 5) Eversource parent's equity ownership interests that are not consolidated, which primarily included the offshore wind investments until sale of the three offshore wind projects in the third quarter of 2024, anatural gas pipeline owned by Enbridge, Inc., and a renewable energy investment fund that was liquidated in the first quarter of 2023.
In the ordinary course of business, Yankee Gas, NSTAR Gas and EGMA purchase natural gas transmission services from the Enbridge, Inc. natural gas pipeline project described above. These affiliate transaction costs total $77.7 million annually and are classified as Purchased Power, Purchased Natural Gas and Transmission on the Eversource statements of income.
Each of Eversource's subsidiaries, including CL&P, NSTAR Electric and PSNH, has one reportable segment.
39
Cash flows used for investments in plant included in the segment information below are cash capital expenditures that do not include amounts incurred on capital projects but not yet paid, cost of removal, AFUDC related to equity funds, and the capitalized and deferred portions of pension and PBOP income/expense.
Eversource's segment information is as follows:
For the Three Months Ended September 30, 2024
Eversource
(Millions of Dollars)
Electric Distribution
Natural Gas Distribution
Electric Transmission
Water Distribution
Other
Eliminations
Total
Operating Revenues
$
2,632.8
$
217.2
$
542.0
$
67.1
$
414.7
$
(810.6)
$
3,063.2
Depreciation and Amortization
(420.8)
(28.2)
(102.0)
(9.8)
(52.1)
2.8
(610.1)
Other Operating Expenses
(1,910.7)
(216.4)
(163.6)
(31.2)
(326.6)
807.8
(1,840.7)
Operating Income/(Loss)
$
301.3
$
(27.4)
$
276.4
$
26.1
$
36.0
$
—
$
612.4
Interest Expense
$
(98.8)
$
(25.2)
$
(48.5)
$
(8.3)
$
(177.7)
$
57.9
$
(300.6)
Loss on Offshore Wind Investments
—
—
—
—
(464.0)
—
(464.0)
Other Income, Net
65.8
11.4
11.8
6.2
48.8
(31.4)
112.6
Net Income/(Loss) Attributable to Common Shareholders
203.5
(30.2)
174.9
23.7
(516.5)
26.5
(118.1)
For the Nine Months Ended September 30, 2024
Eversource
(Millions of Dollars)
Electric Distribution
Natural Gas Distribution
Electric Transmission
Water Distribution
Other
Eliminations
Total
Operating Revenues
$
6,860.8
$
1,516.7
$
1,583.9
$
174.7
$
1,253.6
$
(2,460.4)
$
8,929.3
Depreciation and Amortization
(565.5)
(161.4)
(301.8)
(21.2)
(146.3)
8.1
(1,188.1)
Other Operating Expenses
(5,529.3)
(1,066.2)
(452.6)
(94.2)
(990.3)
2,452.3
(5,680.3)
Operating Income
$
766.0
$
289.1
$
829.5
$
59.3
$
117.0
$
—
$
2,060.9
Interest Expense
$
(272.2)
$
(72.0)
$
(135.4)
$
(29.4)
$
(484.8)
$
171.2
$
(822.6)
Loss on Offshore Wind Investments
—
—
—
—
(464.0)
—
(464.0)
Other Income, Net
189.2
32.5
38.1
8.5
1,145.0
(1,094.4)
318.9
Net Income Attributable to Common Shareholders
521.3
187.4
540.6
37.1
375.9
(923.2)
739.1
Cash Flows Used for Investments in Plant
1,309.1
697.8
985.6
119.3
180.1
—
3,291.9
For the Three Months Ended September 30, 2023
Eversource
(Millions of Dollars)
Electric Distribution
Natural Gas Distribution
Electric Transmission
Water Distribution
Other
Eliminations
Total
Operating Revenues
$
2,371.3
$
218.3
$
491.6
$
68.6
$
394.7
$
(753.0)
$
2,791.5
Depreciation and Amortization
(0.7)
(38.0)
(94.5)
(13.9)
(40.7)
2.3
(185.5)
Other Operating Expenses
(2,124.0)
(211.1)
(144.9)
(30.9)
(315.7)
751.2
(2,075.4)
Operating Income/(Loss)
$
246.6
$
(30.8)
$
252.2
$
23.8
$
38.3
$
0.5
$
530.6
Interest Expense
$
(76.8)
$
(19.7)
$
(43.0)
$
(9.8)
$
(111.4)
$
38.4
$
(222.3)
Other Income, Net
53.5
9.2
11.9
1.3
415.9
(412.7)
79.1
Net Income/(Loss) Attributable to Common Shareholders
173.3
(33.7)
160.3
16.6
397.0
(373.8)
339.7
For the Nine Months Ended September 30, 2023
Eversource
(Millions of Dollars)
Electric Distribution
Natural Gas Distribution
Electric Transmission
Water Distribution
Other
Eliminations
Total
Operating Revenues
$
7,014.3
$
1,672.6
$
1,430.4
$
177.0
$
1,217.3
$
(2,295.1)
$
9,216.5
Depreciation and Amortization
59.3
(156.7)
(276.4)
(41.3)
(115.5)
6.6
(524.0)
Other Operating Expenses
(6,371.4)
(1,280.8)
(409.4)
(87.5)
(992.6)
2,290.0
(6,851.7)
Operating Income
$
702.2
$
235.1
$
744.6
$
48.2
$
109.2
$
1.5
$
1,840.8
Interest Expense
$
(214.4)
$
(62.4)
$
(126.7)
$
(28.4)
$
(297.0)
$
104.8
$
(624.1)
Loss on Offshore Wind Investments
—
—
—
—
(401.0)
—
(401.0)
Other Income, Net
155.7
27.9
30.8
4.0
1,082.6
(1,038.0)
263.0
Net Income Attributable to Common Shareholders
504.3
148.2
476.4
27.4
621.6
(931.7)
846.2
Cash Flows Used for Investments in Plant
1,230.3
536.8
1,011.3
140.1
207.1
—
3,125.6
The following table summarizes Eversource's segmented total assets:
Eversource
(Millions of Dollars)
Electric Distribution
Natural Gas Distribution
Electric Transmission
Water Distribution
Other
Eliminations
Total
As of September 30, 2024
$
31,411.3
$
9,518.2
$
15,750.5
$
3,056.2
$
27,371.0
$
(28,533.9)
$
58,573.3
As of December 31, 2023
29,426.4
8,775.3
14,806.5
2,944.8
26,337.7
(26,678.5)
55,612.2
40
EVERSOURCE ENERGY AND SUBSIDIARIES
Management's Discussion and Analysis of Financial Condition and Results of Operations
The following discussion and analysis should be read in conjunction with our unaudited condensed consolidated financial statements and related combined notes included in this combined Quarterly Report on Form 10-Q, the combined Quarterly Reports on Form 10-Q for the quarters ended March 31, 2024 and June 30, 2024, as well as the Eversource 2023 combined Annual Report on Form 10-K. References in this combined Quarterly Report on Form 10-Q to "Eversource," the "Company," "we," "us," and "our" refer to Eversource Energy and its consolidated subsidiaries. All per-share amounts are reported on a diluted basis. The unaudited condensed consolidated financial statements of Eversource, NSTAR Electric and PSNH and the unaudited condensed financial statements of CL&P are herein collectively referred to as the "financial statements."
Refer to the Glossary of Terms included in this combined Quarterly Report on Form 10-Q for abbreviations and acronyms used throughout this Management's Discussion and Analysis of Financial Condition and Results of Operations.
The only common equity securities that are publicly traded are common shares of Eversource. Our earnings discussion includes financial measures that are not recognized under GAAP (non-GAAP) referencing our earnings and EPS excluding the losses on the offshore wind investments, a loss on the disposition of land that was initially acquired to construct the Northern Pass Transmission project and was subsequently abandoned, and certain transaction and transition costs. EPS by business is also a non-GAAP financial measure and is calculated by dividing the Net Income Attributable to Common Shareholders of each business by the weighted average diluted Eversource common shares outstanding for the period. The earnings and EPS of each business do not represent a direct legal interest in the assets and liabilities of such business, but rather represent a direct interest in our assets and liabilities as a whole.
We use these non-GAAP financial measures to evaluate and provide details of earnings results by business and to more fully compare and explain our results without including these items. This information is among the primary indicators we use as a basis for evaluating performance and planning and forecasting of future periods. We believe the impacts of the losses on the offshore wind investments, the loss on the disposition of land associated with an abandoned project, and transaction and transition costs are not indicative of our ongoing costs and performance. We view these charges as not directly related to the ongoing operations of the business and therefore not an indicator of baseline operating performance. Due to the nature and significance of the effect of these items on Net Income Attributable to Common Shareholders and EPS, we believe that the non-GAAP presentation is a more meaningful representation of our financial performance and provides additional and useful information to readers of this report in analyzing historical and future performance of our business. These non-GAAP financial measures should not be considered as alternatives to reported Net Income Attributable to Common Shareholders or EPS determined in accordance with GAAP as indicators of operating performance.
We make statements concerning our expectations, beliefs, plans, objectives, goals, strategies, assumptions of future events, future financial performance or growth and other statements that are not historical facts. These statements are "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. You can generally identify our forward-looking statements through the use of words or phrases such as "estimate," "expect," "anticipate," "intend," "plan," "project," "believe," "forecast," "should," "could," and other similar expressions. Forward-looking statements involve risks and uncertainties that may cause actual results or outcomes to differ materially from those included in our forward-looking statements. Forward-looking statements are based on the current expectations, estimates, assumptions or projections of management and are not guarantees of future performance. These expectations, estimates, assumptions or projections may vary materially from actual results. Accordingly, any such statements are qualified in their entirety by reference to, and are accompanied by, the following important factors that may cause our actual results or outcomes to differ materially from those contained in our forward-looking statements, including, but not limited to:
•cyberattacks or breaches, including those resulting in the compromise of the confidentiality of our proprietary information and the personal information of our customers,
•the ability to qualify for investment tax credits and investment tax credit adders,
•variability in the costs and final investment returns of the Revolution Wind and South Fork Wind offshore wind projects as it relates to the purchase price post-closing adjustment under the terms of the sale agreement for these projects,
•disruptions in the capital markets or other events that make our access to necessary capital more difficult or costly,
• changes in economic conditions, including impact on interest rates, tax policies, and customer demand and payment ability,
• ability or inability to commence and complete our major strategic development projects and opportunities,
• acts of war or terrorism, physical attacks or grid disturbances that may damage and disrupt our electric transmission and electric, natural gas, and water distribution systems,
• actions or inaction of local, state and federal regulatory, public policy and taxing bodies,
• substandard performance of third-party suppliers and service providers,
• fluctuations in weather patterns, including extreme weather due to climate change,
• changes in business conditions, which could include disruptive technology or development of alternative energy sources related to our current or future business model,
• contamination of, or disruption in, our water supplies,
• changes in levels or timing of capital expenditures,
• changes in laws, regulations or regulatory policy, including compliance with environmental laws and regulations,
• changes in accounting standards and financial reporting regulations,
• actions of rating agencies, and
• other presently unknown or unforeseen factors.
41
Other risk factors are detailed in our reports filed with the SEC and updated as necessary, and we encourage you to consult such disclosures.
All such factors are difficult to predict and contain uncertainties that may materially affect our actual results, many of which are beyond our control. You should not place undue reliance on the forward-looking statements, as each speaks only as of the date on which such statement is made, and, except as required by federal securities laws, we undertake no obligation to update any forward-looking statement or statements to reflect events or circumstances after the date on which such statement is made or to reflect the occurrence of unanticipated events. New factors emerge from time to time and it is not possible for us to predict all of such factors, nor can we assess the impact of each such factor on the business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements. For more information, see Item 1A, Risk Factors, included in this combined Quarterly Report on Form 10-Q and in Eversource's 2023 combined Annual Report on Form 10-K. This combined Quarterly Report on Form 10-Q and Eversource's 2023 combined Annual Report on Form 10-K also describe material contingencies and critical accounting policies in the accompanying Management's Discussion and Analysis of Financial Condition and Results of Operations and Combined Notes to Financial Statements. We encourage you to review these items.
Financial Condition and Business Analysis
Executive Summary
Eversource Energy is a public utility holding company primarily engaged, through its wholly-owned regulated utility subsidiaries, in the energy delivery business. Eversource Energy's wholly-owned regulated utility subsidiaries consist of CL&P, NSTAR Electric and PSNH (electric utilities), Yankee Gas, NSTAR Gas and EGMA (natural gas utilities) and Aquarion (water utilities). Eversource is organized into the electric distribution, electric transmission, natural gas distribution, and water distribution reportable segments.
The following items in this executive summary are explained in more detail in this combined Quarterly Report on Form 10-Q:
Earnings Overview and Future Outlook:
•We had a loss of $118.1 million, or $0.33 per share, in the third quarter of 2024, compared with earnings of $339.7 million, or $0.97 per share, in the third quarter of 2023. We earned $739.1 million, or $2.08 per share, in the first nine months of 2024, compared with $846.2 million, or $2.42 per share, in the first nine months of 2023.
•Our 2024 results include an after-tax loss on the sale of our offshore wind investments of $524.0 million, or $1.48 per share on a year-to-date basis. Our results for the first nine months of 2023 include an after-tax impairment charge on our offshore wind investments of $331.0 million, or $0.95 per share. Our results for the first nine months of 2023 also include after-tax land abandonment and other charges recorded of $6.9 million, or $0.01 per share. These 2024 and 2023 charges were recorded within Eversource Parent and Other Companies. Excluding these charges, our 2024 non-GAAP earnings were $405.9 million, or $1.13 per share, in the third quarter of 2024 and $1.26 billion, or $3.56 per share, in the first nine months of 2024, and our 2023 non-GAAP earnings were $1.18 billion, or $3.38 per share, in the first nine months of 2023.
•We updated our projection to earn within a 2024 non-GAAP earnings guidance range of between $4.52 per share and $4.60 per share, which excludes the impact of the sales of our 50 percent interests in the three jointly-owned offshore wind projects and related transaction costs. We also reaffirmed our projection of our long-term EPS growth rate through 2028 within a 5 to 7 percent range, and increased our previously forecasted capital investments of $23.1 billion to $23.7 billion for the period 2024 to 2028, as a result of the recently approved Electric Sector Modernization Plan (ESMP) in Massachusetts.
Liquidity:
•Cash flows provided by operating activities totaled $1.52 billion in the first nine months of 2024, compared with $1.17 billion in the first nine months of 2023. Investments in property, plant and equipment totaled $3.29 billion in the first nine months of 2024, compared with $3.13 billion in the first nine months of 2023.
•Cash and Cash Equivalents totaled $97.9 million as of September 30, 2024, compared with $53.9 million as of December 31, 2023. Our available borrowing capacity under our commercial paper programs totaled $1.79 billion as of September 30, 2024.
•In the first nine months of 2024, we issued $4.40 billion of new long-term debt and we repaid $1.26 billion of long-term debt.
•On September 12, 2024, our Board of Trustees approved a common share dividend payment of $0.715 per share, paid on September 30, 2024 to shareholders of record as of September 23, 2024.
•In the third quarter of 2024, we received preliminary indicative bidsfor our Aquarion water distribution business, and we are supporting due diligence with potential buyers.
42
Strategic Developments:
•On July 9, 2024, Eversource completed the sale of its 50 percent ownership share of Sunrise Wind to Ørsted for adjusted proceeds of $152 million. Ørsted paid Eversource $118 million at the closing of the sale transaction, and the remaining proceeds of $34 million will be paid after onshore construction is completed and certain other construction milestones are achieved. On September 30, 2024, Eversource completed the sale of its 50 percent ownership share in the South Fork Wind and Revolution Wind projects to GIP for adjusted gross proceeds of $745 million, which were received at closing. Adjusted gross proceeds from the sale were reduced by approximately $375 million as compared with the previously estimated purchase price. Proceeds from the transactions were used to pay off parent company debt. Upon the completion of both sale transactions, Eversource recognized an aggregate after-tax loss on the sale of its offshore wind investments of $524 million in the third quarter of 2024. Eversource recorded a liability of $365 million reflecting its best estimate of the future obligations under the GIP sale terms, which primarily include the expected cost overrun sharing obligation, expected obligation to maintain GIP’s internal rate of return for the Revolution Wind project, and obligation of other future costs. Eversource will not have any ongoing financial obligations associated with Sunrise Wind.
•On August 29, 2024, the DPU approved NSTAR Electric’s ESMP for a five-year period commencing July 1, 2025. For the five-year period from 2025 through 2029, the incremental capital investment is $608 million and the incremental expense amount is $211 million.
Earnings Overview
Consolidated: Below is a summary of our earnings/(loss) by business, which also reconciles the non-GAAP financial measures of consolidated non-GAAP earnings and EPS, as well as EPS by business, to the most directly comparable GAAP measures of consolidated Net (Loss)/Income Attributable to Common Shareholders and diluted EPS.
For the Three Months Ended September 30,
For the Nine Months Ended September 30,
2024
2023
2024
2023
(Millions of Dollars, Except Per Share Amounts)
Amount
Per Share
Amount
Per Share
Amount
Per Share
Amount
Per Share
Net (Loss)/Income Attributable to Common Shareholders (GAAP)
$
(118.1)
$
(0.33)
$
339.7
$
0.97
$
739.1
$
2.08
$
846.2
$
2.42
Regulated Companies
$
371.9
$
1.04
$
316.5
$
0.91
$
1,286.4
$
3.62
$
1,156.3
$
3.30
Eversource Parent and Other Companies (Non-GAAP)
34.0
0.09
23.2
0.06
(23.3)
(0.06)
27.8
0.08
Non-GAAP Earnings
$
405.9
$
1.13
$
339.7
$
0.97
$
1,263.1
$
3.56
$
1,184.1
$
3.38
Losses on Offshore Wind Investments (after-tax) (1)
(524.0)
(1.46)
—
—
(524.0)
(1.48)
(331.0)
(0.95)
Land Abandonment Loss and Other Charges (after-tax) (2)
—
—
—
—
—
—
(6.9)
(0.01)
Net (Loss)/Income Attributable to Common Shareholders (GAAP)
$
(118.1)
$
(0.33)
$
339.7
$
0.97
$
739.1
$
2.08
$
846.2
$
2.42
(1) In the third quarter of 2024, we recorded a loss on the sales of our offshore wind investments. In the second quarter of 2023, we recorded an impairment charge resulting from the expected sales of these offshore wind investments. For further information, see "Business Development and Capital Expenditures – Offshore Wind Business" included in this Management's Discussion and Analysis of Financial Condition and Results of Operations.
(2) The 2023 charges primarily include a loss on the disposition of previously abandoned land intended to be used for the cancelled Northern Pass Transmission project.
Regulated Companies: Our regulated companies comprise the electric distribution, electric transmission, natural gas distribution, and water distribution segments. A summary of our segment earnings and EPS is as follows:
For the Three Months Ended September 30,
For the Nine Months Ended September 30,
2024
2023
2024
2023
(Millions of Dollars, Except Per Share Amounts)
Amount
Per Share
Amount
Per Share
Amount
Per Share
Amount
Per Share
Electric Distribution
$
203.5
$
0.57
$
173.3
$
0.50
$
521.3
$
1.47
$
504.3
$
1.44
Electric Transmission
174.9
0.49
160.3
0.46
540.6
1.52
476.4
1.36
Natural Gas Distribution
(30.2)
(0.09)
(33.7)
(0.10)
187.4
0.53
148.2
0.42
Water Distribution
23.7
0.07
16.6
0.05
37.1
0.10
27.4
0.08
Net Income - Regulated Companies
$
371.9
$
1.04
$
316.5
$
0.91
$
1,286.4
$
3.62
$
1,156.3
$
3.30
Our electric distribution segment earnings increased $30.2 million in the third quarter of 2024, as compared to the third quarter of 2023, due primarily to higher revenues from base distribution rate increases at NSTAR Electric effective January 1, 2024 and at PSNH effective August 1, 2024 and from CL&P's capital tracking mechanism due to increased electric system improvements, lower operations and maintenance expense driven by lower storm-related costs, and an increase in interest income primarily on regulatory deferrals. Those earnings increases were partially offset by higher interest expense, higher depreciation expense, and higher property tax expense.
43
Our electric distribution segment earnings increased $17.0 million in the first nine months of 2024, as compared to the first nine months of 2023, due primarily to higher revenues from base distribution rate increases at NSTAR Electric effective January 1, 2024 and at PSNH effective August 1, 2024 and from CL&P's capital tracking mechanism due to increased electric system improvements, and an increase in interest income primarily on regulatory deferrals. Those earnings increases were partially offset by higher interest expense, higher operations and maintenance expense, higher depreciation expense, the absence of a prior year benefit at PSNH related to the establishment of a new regulatory tracking mechanism that allowed for the recovery of previously incurred operating expenses associated with poles acquired on May 1, 2023, and higher property tax expense.
Our electric transmission segment earnings increased $14.6 million and $64.2 million in the third quarter and the first nine months of 2024, respectively, as compared to the third quarter and the first nine months of 2023, due primarily to a higher transmission rate base as a result of our continued investment in our transmission infrastructure. Additionally, the earnings benefit in the nine month period was due to the impact of the annual rate reconciliation filing with FERC.
Our natural gas distribution segment losses decreased $3.5 million in the third quarter of 2024, as compared to the third quarter of 2023, due primarily to higher revenues from capital tracking mechanisms due to continued investments in natural gas infrastructure, the absence of a prior year unfavorable regulatory adjustment resulting from NSTAR Gas’ GSEP reconciliation filing, and a lower effective tax rate. Those improvements were partially offset by higher property tax expense, higher depreciation expense, higher operations and maintenance expense, and higher interest expense.
Our natural gas distribution segment earnings increased $39.2 million in the first nine months of 2024, as compared to the first nine months of 2023, due primarily to higher revenues from capital tracking mechanisms due to continued investments in natural gas infrastructure and a base distribution rate increase effective November 1, 2023 at NSTAR Gas, lower operations and maintenance expense, the absence of a prior year unfavorable regulatory adjustment resulting from NSTAR Gas’ GSEP reconciliation filing, and a lower effective tax rate. Those earnings increases were partially offset by higher depreciation expense, higher interest expense, and higher property tax expense.
Our water distribution segment earnings increased $7.1 million and $9.7 million in the third quarter and the first nine months of 2024, respectively, as compared to the third quarter and the first nine months of 2023, due primarily to after-tax benefits of $3.4 million and $9.7 million recorded in the third quarter and first nine months of 2024, respectively, to recognize the impacts of the Aquarion Water Company of Connecticut’s rate case decision from PURA. The impacts of PURA’s rate case decision on March 15, 2023 were recorded beginning in March 2024 as a result of the State of Connecticut Superior Court’s decision on the rate case appeal on March 25, 2024. The impacts primarily include a reduction to depreciation expense to reflect lower depreciation rates ordered by PURA in its final decision, partially offset by lower authorized revenues. The earnings increase in both periods was also due to revenues from a water company acquisition, partially offset by higher year-to-date operations and maintenance expense.
Eversource Parent and Other Companies: Eversource parent and other companies’ losses increased by $513.2 million and $237.2 million in the third quarter and the first nine months of 2024, respectively, as compared to the third quarter and the first nine months of 2023, due primarily to the loss on the sale of Eversource parent’s offshore wind investments in the third quarter of 2024, which resulted in an after-tax charge of $524.0 million, as compared to an impairment charge on these investments in the second quarter of 2023 of $331.0 million. Results for the first nine months of 2023 also include a loss on the disposition of land that was initially acquired to construct the Northern Pass Transmission project and was subsequently abandoned and other charges recorded of $6.9 million.
Excluding these charges, Eversource parent and other companies non-GAAP earnings increased by $10.8 million in the third quarter period due primarily to a lower effective tax rate, partially offset by higher interest expense. Eversource parent and other companies non-GAAP earnings decreased $51.1 million in the first nine months period due primarily to higher interest expense and the absence of a benefit in 2023 from the liquidation of Eversource parent’s equity method investment in a renewable energy fund, partially offset by the absence of a charitable contribution made in 2023 with a portion of the proceeds from the liquidation, and a lower effective tax rate.
Liquidity
Sources and Uses of Cash: Eversource’s regulated business is capital intensive and requires considerable capital resources. Eversource’s regulated companies’ capital resources are provided by cash flows generated from operations, short-term borrowings, long-term debt issuances, capital contributions from Eversource parent, and existing cash, and are used to fund their liquidity and capital requirements. Eversource’s regulated companies typically maintain minimal cash balances and use short-term borrowings to meet their working capital needs and other cash requirements. Short-term borrowings are also used as a bridge to long-term debt financings. The levels of short-term borrowing may vary significantly over the course of the year due to the impact of fluctuations in cash flows from operations (including timing of storm costs and regulatory recoveries), dividends paid, capital contributions received and the timing of long-term debt financings.
Eversource, CL&P, NSTAR Electric and PSNH each uses its available capital resources to fund its respective construction expenditures, meet debt requirements, pay operating costs, including storm-related costs, pay dividends, and fund corporate obligations. Eversource's regulated companies recover their electric, natural gas and water distribution construction expenditures as the related project costs are depreciated over the life of the assets. This impacts the timing of the revenue stream designed to fully recover the total investment plus a return on the equity and debt used to finance the investments. Eversource's regulated companies spend a significant amount of cash on capital improvements and construction projects that have a long-term return on investment and recovery period.
44
We expect the future operating cash flows of Eversource, CL&P, NSTAR Electric and PSNH, along with our 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.
Cash and Cash Equivalents totaled $97.9 million as of September 30, 2024, compared with $53.9 million as of December 31, 2023.
Short-Term Debt - Commercial Paper Programs and Credit Agreements: Eversource parent has a $2.00 billion commercial paper program allowing Eversource parent to issue commercial paper as a form of short-term debt. Eversource parent, CL&P, PSNH, NSTAR Gas, Yankee Gas, EGMA and Aquarion Water Company of Connecticut are parties to a five-year $2.00 billion revolving credit facility, which terminates on October 11, 2029. This revolving credit facility serves to backstop Eversource parent's $2.00 billion commercial paper program.
NSTAR Electric has a $650 million commercial paper program allowing NSTAR Electric to issue commercial paper as a form of short-term debt. NSTAR Electric is also a party to a five-year $650 million revolving credit facility, which terminates on October 11, 2029, that serves to backstop NSTAR Electric's $650 million commercial paper program.
The amount of borrowings outstanding and available under the commercial paper programs were as follows:
Borrowings Outstanding as of
Available Borrowing Capacity as of
Weighted-Average Interest Rate as of
September 30, 2024
December 31, 2023
September 30, 2024
December 31, 2023
September 30, 2024
December 31, 2023
(Millions of Dollars)
Eversource Parent Commercial Paper Program
$
322.0
$
1,771.9
$
1,678.0
$
228.1
5.12
%
5.60
%
NSTAR Electric Commercial Paper Program
537.5
365.8
112.5
284.2
4.94
%
5.40
%
There were no borrowings outstanding on the revolving credit facilities as of September 30, 2024 or December 31, 2023.
CL&P and PSNH have uncommitted line of credit agreements totaling $375 million and $250 million, respectively, all of which will expire in either May 2025, September 2025 or October 2025. There are no borrowings outstanding on either the CL&P or PSNH uncommitted line of credit agreements as of September 30, 2024.
Amounts outstanding under the commercial paper programs are included in Notes Payable and classified in current liabilities on the Eversource and NSTAR Electric balance sheets, as all borrowings are outstanding for no more than 364 days at one time. As a result of the CL&P long-term debt issuance in January 2024, $207.3 million of commercial paper borrowings under the Eversource parent commercial paper program were reclassified to Long-Term Debt on Eversource parent’s balance sheet as of December 31, 2023. As a result of the EGMA long-term debt issuance in October 2024, $100.0 million of commercial paper borrowings under the Eversource parent commercial paper program were reclassified to Long-Term Debt on Eversource parent’s balance sheet as of September 30, 2024.
Intercompany Borrowings: Eversource parent uses its available capital resources to provide loans to its subsidiaries to assist in meeting their short-term borrowing needs. Eversource parent records intercompany interest income from its loans to subsidiaries, which is eliminated in consolidation. Intercompany loans from Eversource parent to its subsidiaries are eliminated in consolidation on Eversource's balance sheets. As of September 30, 2024, there were intercompany loans from Eversource parent to CL&P of $135.0 million and to PSNH of $89.3 million. As of December 31, 2023, there were intercompany loans from Eversource parent to CL&P of $457.0 million and to PSNH of $233.0 million. Eversource parent charges interest on these intercompany loans at the same weighted-average interest rate as its commercial paper program. Intercompany loans from Eversource parent are included in Notes Payable to Eversource Parent and classified in current liabilities on the respective subsidiary's balance sheets, as these intercompany borrowings are outstanding for no more than 364 days at one time. As a result of the CL&P long-term debt issuance in January 2024, $207.3 million of CL&P’s intercompany borrowings were reclassified to Long-Term Debt on CL&P’s balance sheet as of December 31, 2023.
Long-Term Debt Issuance Authorizations: On February 8, 2024, the NHPUC approved PSNH’s 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 Electric’s request for authorization to issue up to $2.4 billion in long-term debt through December 31, 2026. On July 24, 2024, PURA approved CL&P’s request for authorization to issue up to $1.0 billion in long-term debt through December 31, 2025. On August 12, 2024, the DPU approved EGMA’s request for authorization to issue up to $325 million in long-term debt through December 31, 2026.
45
Long-Term Debt Issuances and Repayments:The following table summarizes long-term debt issuances and repayments:
(Millions of Dollars)
Interest Rate
Issuance/(Repayment)
Issue Date or Repayment Date
Maturity Date
Use of Proceeds for Issuance/ Repayment Information
CL&P Series A First Mortgage Bonds
4.65
%
$
350.0
January 2024
January 2029
Repaid short-term debt, paid capital expenditures and working capital
CL&P Series B First Mortgage Bonds
4.95
%
300.0
August 2024
August 2034
Repaid Series D Bonds, repaid short-term debt, and working capital
CL&P Series D First Mortgage Bonds
7.875
%
(139.8)
October 2024
October 2024
Paid at maturity
NSTAR Electric Debentures
5.40
%
600.0
May 2024
June 2034
Repaid short-term debt, paid capital expenditures and working capital
PSNH Series X First Mortgage Bonds
5.35
%
300.0
April 2024
October 2033
Repaid short-term debt, paid capital expenditures and working capital
Eversource Parent Series DD Senior Notes
5.00
%
350.0
January 2024
January 2027
Repaid short-term debt
Eversource Parent Series EE Senior Notes
5.50
%
650.0
January 2024
January 2034
Repaid short-term debt
Eversource Parent Series FF Senior Notes
5.85
%
700.0
April 2024
April 2031
Repaid Series X Senior Notes and Aquarion’s 2014 Senior Notes at maturity and short-term debt
Eversource Parent Series GG Senior Notes
5.95
%
700.0
April 2024
July 2034
Repaid Series X Senior Notes and Aquarion’s 2014 Senior Notes at maturity and short-term debt
Eversource Parent Series X Senior Notes
4.20
%
(900.0)
June 2024
June 2024
Paid at maturity
Eversource Parent Series L Senior Notes
2.90
%
(450.0)
October 2024
October 2024
Paid at maturity
NSTAR Gas Series W First Mortgage Bonds
5.29
%
160.0
June 2024
June 2029
Repaid short-term debt, paid capital expenditures and general corporate purchases
NSTAR Gas Series X First Mortgage Bonds
5.48
%
40.0
June 2024
June 2034
Repaid short-term debt, paid capital expenditures and general corporate purchases
Yankee Gas Series W First Mortgage Bonds
5.50
%
90.0
July 2024
July 2029
Repaid short-term debt, paid capital expenditures, working capital and repaid Series P bonds at maturity
Yankee Gas Series X First Mortgage Bonds
5.74
%
90.0
July 2024
July 2034
Repaid short-term debt, paid capital expenditures, working capital and repaid Series P bonds at maturity
Yankee Gas Series P First Mortgage Bonds
2.23
%
(100.0)
October 2024
October 2024
Paid at maturity
EGMA Series E First Mortgage Bonds
5.17
%
100.0
October 2024
November 2034
Refinanced existing indebtedness, paid capital expenditures and general corporate purchases
Aquarion Senior Notes
4.00
%
(360.0)
August 2024
August 2024
Paid at maturity
Aquarion Water Company of Connecticut Senior Notes
5.57
%
70.0
August 2024
September 2034
Repaid short-term debt, paid capital expenditures and general corporate purchases
Rate Reduction Bonds: PSNH's RRB payments consist of principal and interest and are paid semi-annually. PSNH paid $43.2 million of RRB principal payments and $14.9 million of interest payments in the first nine months of 2024, and paid $43.2 million of RRB principal payments and $16.2 million of interest payments in the first nine months of 2023.
Common Share Issuances: Eversource has 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. In the first nine months of 2024, Eversource issued 13.3 million common shares, which resulted in proceeds of $830.2 million, net of issuance costs. Eversource used the net proceeds received for general corporate purposes.
Cash Flows: Cash flows from operating activities primarily result from the transmission and distribution of electricity, and the distribution of natural gas and water. Cash flows provided by operating activities totaled $1.52 billion in the first nine months of 2024, compared with $1.17 billion in the first nine months of 2023. Operating cash flows were favorably impacted by the timing of cash payments made on our accounts payable, an improvement in regulatory recoveries driven primarily by the timing of collections for CL&P’s non-bypassable FMCC and other regulatory tracking mechanisms, a $47.6 million increase in income tax refunds received in 2024 compared to 2023, a $45.3 million decrease in cash payments to vendors for storm costs, and a decrease in cost of removal expenditures. The impacts of regulatory collections are included in both Regulatory Recoveries and Amortization on the statements of cash flows. These favorable impacts were partially offset by the timing of cash collections on our accounts receivable and the timing of other working capital items.
On September 12, 2024, our Board of Trustees approved a common share dividend payment of $0.715 per share, paid on September 30, 2024 to shareholders of record as of September 23, 2024. In the first nine months of 2024, we paid cash dividends of $745.2 million and issued non-cash dividends of $17.8 million in the form of treasury shares, totaling dividends of $763.0 million. In the first nine months of 2023, we paid cash dividends of $688.9 million and issued non-cash dividends of $17.6 million in the form of treasury shares, totaling dividends of $706.5 million.
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Eversource issues treasury shares to satisfy awards under the Company's incentive plans, shares issued under the dividend reinvestment and share purchase plan, and matching contributions under the Eversource 401k Plan.
In the first nine months of 2024, CL&P, NSTAR Electric and PSNH paid $247.6 million, $643.9 million and $62.0 million respectively, in common stock dividends to Eversource parent.
Investments in Property, Plant and Equipment on the statements of cash flows do not include amounts incurred on capital projects but not yet paid, cost of removal, AFUDC related to equity funds, and the capitalized and deferred portions of pension and PBOP income/expense. In the first nine months of 2024, investments for Eversource, CL&P, NSTAR Electric, and PSNH were $3.29 billion, $759.0 million, $1.07 billion, and $461.4 million, respectively. Capital expenditures were primarily for continuing projects to maintain and improve infrastructure and operations, including enhancing reliability to the transmission and distribution systems.
Contractual Obligations: Our cash requirements from contractual obligations were reported in Item 7, "Management’s Discussion and Analysis of Financial Condition and Results of Operations," of the Eversource 2023 Form 10-K. See Note 9B, “Commitments and Contingencies - Long-Term Contractual Arrangements,” to the financial statements for discussion of material changes to our cash requirements from contractual obligations. Other than as described in the footnote, there have been no material changes to our cash requirements from contractual obligations and payment schedules previously disclosed in our 2023 Form 10-K.
Business Development and Capital Expenditures
Our consolidated capital expenditures, including amounts incurred but not paid, cost of removal, AFUDC, and the capitalized and deferred portions of pension and PBOP income/expense (all of which are non-cash factors), totaled $3.40 billion in the first nine months of 2024, compared to $3.21 billion in the first nine months of 2023. These amounts included $209.4 million and $172.3 million in the first nine months of 2024 and 2023, respectively, related to information technology and facilities upgrades and enhancements, primarily at Eversource Service and The Rocky River Realty Company.
Electric Transmission Business: Our consolidated electric transmission business capital expenditures increased by $44.8 million in the first nine months of 2024, as compared to the first nine months of 2023. A summary of electric transmission capital expenditures by company is as follows:
For the Nine Months Ended September 30,
(Millions of Dollars)
2024
2023
CL&P
$
351.4
$
282.1
NSTAR Electric
366.9
388.3
PSNH
280.0
283.1
Total Electric Transmission
$
998.3
$
953.5
Our transmission projects are designed to improve the reliability of the electric grid, meet customer demand for power, and strengthen the electric grid's resilience against extreme weather and other safety and security threats. In Connecticut, Massachusetts and New Hampshire, our transmission projects include transmission line upgrades, the installation of new transmission interconnection facilities, substations and lines, and transmission substation enhancements.
Distribution Business: A summary of distribution capital expenditures is as follows:
For the Nine Months Ended September 30,
(Millions of Dollars)
CL&P
NSTAR Electric
PSNH
Total Electric
Natural Gas
Water
Total
2024
Basic Business
$
202.4
$
346.6
$
91.9
$
640.9
$
171.8
$
16.4
$
829.1
Aging Infrastructure
129.8
232.3
43.3
405.4
534.8
103.9
1,044.1
Load Growth and Other
81.9
157.0
39.4
278.3
38.2
0.6
317.1
Total Distribution
$
414.1
$
735.9
$
174.6
$
1,324.6
$
744.8
$
120.9
$
2,190.3
2023
Basic Business
$
209.4
$
271.3
$
60.5
$
541.2
$
145.9
$
11.8
$
698.9
Aging Infrastructure
194.2
216.6
72.3
483.1
507.8
99.4
1,090.3
Load Growth and Other
88.0
136.3
22.9
247.2
46.3
0.5
294.0
Total Distribution
$
491.6
$
624.2
$
155.7
$
1,271.5
$
700.0
$
111.7
$
2,083.2
For the electric distribution business, basic business includes the purchase of meters, tools, vehicles, information technology, transformer replacements, equipment facilities, and the relocation of plant. Aging infrastructure relates to reliability and the replacement of overhead lines, plant substations, underground cable replacement, and equipment failures. Load growth and other includes requests for new business and capacity additions on distribution lines and substation additions and expansions.
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For the natural gas distribution business, basic business addresses daily operational needs including meters, pipe relocations due to public works projects, vehicles, and tools. Aging infrastructure projects seek to improve the reliability of the system through enhancements related to cast iron and bare steel replacement of main and services, corrosion mediation, and station upgrades. Load growth and other reflects growth in existing service territories including new developments, installation of services, and expansion.
For the water distribution business, basic business addresses daily operational needs including periodic meter replacement, water main relocation, facility maintenance, and tools. Aging infrastructure relates to reliability and the replacement of water mains, regulators, storage tanks, pumping stations, wellfields, reservoirs, and treatment facilities. Load growth and other reflects growth in our service territory, including improvements of acquisitions, installation of new services, and interconnections of systems.
Offshore Wind Business: Eversource’s offshore wind business included 50 percent ownership interests in each of North East Offshore and South Fork Class B Member, LLC. In the third quarter of 2024, Eversource sold its interest in these entities, and in doing so, sold its interests in the Revolution Wind project, the South Fork Wind project, and the Sunrise Wind project. Eversource’s offshore wind business continues to hold a noncontrolling tax equity investment in South Fork Wind through a 100 percent ownership in South Fork Wind Holdings, LLC Class A interests.
On 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. On September 7, 2023, 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 Ørsted for $625 million in an all-cash transaction.
In September of 2023, Eversource made a contribution of $528 million to invest in a tax equity interest for South Fork Wind. South Fork Wind was restructured as a tax equity investment, with Eversource purchasing 100 percent ownership of a new Class A tax equity membership interest. This investment will result in Eversource receiving cash flow benefits from investment tax credits (ITC) and other future cash flow benefits as well. As of September 30, 2024, $459 million of expected investment tax credits and other expected tax benefits were reclassified from the South Fork Wind tax equity investment balance reported in Investments in Unconsolidated Affiliates as a reduction in current taxes payable of $54 million and a decrease in Accumulated Deferred Income Taxes of $405 million on the Eversource balance sheet as of September 30, 2024. As a result of these investment tax credits, Eversource expects lower federal income tax payments between 2024 through 2026. As of September 30, 2024, the tax equity interest in South Fork Wind totaled $22.2 million.
On January 24, 2024, Eversource signed an agreement with Ørsted to sell Eversource’s 50 percent share of Sunrise Wind, subject to certain conditions and regulatory approvals. On April 18, 2024, Eversource and Ørsted executed an equity and asset purchase agreement for a gross purchase price of $230 million. The purchase price was subject to reduction for actual capital spending less than forecasted spending between signing the agreement in January and closing of the transaction. On July 9, 2024, Eversource completed the sale of its 50 percent ownership share of Sunrise Wind to Ørsted. In accordance with the equity and asset purchase agreement and after adjustment for the reduction in capital spending compared to forecasted amounts, adjusted proceeds totaled $152 million. Ørsted paid Eversource $118 million at the closing of the sale transaction, which was used to pay off parent company debt. Remaining proceeds of $34 million will be paid after onshore construction is completed and certain other construction milestones are achieved. The remaining expected proceeds have been recorded in Other Long-Term Assets on Eversource’s balance sheet as of September 30, 2024. Eversource recorded a pre-tax gain on the sale of Sunrise Wind of $377 million in the third quarter of 2024. With completion of the sale, Eversource will not have any ongoing financial obligations associated with Sunrise Wind.
On February 13, 2024, Eversource executed an agreement to sell its 50 percent interests in the South Fork Wind and Revolution Wind projects to Global Infrastructure Partners (GIP) for an initial gross purchase price of approximately $1.1 billion. The initial purchase price was subject to adjustments based on, among other things, the progress, timing and the construction cost of Revolution Wind, including changes in actual versus forecasted capital spending between signing the agreement and closing of the transaction. On September 30, 2024, Eversource completed the sale of its 50 percent ownership share in the South Fork Wind and Revolution Wind projects to GIP for adjusted gross proceeds of $745 million, which were received at closing. Adjusted gross proceeds from the sale were reduced by approximately $375 million as compared with the previously estimated purchase price. This reduction reflects approximately $150 million resulting from lower capital spending between announcing the transaction and closing, and approximately $225 million related to the final terms of the sale transaction, primarily due to the delay of the commercial operations date of Revolution Wind. Proceeds from the transaction were used to pay off parent company debt.
As part of the Revolution Wind and South Fork Wind sale, Eversource and GIP agreed to make certain post-closing purchase price adjustment payments, which could further impact the final purchase price. The post-closing purchase price adjustment payments include cost sharing obligations that provide Eversource will share equally with GIP in GIP’s funding obligations up to an effective cap of approximately $240 million of incremental capital expenditure overruns incurred during the construction phase for Revolution Wind, after which Eversource will have responsibility for GIP’s obligations for any additional capital expenditure overruns in excess of the capped amount. The purchase price is also subject to post-closing adjustments as a result of final project economics, which includes Eversource’s obligation to maintain GIP’s internal rate of return for each project as specified in the agreement. Post-closing purchase price adjustment payments will be made following the commercial operation of Revolution Wind.
Upon the completion of both sale transactions, the total proceeds were compared to the carrying value of the investments, including an estimate of liability for post-closing adjustment payments to GIP, and Eversource recognized an aggregate after-tax loss on the sale of its offshore wind investments of $524 million in the third quarter of 2024. The aggregate after-tax loss is comprised of (1) the lower proceeds related to final terms of the sale transaction to GIP of approximately $225 million related to non-construction costs for the Revolution Wind and South Fork Wind projects, primarily due to a purchase price reduction of $150 million resulting from the delay of the commercial operations date of Revolution Wind, (2) recently identified forecasted construction costs as a result of a delay in the anticipated commercial operation date related to Revolution Wind of approximately $350 million, which includes an estimate for the anticipated post-closing adjustment to GIP related to Eversource’s
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expected cost overrun sharing obligation, and (3) approximately $326 million, which includes an estimate for the anticipated post-closing adjustment related to Eversource’s expected obligations to GIP as a result of final economics of the Revolution Wind and South Fork Wind projects and other future costs as well as a net $60 million increase in income tax expense including an increase in the valuation allowance for unused capital losses. These losses were partially offset by the $377 million gain on the sale of Sunrise Wind.
Upon sale, Eversource recorded a liability of $365 million reflecting its best estimate of the future obligations under the GIP sale terms, which primarily include the expected cost overrun sharing obligation, expected obligation to maintain GIP’s internal rate of return for the Revolution Wind project, and obligation of other future costs. The majority of this liability is expected to be settled in 2026. The long-term portion of the liability of $350 million was recorded in Other Long-Term Liabilities, and the remainder was recorded in Other Current Liabilities on Eversource’s balance sheet as of September 30, 2024.
Factors that could increase the post-closing adjustment payments owed to GIP include the ultimate cost of construction and extent of cost overruns for Revolution Wind, delays in constructing Revolution Wind, which would impact the economics associated with the purchase price adjustment, and Revolution Wind’s eligibility for federal investment tax credits at less than the value included in the purchase price. The purchase price included the sales value related to a 40 percent level of federal investment tax credits, 10 percent of which is the energy community ITC adder of approximately $170 million related to Revolution Wind. It is possible that new information or future developments could require a reassessment of the potential exposure of the estimated liability for the post-closing adjustment payments. As this information becomes available, Eversource will continue to assess the potential exposure and adjust the liability if needed. Incremental exposure of this estimated liability remains possible, but management cannot reasonably estimate a range of loss beyond the amount recorded at this time. Total net proceeds could also be adjusted for a benefit due to Eversource if there are lower operation costs or higher availability of the projects through the period that is four years following the commercial operation of Revolution Wind. South Fork Wind has achieved commercial operation and, as a result, Eversource does not expect any material cost sharing or other purchase price adjustment payments related to this project.
Under the agreement with GIP, Eversource’s existing and certain additional credit support obligations for Revolution Wind are expected to roll off as the project completes construction. Under the agreement with Ørsted, Eversource’s existing credit support obligations for Sunrise Wind were either terminated or indemnified by Ørsted as a result of the sale. Eversource has entered into separate construction management agreements to manage Sunrise Wind’s and Revolution Wind’s onshore construction through completion. In this role, Eversource will be solely a service provider to Sunrise Wind and Revolution Wind.
Impairments: In the second quarter of 2023, in connection with the process to divest its offshore wind business, Eversource identified indicators for impairment. In the impairment assessment, Eversource evaluated its investments and determined that the carrying value of the equity method offshore wind investments exceeded the fair value of the investments and that the decline in fair value was other-than-temporary. The completion of the strategic review in the second quarter of 2023 resulted in Eversource recording a pre-tax other-than-temporary impairment charge of $401 million ($331 million after-tax) to reflect the investment at estimated fair value based on the expected purchase price at that time. In the fourth quarter of 2023, Eversource recognized an additional pre-tax other-than-temporary impairment charge of $1.77 billion ($1.62 billion after-tax) in its offshore wind investments and established a new cost basis in the investments as of December 31, 2023. The impairment charges were non-cash charges and did not impact Eversource’s cash position. In the third quarter of 2024, Eversource sold its interest in its offshore wind investments.
FERC Regulatory Matters
FERC ROE Complaints: 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). In each of the first three complaints, filed on October 1, 2011, December 27, 2012, and July 31, 2014, respectively, the Complainants challenged the NETOs' base ROE of 11.14 percent that had been utilized since 2005 and sought an order to reduce it prospectively from the date of the final FERC order and for the separate 15-month complaint periods. In the fourth complaint, filed April 29, 2016, the Complainants challenged the NETOs' base ROE billed of 10.57 percent and the maximum ROE for transmission incentive (incentive cap) of 11.74 percent, asserting that these ROEs were unjust and unreasonable.
The ROE originally billed during the period October 1, 2011 (beginning of the first complaint period) through October 15, 2014 consisted of a base ROE of 11.14 percent and incentives up to 13.1 percent. On October 16, 2014, FERC issued Opinion No. 531-A and set the base ROE at 10.57 percent and the incentive cap at 11.74 percent for the first complaint period. This was also effective for all prospective billings to customers beginning October 16, 2014. This FERC order was vacated on April 14, 2017 by the U.S. Court of Appeals for the D.C. Circuit (the Court).
All amounts associated with the first complaint period have been refunded. Eversource has recorded a reserve of $39.1 million (pre-tax and excluding interest) for the second complaint period as of both September 30, 2024 and December 31, 2023. This reserve represents the difference between the billed rates during the second complaint period and a 10.57 percent base ROE and 11.74 percent incentive cap. The reserve consisted of $21.4 million for CL&P, $14.6 million for NSTAR Electric and $3.1 million for PSNH as of both September 30, 2024 and December 31, 2023.
On October 16, 2018, FERC issued an order on all four complaints describing how it intends to address the issues that were remanded by the Court. FERC proposed a new framework to determine (1) whether an existing ROE is unjust and unreasonable and, if so, (2) how to calculate a replacement ROE. Initial briefs were filed by the NETOs, Complainants and FERC Trial Staff on January 11, 2019 and reply briefs were filed on March 8, 2019. The NETOs' brief was supportive of the overall ROE methodology determined in the October 16, 2018 order provided the FERC does not change the proposed methodology or alter its implementation in a manner that has a material impact on the results.
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The FERC order included illustrative calculations for the first complaint using FERC's proposed frameworks with financial data from that complaint. Those illustrative calculations indicated that for the first complaint period, for the NETOs, which FERC concludes are of average financial risk, the preliminary just and reasonable base ROE is 10.41 percent and the preliminary incentive cap on total ROE is 13.08 percent.
If the results of the illustrative calculations were included in a final FERC order for each of the complaint periods, then a 10.41 percent base ROE and a 13.08 percent incentive cap would not have a significant impact on our financial statements for all of the complaint periods. These preliminary calculations are not binding and do not represent what we believe to be the most likely outcome of a final FERC order.
On November 21, 2019, FERC issued Opinion No. 569 affecting the two pending transmission ROE complaints against the Midcontinent ISO (MISO) transmission owners, in which FERC adopted a new methodology for determining base ROEs. Various parties sought rehearing. On December 23, 2019, 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. On May 21, 2020, 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. On November 19, 2020, 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. The new methodology differs significantly from the methodology proposed by FERC in its October 16, 2018 order to determine the NETOs' base ROEs in its four pending cases. FERC Opinion Nos. 569-A and 569-B were appealed to the Court. On 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. The Court found that FERC’s development of the new return methodology was arbitrary and capricious due to FERC’s failure to offer a reasonable explanation for its decision to reintroduce the risk-premium financial model in its new methodology for calculating a just and reasonable return.
On October 17, 2024, FERC issued an order on the remand of the MISO ROE proceedings. The order addressed the Court’s decision that the reintroduction of the risk-premium financial model in the ROE methodology was arbitrary and capricious by removing the risk-premium financial model from the ROE methodology. The removal of the risk-premium financial model was the only revision to FERC’s ROE methodology and resulted in a two-model approach utilizing the two-step discounted cash flow model and the capital asset pricing model. MISO was directed to provide refunds for the period November 12, 2013 to February 11, 2015 (the first MISO ROE complaint refund period) and for the period from September 28, 2016 (the date of FERC’s order on the first MISO ROE complaint) to October 17, 2024 by December 1, 2025. The order also stated that FERC does not preclude the use of the risk-premium financial model in future proceedings if the parties can demonstrate that FERC’s stated concerns around the inclusion of the model have been addressed.
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 a range of loss for any of the four complaint proceedings at this time. The resolution of these proceedings could have a material impact on the results of operations, financial condition and cash flows.
Eversource, CL&P, NSTAR Electric and PSNH currently record revenues at the 10.57 percent base ROE and incentive cap at 11.74 percent established in the October 16, 2014 FERC order.
A change of 10 basis points to the base ROE used to establish the reserves would impact Eversource’s after-tax earnings by an average of approximately $3 million for each of the four 15-month complaint periods. Prospectively from the date of a final FERC order implementing a new base ROE, based off of estimated 2024 rate base, a change of 10 basis points to the base ROE would impact Eversource’s future annual after-tax earnings by approximately $6 million per year, and will increase slightly over time as we continue to invest in our transmission infrastructure.
FERC Notice of Proposed Rulemaking on Transmission Incentives: On March 20, 2020, FERC issued a Notice of Proposed Rulemaking (NOPR) on transmission incentives. The NOPR intends to revise FERC’s electric transmission incentive policies to reflect competing uses of transmission due to generation resource mix, technological innovation and shifts in load patterns. FERC proposes to grant transmission incentives based on measurable project economics and reliability benefits to consumers rather than its current project risks and challenges framework. On July 1, 2020, Eversource filed comments generally supporting the NOPR.
On April 15, 2021, 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. On June 25, 2021, the NETOs jointly filed comments strongly opposing FERC’s proposal. On July 26, 2021, the NETOs filed Supplemental NOPR reply comments responding to various parties advocating for the elimination of the RTO Adder. If FERC issues a final order eliminating the RTO ROE incentive as proposed in the Supplemental NOPR, the estimated annual impact (using estimated 2024 rate base) on Eversource's after-tax earnings is approximately $23 million. The Supplemental NOPR contemplates an effective date 30 days from the final order.
At this time, Eversource cannot predict the ultimate outcome of these proceedings, including possible appellate review, and the resulting impact on its transmission incentives.
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Regulatory Developments and Rate Matters
Electric, Natural Gas and Water Utility Base Distribution Rates: The regulated companies’ distribution rates are set by their respective state regulatory commissions, and their tariffs include mechanisms for periodically adjusting their rates for the recovery of specific incurred costs. Other than as described below, for the first nine months of 2024, changes made to the regulated companies’ rates did not have a material impact on their earnings. For further information, see "Financial Condition and Business Analysis – Regulatory Developments and Rate Matters" included in Item 7, "Management’s Discussion and Analysis of Financial Condition and Results of Operations," of the Eversource 2023 Form 10-K.
Connecticut:
CL&P RAM Filing: On April 17, 2024, PURA issued an interim decision in CL&P’s Rate Adjustment Mechanisms (RAM) filing and approved rates for six RAM components, with rates effective July 1, 2024 through April 30, 2025. The rate approvals include the recovery of NBFMCC and SBC net underrecoveries as of December 31, 2023 of $264.9 million and $86.2 million, respectively, and the recovery of expected net costs of $388.5 million for the NBFMCC and $254.4 million for the SBC for the period July 1, 2024 through April 30, 2025. The NBFMCC rate adjustment is primarily driven by long-term nuclear power purchase agreements required by state policy and the SBC rate adjustment is primarily driven by costs associated with accounts receivable hardship customer protection and the new low-income discount rate effective December 2023. On August 14, 2024, PURA issued a final decision that approved a further adjustment to the NBFMCC rate to include the recovery of incurred and deferred electric vehicle program costs from 2021 through May 31, 2024 of $44.4 million and expected electric vehicle program costs from June 1, 2024 through December 31, 2024 of $24.3 million. The $44.4 million, plus $5.4 million in carrying costs, will be recovered over a 20-month period of September 1, 2024 through April 30, 2026, and the $24.3 million will be recovered over an eight-month period of September 1, 2024 through April 30, 2025. In addition, PURA approved an incremental $3.5 million of 2024 Innovative Energy Solutions program costs and $1.5 million of Connecticut Green Bank program costs over an eight-month period of September 1, 2024 through April 30, 2025.
CL&P Advanced Metering Infrastructure Filing: On July 31, 2020, CL&P submitted to PURA its proposed $512 million Advanced Metering Infrastructure (AMI) investment and implementation plan. On November 8, 2021, CL&P submitted an Amended Proposal in response to PURA’s request with an updated schedule for the years 2022 through 2028, which included additional information as required by PURA. As required, the plan includes a full deployment of advanced metering functionality and a composite business case in support of the Advanced Metering Infrastructure plan. On January 3, 2024, PURA issued a final decision regarding CL&P’s Advanced Metering Infrastructure investment and implementation plan, which CL&P had most recently estimated at $766.4 million for capital costs and operating expenses. In CL&P’s view, the final decision does not provide a reasonable path for cost recovery and delays implementation by at least a year during the pendency of the cost recovery proceeding. In addition, in CL&P’s view, the final decision modifies the prudence standard for recovery of costs expended on the project, improperly linking recovery to outcomes not known at the outset of the project. On January 18, 2024, CL&P submitted a motion for reconsideration to PURA asking that the agency modify these aspects of the decision, which PURA subsequently denied on February 14, 2024. On March 6, 2024, CL&P filed written comments citing four major problems associated with PURA’s guidelines for recovery of the costs of AMI implementation, which if not addressed, represent obstacles to AMI implementation in Connecticut. On April 16, 2024, 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. CL&P witnesses pre-filed testimony, including an updated estimate of $855 million for capital costs and operating expenses, and then subsequently participated in the AMI cost recovery hearing on June 6,2024. On October 17, 2024, PURA issued a proposed final decision on recovery of the costs for AMI implementation. Written exceptions to the proposed final decision were filed on October 31, 2024, and oral arguments are scheduled for November 7, 2024. CL&P’s written exceptions focused on three main aspects of the proposed decision, which include (1) clarifying the prudence standard to be used in evaluating AMI investments, (2) timing of prudency reviews, and (3) cost recovery related to incremental O&M expenses. A final decision is currently expected on November 20, 2024.
Aquarion Water Company of Connecticut Distribution Rate Case: On August 29, 2022, Aquarion Water Company of Connecticut (AWC-CT) filed an application with PURA to amend its existing rate schedules to address an operating revenue deficiency. AWC-CT’s rate application requested approval of rate increases of $27.5 million, an additional $13.6 million, and an additional $8.8 million, effective March 15, 2023, 2024, and 2025, respectively. On March 15, 2023, 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. The decision allows an authorized regulatory ROE of 8.70 percent. On March 30, 2023, AWC-CT filed an appeal on the decision and requested a stay of the decision with the State of Connecticut Superior Court. On April 5, 2023, the Court temporarily granted AWC-CT’s request to stay and on May 25, 2023 granted a permanent stay of certain orders affecting base rates, which would keep existing rates in place until the appeal is completed. The stay included the condition that AWC-CT place any revenue received from customers above the rates and amounts authorized in the March 15, 2023 decision in a separate, interest bearing account until further order. On March 25, 2024, 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-CT’s twelve claims of error in its appeal. On March 28, 2024, AWC-CT filed an appeal of the Connecticut Superior Court decision to the Connecticut Appellate Court and that appeal was subsequently transferred to the Connecticut Supreme Court for review. A ruling on the appeal is pending.
On April 18, 2024, PURA initiated a docket to address the matters on remand. On July 31, 2024, PURA issued a final decision in this docket and increased AWC-CT’s approved revenue requirement by $0.1 million above the amount authorized in the March 15, 2023 decision. Rates went into effect on July 31, 2024. On September 13, 2024, AWC-CT filed an appeal of PURA’s July 31, 2024 final decision to the Connecticut Superior Court. A ruling on the appeal is pending.
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As a result of the State of Connecticut Superior Court’s March 2024 decision on the appeal, AWC-CT recorded the impacts of the PURA rate case decision from the effective date of the order on March 15, 2023 through September 30, 2024. The impacts primarily include a reduction to depreciation expense to reflect lower depreciation rates ordered by PURA in its 2023 final decision, partially offset by lower authorized revenues. These adjustments resulted in after-tax benefits of $3.4 million and $9.7 million recorded in the third quarter and first nine months of 2024, respectively.
Massachusetts:
NSTAR Electric Distribution Rates: NSTAR Electric’s PBR mechanism allows for an annual adjustment to base distribution rates for inflation, exogenous events and future capital additions based on a historical five-year average of total capital additions. On September 16, 2024, NSTAR Electric submitted its annual PBR Adjustment filing for a $56 million increase to base distribution rates, for effect on January 1, 2025. The requested base distribution rate increase is comprised of a $35 million inflation-based adjustment and a $21 million K-bar adjustment for capital additions based on the difference between the historical five-year average of total capital additions and the base capital revenue requirement.
NSTAR Gas Distribution Rates: NSTAR Gas’ PBR mechanism allows for an annual adjustment to base distribution rates for inflation and exogenous events. On September 16, 2024, NSTAR Gas submitted its annual PBR Adjustment filing for a $12.7 million increase to base distribution rates for effect on November 1, 2024. On October 30, 2024, the DPU approved this filing.
EGMA Distribution Rates: On November 4, 2024, EGMA submitted a revised filing for its first rate base reset for rates to be effective November 1, 2024, in accordance with an October 7, 2020 EGMA Rate Settlement Agreement approved by the DPU. The compliance filing was ordered by the DPU on October 31, 2024. The rate base reset occurring on November 1, 2024 adjusts distribution rates to account for capital additions (including the roll-in of GSEP capital additions), depreciation expense, property taxes, and return on rate base for capital additions placed into service through December 31, 2023. The total revenue requirement calculated for the first rate base reset is an increase to base distribution rates of $147.8 million, of which $34.0 million is associated with GSEP investments through December 31, 2023. Under the terms of the Rate Settlement Agreement, EGMA applied a cap on the revenue change to be effective November 1, 2024, and the amount in excess of the cap will be deferred for recovery through the Local Distribution Adjustment Clause (LDAC) on November 1, 2025, including carrying charges. After adjusting for the cap, the increase to base distribution rates is $85.6 million to be effective November 1, 2024 (of which $8.8 million is offset by a reduction in the GSEP revenue requirement and GSEP rate also taking effect on November 1, 2024 for a net distribution rate change November 1, 2024 of $76.8 million), and an increase of $62.2 million to base distribution rates to be effective November 1, 2025. EGMA is awaiting a final decision from the DPU.
NSTAR Electric’s Electric Sector Modernization Plan (ESMP) Filing: On January 29, 2024, in accordance with Massachusetts state law, NSTAR Electric filed its ESMP with the DPU. The law required each electric distribution company to develop and file a comprehensive distribution system plan to proactively upgrade the distribution system (and, where applicable, the associated transmission system) to: (i) improve grid reliability, communications and resiliency; (ii) enable increased, timely adoption of renewable energy and distributed energy resources; (iii) promote energy storage and electrification technologies necessary to decarbonize the environment and economy; (iv) prepare for future climate-driven impacts on the transmission and distribution systems; (v) accommodate increased transportation electrification, increased building electrification and other potential future demands on distribution and, where applicable, the transmission system; and (vi) minimize or mitigate impacts on Massachusetts ratepayers, thereby helping the state realize its statewide greenhouse gas emissions limits and sublimits under the law. NSTAR Electric’s plan meets these requirements by providing a comprehensive view of all the investments required to build a safer, more reliable, more resilient electric distribution system to enable an affordable, equitable clean energy transition taking into account the needs of environmental justice communities. For the five-year period from 2025 through 2029, the proposed incremental capital investment is $608 million and the incremental expense amount is $211 million. On August 29, 2024, the DPU approved the overall ESMP for a five-year period commencing July 1, 2025. The DPU has indicated that it will open a second phase of the proceeding to consider a short-term ESMP-focused cost-recovery mechanism for completion prior to the start of the plan in July 2025.
New Hampshire:
PSNH Distribution Rate Case: On June 11, 2024, PSNH filed an application with the NHPUC for approval of a temporary annual base distribution rate increase. On July 31, 2024, the NHPUC approved a settlement agreement that was reached by PSNH, New Hampshire Department of Energy, and the Office of the Consumer Advocate to implement a temporary annual base distribution rate increase of $61.2 million effective August 1, 2024.
Also on June 11, 2024, PSNH filed an application with the NHPUC to request an increase in permanent base distribution rates of $181.9 million, which is inclusive of the temporary rate increase, and proposed to take effect August 1, 2025. The temporary rates are subject to reconciliation based on the outcome of the permanent rate case back to the date when temporary rates took effect. The permanent rate increase request includes $247 million in unrecovered storm costs to be recovered over a five-year period. As part of the rate case, PSNH proposed to implement a performance-based rate making plan that would adjust rates annually over a four-year term with a corresponding stay out provision. The plan includes a revenue-cap formula adjusted for inflation, a supplemental capital adjustment formula to support PSNH’s planned capital infrastructure improvements, an exogenous events recovery mechanism, performance metrics and an earnings sharing mechanism, among others. The NHPUC is permitted up to twelve months in all to investigate the proposed rates and issue a final order. A decision by the NHPUC on permanent rates is expected by August 1, 2025.
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Critical Accounting Policies
The preparation of financial statements in conformity with GAAP requires management to make estimates, assumptions and, at times, difficult, subjective or complex judgments. Changes in these estimates, assumptions and judgments, in and of themselves, could materially impact our financial position, results of operations or cash flows. Our management discusses with the Audit Committee of our Board of Trustees significant matters relating to critical accounting policies. Our critical accounting policies that we believed were the most critical in nature were reported in the Eversource 2023 Form 10-K. There have been no material changes with regard to these critical accounting policies.
Other Matters
Web Site: Additional financial information is available through our website at www.eversource.com. We make available through our website a link to the SEC's EDGAR website (http://www.sec.gov/edgar/searchedgar/companysearch.html), at which site Eversource's, CL&P's, NSTAR Electric's and PSNH's combined Annual Reports on Form 10-K, combined Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and any amendments to those reports may be reviewed. Information contained on the Company's website or that can be accessed through the website is not incorporated into and does not constitute a part of this combined Quarterly Report on Form 10-Q.
RESULTS OF OPERATIONS – EVERSOURCE ENERGY AND SUBSIDIARIES
The following provides the amounts and variances in operating revenues and expense line items in the statements of income for Eversource for the three and nine months ended September 30, 2024 and 2023 included in this combined Quarterly Report on Form 10-Q:
For the Three Months Ended September 30,
For the Nine Months Ended September 30,
(Millions of Dollars)
2024
2023
Increase/(Decrease)
2024
2023
Increase/(Decrease)
Operating Revenues
$
3,063.2
$
2,791.5
$
271.7
$
8,929.3
$
9,216.5
$
(287.2)
Operating Expenses:
Purchased Power, Purchased Natural Gas and Transmission
917.9
1,168.6
(250.7)
2,995.2
4,232.9
(1,237.7)
Operations and Maintenance
510.4
500.7
9.7
1,437.8
1,382.6
55.2
Depreciation
366.1
329.5
36.6
1,060.7
962.5
98.2
Amortization
244.0
(144.0)
388.0
127.5
(438.5)
566.0
Energy Efficiency Programs
148.0
162.4
(14.4)
506.8
531.2
(24.4)
Taxes Other Than Income Taxes
264.4
243.7
20.7
740.4
705.0
35.4
Total Operating Expenses
2,450.8
2,260.9
189.9
6,868.4
7,375.7
(507.3)
Operating Income
612.4
530.6
81.8
2,060.9
1,840.8
220.1
Interest Expense
300.6
222.3
78.3
822.7
624.3
198.4
Losses on Offshore Wind Investments
464.0
—
464.0
464.0
401.0
63.0
Other Income, Net
112.6
79.1
33.5
318.9
263.0
55.9
(Loss)/Income Before Income Tax Expense
(39.6)
387.4
(427.0)
1,093.1
1,078.5
14.6
Income Tax Expense
76.6
45.8
30.8
348.4
226.7
121.7
Net (Loss)/Income
(116.2)
341.6
(457.8)
744.7
851.8
(107.1)
Net Income Attributable to Noncontrolling Interests
1.9
1.9
—
5.6
5.6
—
Net (Loss)/Income Attributable to Common Shareholders
$
(118.1)
$
339.7
$
(457.8)
$
739.1
$
846.2
$
(107.1)
Operating Revenues
Sales Volumes: A summary of our retail electric GWh sales volumes, our firm natural gas MMcf sales volumes, and our water MG sales volumes, and percentage changes, is as follows:
Electric
Firm Natural Gas
Water
Sales Volumes (GWh)
Percentage Increase/(Decrease)
Sales Volumes (MMcf)
Percentage Increase
Sales Volumes (MG)
Percentage Increase
Three Months Ended September 30:
2024
2023
2024
2023
2024
2023
Traditional
2,125
2,090
1.7
%
—
—
—
%
563
469
20.0
%
Decoupled
11,796
12,140
(2.8)
%
16,633
15,755
5.6
%
7,751
7,168
8.1
%
Total Sales Volumes
13,921
14,230
(2.2)
%
16,633
15,755
5.6
%
8,314
7,637
8.9
%
Nine Months Ended September 30:
Traditional
5,908
5,735
3.0
%
—
—
—
%
1,283
1,148
11.8
%
Decoupled
32,435
31,858
1.8
%
102,982
99,289
3.7
%
18,257
17,761
2.8
%
Total Sales Volumes
38,343
37,593
2.0
%
102,982
99,289
3.7
%
19,540
18,909
3.3
%
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Weather, fluctuations in energy supply rates, conservation measures (including utility-sponsored energy efficiency programs), and economic conditions affect customer energy usage and water consumption. Industrial sales volumes are less sensitive to temperature variations than residential and commercial sales volumes. In our service territories, weather impacts both electric and water sales volumes during the summer and both electric and natural gas sales volumes during the winter; however, natural gas sales volumes are more sensitive to temperature variations than electric sales volumes. Customer heating or cooling usage may not directly correlate with historical levels or with the level of degree-days that occur.
Fluctuations in retail electric sales volumes at PSNH impact earnings ("Traditional" in the table above). For CL&P, NSTAR Electric, NSTAR Gas, EGMA, Yankee Gas, and our Connecticut water distribution business, fluctuations in retail sales volumes do not materially impact earnings due to their respective regulatory commission-approved distribution revenue decoupling mechanisms ("Decoupled" in the table above). These distribution revenues are decoupled from their customer sales volumes, which breaks the relationship between sales volumes and revenues recognized.
Operating Revenues: The variance in Operating Revenues by segment is as follows:
(Millions of Dollars)
Three Months Ended
Nine Months Ended
Electric Distribution
$
261.5
$
(153.5)
Natural Gas Distribution
(1.1)
(155.9)
Electric Transmission
50.4
153.5
Water Distribution
(1.5)
(2.3)
Other
20.0
36.3
Eliminations
(57.6)
(165.3)
Total Operating Revenues
$
271.7
$
(287.2)
Electric and Natural Gas Distribution Revenues:
Base Distribution Revenues:
•Base electric distribution revenues increased $43.0 million and $99.8 million for the three and nine month periods, respectively, due primarily to base distribution rate increases at NSTAR Electric effective January 1, 2024 and at PSNH effective August 1, 2024.
•Base natural gas distribution revenues increased $0.7 million and $14.9 million for the three and nine month periods, respectively, due primarily to a base distribution rate increase at NSTAR Gas effective November 1, 2023.
NSTAR Electric’s PBR mechanism allows for an annual adjustment to base distribution rates for inflation, exogenous events and future capital additions based on a historical five-year average of total capital additions. On December 26, 2023, the DPU approved a $104.9 million increase to NSTAR Electric’s base distribution rates effective January 1, 2024.
NSTAR Gas’ PBR mechanism allows for an annual adjustment to base distribution rates for inflation and exogenous events. On October 30, 2023, the DPU approved a $25.4 million increase to NSTAR Gas’ 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.
Tracked Distribution Revenues: Tracked distribution revenues consist of certain costs that are recovered from customers in retail rates through regulatory commission-approved cost tracking mechanisms and therefore, recovery of these costs has no impact on earnings. Costs recovered through cost tracking mechanisms include, among others, energy supply and natural gas supply procurement and other energy-related costs, electric retail transmission charges, energy efficiency program costs, electric restructuring and stranded cost recovery revenues (including securitized RRB charges), certain capital tracking mechanisms for infrastructure improvements, and additionally for the Massachusetts utilities, pension and PBOP benefits, net metering for distributed generation, and solar-related programs. Revenues from certain of these cost tracking mechanisms also include certain incentives earned, return on capital tracking mechanisms, and carrying charges that are billed in rates to customers, which do impact earnings. Tracked revenues also include wholesale market sales transactions, such as sales of energy and energy-related products into the ISO-NE wholesale electricity market, sales of natural gas to third party marketers, and the sale of RECs to various counterparties.
Customers have the choice to purchase electricity from their Eversource electric utility or from a competitive third party supplier. For customers who have contracted separately with these competitive suppliers, revenue is not recorded for the sale of the electricity commodity, as the utility is acting as an agent on behalf of the third party supplier. For customers that choose to purchase electric generation from CL&P, NSTAR Electric or PSNH, each utility purchases power on behalf of, and is permitted to recover the related energy supply cost without mark-up from, its customers, and records offsetting amounts in revenues and purchased power related to this energy supply procurement. CL&P, NSTAR Electric and PSNH each remain as the distribution service provider for all customers and charge a regulated rate for distribution delivery service recorded in revenues. Certain eligible natural gas customers may elect to purchase natural gas from their Eversource natural gas utility or may contract separately with a gas supply operator. Revenue is not recorded for the sale of the natural gas commodity to customers who have contracted separately with these operators, only the delivery to a customer, as the utility is acting as an agent on behalf of the gas supply operator.
54
The variance in tracked distribution revenues for the three and nine month periods is due primarily to the following:
Electric Distribution
Natural Gas Distribution
(Millions of Dollars)
Three Months Ended
Nine Months Ended
Three Months Ended
Nine Months Ended
Retail Tariff Tracked Revenues:
Energy supply procurement
$
(227.4)
$
(1,083.0)
$
34.6
$
(162.2)
CL&P FMCC
207.3
365.2
—
—
Retail transmission
16.5
107.5
—
—
Net Metering
42.6
102.1
—
—
Other distribution tracking mechanisms
159.4
264.2
6.5
30.6
Wholesale Market Sales Revenue
18.9
(13.3)
(42.6)
(38.3)
The decrease in energy supply procurement within electric distribution for the three and nine month periods was driven by lower average prices and lower average supply-related sales volumes. The increase in energy supply procurement within natural gas distribution for the three month period was driven by higher average supply-related sales volumes, partially offset by lower average prices. The decrease in energy supply procurement within natural gas distribution for the nine month period was driven by lower average prices, partially offset by higher average supply-related sales volumes.
The increase in CL&P’s FMCC revenues was driven by an increase in the retail Non-Bypassable Federally Mandated Congestion Charge (NBFMCC) rate. The CL&P NBFMCC rate includes the recovery of costs incurred under long-term state approved energy contracts with the Millstone and Seabrook nuclear power plants, net of the benefits received from selling this energy into the ISO-NE wholesale market. Effective January 1, 2023, CL&P reduced the average NBFMCC rate to a credit of $0.01524 per kWh. The rate reduction returned to customers the net benefits of higher wholesale market sales received in the ISO-NE market for these energy contracts. The average NBFMCC rate changed to $0.00000 per kWh effective July 1, 2023 and then to $0.00293 per kWh effective September 1, 2023. As a result of the April 2024 interim decision in the 2024 CL&P RAM filing, the average NBFMCC rate increased to $0.03906 per kWh effective July 1, 2024. As a result of the August final decision in the 2024 CL&P RAM filing, the average NBFMCC increased to $0.04290 per kWh effective September 1, 2024. The rate increases primarily resulted from higher costs associated with power purchase agreements with the Millstone and Seabrook nuclear power plants.
Fluctuations in retail transmission revenues are driven by the recovery of the costs of our wholesale transmission business, such as those billed by ISO-NE and Local and Regional Network Service charges. For further information, see "Purchased Power, Purchased Natural Gas and Transmission” expense below.
Electric Transmission Revenues: Electric transmission revenues increased $50.4 million and $153.5 million for the three and nine month periods, respectively, due primarily to a higher transmission rate base as a result of our continued investment in our transmission infrastructure and the impact of the annual rate reconciliation filing with FERC.
Other Revenues and Eliminations: Other revenues primarily include the revenues of Eversource's service company, most of which are eliminated in consolidation. Eliminations are also primarily related to the Eversource electric transmission revenues that are derived from ISO-NE regional transmission charges to the distribution businesses of CL&P, NSTAR Electric and PSNH that recover the costs of the wholesale transmission business in rates charged to their customers.
Purchased Power, Purchased Natural Gas and Transmission expense includes costs associated with providing electric generation service supply and natural gas to all customers who have not migrated to third party suppliers, the cost of energy purchase contracts entered into as required by regulation, and transmission costs. These electric and natural gas supply procurement costs, other energy-related costs, and transmission costs are recovered from customers in rates through commission-approved cost tracking mechanisms, which have no impact on earnings (tracked costs). The variance in Purchased Power, Purchased Natural Gas and Transmission expense is due primarily to the following:
(Millions of Dollars)
Three Months Ended
Nine Months Ended
Energy supply procurement costs
$
(231.1)
$
(1,086.8)
Other electric distribution costs
12.1
91.8
Natural gas supply costs
(12.3)
(204.0)
Transmission costs
15.7
84.7
Eliminations
(35.1)
(123.4)
Total Purchased Power, Purchased Natural Gas and Transmission
$
(250.7)
$
(1,237.7)
The variance in energy supply procurement costs is offset in Operating Revenues (tracked energy supply procurement revenues). The variance in other electric distribution costs for the three and nine month periods was primarily the result of higher net metering costs at NSTAR Electric, higher long-term contractual energy-related costs that are recovered in the non-bypassable component of the FMCC mechanism at CL&P for the nine month period, partially offset by a decrease in long-term renewable energy purchase contract costs at PSNH.
Costs at the natural gas distribution segment relate to supply procurement costs for retail customers. Total natural gas costs decreased for the three month period due primarily to a decrease in the retail cost deferral and lower average purchased volumes, partially offset by higher average prices.Total natural gas costs decreased for the nine month period due primarily to a decrease in the retail cost deferral and lower average prices, partially offset by higher average purchased volumes.
55
The increase in transmission costs for the three month period was primarily the result of an increase in costs billed by ISO-NE that support regional grid investments and an increase in Local Network Service charges, which reflect the cost of transmission service provided by Eversource over our local transmission network. This was partially offset by a decrease in the retail transmission cost deferral, which reflects the actual cost of transmission service compared to estimated amounts billed to customers. The increase in transmission costs for the nine month period was primarily the result of an increase in costs billed by ISO-NE and an increase in Local Network Service charges. This was partially offset by a decrease in the retail transmission cost deferral.
Operations and Maintenance expense includes tracked costs and costs that are part of base electric, natural gas and water distribution rates with changes impacting earnings (non-tracked costs). The variance in Operations and Maintenance expense is due primarily to the following:
(Millions of Dollars)
Three Months Ended
Nine Months Ended
Base Electric Distribution (Non-Tracked Costs):
Uncollectible expense
$
12.6
$
16.4
General costs (including vendor services in corporate areas, insurance, fees and assessments)
6.0
3.6
Shared corporate costs (including IT system depreciation at Eversource Service)
2.9
9.6
Storm-related costs
(18.4)
(2.1)
Employee-related expenses (including labor and benefits)
(7.8)
(3.0)
Operations-related expenses (including vegetation management, vendor services, vehicles and materials)
(3.6)
7.7
Total Base Electric Distribution (Non-Tracked Costs)
(8.3)
32.2
Tracked Electric Costs (Electric Distribution and Electric Transmission) - Increase in both periods due primarily to higher transmission expense
17.1
64.3
Total Electric Distribution and Electric Transmission
8.8
96.5
Natural Gas Distribution:
Base (Non-Tracked Costs) - Three month increase due primarily to higher employee-related expenses; nine month decrease due primarily to lower employee-related expenses and uncollectible expense
5.9
(16.1)
Tracked Costs
4.7
10.8
Total Natural Gas Distribution
10.6
(5.3)
Water Distribution
(0.3)
5.0
Eversource Parent and Other Companies - other operations and maintenance
11.6
(2.4)
Eliminations
(21.0)
(38.6)
Total Operations and Maintenance
$
9.7
$
55.2
Depreciation expense increased for the three and nine month periods due primarily to higher net plant in service balances.
Amortization expense includes the deferral of energy-related costs and other costs that are included in certain regulatory commission-approved cost tracking mechanisms. This deferral adjusts expense to match the corresponding revenues compared to the actual costs incurred. These costs are recovered from customers in rates and have no impact on earnings. Amortization expense also includes the amortization of certain costs as those costs are collected in rates.
The variance in Amortization for the three and nine month periods is due primarily to the deferral adjustment of energy-related and other tracked costs at CL&P (included in the non-bypassable component of the FMCC mechanism), NSTAR Electric and PSNH, which can fluctuate from period to period based on the timing of costs incurred and related rate changes to recover these costs. The CL&P non-bypassable FMCC retail rate increased in 2024 as compared to 2023, and the higher collections lowered the regulatory under-recovery deferral adjustment recorded in the three and nine month periods, resulting in an increase to amortization expense of $228.0 million and $344.3 million, respectively. Amortization expense also increased for the three and nine month periods at NSTAR Electric as a result of an increase in storm costs recovered in rates and increased for the nine month period at PSNH due to the absence of a second quarter 2023 benefit related to the establishment of a new regulatory tracking mechanism that allowed for the recovery of previously incurred operating expenses associated with poles acquired from Consolidated Communications on May 1, 2023. The establishment of the PPAM regulatory asset resulted in a pre-tax benefit of $16.9 million recorded in Amortization expense on the statement of income in the second quarter of 2023.
Energy Efficiency Programsexpenseincludes costs of various state energy policy initiatives and expanded energy efficiency programs that are recovered from customers in rates, most of which have no impact on earnings. Energy Efficiency Programs expense includes a deferral adjustment that reflects the actual costs of energy efficiency programs compared to the amounts billed to customers, which can fluctuate from period to period based on the timing of costs incurred and related rate changes to recover these costs. Energy Efficiency Programs expense decreased for the three and ninemonth periods due primarily to the deferral adjustment, partially offset by higher program spending.
Taxes Other Than Income Taxes expense increased for the three and nine month periods due primarily to higher property taxes as a result of higher utility plant balances and higher assessments and higher Connecticut gross earnings taxes.
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Interest Expense increased for the three and nine month periods due primarily to an increase in interest on long-term debt as a result of new debt issuances ($57.2 million and $177.7 million, respectively), an increase in interest expense on regulatory deferrals ($7.3 million and $20.4 million, respectively), and higher interest on short-term notes payable due to increased borrowings ($5.7 million and $17.1 million, respectively). Additionally, Interest Expense increased for the three month period as a result of a decrease in capitalized AFUDC related to debt funds and other capitalized interest ($7.3 million), and decreased for the nine month period as a result of an increase in capitalized AFUDC related to debt funds and other capitalized interest ($21.9 million).
Losses on Offshore Wind Investments relates to the loss recorded on the 2024 sales of our equity method offshore wind investments and the impairment charge in 2023 resulting from the expected sales of these offshore wind investments. See "Business Development and Capital Expenditures – Offshore Wind Business" included in this Management's Discussion and Analysis of Financial Condition and Results of Operations for further information.
Other Income, Net increased for the three and nine month periods due primarily toan increase in interest income primarily from regulatory deferrals ($14.8 million and $37.4 million, respectively), an increase in equity in earnings related to Eversource's equity method investments ($14.4 million and $36.6 million, respectively), an increase in capitalized AFUDC related to equity funds ($1.7 million and $17.7 million, respectively), and a gain on the sale of an unregulated water business in the third quarter of 2024 ($4.4 million), partially offset by unfavorable investment activity in 2024 compared to 2023 driven by market volatility ($4.8 million and $1.4 million, respectively). Additionally, Other Income, Net increased for the three month period as a result of an increase related to pension, SERP and PBOP non-service income components ($3.1 million), and decreased for the nine month period as a result of a decrease related to pension, SERP and PBOP non-service income components ($7.2 million).
The variance in Other Income, Net for the nine month period was also due to the absence in 2024 of a benefit in both the first and second quarters of 2023 from the liquidation of Eversource’s equity method investment in a renewable energy fund in excess of its carrying value, partially offset by a charitable contribution made with a portion of the proceeds from the liquidation in the first quarter of 2023, as well as the absence in 2024 of a loss on the disposition of land in the second quarter of 2023.
Income Tax Expense increased for the three month period due primarily to an increase in reserves ($208.9 million) primarily related to the loss on sales of Eversource’s offshore wind investments. Other factors were a decrease in amortization of EDIT ($1.0 million), partially offset by lower pre-tax earnings ($89.7 million), lower state taxes ($41.6 million), lower return to provision adjustments ($40.3 million) and a decrease in items that impact our tax rate as a result of regulatory treatment (flow-through items) and permanent differences ($7.5 million).
Income Tax Expense increased for the nine month period due primarily to an increase in reserves ($165.9 million) primarily related to the loss on sales of Eversource’s offshore wind investments in 2024 compared to the impairment on these investments in 2023. Other factors were a decrease in amortization of EDIT ($11.0 million), a higher share-based payment tax deficiency ($1.8 million), and higher pre-tax earnings ($3.0 million), partially offset by lower state taxes ($9.5 million), lower return to provision adjustments ($40.3 million), and a decrease in items that impact our tax rate as a result of regulatory treatment (flow-through items) and permanent differences ($10.2 million).
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RESULTS OF OPERATIONS –
THE CONNECTICUT LIGHT AND POWER COMPANY
NSTAR ELECTRIC COMPANY AND SUBSIDIARY
PUBLIC SERVICE COMPANY OF NEW HAMPSHIRE AND SUBSIDIARIES
The following provides the amounts and variances in operating revenues and expense line items in the statements of income for CL&P, NSTAR Electric and PSNH for the nine months ended September 30, 2024 and 2023 included in this combined Quarterly Report on Form 10-Q:
For the Nine Months Ended September 30,
CL&P
NSTAR Electric
PSNH
(Millions of Dollars)
2024
2023
Increase/ (Decrease)
2024
2023
Increase/ (Decrease)
2024
2023
Increase/ (Decrease)
Operating Revenues
$
3,431.2
$
3,563.1
$
(131.9)
$
2,870.2
$
2,728.8
$
141.4
$
955.5
$
1,123.3
$
(167.8)
Operating Expenses:
Purchased Power and Transmission
1,516.1
2,136.9
(620.8)
818.0
936.5
(118.5)
169.8
499.6
(329.8)
Operations and Maintenance
593.1
525.7
67.4
526.3
487.0
39.3
207.3
217.5
(10.2)
Depreciation
302.0
281.1
20.9
301.8
277.4
24.4
114.4
104.3
10.1
Amortization of Regulatory (Liabilities)/Assets, Net
(73.5)
(425.4)
351.9
120.8
14.9
105.9
101.9
(35.2)
137.1
Energy Efficiency Programs
114.6
100.7
13.9
222.2
252.3
(30.1)
33.0
30.5
2.5
Taxes Other Than Income Taxes
316.0
303.2
12.8
205.8
188.2
17.6
71.8
73.3
(1.5)
Total Operating Expenses
2,768.3
2,922.2
(153.9)
2,194.9
2,156.3
38.6
698.2
890.0
(191.8)
Operating Income
662.9
640.9
22.0
675.3
572.5
102.8
257.3
233.3
24.0
Interest Expense
180.1
145.4
34.7
164.9
139.8
25.1
62.7
55.9
6.8
Other Income, Net
61.4
46.6
14.8
143.0
120.7
22.3
22.9
19.2
3.7
Income Before Income Tax Expense
544.2
542.1
2.1
653.4
553.4
100.0
217.5
196.6
20.9
Income Tax Expense
142.4
141.0
1.4
151.3
120.1
31.2
53.9
44.6
9.3
Net Income
$
401.8
$
401.1
$
0.7
$
502.1
$
433.3
$
68.8
$
163.6
$
152.0
$
11.6
Operating Revenues
Sales Volumes: A summary of our retail electric GWh sales volumes is as follows:
For the Nine Months Ended September 30,
2024
2023
Percentage Increase
CL&P
15,363
14,830
3.6
%
NSTAR Electric
17,072
17,028
0.3
%
PSNH
5,908
5,735
3.0
%
Fluctuations in retail electric sales volumes at PSNH impact earnings. For CL&P and NSTAR Electric, fluctuations in retail electric sales volumes do not impact earnings due to their respective regulatory commission-approved distribution revenue decoupling mechanisms.
Operating Revenues: Operating Revenues, which consist of base distribution revenues and tracked revenues further described below, decreased $131.9 million at CL&P and $167.8 million at PSNH, and increased $141.4 million at NSTAR Electric for the nine month period.
Base Distribution Revenues:
•CL&P's distribution revenues were flat for the nine month period.
•NSTAR Electric's distribution revenues increased $80.7 million for the nine month period due primarily to a base distribution rate increase effective January 1, 2024.
•PSNH's distribution revenues increased $19.1 million for the nine month period due primarily to a base distribution rate increase effective August 1, 2024.
Tracked Distribution Revenues: Tracked distribution revenues consist of certain costs that are recovered from customers in retail rates through regulatory commission-approved cost tracking mechanisms and therefore, recovery of these costs has no impact on earnings. Costs recovered through cost tracking mechanisms include, among others, energy supply procurement and other energy-related costs, retail transmission charges, energy efficiency program costs, electric restructuring and stranded cost recovery revenues (including securitized RRB charges), certain capital tracking mechanisms for infrastructure improvements, and additionally for NSTAR Electric, pension and PBOP benefits, net metering for distributed generation, and solar-related programs. Revenues from certain of these cost tracking mechanisms also include certain incentives earned, return on capital tracking mechanisms, and carrying charges that are billed in rates to customers, which do impact earnings. Tracked revenues also include wholesale market sales transactions, such as sales of energy and energy-related products into the ISO-NE wholesale electricity market and the sale of RECs to various counterparties.
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Customers have the choice to purchase electricity from their Eversource electric utility or from a competitive third party supplier. For customers who have contracted separately with these competitive suppliers, revenue is not recorded for the sale of the electricity commodity, as the utility is acting as an agent on behalf of the third party supplier. For customers that choose to purchase electric generation from CL&P, NSTAR Electric or PSNH, each utility purchases power on behalf of, and is permitted to recover the related energy supply cost without mark-up from, its customers, and records offsetting amounts in revenues and purchased power related to this energy supply procurement. CL&P, NSTAR Electric and PSNH each remain as the distribution service provider for all customers and charge a regulated rate for distribution delivery service recorded in revenues.
The variance in tracked distribution revenues for the nine month period is due primarily to the following:
(Millions of Dollars)
CL&P
NSTAR Electric
PSNH
Retail Tariff Tracked Revenues:
Energy supply procurement
$
(613.3)
$
(217.5)
$
(252.2)
CL&P FMCC
365.2
—
—
Retail transmission
20.7
52.6
34.2
Net Metering
—
102.1
—
Other distribution tracking mechanisms
82.0
131.5
50.7
Wholesale Market Sales Revenue
22.4
(11.8)
(23.9)
The decrease in energy supply procurement at CL&P, NSTAR Electric and PSNH for the nine month period was driven by lower average prices and lower average supply-related sales volumes.
The increase in CL&P’s FMCC revenues was driven by an increase in the retail Non-Bypassable Federally Mandated Congestion Charge (NBFMCC) rate. The CL&P NBFMCC rate includes the recovery of costs incurred under long-term state approved energy contracts with the Millstone and Seabrook nuclear power plants, net of the benefits received from selling this energy into the ISO-NE wholesale market. Effective January 1, 2023, CL&P reduced the average NBFMCC rate to a credit of $0.01524 per kWh. The rate reduction returned to customers the net benefits of higher wholesale market sales received in the ISO-NE market for these energy contracts. The average NBFMCC rate changed to $0.00000 per kWh effective July 1, 2023 and then to $0.00293 per kWh effective September 1, 2023. As a result of the April 2024 interim decision in the 2024 CL&P RAM filing, the average NBFMCC rate increased to $0.03906 per kWh effective July 1, 2024. As a result of the August final decision in the 2024 CL&P RAM filing, the average NBFMCC increased to $0.04290 per kWh effective September 1, 2024. The rate increases primarily resulted from higher costs associated with power purchase agreements with the Millstone and Seabrook nuclear power plants.
Fluctuations in retail transmission revenues are driven by the recovery of the costs of our wholesale transmission business, such as those billed by ISO-NE and Local and Regional Network Service charges. For further information, see "Purchased Power and Transmission” expense below.
Transmission Revenues: Transmission revenues increased $53.8 million at CL&P, $69.4 million at NSTAR Electric, and $30.3 million at PSNH for the nine month period, due primarily to a higher transmission rate base as a result of our continued investment in our transmission infrastructure and the impact of the annual rate reconciliation filing with FERC.
Eliminations: Eliminations are primarily related to the Eversource electric transmission revenues that are derived from ISO-NE regional transmission charges to the distribution businesses of CL&P, NSTAR Electric and PSNH that recover the costs of the wholesale transmission business in rates charged to their customers. The impact of eliminations decreased revenues by $62.7 million at CL&P, $66.9 million at NSTAR Electric, and $29.2 million at PSNH for the nine month period.
Purchased Power and Transmission expense includes costs associated with providing electric generation service supply to all customers who have not migrated to third party suppliers, the cost of energy purchase contracts entered into as required by regulation, and transmission costs. These energy supply procurement costs, other energy-related costs, and transmission costs are recovered from customers in rates through commission-approved cost tracking mechanisms, which have no impact on earnings (tracked costs). The variance in Purchased Power and Transmission expense is due primarily to the following:
(Millions of Dollars)
CL&P
NSTAR Electric
PSNH
Energy supply procurement costs
$
(613.7)
$
(221.7)
$
(251.4)
Other electric distribution costs
50.1
117.1
(75.4)
Transmission costs
5.5
53.0
26.2
Eliminations
(62.7)
(66.9)
(29.2)
Total Purchased Power and Transmission
$
(620.8)
$
(118.5)
$
(329.8)
The variance in energy supply procurement costs is offset in Operating Revenues (tracked energy supply procurement revenues). The variance in other electric distribution costs at NSTAR Electric is due to an increase in net metering costs, at CL&P is due to higher long-term contractual energy-related costs that are recovered in the non-bypassable component of the FMCC mechanism, and at PSNH is due to a decrease in long-term renewable energy purchase contract costs.
Included in transmission costs are charges that recover the cost of transporting electricity over high-voltage lines from generation facilities to substations, including costs allocated by ISO-NE to maintain the wholesale electric market. The increase in transmission costs at CL&P, NSTAR Electric and PSNH was due primarily to an increase in costs billed by ISO-NE that support regional grid investments and an increase in Local Network Service charges, which reflect the cost of transmission service provided by Eversource over our local transmission network. The
59
increases at CL&P and PSNH were partially offset by a decrease resulting from the retail transmission cost deferral, which reflects the actual costs of transmission service compared to estimated amounts billed to customers.
Operations and Maintenance expense includes tracked costs and costs that are part of base distribution rates with changes impacting earnings (non-tracked costs). The variance in Operations and Maintenance expense is due primarily to the following:
(Millions of Dollars)
CL&P
NSTAR Electric
PSNH
Base Electric Distribution (Non-Tracked Costs):
Operations-related expenses (including vegetation management, vendor services, vehicles and materials)
$
9.4
$
2.1
$
(3.8)
Employee-related expenses (including labor and benefits)
6.4
(7.9)
(1.5)
Shared corporate costs (including IT system depreciation at Eversource Service)
4.4
3.6
1.6
Uncollectible expense
3.0
13.6
(0.2)
General costs (including vendor services in corporate areas, insurance, fees and assessments)
(4.0)
4.4
3.2
Storm-related costs
(1.3)
3.7
(4.5)
Total Base Electric Distribution (Non-Tracked Costs)
17.9
19.5
(5.2)
Total Tracked Costs - Increase at CL&P and NSTAR Electric due primarily to higher transmission expense
49.5
19.8
(5.0)
Total Operations and Maintenance
$
67.4
$
39.3
$
(10.2)
Depreciationexpense increased for the nine month period for CL&P, NSTAR Electric and PSNH due to higher net plant in service balances.
Amortization of Regulatory (Liabilities)/Assets, Net expense includes the deferral of energy-related costs and other costs that are included in certain regulatory commission-approved cost tracking mechanisms. This deferral adjusts expense to match the corresponding revenues compared to the actual costs incurred. These costs are recovered from customers in rates and have no impact on earnings. Amortization expense also includes the amortization of certain costs as those costs are collected in rates. The variance in Amortization of Regulatory (Liabilities)/Assets, Net for the nine month period is due primarily to the following:
•The variance at CL&P was due primarily to the deferral adjustment of energy-related and other tracked costs that are included in the non-bypassable component of the FMCC mechanism, which can fluctuate from period to period based on the timing of costs incurred and related rate changes to recover these costs. The CL&P non-bypassable FMCC retail rate increased in 2024 as compared to 2023, and the higher collections lowered the regulatory under-recovery deferral adjustment recorded in the same period, resulting in an increase to amortization expense of $344.3 million.
•The increase in expense at NSTAR Electric was due to the deferral adjustment of energy-related and other tracked costs that are included in the transition and solar facilities regulatory mechanisms, and higher amortization of storm costs recovered in rates.
•The increase in expense at PSNH was due to the deferral adjustment of energy-related and other tracked costs that are included in the stranded cost recovery charge regulatory mechanism and the absence of a second quarter 2023 benefit related to the establishment of a new regulatory tracking mechanism that allowed for the recovery of previously incurred operating expenses associated with poles acquired from Consolidated Communications on May 1, 2023. The establishment of the PPAM regulatory asset resulted in a pre-tax benefit of $16.9 million recorded in Amortization expense on the PSNH statement of income in the second quarter of 2023.
Energy Efficiency Programs expenseincludes costs of various state energy policy initiatives and expanded energy efficiency programs that are recovered from customers in rates, most of which have no impact on earnings. Energy Efficiency Programs expense includes a deferral adjustment that reflects the actual costs of energy efficiency programs compared to the amounts billed to customers, which can fluctuate from period to period based on the timing of costs incurred and related rate changes to recover these costs. The variance in Energy Efficiency Programs expense for the nine month period is due primarily to the following:
•The increase at CL&P was due to the deferral adjustment, partially offset by lower program spending.
•The decrease at NSTAR Electric was due to the deferral adjustment, partially offset by higher program spending.
•The increase at PSNH was due to higher program spending, partially offset by the deferral adjustment.
Taxes Other Than Income Taxes- the variance is due primarily to the following:
•The increase at CL&P was due to higher Connecticut gross earnings taxes and higher property taxes as a result of higher utility plant balances.
•The increase at NSTAR Electric was due to higher property taxes as a result of higher utility plant balances and higher assessments.
•The decrease at PSNH was due to lower property taxes as a result of lower assessments.
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Interest Expense - the variance is due primarily to the following:
•The increase at CL&P was due to higher interest on long-term debt as a result of new debt issuances ($21.0 million), an increase in interest expense on regulatory deferrals ($7.1 million), higher interest on short-term notes payable due to increased borrowings ($6.2 million), and higher amortization of debt discounts and premiums, net ($0.6 million), partially offset by an increase in capitalized AFUDC related to debt funds ($0.7 million).
•Theincrease at NSTAR Electric was due to higher interest on long-term debt as a result of new debt issuances ($15.4 million), an increase in interest expense on regulatory deferrals ($11.5 million), and higher interest on short-term notes payable due to increased borrowings ($5.7 million), partially offset by an increase in capitalized AFUDC related to debt funds ($8.2 million).
•The increase at PSNH was due to higher interest on long-term debt as a result of new debt issuances ($11.7 million) and higher interest on short-term notes payable ($0.3 million), partially offset by an increase in capitalized AFUDC related to debt funds ($3.0 million), a decrease in RRB interest expense ($1.0 million), a decrease in interest expense on regulatory deferrals ($0.8 million), and lower amortization of debt discounts and premiums, net ($0.5 million).
Other Income, Net - the variance is due primarily to the following:
•The increase at CL&P was due primarily to an increase in interest income primarily on regulatory deferrals ($16.8 million) and an increase in capitalized AFUDC related to equity funds ($3.0 million), partially offset by a decrease related to pension, SERP and PBOP non-service income components ($3.5 million) and an increase in investment losses driven by market volatility ($1.5 million).
•The increase at NSTAR Electric was due primarily to an increase in interest income primarily on regulatory deferrals ($13.8 million) and an increase in capitalized AFUDC related to equity funds ($10.4 million), partially offset by a decrease related to pension, SERP and PBOP non-service income components ($2.2 million).
•The increase at PSNH was due primarily to an increase in interest income primarily on regulatory deferrals ($3.5 million) and an increase in capitalized AFUDC related to equity funds ($1.7 million), partially offset by a decrease related to pension, SERP and PBOP non-service income components ($0.6 million) and investment losses in 2024 ($0.5 million).
Income Tax Expense - the variance is due primarily to the following:
•The increase at CL&P was due primarily to higher pre-tax earnings ($0.5 million), a decrease in amortization of EDIT ($0.8 million), an increase in valuation allowances ($1.0 million), a higher share-based payment tax deficiency ($0.6 million), and an increase in items that impact our tax rate as a result of regulatory treatment (flow-through items) and permanent differences ($2.3 million), partially offset by lower state taxes ($2.6 million) and lower return to provision adjustments ($1.2 million).
•The increase at NSTAR Electric was due primarily to higher pre-tax earnings ($21.1 million), higher state taxes ($6.1 million), a higher share-based payment tax deficiency ($0.6 million), and a decrease in amortization of EDIT ($6.7 million), partially offset by a decrease in items that impact our tax rate as a result of regulatory treatment (flow-through items) and permanent differences ($3.3 million).
•The increase at PSNH was due primarily to higher pre-tax earnings ($4.6 million), a decrease in amortization of EDIT ($0.9 million), higher state taxes ($1.2 million), and an increase in items that impact our tax rate as a result of regulatory treatment (flow-through items) and permanent differences ($2.6 million).
EARNINGS SUMMARY
CL&P's earnings increased $0.7 million for the nine month period due primarily to higher revenues from its capital tracking mechanism due to increased electric system improvements, an increase in transmission earnings driven primarily by a higher transmission rate base, and an increase in interest income primarily on regulatory deferrals. The earnings increase was partially offset by higher interest expense, higher operations and maintenance expense, higher depreciation expense, and higher property tax expense.
NSTAR Electric's earnings increased $68.8 million for the nine month period due primarily to higher revenues as a result of the base distribution rate increase effective January 1, 2024, an increase in transmission earnings driven primarily by a higher transmission rate base, an increase in interest income primarily on regulatory deferrals, and higher AFUDC equity income. The earnings increase was partially offset by higher interest expense, higher operations and maintenance expense, higher property tax expense, and higher depreciation expense.
PSNH's earnings increased $11.6 million for the nine month period due primarily to an increase in transmission earnings driven primarily by a higher transmission rate base, higher revenues as a result of the base distribution rate increase effective August 1, 2024, and lower operations and maintenance expense. The earnings increase was partially offset by the absence of a prior year benefit related to the establishment of a new regulatory tracking mechanism that allowed for the recovery of previously incurred operating expenses associated with poles acquired on May 1, 2023, higher interest expense, a higher effective tax rate, and higher depreciation expense.
LIQUIDITY
Cash Flows: CL&P had cash flows provided by operating activities of $390.2 million for the nine months ended September 30, 2024, as compared to $320.0 million in the same period of 2023. The increase in operating cash flows was due primarily to an $80.6 million increase in income tax refunds received in 2024 compared to 2023, a $42.0 million decrease in cash payments to vendors for storm costs, an improvement in regulatory recoveries driven primarily by the timing of collections for the non-bypassable FMCC and other regulatory tracking mechanisms partially offset by the unfavorable impact in the timing of collections for energy supply costs, and a decrease in cost of removal expenditures. These favorable impacts were partially offset by the timing of cash payments made on our accounts payable, the timing of cash collections on our
61
accounts receivable, and the timing of other working capital items. The impacts of regulatory collections are included in both Regulatory Recoveries and Amortization of Regulatory Liabilities, Net on the statements of cash flows.
NSTAR Electric had cash flows provided by operating activities of $572.2 million for the nine months ended September 30, 2024, as compared to $529.0 million in the same period of 2023. The increase in operating cash flows was due primarily to an improvement in regulatory recoveries driven primarily by the timing of collections for net metering costs, solar costs and other regulatory tracking mechanisms, a decrease in cost of removal expenditures, and the timing of other working capital items. The impacts of regulatory collections are included in both Regulatory Recoveries and Amortization of Regulatory Assets, Net on the statements of cash flows. These favorable impacts were partially offset by the timing of cash collections on our accounts receivable, a $75.5 million decrease in operating cash flows due to income tax payments made in 2024 compared to income tax refunds received in 2023, a $24.0 million increase in cash payments to vendors for storm costs, and the timing of cash payments made on our accounts payable.
PSNH had cash flows provided by operating activities of $205.2 million for the nine months ended September 30, 2024, as compared to cash flows used in operating activities of $12.9 million in the same period of 2023. The increase in operating cash flows was due primarily to an improvement in regulatory recoveries driven primarily by the timing of collections for stranded costs, net metering and other regulatory tracking mechanisms, the timing of cash payments made on our accounts payable, a $27.4 million decrease in cash payments to vendors for storm costs, and the timing of other working capital items. The impacts of regulatory collections are included in both Regulatory Recoveries and Amortization of Regulatory Assets/(Liabilities), Net on the statements of cash flows. These favorable impacts were partially offset by the timing of cash collections on our accounts receivable and a $32.3 million decrease in income tax refunds received in 2024 compared to 2023.
For further information on CL&P's, NSTAR Electric's and PSNH's liquidity and capital resources, see "Liquidity" and "Business Development and Capital Expenditures" included in this Management's Discussion and Analysis of Financial Condition and Results of Operations.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Market Risk Information
Commodity Price Risk Management: Our regulated companies enter into energy contracts to serve our customers, and the economic impacts of those contracts are passed on to our customers. Accordingly, the regulated companies have no exposure to loss of future earnings or fair values due to these market risk-sensitive instruments. Eversource's Energy Supply Risk Committee, comprised of senior officers, reviews and approves all large-scale energy related transactions entered into by its regulated companies.
Other Risk Management Activities
Interest Rate Risk Management: Interest rate risk is associated with changes in interest rates for our outstanding long-term debt. Our interest rate risk is significantly reduced as typically all or most of our debt financings have fixed interest rates. As of September 30, 2024, all of our long-term debt was at a fixed interest rate.
Credit Risk Management: Credit risk relates to the risk of loss that we would incur as a result of non-performance by counterparties pursuant to the terms of our contractual obligations. We serve a wide variety of customers and transact with suppliers that include IPPs, industrial companies, natural gas and electric utilities, oil and natural gas producers, financial institutions, and other energy marketers. Margin accounts exist within this diverse group, and we realize interest receipts and payments related to balances outstanding in these margin accounts. This wide customer and supplier mix generates a need for a variety of contractual structures, products and terms that, in turn, require us to manage the portfolio of market risk inherent in those transactions in a manner consistent with the parameters established by our risk management process.
Our regulated companies are subject to credit risk from certain long-term or high-volume supply contracts with energy marketing companies. Our regulated companies manage the credit risk with these counterparties in accordance with established credit risk practices and monitor contracting risks, including credit risk. As of September 30, 2024, our regulated companies held collateral (letters of credit or cash) of $5.5 million from counterparties related to our standard service contracts. As of September 30, 2024, Eversource had $21.1 million of cash posted with ISO-NE related to energy transactions.
We have provided additional disclosures regarding interest rate risk management and credit risk management in Part II, Item 7A, "Quantitative and Qualitative Disclosures about Market Risk," in Eversource's 2023 Form 10-K, which is incorporated herein by reference. There have been no additional risks identified and no material changes with regard to the items previously disclosed in the Eversource 2023 Form 10-K.
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ITEM 4. CONTROLS AND PROCEDURES
Management, on behalf of Eversource, CL&P, NSTAR Electric and PSNH, evaluated the design and operation of the disclosure controls and procedures as of September 30, 2024 to determine whether they are effective in ensuring that the disclosure of required information is made timely and in accordance with the Securities Exchange Act of 1934 and the rules and regulations of the SEC. This evaluation was made under management's supervision and with management's participation, including the principal executive officer and principal financial officer as of the end of the period covered by this Quarterly Report on Form 10-Q. There are inherent limitations of disclosure controls and procedures, including the possibility of human error and the circumventing or overriding of the controls and procedures. Accordingly, even effective disclosure controls and procedures can only provide reasonable assurance of achieving their control objectives. The principal executive officer and principal financial officer have concluded, based on their review, that the disclosure controls and procedures of Eversource, CL&P, NSTAR Electric and PSNH are effective to ensure that information required to be disclosed by us in reports filed under the Securities Exchange Act of 1934 (i) is recorded, processed, summarized, and reported within the time periods specified in SEC rules and regulations and (ii) is accumulated and communicated to management, including the principal executive officer and principal financial officer, as appropriate to allow timely decisions regarding required disclosures.
There have been no changes in internal controls over financial reporting for Eversource, CL&P, NSTAR Electric and PSNH during the quarter ended September 30, 2024 that have materially affected, or are reasonably likely to materially affect, internal controls over financial reporting.
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
We are parties to various legal proceedings. We have disclosed certain legal proceedings in Part I, Item 3, "Legal Proceedings," and elsewhere in our 2023 Form 10-K. These disclosures are incorporated herein by reference. There have been no material legal proceedings identified and no material changes with regard to the legal proceedings previously disclosed in our 2023 Form 10-K.
ITEM 1A. RISK FACTORS
We are subject to a variety of significant risks in addition to the matters set forth under our forward-looking statements section in Item 2, "Management's Discussion and Analysis of Financial Condition and Results of Operations," of this Quarterly Report on Form 10-Q. We have identified a number of these risk factors in Part I, Item 1A, "Risk Factors," in our 2023 Form 10-K, which risk factors are incorporated herein by reference. These risk factors should be considered carefully in evaluating our risk profile. There have been no additional risk factors identified and no material changes with regard to the risk factors previously disclosed in our 2023 Form 10-K.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
The following table discloses purchases of our common shares made by us or on our behalf for the periods shown below. The common shares purchased consist of open market purchases made by the Company or an independent agent. These share transactions related to matching contributions under the Eversource 401k Plan.
Period
Total Number of Shares Purchased
Average Price Paid per Share
Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs
Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans and Programs (at month end)
July 1 - July 31, 2024
—
$
—
—
—
August 1 - August 31, 2024
—
—
—
—
September 1 - September 30, 2024
2,680
67.96
—
—
Total
2,680
$
67.96
—
—
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
Not applicable.
ITEM 4. MINE SAFETY DISCLOSURES
Not applicable.
ITEM 5. OTHER INFORMATION
During the quarter ended September 30, 2024, none of the Company’s directors or officers adopted, modified, or terminated a “Rule 10b5-1 trading arrangement” or a “non-Rule 10b5-1 trading arrangement,” as such terms are defined under Item 408 of Regulation S-K.
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ITEM 6. EXHIBITS
Each document described below is filed herewith, unless designated with an asterisk (*), which exhibits are incorporated by reference by the registrant under whose name the exhibit appears.
Listing of Exhibits (Eversource, CL&P, NSTAR Electric, PSNH)
101.INS
Inline XBRL Instance Document - the instance document does not appear in the interactive data file because its XBRL tags are embedded within the inline XBRL document
101.SCH
Inline XBRL Taxonomy Extension Schema
101.CAL
Inline XBRL Taxonomy Extension Calculation
101.DEF
Inline XBRL Taxonomy Extension Definition
64
101.LAB
Inline XBRL Taxonomy Extension Labels
101.PRE
Inline XBRL Taxonomy Extension Presentation
104
The cover page from the Quarterly Report on Form 10-Q for the quarter ended September 30, 2024, formatted in Inline XBRL
65
SIGNATURE
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
EVERSOURCE ENERGY
November 6, 2024
By:
/s/ Jay S. Buth
Jay S. Buth
Vice President, Controller and Chief Accounting Officer
SIGNATURE
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
THE CONNECTICUT LIGHT AND POWER COMPANY
November 6, 2024
By:
/s/ Jay S. Buth
Jay S. Buth
Vice President, Controller and Chief Accounting Officer
SIGNATURE
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
NSTAR ELECTRIC COMPANY
November 6, 2024
By:
/s/ Jay S. Buth
Jay S. Buth
Vice President, Controller and Chief Accounting Officer
SIGNATURE
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
PUBLIC SERVICE COMPANY OF NEW HAMPSHIRE
November 6, 2024
By:
/s/ Jay S. Buth
Jay S. Buth
Vice President, Controller and Chief Accounting Officer
