Eversource Energy Q3 2024 Earnings Call Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Shahriar Pourreza - Guggenheim Partners - Analyst : Joe, I just wanted to maybe start really quickly on Millstone. Just a lot of discussion in Connecticut the public benefits charges. Now it sounds like the state of Massachusetts involved in the dialogue. Are you involved in these conversations? Is the net positive for both sides with the state's bulk at pricing above the current $50.

Question: Shahriar Pourreza - Guggenheim Partners - Analyst : Got it. Perfect. And then just lastly, Joe, I mean, (technical difficulty) this morning took another impairment on construction contingency and market prices with evolution, I think, for another $250 million. I guess, what are your obligations costs here under the GIP agreement? Is this morning's Orsted impairment included in your net loss for offshore wind under the GIP agreement, are you going to fund the contingency cost increase?

Question: Shahriar Pourreza - Guggenheim Partners - Analyst : Okay. Got it. So everything is embedded in your charge or just no incremental as of right now?

Question: Carly Davenport - Goldman Sachs Group Inc - Analyst : Maybe just to start on the financing side. You've now done about $1 billion of equity for the year. Messaging has been sort of up to $1.3 billion over the next several years. I guess, can you just provide some color on the cadence looking into '25 and beyond on the equity side in the context of what you've now done so far in 2024?

Question: Carly Davenport - Goldman Sachs Group Inc - Analyst : Great. We'll stay tuned there. And then maybe just a follow-up on the FFO to debt walk. I appreciate the update on the known cash flow enhancements moving higher here. Could you give us a little bit of a sense of when we look at that 3% to 4% benefit to FFO to debt from those enhancements sort of how far you can get with the known enhancements versus having the Aquarion sale that's still kind of TBD built into those numbers?

Question: Nicholas Campanella - Barclays Bank PLC. - Analyst : Just wanted to follow up on Shar's question around the offshore wind costs. I just I recall that you kind of had the 50-50 sharing agreement with GIP. And obviously, some of the costs on revolution have changed. Can you just kind of confirm are you now taking on 100%, or is there still more to go there? And what's that level look like now?

Question: Nicholas Campanella - Barclays Bank PLC. - Analyst : Okay, that's helpful. And then on the 5 to 7, I just wanted to kind of confirm, you typically kind of rebase off of prior year actuals. So is that kind of the plan as we get into the fourth quarter so we would kind of take this new fiscal '24 guide and rebate off of that. And then does that 5 to 7 include the Aquarion proceeds? Or is that upside to the plan? And how should we think about that?

Question: Durgesh Chopra - Evercore ISI Institutional Equities - Analyst : Just a couple of clarification questions. One, is that the Cambridge underground station investment, is that incorporated in the current five-year plan, or would that be incremental?

Question: Durgesh Chopra - Evercore ISI Institutional Equities - Analyst : Okay. So it's in the plan, clear. How about the funding of the $600 million higher CapEx, I guess, you that's -- you'll give us an update on the Q4 call, I guess. So let me now front run that, but maybe just then...

Question: Durgesh Chopra - Evercore ISI Institutional Equities - Analyst : Okay. Yes. Understood. Okay. So then maybe just can you -- as you file this Yankee Gas rate case here in the back half of the month, maybe just talk to your strategy there? What to expect? Will you be filing for a sort of a PBR framework like you've done in the other states? I mean just how do you view the risk to ROEs given sort of some of the data points and decisions you've seen in the state?

Question: William Appicelli - UBS Group AG - Analyst : Can you maybe just expand upon the comments around the Connecticut draft decision in AMI docket. You mentioned some conditions that you'd like to see modified. Can you maybe just expand upon what you'd like to see to make that a more acceptable outcome? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. NOVEMBER 05, 2024 / 2:00PM, ES.N - Q3 2024 Eversource Energy Earnings Call

Question: William Appicelli - UBS Group AG - Analyst : Okay. And so then how would it work after the final decision? I mean, do you -- is it potential to scale some of the investment up or down, or would you have to sort of make a decision to do the program or not?

Question: William Appicelli - UBS Group AG - Analyst : Okay. And then just the second part on the higher interest expense, is that -- was that more timing related or rates being higher or just more debt being issued?

Question: Jeremy Tonet - JPMorgan Chase & Co - Analyst : Just want to dive into Aquarion a little bit more, if I could appreciate there's limitations to what you can say at this juncture. But just any other high-level comments that you could provide as far as, I guess, the level of interest how process is tracking versus expectations? And how do you think about, I guess, value achieved versus timing of sales execution here? Just any other color would be great.

Question: Jeremy Tonet - JPMorgan Chase & Co - Analyst : Got it. Great. That's very helpful there. And just wanted to touch on the equity a little bit more. Can you just remind us, maybe I missed it apologies for that, if any of the equity issued was forward sale or just wanted to make sure it was trait on that.

Question: Ross Fowler - Bank of America Merrill Lynch - Analyst : So just a couple of questions for me on sort of going forward looking at regulation. You've talked about Yankee and the deficiency here and moving that to PBR. Have you kind of -- have you got an initial estimate or a feel for how the PBR shift would sort of layer that into customer rates over time?

Question: Ross Fowler - Bank of America Merrill Lynch - Analyst : And maybe on that point, John, just kind of thinking about Massachusetts and what you've got there in terms of the regulatory setup. How do you give us maybe some color on the process of full electrification. We've seen some policy statements that are pushing that forward in Massachusetts. How do you think about 2 things. One, there's probably some bill pressure coming from that, but you've got some PBR there as well, but how do we contextualize also the other side of that, which is some capital opportunity? You guys have already started on, but like I'm just trying to gauge the upside there as you continue that transition in the state.

Question: Steven Fleishman - Wolfe Research - Analyst : Just wanted to close the (technical difficulty) on the revolution, or is it also mentioned higher vessel costs their impairment. Just wanted to clarify that, that was also updated when you closed your sale.

Question: Steven Fleishman - Wolfe Research - Analyst : Okay. And then simple question. I'm not sure I missed this, but just the guidance range for this year, just the midpoint down a couple of pennies, not a big deal. Is that -- is it fair to say that that's just the equity issuance maybe coming a little earlier in the plan, or is there some other driver this year? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. NOVEMBER 05, 2024 / 2:00PM, ES.N - Q3 2024 Eversource Energy Earnings Call

Question: Travis Miller - Morningstar - Analyst : Just a little more on the ESMP and kind of higher level, linking it with the whole clean energy idea. If you were to kind of put it in a percentage basis, how far does this get you? Just that program, the $600 million get you to kind of either where you need to be or where you want to be in terms of clean energy electrification. And I guess another way to think about it is how much more is there to go to get to where you want to be, if that makes sense.

Question: Travis Miller - Morningstar - Analyst : Okay. Beyond the ESMP, Okay.

Question: Travis Miller - Morningstar - Analyst : Okay. And then Connecticut, certainly now, you've been pretty forthright and public about the fact that you don't want to invest until you get better regulatory treatment there. other than the AMI, what types of larger projects or are there even larger projects that are sitting on the sidelines right now that might come either gas or electric, if there were a positive at the gas -- Yankee Gas or on the electric side. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. NOVEMBER 05, 2024 / 2:00PM, ES.N - Q3 2024 Eversource Energy Earnings Call

Question: Julien Dumoulin-Smith - Jefferies Financial Group Inc. - Analyst : So just wanted to follow up on a couple of cleanup items here. I know earlier you were talking with Carly there about FFO to debt. Can you just give us a little bit of sense of where you stand as of your kind of year-to-date sense as you track towards that improvement. I know you listed out what the items are, but how are you doing against that target, if you will?

Question: Julien Dumoulin-Smith - Jefferies Financial Group Inc. - Analyst : Yes. Okay. I got you there. And then separately, a little bit of a cleanup item. You've talked a little bit about this elevated interest expense here. Can you give us a sense like what is that gross run rate kind of year-end exiting or starting into '25 if you will, just kind of nets against the parent positive here if you think about it. Is there kind of any way to kind of give us a gross magnitude that you're thinking about there at this point, or even as of the quarter run rate?

Question: Julien Dumoulin-Smith - Jefferies Financial Group Inc. - Analyst : Yes. You talked about elevated parent interest expense. Maybe can you give us a sense of like what that gross run rate is at this point, if you will, whether quarter end or entering '25 or what have you? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. NOVEMBER 05, 2024 / 2:00PM, ES.N - Q3 2024 Eversource Energy Earnings Call

Question: Julien Dumoulin-Smith - Jefferies Financial Group Inc. - Analyst : Awesome. Yes absolutely. And just quickly on the new substation, kudos there, interesting development there. Any -- like how do you think about the cost provisions and recovery mechanisms there? Just give us a little bit of a larger size figure I'd ask on that front.

Question: Andrew Weisel - Scotiabank Global Banking and Markets - Analyst : First question I have for you is on the South for tax equity investment. You're still showing the $500 in the cash flow walk. My question though is given the timing of some of the losses and the write-downs, do you still expect that full benefit to show up in -- by year-end '25, or might some of that spill into 2026 or later?

Question: Andrew Weisel - Scotiabank Global Banking and Markets - Analyst : Okay. Got it. So the dollars will be -- they'll be replaced with other dollars. So the mess still works, it will be -- you'll be able to use those credits in later years in other words, is that right?

Question: Andrew Weisel - Scotiabank Global Banking and Markets - Analyst : Okay. Great. That's helpful. Then more broadly on that walk. I always appreciate the details, even though there's a lot of moving part, well, because there's a lot of moving parts. When I look at the bottom line there, obviously, you're now showing $3.75 billion. That's up quite a bit from $2.6 billion last quarter. The punch line is still 14% to 15%. You -- how do you trend though? Or does that mean that you're more confident in that? Are you may be thinking more of the higher end versus low end? Or is it just more better visibility in getting to that range?

Question: Andrew Weisel - Scotiabank Global Banking and Markets - Analyst : Okay. That's very helpful. Then last one, high level in Connecticut. You talked a lot about the AMI. And more broadly, obviously, it's a tough environment, not only in terms of approvals, but there's a lot of concern about affordability. My question is when you think about putting capital to work in Connecticut versus other states, what should we expect when we see the CapEx update in three months? I'm not looking for numbers. I know we have to be patient, but how do you think qualitatively about putting capital to work there versus in other more constructive states? And is there a potential to maybe move more capital away from Connecticut like you did a few months ago?

Question: Angie Storozynski - Seaport Global Holdings LLC - Analyst : So lots of questions. Just one question about your earnings benefit from the NEC transmission line. I remember in the past when we had waited for that project to come online. There was like an earnings benefit associated with the interconnection into the transmission line eventual. And I'm just wondering if that if you could quantify that benefit? And also, if that benefit changed depending on the capital cost of this project given the recent increase that was approved in Massachusetts.

Question: Angie Storozynski - Seaport Global Holdings LLC - Analyst : That's right. Okay. So there's no like benefit just -- okay.

Question: Angie Storozynski - Seaport Global Holdings LLC - Analyst : And that percentage over the cost of power delivered, or just, again, is it linked to the capital cost of the.

Question: Angie Storozynski - Seaport Global Holdings LLC - Analyst : I understand. Okay. I might follow up in the past. And also, I mean, and I understand that the SAC associated with those [precision] lines over the last couple of decades, actually. But how are you, I mean, looking at these projects going forward? I mean, would you consider maybe reviving your transmission line from Canada? I mean, how would you actually see that the supply backdrop for your -- well, for New England and overall, given the low growth that we're seeing in granted. I understand that most of the other data centers are not going to be in New England, but I'm just wondering how you think about the supply-demand dynamics in New England.

Question: Paul Patterson - Glenrock Associates - Analyst : Last but not least, hopefully. So really quickly on the AMI. When I look through your exceptions, I mean I understood pretty much all of it. The only thing is with the O&M, it seemed to me that this is -- and correct me if I was wrong, you guys were concerned about just the ability to institute the rate increases, that more of the issue than then with respect to the incremental O&M than there being a dispute about the incremental O&M. Am I correct in that?

Question: Paul Patterson - Glenrock Associates - Analyst : Okay. No problem. And then with respect to one of the things that we're -- and I know this is necessarily directly associated with you guys, but there is this discussion about offshore wind, some concerns about the impact of offshore wins costs on Connecticut. And I know this isn't specifically you guys are getting out to business, obviously, and what have you. But there's a discussion about swapping Millstone, again, not your facility with perhaps offshore wind and what have you. And I was just wondering if you -- how you guys from their perspective are either seeing this sort of longer-term regional questions about offshore wind in Connecticut's participation, maybe in it, what have you having any potential impact or just any comments you have about how you see the -- sort of maybe Angie's kind of question here about the outlook for power prices and what have you in the state, even though they may not be directly associated with your business. Nonetheless, you guys are delivering the power to people and you guys are concerned about affordability, I know. So just what are your thoughts about the discussions that we're hearing about offshore wind and potentially the swap with nuclear?

Question: Paul Patterson - Glenrock Associates - Analyst : Got it. And then just respect to the climate bill.