Good morning ladies and gentlemen and welcome to the Eversource Energy Fourth Quarter 2017 and Year-End Results conference call. My name is Vanessa and I will be your operator for today’s call. At this time, all participants are in a listen-only mode. Later we will conduct a question and answer session. During the question and answer session, if you have a question, please press star then one on your phone. Please note that this conference is being recorded. I will now turn the call over to Mr. Jeffrey Kotkin. You may begin, sir.

Thank you, Vanessa. Good morning and thank you for joining us. During this call, we’ll be referencing slides that we posted last night on our website. I’m Jeff Kotkin, Eversource Energy’s Vice President for Investor Relations. As you can see on Slide 1, some of the statements made during this investor call may be forward-looking as defined within the meaning of the Safe Harbor provisions of U.S. Private Securities and Litigation Reform Act of 1995. These forward-looking statements are based on management’s current expectations and are subject to risks and uncertainties which may cause the actual results to differ materially from forecasts and projections. Some of these factors are set forth in the news release issued yesterday. Additional information about the various factors that may cause actual results to differ can be found in our annual report on Form 10-K for the year ended December 31, 2016 and the 10-Q for the three months ended September 30, 2017. Additionally, our explanation of how and why we use certain non-GAAP measures is contained within our news release and the slides we posted last night, and in our most recent 10-K. Turning to Slide 2, speaking today will be Jim Judge, our Chairman, President and CEO; Lee Olivier, our Executive Vice President for Enterprise Energy Strategy and Business Development, and Phil Lembo, our Executive Vice President and CFO. Also joining us today are Jay Buth, our VP and Controller, and John Moreira, our VP of Financial Planning and Analysis. Now I will turn to Slide 4 and turn over the call to Jim.

Thank you, Jeff. I want to thank everyone who is joining us this morning for our recap of the year that we just completed and a comprehensive look at our opportunities and financial outlook for the next four years. To start, I want to congratulate our 8,000 employees for the great progress we made over the past year in achieving our vision of being recognized as the best utility in the country and as a catalyst for clean energy development in New England. Our region is mandating a 75 to 80% reduction in carbon emissions by the year 2050 and we plan to play a central role in helping New England reach its targets. Older coal, oil and nuclear plants continue to retire, only to be replaced by renewables and natural gas. Two large and economic new sources of renewable energy are hydroelectric power in Quebec and offshore wind southeast of Massachusetts. Through Northern Pass and Bay State Wind, we expect to be deeply involved in accessing both, and Hydro Quebec and Orsted are great partners. We continue to believe that Northern Pass is uniquely designed to significantly lower the region’s greenhouse gas emissions, reduce energy costs, and reduce our growing and increasingly ominous dependence on natural gas for power generation. We were surprised and disappointed, and I’m going to say humbled by the recent decision from the New Hampshire site evaluation committee rejecting the project. Clearly we have not fully addressed all the major concerns in New Hampshire yet. We expected the process to allow us to address what were legitimate concerns raised during the proceedings. If allowed re-hearing, we expect there may be an opportunity to address those concerns. In a couple of minute, Lee will discuss the steps we are taking to move the project ahead. At…

Okay, thanks Jim. I’ll provide you with an update on a major project, expand on Jim’s comments on the New England winter supply situation, and then turn the call over to Phil. I’ll start with Northern Pass. Following our November earnings call, we received a string of good news about the project with various federal and state approvals listed on Slide 10. In late January, a combination of Northern Pass transmission and Hydro Quebec’s all-hydro energy offering won the entire Massachusetts clean energy RFP over more than 40 other clean energy projects of various scales and technologies. The RFP sought nearly 9.5 terawatt hours a year of clean energy for up to 20 years, and our bid was the sole winner. Clearly NPT is the best clean energy solution for the region. However, on February 1 we experienced a setback. The New Hampshire SEC had commenced deliberations on January 30 and had determined that Northern Pass possessed the financial, technical, and managerial capability to construct, operate and maintain the project. When the SEC members began discussing criteria known as orderly development, they noted the benefits Northern Pass would have in multiple areas, including promoting economic development, job growth, and increased property tax revenues, but the members indicated they were concerned about other items such as tourism, property values, and the impact on municipal development plans. Without discussing the potential conditions that could have been imposed to address those concerns, the SEC ended deliberations and voted unanimously to reject the project. Left un-discussed were key topics such as whether Northern Pass would serve the public interest, whether it would have an unreasonable adverse effect on aesthetics, historic sites, air and water quality, and the natural environment and public health and safety. As Jim said, we were deeply disappointed by the committee’s…

Thank you, Lee. Today I’ll cover our fourth quarter and full year 2017 financial results, our new four-year capital expenditures and rate base growth forecast, the status of our key regulatory dockets, and discuss the impact of tax reform. I’ll start with our fourth quarter results on Slide 16. Earnings were $0.75 per share in the fourth quarter of ’17 compared with $0.72 per share in the fourth quarter of ’16. The primary driver for the increase was improved electric distribution results where earnings were $0.33 per share compared with $0.26 per share for the same period in 2016. The earnings increase was due primarily to a lower effective tax rate, lower non-tracked operations and maintenance cost, and modest revenue growth, and these were partially offset by higher depreciation and property tax expense. Our electric transmission segment earned a total of $0.32 per share in the fourth quarter of ’17 compared with $0.33 in the fourth quarter of ’16. The decline was due to a $0.05 gain we recorded in 2016 as a result of FERC’s approval of a settlement allowing us to recover certain merger costs through transmission rates. There was no such gain in the fourth quarter of 2017. We did benefit also from higher transmission rate base due to continued investment in our infrastructure. Transmission capital expenditures totaled $932 million in 2017 compared to $897 million in ’16 and $807 million in 2015. Earnings at our natural gas distribution segment totaled $0.08 per share in both the fourth quarter of 2017 and ’16. A 4.7% increase in the fourth quarter sales in ’17 was offset by higher depreciation, O&M, and property tax expense. At Eversource parent and other, we earned $0.02 per share in the fourth quarter of ’17 compared with $0.05 per share in the fourth…

Thank you, Phil, and I’m going to turn it back to Vanessa just to remind you how to enter your questions. Vanessa?

[Operator instructions]

Thank you, Vanessa. Our first question this morning is from Shar Pourezza from Guggenheim. Good morning, Shar.

Good morning, guys. Phil and Jim and everyone, let me just bring this point again - without Northern Pass, you are comfortable with 5 to 7% growth, with or without this project, so in light of what you’re seeing with the rate base jump on Slide 20, how does the growth look with Northern Pass, because you seem to be comfortable without it at 5 to 7%, so I’m curious if Northern Pass does move forward, where you do land within your growth rate? Then as you think about your trajectory post how you’re guiding, is there enough projects for you to continue to be able to reiterate the 5 to 7%, given what seems to be perpetual infrastructure needs?

Right. So I guess--you know, with anything, Shar, there’s many factors that influence where you end up in the range, and certainly with Northern Pass in there, that’s more infrastructure investment; without Northern Pass, that’s a little less infrastructure investment. So just be definition, that would probably put you higher in any calculation range. But you know, you have capital plans. We’ve demonstrated the ability over many years to add or find needed reliability projects. I think I’ve been asked in the past, where is our list of projects to pull out, and my answer is always, there’s not a list, it’s dependent upon the reliability needs of the region, and we feel that we are in the best position to address them. We’re good at identifying and moving those projects forward, so I feel confident that that will continue moving forward. We have a great team in place to do that, and as each of these projects goes in, it improves the reliability and helps lower costs to customers, so you have that. You have an ability to control costs that moves you around in the range. You could have rate case outcomes. Certainly our set Massachusetts case and hopefully soon we’ll have approval in Connecticut, certainly provides a nice strong, consistent framework that you can count on, but there’s always other rate decisions - we talked about the FERC decision that’s pending out there. So we’re comfortable for all those reasons that we’ll be in that range.

Okay, good. That’s helpful. Just on Aquarion, Connecticut regulators clearly highlighted to us that they were big fans of the transaction, so they touted it several times. There are roughly 31 regulated water utilities that are within the state, so I’m curious how you’re thinking about inorganic opportunities when it comes to water, within the state or outside.

Shar, this is Jim. I’d just say that we just closed on this transaction two months ago, and we continue to like the company that we acquired. We continue to like the water platform and the growth opportunities, whether it’s growing up small communities or municipals, which they continue to do, looking at larger transactions potentially, even public water companies that are out there, so I think that there’s plenty of growth opportunity. What you need to keep in mind is this is a company, Eversource, that I think has a long track record of doing deals that are smart for our shareholders, so we will be deliberate about what we do in terms of our next transaction, always with the shareholders’ interest in mind. It’s a very fragmented space, as you indicated. There’s something like 50,000 water companies, entities nationwide, so a lot of opportunity for rolling up additional companies and creating some standardization and efficiencies.

Got it, that’s helpful. If you don’t mind me asking one last one, thoughts on the competitive process for wind going into the RFP without Northern Pass. What I’m asking is if Northern Pass ends up going to someone, one of your neighbors for instance, because Massachusetts can’t wait for New Hampshire, does that actually indirectly position Eversource better for the next Massachusetts RFP? I’m sort of--you’re sort of like the home team and you could be left without any skin in the game, so how should we be thinking about this as an indirect read through the RFPs?

I think we’ve always claimed that Northern Pass was not dependent upon any specific RFP. You get a sense from our comments earlier and statements that you read coming from policy makers in the region that there’s a tremendous appetite for clean energy solutions in the region. We were thrilled to see the evaluation in Massachusetts conclude that the Northern Pass project was the most advanced and low-cost alternative out of the 46 that were bid, so that tells us that we’ve got a very attractive project. There are about 20 major permits that are necessary for a project like Northern Pass, and we literally are down to the final two or three, so I think from a--including the two and a half years for a Canadian approval, so we have a project that is very advanced, very cost effective for customers. It was proven that way in the competitive solicitation, so there will be an opportunity interest in receiving power over that line. It’s just that we need to obviously make sure that we address the conditions and concerns that continue to exist in New Hampshire. Our goal would be that the re-hearing would give us an opportunity to do that.

Thanks very much, guys. Appreciate it.

Thanks Shar. Next question is from Caroline Bone with Deutsche Bank. Good morning, Caroline.

Hey, good morning guys. On Northern Pass again, just to follow up on that, is there going to be any waiting here for a final written order, and how quickly do you expect the reconsideration process to go?

Caroline, this is Lee. We would expect to file for reconsideration very soon, and the SEC essentially identified three areas that they believe were deficient. We will file in our reconsideration with cures that we believe would resolve their deficiencies, and that should take place over the next 10 days.

You mean, when you actually file--

Yes.

--or when they respond, sorry?

They have 10 days. Once we file, they have 10 days to respond.

Okay, so even if you guys file something new with these cures, would they have to respond to that in 10 days? I guess the response could be something like, interesting - we’ll continue to look at this, or will they have to give you a decision?

What they do is they have to acknowledge whether they accept our reconsideration motion or not, and then once they accept the reconsideration motion, then they would put together a schedule.

Okay, got it. Then just back to Lee, you mentioned that you were working with--and this is on, I guess, a gas pipeline solution, that you were working with stakeholders in DC and New England. What sort of solutions are under discussion, and are you still focused on Access Northeast or is there another project you might be working on too?

Yes, I mean, I think the big picture on this one is that there is a growing emergence of leadership in the region, obviously ISO New England but particularly key stakeholders inside of Massachusetts that realize that gas is not the enemy, gas is part of a solution, and if you want to ensure reliability and keep costs down and integrate renewables, then you want more gas, which is why we put those slides in there. As I’m sure you know, all you have to go do is look at Texas, which is the fastest growing economy in the U.S. - energy use is going up, costs are going down, and carbon is going down, so the integration of renewables, particularly wind and gas, provide that certainty about the economic future of the region. So again, in terms of projects, clearly it has to be a brownfield project. Our Access Northeast project was essentially mostly brownfield. We are looking at that to make that even more compatible and to have less of an impact on the environmental footprint that we have here in New England.

But how do you get around the issue around how it gets paid for? How are you addressing the issues that you ran into in the past?

There’s two paths there. Obviously there’s the state pass inside of Massachusetts, where you need legislation. We have ongoing litigation in New Hampshire that we believe could resolve that issue at the Supreme Court, and then there’s always the federal path. It’s a longer, more complex path, but there is the federal path through FERC and ISO New England to put in place a tariff that would ensure sufficient fuel supplies and reliability. So there’s two paths there. The state path I think clearly is more preferable just from the timing standpoint, so we continue to work both. Jim has met with FERC commissioners and FERC staff recently to discuss this issue, so there is just this growing awareness that something has to get done, and we continue to help to provide really information that is educational, that really gets people to understand gas is part of the solution, not the problem.

Okay, thank you. Maybe just one last minor one on--I think Phil mentioned that you expected to pay $100 million to $120 million in federal cash taxes in 2018. How does that compare to your expected book taxes?

For 2018, Caroline?

Yes, I’m just wondering, that seems low. I guess I would have expected your book taxes to be higher. I mean, what’s allowing you to defer federal cash? Do you guys have some sort of NOLs or credits that might be driving the difference, or maybe I’m just calculating it wrong?

Just regular timing differences that we expect the book to be higher, Caroline.

Okay, all right. Thanks very much.

Thanks Caroline. Next question is from Michael Lapides from Goldman Sachs. Good morning, Michael.

Hey guys, good morning. Two questions. One, if the New Hampshire Site and Evaluation Committee does not selection Northern Pass after the reconsideration process, how do you think about the use of that capital that frees up on the balance sheet, given you wouldn’t be making the capex tied to NPT?

Michael, I think what we’ve always talked about and I would still say, that we’d look first to redeploy that into infrastructure investments. We talked about that over the last year or so in terms of if we had cash, and we’d use cash from the proceeds from the generation sales to invest in infrastructure with our Aquarion water transaction. So our first look would be to develop additional regulated infrastructure.

Michael, this is Jim. I think as Phil’s comments earlier mentioned that the four-year plan without Northern Pass, if you adjust out Northern Pass, it’s actually a higher capital plan than what we had a year ago, so we found some projects there. I mean, if what you’re getting at, would you possibly use it for a share buyback, that is obviously an option that we have. We’re not announcing it. We don’t think that we need it necessarily to hit the 5%, but it’s a nice tool to have given our extremely strong balance sheet and our credit rating. So I think we have a lot of optionality in terms of how we can deliver, as we have in the past, on our guidance.

Right, thank you for that, Jim. That actually falls into my next question, which was how do you think about what the right credit rating is for a company of your risk profile? How do you go through that quantitative analysis of what’s the optimal credit rating for Eversource?

We don’t actually have as a target an optimal credit rating. I think the recent [indiscernible] tax reform has sort of indicated that a lot of companies probably wish they hadn’t levered as much as they had. We’re fortunate to be sitting where we are - no equity issuances needed going forward. What we have offered in the past is top tier financial performance, and certainly the total shareholder slide that we have indicates that we’ve been able to achieve that. Coupled with that top tier financial performance is the number one financial condition, our lowest risk it the industry. That’s an offering that we continue to have and we’ve enjoyed and our shareholders have enjoyed, having that balance of a strong financial condition along with the performance. So clearly--you know, do we need to be an A-plus, two notches removed from the next best credit in the industry? Probably not, but we’ve been able to sustain that while putting up the earnings, dividend and share price growth. It’s a long answer there, but basically we don’t have a targeted minimum credit rating that we’re striving for. We’re going to continue to maintain a very strong financial condition while we put up good numbers.

Got it. Last item, and I hope Jeff doesn’t kill me for asking three instead of two, how do you--Jim, how do you and how does the board think about the environment for utility sector M&A, given a, higher rates and therefore potentially higher cost of debt; b, the impact of tax reform and really what it’s doing to your competitive balance sheet position versus other people’s balance sheet positions; and c, the pullback we’ve seen a little bit in the equity of utility stocks?

Yes, I guess it’d be situation specific. I think our board is thrilled with the outcome of the merger between Northeast Utilities and eNSTAR. I think we’ve exceeded their expectations. I think the water acquisition continues to pay dividends and is an accretive transaction, so we have a balance sheet and a currency that will continue to be strong. But again, we have been a very, very disciplined player in that realm and will continue to be. It’ll be, as I said earlier, transactions that are in our shareholders’ best interests rather than just growing for growth’s sake.

Got it. Thank you, Jim. Much appreciated, guys.

Thank you, Michael. Next question is from Paul Patterson at Glenrock. Good morning, Paul.

Good morning. A lot of my questions have been answered, but just back to Northern Pass, what’s the viability of Northern Pass without the Massachusetts RFP?

Well you know, as Jim said earlier, Paul - this is Lee, we believe Northern Pass will be viable because if you look at the region and the region’s goals around carbon reduction and renewable energy, and here we are with essentially almost all of the permits complete - again, almost 20 permits, we really are down to the SEC permit and the Army Corps of Engineer permit comes after that, so we’ll have a project that will essentially be ready to go; however, obviously we need the SEC siting. So we believe just looking at the Connecticut energy strategy, and if you go look at the draft bills that are inside the Massachusetts senate, all of them call for more hydro, more renewable energy, so there will be a home, as we’ve said many times in the past, for Northern Pass. We just have to figure out what the timing of that is.

Okay, so assuming that the NH SEC may not get back to you before the 27th and they go with whatever it is - the New England Clean Power Link, whatever it is, they go with the alterative, Massachusetts does, what would happen in that scenario? Would you guys continue, would you start construction and everything if after that you got the New Hampshire Site Evaluation Committee--in other words, if the NH SEC gave approval after the Massachusetts RFP had been selected, had gone with somebody else, would you guys proceed with construction and what have you, or how would things proceed in that situation?

Paul, this is Jim. Remember we have a partner here in Hydro Quebec. Hydro Quebec has expressed publicly a number of times their interest in exporting more energy in particular into the region. I think they would be interested in doing three Northern Passes, so as long as they continue to look to grow their bottom line by exports to New England, they would be interested in continuing with the project, so we can’t sort of speak independently about what that would look like if the Mass RFP went by the boards. Keep in mind that projects that are being considered for that Mass clean energy RFP still have a long way to go, including the beginning of the process on the other side of the border that took us two and a half years to get the Quebec approval. So I don’t think we need to address that contingency now, other than to say that we’ve got a project that’s cost effective, we’ve proved that in the Mass energy RFP, and we have a partner in Hydro Quebec that’s very committed and interested in exporting hydro power to our region, so that bodes well for this project going forward.

Okay, then just finally, I apologize if I missed this, what was the weather-adjusted sales growth for 2017?

For electric, Paul?

Yes, for electric. Yes.

It was slightly negative - you know, less than 1%.

Okay. Thanks again, guys. Hang in there.

Thank you, Paul. Our next question is from Greg Gordon from Evercore ISI. Good morning, Greg.

Hey Jeff, it’s actually [indiscernible] on for Greg. Good morning.

Hi, how are you?

Good, excellent. Just wanted to follow up, I think you stated this in your prepared remarks, but the rate base on Northern Pass is roughly 1.5, 1.6 billion, right, and then the new rate base for 2020 with the tax reform and all the capex is roughly 2 billion higher, so are we thinking about this the right way, that basically the reason why you’re still comfortable with your 5 to 7% is essentially you have a 2 billion higher rate base number on the back of capex and tax reform, so even if you don’t go ahead with Northern Pass, you can still hit your ’20 rate base numbers and your 5 to 7% earnings score? Is that the right way to put it?

Yes, it is. That’s the correct way to look at it.

Excellent, thank you.

All right, thank you. Next question is from Julien Dumoulin-Smith from Bank of America. Good morning, Julien.

Good morning, it’s actually Josephine here. How are you guys?

Hi Josephine.

I know we’ve talked a lot about the Northern Pass already, but I was just curious how much Northern Pass earnings, if you do see it, is in the 2018 guidance?

What we’ve said is--I think Lee mentioned in his remarks, if everything were to progress during the year, there might be a small amount of capex, $300 million or so, started in 2018, there’s probably a few cents related to AFUDC related to that.

Okay, then could you comment on where ROEs are trending at Public Service New Hampshire and Yankee Gas after this cold winter, and your thoughts on going in for a rate case on those jurisdictions?

Yes, so we have not announced any plans to go in, but we do have-- I mentioned in my remarks that in each of the jurisdictions, we’re looking to develop plans to--how we’re going to credit back the ADIT to customers, so that could be an opportunity that during those--during that process, that those two things could be tied together, but we don’t have plans there. I would say that they’re trending close to their allowed--they're probably under-performing just slightly in both those areas. Neither one of those have decoupled rates - that would be something that we’d look to do if we went in. Certainly in New Hampshire where we’re divesting of the generating assets, it makes sense at some point in the not-too-distant future to make sure all the rates are re-coordinated, that reflects the absence of generation.

Great. Then just one last question - I know it’s late here already, could you just comment on where your FFO to debt metrics are currently and how much latitude there is for any transactions or returns of capital to shareholders?

Sure. The FFO metrics for our rating, we deliver in the high teens, so that’s where those metrics are. So as Jim said, the balance sheet has capacity for optionality, and we could take advantage of that, but they're in the high teens, above the target ranges.

Got it, okay. That’s all on my end. Thank you very much.

Thanks Josephine. One more question, and I think he’s still online. Is Praful Mehta from Citi still on the line? I think that’s probably a no. So alright, with that, we don’t have any more questions. Thank you for joining us this morning. I know we went over a bit, but if you have any follow-up, please give us a call this afternoon. Take care.

Thank you. Ladies and gentlemen, this concludes today’s conference. We thank you for participating and you may now disconnect.