Welcome to the Eversource Energy Q3, 2021 results conference call. My name is Cheryl 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'd like to ask a question, please press [Operator Instructions] on your touchtone phone. Please note that this conference is being recorded and I will now turn the call over to Jeffrey Kotkin. Sir, you may begin.

Thank you, Cheryl. Good morning and thank you for joining us. I'm Jeffrey Kotkin, Eversource Energy's Vice President for Investor Relations. During this call, we'll be referencing slides that we posted last night on our website. And 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 the U.S. Private Securities Litigation Reform Act of 1995. These forward-looking statements are based on management's current expectations and are subject to risks and uncertainty which may cause the actual results to differ materially from forecasts and projections. 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 31st, 2020 and on our Form 10-Q for the 6 months ended June 30th, 2021. Additionally, our explanation of how and why we use certain non-GAAP measures and how those measures reconcile to GAAP results is contained within our news release and the slides we posted last night and in our most recent 10-K and 10-Q. Speaking today will be Joe Nolan, our President and Chief Executive Officer; and Phil Lembo, our Executive Vice President and CFO. Also joining us today are John Moreira, our Treasurer and Senior VP for Finance and Regulatory; and Jay Buth, our VP and Controller. Now I will turn to Slide 3 and turn over the call to Joe.

Thank you, Jeff. We hope that all on the phone are safe and well, and we look forward to seeing many of you in person next week at the EEI Conference. I will cover a few topics this morning and then turn over the call to Phil to discuss our third quarter financial results in our regulatory activity. First, I want to discuss loss weeks Northeast, which impacted approximately 525,000 customers across our service territory. Our Eastern Massachusetts customers sustained the greatest damage with more than 450,000 customers impacted. That's over 35% of Eversources customers in Eastern Massachusetts. This storm was far less damaging in Connecticut, Western Massachusetts, and New Hampshire. So as we wrapped up the restoration in those areas, we were able to quickly redeploy resources to Southeastern Massachusetts, Cape Cod in Martha's Vineyard Areas that took the brunt of the storm. Our internal resources were supplemented by hundreds of crews from outside the region. And we were able to essentially complete the work over this past weekend. This experience underscores the benefits of a large TD organization. One where resources can be shifted based on the greatest need. Last year, it was Connecticut last week it was Massachusetts. Next time, it might be in New Hampshire. We have 9,300 dedicated employees all focused on providing the best possible experience for our customers. Lessons we learned last year in Connecticut, particularly regarding communication with municipalities have been vigorously applied this year. Our customers and community leaders have certainly noticed our enhancements and we have received many positive comments on our strong response. Customers are noting, that not all the best linemen in New England work for the New England Patriots. When storms have threatened us, and recall that we have had glancing blows from three tropical storms this…

Thank you, Joe. This morning, I will cover a few topics, our third quarter results, details about the Connecticut settlement. An update on grid modernization, electric vehicle initiatives, and to look at natural gas outlook for the coming winter. I will start with our results for the quarter, Slide 4, our GAAP earnings were $0.82 per share for the quarter, including $0.19 charge associated with the Connecticut electric rate settlement and $0.01 charge relating to our integration of Eversource Gas of Massachusetts. Overall, we experienced improved operating results at the electric transmission and distribution segments and lower results at the natural gas and water segments, as well as the [Indiscernible] and other. Our electric transmission business earned $0.40 per share in the Third Quarter of 2021, compared with earnings of $0.36 in the Third Quarter of last year, reflecting a higher level of necessary investment in our transmission facilities. Our electric distribution business, excluding charges related to the Connecticut rate settlement, earned $0.62 per share in the Third Quarter of 2021 compared with earnings of $0.60 in the Third Quarter of 2020. Higher distribution revenues were partially offset by higher O&M, depreciation, interest. and property taxes. Storm-related expenses remain a headwind for us, costing us a penny a share in the Third Quarter of 2021 compared to the same period in 2020 and a total of $0.05 a share more in 2021 than last year on a year-to-date basis. Our natural gas distribution business lost $0.06 per share in the Third Quarter of 2021 compared with a loss of $0.04 in the Third Quarter of 2020. Given the seasonal nature of customer usage, natural gas utilities tend to record losses over the summer months. Our natural gas segment now -- our natural gas segment loss is now about 50% larger…

Thank you, Phil. And I'm going to return the call to Cheryl just to remind you how to enter your questions.

Thank you. We will now begin the Q&A session. If you would like to ask a question, [Operator Instructions].

Thank you Cheryl. Our first question this morning is from Jeremy Tonet from JPMorgan. Good morning, Jeremy.

Good morning. Thanks for the update there, well it covered a lot of ground. Maybe just starting off with Connecticut a little bit more here. Thanks for all the color, but just wondering if you could provide a little bit more color on how you think about -- how you're planning to manage the rate freeze in Connecticut and how we should be thinking about go-forward an earned ROE and when you think you might end up filing the next case there?

Well Jeremy, thank you for the question. As I mentioned, Connecticut Light and Power and Star Electric public service in New Hampshire, the Eversource family has a strong track record from managing operations in an effective manner, and we'll continue to do that throughout all of our franchises Connecticut included. So as I mentioned, the last reported quarterly ROE in Connecticut was just under 8.7, I think was 8.661% or 8.66%. So even though we're allowed 9.25% ROE, we've been sort of operating underneath that measure since the settlement in 2018. So I would expect that we'll continue to operate that Franchise effectively, I can't really predict at this moment what an ROE might look like there, but I can assure you that we're going to do everything possible to first provide customers with outstanding service that they deserve, and we fully expect to deliver and do that in an efficient and effective way. In terms of when we file our next [Indiscernible] case, the ink is just dry on the settlement and we can't go in. There's nothing that we can implement before 2024. And as I said, with the four-year sort of legislative requirement. We wouldn't mandate it to be in there until 2025. We haven't really thought about that. At this point, we're thinking about how we operate our franchises in an effective manner for customers.

Got it. Thanks for that. And maybe pivoting over towards offshore here. Now that we have scheduled across all three projects, when do you think it might be inappropriate to give increased disclosures here on the project economics. And specifically, how do you think about, I guess the ROFO guidance here for long-term EPS growth, given the Offshore Wind -- it's going to be hitting our earnings -- grow our fund rates going forward?

That's a great question, and one that we've been asked and we've been thinking about. What our expectation is? We generally would update our long-range plans in February with our year-end results and then we'll talk about our forecast, so we plan to do that again this year. We'll roll forward our forecast like we've done in the past, drop a year, add a year out to 2026. And as you point out, given the schedule of the projects, we're going to see significant contribution from bigger projects in that time frame. So the expectation is that as we roll out that next forecast in February, there would be more clarity, more transparency, more information on that segment. So that they'll be able to either model it in a way that you want -- in a way that makes sense. I'd say we are getting close to that and the expectation is in our February update. We'll roll the wind in a more, I guess, discrete -- in a more definitive way.

Got it, that's helpful just real ask quick one, if I could. It looks like Eversource didn't participate in the most recent Massachusetts RFP process. And would you be able to talk about, I guess next opportunities do you see to add incremental projects and just any high-level thoughts on the broader industry returns at this point?

Yes. Thanks, Jeremy, it's Joe, I'll take that. Massachusetts is unique in that they are looking for the lowest price, they're not looking for economic development opportunities like some of the other states. That is now changing. The Governor is very, very interested in economic development and opportunities in this business. When you look at States like New York that are kind of dedicated to -- I was in upstate New York for a pretty big announcement around foundations, which -- it's nice to bring some of the supply chain here to America. And that was a big, big step I think for Offshore Wind opportunities, we're seeing for offshore in RFPs. And in 2022, looking at New York potential in Connecticut, as well as in Rhode Island and Massachusetts. I think there's opportunities everywhere, I think the first one you will see will be NIOC. They're very aggressive with their targets and that's a place that we know we'll put out another big RFP.

Got it. That's very helpful. I'll leave it there. Thanks. Thank you.

Thanks, Jeremy. Next question is from Steve Fleishman from Wolfe. Good morning, Steve.

Hey. Good morning. Just in terms of supply chain issues and the like, could you just talk to how you're feeling about the current schedules for your three main projects and managing that right now?

Yes, Steve. This is Phil. Good morning. We talked about this is certainly about a topic that people have been interested in, as well as the project and the Company. We feel we're in a very good position in terms of our contracting for both substations or turbines or foundations, what we have in place for strategy for vessels, etc. So our supply chain exposure, I'd say there is some supply chain exposure, but we've done a very good job in solidifying most of that to not make it an issue for us. As I've talked about before, there are puts and takes for all these projects, so some costs maybe move in one direction and other things are moving in a different direction. Taking all that, if there are price changes or if there are schedule impacts, all of that allows us to be confident in the schedules that we've put out to date. And in our estimate and our expectations that these projects will earn in the mid-teens in terms of ROE. There are a number of factors that come at you every day, on these projects and we still feel good about the schedules and the return estimates.

Okay. Because I know the Empire Wind project, which I think was awarded at the same time. As Sunrise is now saying late 26, but obviously, different people, different situation. And then I think they've had some issues with the New York ISO interconnect agreement, so it sounds like you're not seeing that kind of delay.

No, Steve, this is Joe. We're not -- I mean, they did announce that delay. We do not expect any similar delays on our projects. We have good visibility on that. We feel very confident.

Great. And then maybe just high level. The Biden info planned a reconciliation one. Could you talk to if there's anything broadly in there that would impact the way you're looking at your plan in terms of just new credits, cash flows, anything that you are most focused on?

Yeah, Obviously, we would like to take advantage of tax credits to help our customers in any way we can as well as our -- improve our projects. But that's really what our focus would be on that -- on the Biden plan.

Okay. Great. Thank you.

Alright. Thanks, Steve. Appreciate at the next question is from Julien for Bank of America. Good morning, Julien.

Hey, good morning to you, thanks for the time. Appreciate the [Indiscernible]. Let me start with a higher level of question for you, guys. Obviously, looking at the outcome of the election in Maine here, how are you thinking about the Massachusetts renewable procurement at large? And I know it's very fresh here, but any prospects for revisiting perhaps some of the legacy projects that we've all talked about for a long time and/or, frankly, revisiting alternatives to long-distance transmission, given the pushback in New Hampshire and Maine historically here?

Good morning, Julien.

So the same might apply to the gas and Access Northeast while we're at it as well.

Yes. Good morning, Julien. Thanks for the question. If the question is, are we going to dust off Northern pass the answer is no. We will not dust that off. Is there an opportunity for projects? I think there's definitely opportunity in Massachusetts around wind. I think the Governor 's appetite for additional renewable projects, his desire to change the legislation which requires it to be lower than the previous RFP, is definitely on the table. We've had discussions not only with the Governor, but with key legislative leaders around this. And I think that if they see challenges up the year, I would not be surprised if we see some bids out here, RFP out here in the near-term. In terms of what our future holds for other types of opportunities in this space, I think it's premature. I mean, I don't think they're finished counting the boats in Maine, but we'll certainly take a good hard look at that and see what opportunities might be available.

Got it. Fair enough. It sounds like Access Northeast not necessarily in the same vein on table, but if I can pivot a little bit more locally, right? Talking about Massachusetts situated opportunities, I mean, how are you thinking about enabling distributed resources themselves. There's been some interesting filings in various dockets here that seemed to suggest some pretty meaningful opportunities for you all vis-a-vis just simply interconnection. Whether that's on the distribution or transmission side. And I'm also cognizant that you update your outlook with fourth-quarter here. But any initial thoughts there around distributed assets and enabling them?

I'll just tell you that our interests on this issue around the smart grid and allowing folks to interconnect and AMI, all of those are shared agendas with our key regulators and policymakers in all -- in Connecticut and Massachusetts particularly. And I think we talked about Connecticut, what happened down there on our settlement, I think this really starts the opportunity for us to really begin to look at AMI and the smart grid and opportunities for unlocking access or greater access to renewables and distributed generation for folks that are eager to interconnect. So I think it's -- I think you'll see a lot of activity in 2022. I'll let Phil talk a little bit around the financial piece of it.

Julien, as you suggest, we do update in February, as we've discussed. And I think the area that we're looking at, we refreshed all of our plans, all of our investment activity so in the area of transmission, certain categories, I'd say broadly that we would expect to take another look at and identify opportunities that may exist, just are maybe in three different categories. One being just these end-of-life asset replacement projects. What do we have out there? What do we have in expectation-wise? Certainly electrification is a category. The States have targets we have to meet. We have to enable those targets to be met so there could be additional transmission in that category. And the third category, and one that you highlight is connecting distributed energy resources to the upgrades that are required to connect either currently contracted Offshore Wind or future Offshore Wind into the service territory. There's a large desire for Offshore Wind across New England, New York, and making sure that we have the connectability or interconnections and the transmission to not be a bottleneck for that. That is likely to be some increased investment needed on the system. I'd say those are the types of things that I think you'll see when we rollout our update in February in those categories.

Got it. All right. We shall wait for what those numbers amount to. But I wish you the best of luck guys. [Indiscernible].

Thanks Julien.

Thank you.

Thank you.

Next question is from David Arcaro from Morgan Stanley. Good morning David.

Hey, good morning. Thanks for taking my question. I was wondering if you could just give an update on the equity needs. Apologies if I missed it in the prepared remarks, but just latest thinking on the amount and timing of equity here.

Yes, David, this is Phil. There's been no change in what our equity needs are going forward at this stage. So that would mean that from what we had announced previously a few years ago, this $700 million of equity that we would plan to issue on some sort of ATM or at the market type of program. that goes throughout our current forecast. So our current forecast goes through 2025, so there's no specific timing of that at this point. And we continue to issue original issue shares from our dividend reinvestment equity comp type of things, and that's a $100 million a year. So there's been no change and that's where we are, no increase or change in those needs.

Okay. Got it. Understood. And then had a question on the turbine installation vessel that you're contracting with Dominion. Just wondering if you could talk a little bit about the amount of time there is between using that vessel for your projects. Sunrise and Revolution, and then moving to Dominion in 2026. Just if there's any risk that you would lose access to the vessel in the case of any project delays or how you're thinking about that.

So, thank you. I'll take that. That vessel, its first port-of-call is going to be on New London. We have an opportunity to use that vessel that would -- for both Sunrise as well as Revolution Wind. It will not be ready for Southwark. There's enough of a cushion in there to allow for us to complete those projects. In addition, there's a day for day delay opportunity. If the vessel is delayed, coming into New London, we have the first customer, that would be pushed out on the other end. We do not anticipate any issues around the use of that state-of-the-art vessel. I mean as the extraordinary Vessel, it carries six wind turbine assemblies. New London is only 70 miles from our lease area. We think it's the most efficient way to install our wind turbines. And we're really excited about that. I was -- had an opportunity to spend a little time with the Dominion folks and the vessel is on track and some of our folks will head down and check on the progress, but that is going to be -- it's going to be quite a piece of equipment.

Okay, great. Thanks so much.

Alright, thanks, David, Our next question is from Sophie Karp from KeyBanc. Morning Sophie.

Good morning. And thank you for taking my questions. Going back to Connecticut on just kind of curious. I appreciate the overall capex forecast is unchanged, but kind of shift in the timing of some projects, maybe between phase one of the levers you can pull here to manager, or in that arena next few years there or what are some of the levers you can pull to offset inflationary process and just overall normal course of investments there?

So, Sophie, I think as I've said in the past and we've commented on. Our investments and our operations are geared to meeting our customer expectations. So investments that we make in our system are driven by what our customer needs are. How do we reinforce the system? How do we provide? -- We might be able to make a capital investment that offset some O&M costs so that's also good for customers. Our focus on our investment needs, whether they'd be transmission, distribution, gas, electric, water, are on first and foremost, what does it do for customers. We wouldn't be looking at moving around investments into other areas for other reasons other than how would meet the customer needs. There's levers. As I said, we've -- I'd put our track record up against anybody's in the industry, in terms of managing our operations in an efficient and effective manner. How we integrate EGMA into our family is going to provide some uplift, we have opportunities there. and how we roll out programs in an effective manner. So I'd say that we're focused on managing our operations to meet the customer needs, and that'll be the lever that we have to get to where we want to get to in terms of our earnings profile.

Got it. And just what are you seeing right now, I guess, aside from the energy cores? Just overall, like materials, labor, type of inflation and inflationary pressures within your regulated franchises. Is that something that is becoming material and requires, I guess, certain efforts to offset or are you seeing that within the -- maybe a pretty decent trajectory? Or how should we think about that right now?

I'd say it's had an impact, but I wouldn't say it's been significant. We've -- a year ago the supply chain team, who's in sort of the financial organization, works very closely with our engineers and our operating folks. And at the start of this pandemic, I think a lot of companies like to have a just-in-time delivery model. We made a conscious decision over a year ago to not do that, to have -- to actually build up our inventories, poles, transformers, wire, cable, all the types of things. And if it's not in our facility, we have provisions with our suppliers to keep it on their property. And we're using a lot of it. I mean, we have had -- Joe talked about storm. I read at the beginning, we go through a lot of polls and wire, etc. you know when there's a storm and that's not been a factor for us. We've had the supplies available to us. Now, having said that, we certainly have our eyes on it, there are types of equipment that are getting more difficult and it may not be the whole piece of equipment, it could just be the plastic component of something is you can't get. And so we've -- also expanded the types of suppliers we have, and where the supplier is located and that type of things. So if It has had an impact, I'd be fooling myself or anybody to say, we haven't had some delays in some products, but they haven't been a material of significant impact to us.

Got it. Thank you and if I may squeeze one more on the gas supply situation. I'm just curious if you could quantify for us between the storage -- physical storage and capacity contracts, what percentage of your normal demand I guess is hedged at this point in time? And given the situation, have you given any thought to maybe even bring into your regulators proposals to build more storage facilities on the [Indiscernible]? Thank you.

I'd say about 1/3 of it. If you look at what we have in storage and what's fixed, I'd say it's about a third of that supply. And as I mentioned, the remaining part of the supply, we have the capability, we have the pipeline contracts to obtain it, and we have the capability of obtaining it from a lower-priced region than the city gate pricing. In terms of incremental storage, we do have programs that we do have in place to refurbish some of our LNG facilities or make sure that they are operating at the maximum capacity, but we haven't looked to expand those facilities. We naturally expanded them just by the acquisition or the purchase of Columbia Gas of Massachusetts, almost doubling the storage capacity that we have as an entity. And as Joe mentioned, size matters in this case too. It matters in terms of storm response. But it matters in this case too because we can operate the synergies by moving those 2 companies together, between NSTAR Gas in Massachusetts and Eversource Gas of Massachusetts. We can use contracts better than each Company could have used them individually and we can use our storage better than either Company could, so there's some natural benefits for us. So that was a point that we made in terms of getting the deal approved at the DPU. I guess that is a way of saying we've increased the ability to have storage, but we're not looking to build anything extra at this point.

Thank you. [Indiscernible]

Thank you. Thank you, Sophie. Next question is from Travis Miller from Morningstar. Good morning, Travis.

Good morning, everyone, and thank you. On the offshore transmission, it sounds like you have a lot of the pieces in place for the Southwark project if I heard you correctly. What's the status of the transmission side of the other projects that you have going?

Yeah, can you -- I'm not sure we understand the question, Travis, you say the status of the transmission side?

Transmission, the connections -- that are connections between offshore projects and land, essentially.

Thanks, Travis. I will take that. All of those projects, all the permitting and the siting, and applications are all in motion. We haven't had any bumps in the road, and we are -- they are all on track. Everything has a line of sight on it, and it's in motion.

Okay, great. And then in Connecticut, you talked about the trackers there. About what percent of the capex do you have over the next couple of years is subject to those trackers that you talked about?

It's about half. It's about half of our spend.

Okay. Great. That's all I had. Thanks so much.

Thank you.

Thanks, Travis. And that was the last question we have this morning, so we want to thank you all for joining us today. We look forward to seeing many of you at the EEI Conference next week. And if you have any follow-up questions, please either call or email. Thank you.

Thank you, ladies and gentlemen, this concludes today's conference. Thank you for your participation. You may now.