Good morning and good afternoon ladies and gentlemen. Welcome to the Eversource Energy Q2 2024 Earnings Call. My name is Jaquita. I will be your moderator for today's call. All lines will be muted during the presentation portion of the call with the opportunity for questions and answers at the end. [Operator Instructions] I would now like to pass the conference over to your host Matthew Fallon with Eversource Energy Director for Investor Relations. Matt please go ahead.

Good morning and thank you for joining us. I am Matthew Fallon, Eversource Energy’s Director for Investor Relations. During this call, we’ll be referencing slides that we posted yesterday on our website. As you can see on Slide 1, some of the statements made during this investor call may be forward-looking. These statements are based on management’s current expectations and are subject to risk and uncertainty, which may cause the actual results to differ materially from forecasts and projections. We undertake no obligation to update or revise any of these statements. Additional information about the various factors that may cause actual results to differ and our explanation of non-GAAP measures and how they reconcile to GAAP results is contained within our news release, the slides that we posted last night and in our most recent 10-Q. Speaking today will be Joe Nolan, our Chairman, President and Chief Executive Officer; and John Moreira, our Executive Vice President, CFO and Treasurer. Also joining us today is Jay Buth, our Vice President and Controller. I will now turn the call over to Joe.

Thank you, Matt. Good morning everyone and thank you for joining us on the call. Let me begin with an update on offshore wind. I am very pleased to report that we have closed the sale of Sunrise Wind Project to Ørsted and that we anticipate closing the sale of our South Fork and Revolution Wind Projects to Global Infrastructure Partners in the third quarter. Closing these sales delivers on our commitment to exit the offshore wind business and focus our resources on being a pure play regulated utility with tremendous low risk regulated growth opportunities to enable the clean energy transition for customers. Turning to Slide 3. We continue to be a leader on delivering energy solutions for our customers with our focus on resiliency investments to address aging infrastructure and minimize customer outages on blue sky days and during storm events. We are also very busy preparing for the future of electrification to achieve our region's greenhouse gas reduction goals. Moving to Slide 4. Shown here are our state's near-term and long-term greenhouse gas reduction goals. To achieve these goals, we are planning investments to our grid to meet the demand growth from electrification of transportation in residential and commercial heating sectors. This effort requires us to upgrade and expand the electric system to handle the new demands that we will face, including more EV charging, more customers turning to heat pumps to warm and cool their homes, and expanded capacity needs to accommodate additional renewable energy resources. In addition, we must make our system smarter and stronger to withstand Mother Nature and the forces of climate change, which are resulting in more frequent and intense storms. We are continuing to invest in our electric system with smart technologies to help the grid automatically adjust to disturbances on…

Thank you, Joe, and good morning, everyone. This morning, I will discuss our second quarter earnings results, provide a regulatory update and review our financing activity. As shown on Slide 9, our GAAP and recurring earnings for the second quarter were $0.95 per share as compared with GAAP earnings of $0.04 per share in the second quarter of 2023 and recurring earnings of $1 per share in the second quarter of last year. You will recall in the second quarter of 2023, we recorded the first of two impairment charges associated with our offshore wind investment of $331 million, or $0.95 per share. We also had other nonrecurring charges of $6.2 million, or $0.01 per share, in the second quarter of 2023. Both items are included in our GAAP earnings results for 2023. Breaking down the second quarter earnings results by segment, starting with electric transmission, which earned $0.54 per share compared with earnings of $0.46 per share in 2023. Electric transmission earnings increased due to rate base growth. Our electric distribution earnings were $0.42 per share for the quarter compared with earnings of $0.47 per share in 2023. The earnings decrease was due primarily to higher O&M expense, driven by higher storm restoration costs and the absence of a favorable prior year regulatory adjustment in New Hampshire, partially offset by higher revenues driven by NSTAR Electric's base distribution rate increase effective January 1 of this year. Electric distribution earnings are expected to be higher in the second half of the year, driven by capital cost recovery and New Hampshire's $61 million interim rate increase effective August 1. Our natural gas distribution business earned $0.08 per share for the quarter compared with $0.03 per share last year. The earnings increase was due primarily to higher revenues from NSTAR Gas' November…

Thank you. Jaquita, we are now ready for Q&A.

Absolutely. . We will now begin the question-and-answer session. [Operator Instructions] The first question comes from the line of Shah Pourreza with Guggenheim Partners. Your line is now open.

Hi, guys. Good morning.

Good morning, Shah. Good morning.

Good morning. Good morning. Joe, just maybe starting with Connecticut. I mean some constructive outcomes on the EV side. It sounds like the governor brought everyone together there. You're still kind of working through how to recover AMI. Are these like kind of green shoots in your view? Could we see some of that $500 million in capital you allocated elsewhere flow back into the state?

Yes. Well, thank you. As you know, I had committed to folks that we will work diligently on our relationships in Connecticut. This is one of the areas of focus. As you know, we talked about our exit from wind. I think you're seeing that we've successfully executing that strategy, working on Connecticut, the sale of Aquarion. With regard to Connecticut, I wish I could say that I had a high degree of comfort right now, the jury is still out. We are grateful for Governor Lamont's leadership. I think he's done a good job, and we'll continue to work at that. You have my commitment that I will continue to work on that relationship so that we get a stable regulatory environment for us to make any investments down there, especially on AMI because I've got to tell you, what's taking place in the energy markets, AMI today is more important than ever that we have a system that allows customers to make informed decisions around their use of energy. I think it saw what took place in the PJM markets, and this is the type of technology that we're going to need to deploy in our states in order to allow our customers to make those decisions around spending their dollars on energy.

Got it. And sorry, Joe, just to PURA size, there's some noise there, like is 3 of the magic number? Or could we see the governor sort of expand to 5?

Yes, sure. So the governor is now at 4, but it will go down to 3 in January. I think the governor is committed. I mean, certainly, any discussions I've had with him, he wants to strike a balance, and that's what he has told me that he wants to strike a balance in Connecticut. So yes, he may go to 5. I think he's going to continue to work at it. It's a work in progress to make sure that he brings stability and regulatory certainty to the state of Connecticut. But again, it's -- we're taking a wait-and-see approach.

Got it. Okay. Got it. And then just lastly, the Aquarion I mean, some data points around the Muni legislation this spring and trade press on the process. I guess any finer point you can put on the sale time line? Is it kind of your goal at this point to roll forward the plan next February without anything for Aquarion in it? Thanks, guys.

Yes. Well, I got to tell you, first, in terms of the legislative process, and there was a lot of discussion on that. That one particular piece of legislation was designed to allow a bidder that in the absence of that legislation would not have been able to participate in our sale process. So it doesn't give them any more of a leg up than anybody else. We have a very robust group. So that was encouraging that this is a player that wanted to be there. They are a known entity in Connecticut. So the process will move forward. And we -- John, if you want to talk about with respect to timing?

Sure, as I mentioned in my formal remarks, we recently have launched the process. Actually we're still working our way through finalizing some NDAs, In our forecasted financing plan, we assume that that transaction would wrap up by the -- by 2025 -- by the end of 2025. So that's our -- no change in that timeframe.

Okay, guys, excellent. Thank you so much. We will see you soon. Appreciate it.

Thank you.

Thank you. The next question comes from the line of Jeremy Tonet with JPMorgan. Your line is now open.

Hi, good morning.

Good morning, Jeremy.

Hi, Jeremy.

Hi. I just want to go back to the FFO to debt slide, if I could. I just want to make sure that I've seen that right, specifically on the under recoveries in the bridge. It looks like the $600 million is listed twice. So I just want to kind of clarify what's happening there.

Well, the -- if you look at the table, Jeremy, the way this was designed is to highlight where it will end up in the FFO to debt calculation. So the $600 million is -- will be impacting the enhanced numerator of the math there and the $2.6 billion will offset debt. So that's -- that was the purpose of that table in there. So, sorry, if you add in any confusion. But that was the kind of the design.

Got it. And…

And keep in mind, Jeremy, just I think it's important to keep in mind that these numbers only reflect 2024 and 2025. Obviously, there are certain recoveries that will continue well beyond 2025.

Got it. That's helpful there. And then I just want to go back to the offshore wind sale timing. Could you just update us there on, I guess, when everything would close? And I guess the time line shifted a little bit just wondering if there's anything to note there.

Well, Jeremy, the time line has not shifted. We were guiding that this potentially will close late Q2 or early Q3. And what we've said is we've already closed Sunrise Wind. We did that on July 9, and we expect to close the GIP deal in this quarter.

Okay, I understood. I will leave it there. Thank you.

Thank you.

Thank you. The next question comes from the line of Nick Campanella with Barclays. Your line is now open.

Hi. Good morning. Hope you're having a great summer.

Good morning. Yes.

Yes, thanks.

Hi. Yes. So I just wanted to -- just to follow up on Jeremy's question on the offshore wind. Just can you just maybe give us a state of the construction status on Revolution, where you stand on those costs and capital expenditures? And then just how much does Eversource actually incur an offshore wind CapEx for this year before you sell the assets to GIP? Thank you.

Well, I would say, the construction activity is progressing very, very well. As of a week ago, when we connected with Ørsted, the monopiles or the foundations, they're probably at 50% installed, which is a remarkable task knowing that we had the time of year restrictions. From a capital deployment standpoint, Jeremy, obviously, that is sensitive information as you -- I'm sorry, Nick, as you know, we haven't really disclosed that.

Okay, no problem.

…but knowing that -- that the sale process is imminent. It may happen in the third quarter. So you'll have line of sight.

And you guys still feel good about that underlying IRR that you have to kind of deliver to GIP as per the contract?

Yes. Yes, we do. I mean it's -- as I just stated, Nick, the construction activity is going very well, thus far.

I appreciate that. Thank you. I appreciate it. And Jeremy and I are friends, so that's totally okay. So just on storm cost recovery, the $200 million that you have in the FFO to debt enhancements, I know you're in the discovery phase right now, and there's been some shift in that proceeding over the last year. But just mechanically, do you have to file a rate case to get that cash recovery ultimately back and get that regulatory asset wind down? Or what's the rate case outlook in Connecticut for you currently? Just maybe you can walk us through that. Thank you.

Yes, sure. Sure. So let me start with the $200 million, Nick. The $200 million it does not reflect any recovery of Connecticut storms, okay? The $200 million is more -- is all related to Mass and New Hampshire. And keep in mind, this is only two-year recovery in both of those jurisdictions, the recovery period is five years. As it pertains to $634 million request that we have in front of PURA from a prudency review. As the schedule currently is laid out, which we're hoping to have a bit more of an acceleration there will take us through September-ish timeframe of 2025. So that really would align with the expectation of potentially we could file a rate case around that time. The historical process is you do the prudence in Connecticut, you do the prudency review and then you file a rate case and then the -- once the rate case has been buttoned up, and those -- that new rate goes into effect, that's when we would roll in the storm costs.

That's super helpful. I appreciate the clarification, and thanks for the time.

Thanks, Nick.

Thank you. The next question comes from the line of Steve Fleishman with Wolfe Research. Your line is now open.

Good morning, Steve.

Good morning.

Hi, good morning. Thank you. Just to kind of maybe close the loop on a prior question. Just whatever the latest cost estimate on Revolution is that still a good cost estimate?

As of right now, I mean, we always continue to work with Ørsted on further updates. But as of right now, yes.

Okay. And then on -- just on the equity plan, so back at the beginning of the year, I think that was before you had the go-ahead on Sunrise and I think not only did you get this $230 million, but you avoided potential breakage costs. If I recall, when you kind of came up with the current plan?

That's correct. That's correct, Steve.

And so kind of given that is now done and I just -- I guess, maybe like to get more color on how that plays into the up to $1.3 billion and obviously, you still have other things in flux. But maybe just a little more color since we now have that specific update.

Sure. Sure, sure. So I think you just nailed the answer to that question. We do have a lot of things in flux. Our forecast -- our financing forecast when we pulled it together and disseminate it as part of our guidance in February, had a lot of puts and takes. I had a lot of assumptions and we're still navigating our way through that. So I think it's a bit too early to give further guidance on our equity needs. Where we are today, as we stand here, $1.3 billion is the right number until certain things reach closure.

And can you just remind me the $1.3 billion, like what the timeframe was for that? Was that over the whole four-year period or...

What was the guidance that we've said over the next several years.

Several years. Okay. And yes, I think that's it for now. Thank you.

Thank you, Steve.

Thank you, Steve.

Thank you. The next question comes from the line of David Arcaro with Morgan Stanley. Your line is now open.

Good morning, David.

Good morning.

Good morning. Good morning. Hi, thanks so much for taking my questions. I wanted to circle back on the FFO to debt enhancement slide. I was just wondering if -- like, have there been any changes in the underlying enhancements there? Or is this mostly just pulling in some of the known items, breaking them out more specifically here? Or has anything changed to the upside or downside?

Yes. These are the major, I would say, headlines, right? However, things always change -- one of the items that's not included in the slide that has materially developed is some of the tax benefits that we've been able to harvest has generated some cash refunds. So that -- the 2024 alone we had an inflow of tax refunds of about $120 million.

So and that's not…

And the other thing that's noted that has not been quantified. But in my formal remarks, I did give you a lot of intel is the rate increases. We have EGMA going in with -- with a very sizable increase to start recovering the significant level of investments that we've made to that utility. And then we have the normal PBR rate mechanisms kicking in. And just yesterday, we got the approval to increase rates at PSNH, $61 million of interim rates. And within the next 12 months, we hope to have the final decision with another rate change effective August 1st of 2025. So that quantification would be further upside to this table that's shown, David.

Great. That's helpful color. Thanks. And the $120 million that's not included in here currently, so that would be an upside.

Correct. That would enhance the numerator and enhance our operating cash flows.

Okay. Awesome. Thanks for that. And then I was just wondering on EGMA, it's -- any issues that you would anticipate with this rate base step-up. It's a pretty big increase, obviously, given all the investment that you've made in that system. Just wondering what your expectations would be without challenging this case might be? And then subsequent to the extent you hit the cap, subsequent increases?

Yes, we do expect to hit the cap. And I would say what gives us comfort is the fact that this was all assumed as part of our settlement agreement when we acquired the company. We worked through with the regulators, the key stakeholders as to what that -- the investments that, that entity needed, and that's why we needed this rate base roll in. This is the first of two rate-based roll-ins that will kick in. The first one is we -- as I just announced on the call this morning, kicks in November 1st of this year and then the second one will kick in November 1st of 2027.

Okay, great. Thanks so much. Appreciate it.

Thanks, David.

Thank you. The next question comes from the line of Julien Dumoulin-Smith with Jefferies. Your line is now open.

Julien, welcome back.

Welcome back, the prodigal son. What a pleasant surprise.

Thank you guys very much. I appreciate it. It's nice to chat with you guys again. It's -- look, let me follow up on a couple of the things have been flagged here speaking of returns here. How do you think about the green shoots in Connecticut? I want to talk a little bit more on that thesis for a quick second. I suppose, of the Yankee Gas filing at some point here, maybe late this year in December. How do you think about that foreshadowing any elements of that, call it, 4Q 2025 CL&P case? Anything that you'd be watching? Any items there? Again, I get it electric versus gas, but curious on that front. And then related, any items that you'd be watching on the PBR front, right, given that that's been kicked out here a little bit presumably a year or so. How do you think about the items that you'd be looking there for those presumed green shoots as well? So, thank you guys very much. Nice to chat.

Yes. Well, listen, I just will tell you that we have been spending a lot of time, significant outreach to over 100 communities that we serve there. We spent a lot of time down there. We continue to work it. I think it's important, and I think folks are beginning to understand just the type of impact Eversource has in Connecticut. I mean we employ over 5,000 people in that state, pay over $300 million in taxes. And our reliability numbers are extraordinary. When we first did that merger, our months between interruptions was in 12, now we're over 24 months between interruptions. We're probably best-in-class down there in terms of reliability. So I feel very good about that. But I wish I could tell you with certainty that everything is sanitary, but it's not. We are taking a wait-and-see approach on it, but I will commit to you that my efforts as we have exited the wind business, it's not only down to my focus is Connecticut. I spent a lot of time. I was there last week, had an opportunity to spend some time with key decision makers. I will continue to do that until such time as those relationships improve and that we can get some regulatory certainty on behalf of our customers and also our investors.

Excellent. All right. Fair enough. I hear you on that one. And then maybe related here, how do you think about just the amortization period, to the extent which you get that 600 change in Connecticut here, presumably in the next rate case, how do you think about the time period that, that recovery would entail? Again, I'm thinking with the FFO to debt to head on as you roll in out of that case.

Sure. So the historical amortization period in Connecticut has been six years.

Okay. So about $100 million a year of uplift after you get that approved…

Correct. As I mentioned in my formal remarks, we're also preparing to file our second prudency request for incremental storms that we've incurred. That's not part of the 634. So that -- we hope to goes in closing later this year.

Exactly. And presumably, that would be also trued up in the next case such that, that would be incremental for kind of a 2026 run rate?

That is correct.

Okay, excellent. Thank you. Hey, see you guys soon, all right?

Yeah, hope so. Thank you.

See you.

Thank you. The next question comes from the line of Paul Patterson with Glenrock. Your line is now open.

Good morning, Paul.

Good morning. How are you?

Great.

I wanted to follow up on the particle on Julien's question on Connecticut. The delay in the PBR case, what do you attribute that to? Is that just simply the complexity of the case? Or is there something else we should be thinking about?

Yes. I think the -- and we're glad that it did get pushed out -- it allows -- and we've been pushing for this. It allows for us to bring in key stakeholders and collaborate with these key stakeholders in Connecticut to reach a very constructive PBR structure. We are very familiar with the PBR, what we have in Massachusetts. And recently, as I mentioned on the -- in my formal remarks, we're looking to introduce the same type of structure in New Hampshire.

Okay. And then with respect to the transmission and everything, there's -- as you know, at FERC, the White House, et cetera, there's a lot of talk about the implementation of agreed enhancing technologies and a lot of law makers from New England what have you seen to be pushing for this as well, DLR, what have you. And I'm just sort of wondering how you think about that -- those technologies, I guess, and what kind of opportunities you see there or issues or any color that you might give with respect to that, given your build-out and everything that you're looking at doing?

Sure. I mean we've been active participants in these forums. And I think as you know the one attractive piece of Eversource is that over 40% of our business is FERC related and transmission. So we're very good at it. I think we probably have the best engineering talent in the industry and any type of technology or deployment of technology or opportunities. I can promise you that Eversource will be at the forefront of them.

Okay, But you don't see. Okay. Okay. I appreciate it. Thanks so much. Rest of my questions been answered. Thank you.

Thank you. Thanks, Paul.

Thank you. Next question comes from the line of Anthony Crowdell with Mizuho. Your line is now open.

Good morning, Anthony.

Hi, good morning, Joe. Good morning, John. Good. I feel like the prodigal son older brother that I got nothing. I guess just quickly apologize so just keep going back to Slide 11 and then just a clarification. Is the right way to look at this the 600, the top 4 plus 2, you're saying goes into numerator on FFO and what's on the bottom below that green line or the green table there, the 2.6 goes on the denominator?

Correct, which would be permanent because we offload our debt with that. And then on the numerator side, once again, as I previously mentioned, those numbers only reflect cash inflows to 2024 and 2025. Obviously, these deferrals will continue beyond that period.

Great. That's all I had. Thanks for taking my questions.

Thank you.

Thanks, Anthony.

Thank you. The next question comes from the line of Travis Miller with Morningstar. Your line is now open.

Hi, Travis.

Hi, Travis.

Hi, there. Yes I'm just going to go one quick clarification here on Slide 11 again to the $200 million for the storm cost recovery that -- that primarily is the New Hampshire number, right? Or is it something else?

New Hampshire. No, it's both Mass.

Okay, that's being debated. That's part of the prudency review right now.

No. Those -- the prudency review there's multiple things happening in Mass. So we do have a prudency review happening in Mass. These are what -- these costs have already been approved in rates -- so any -- for Massachusetts. The one in New Hampshire yes, a good chunk of that we filed for $240 million that's going through the prudency review there. That will kick in right around the time that permanent rates goes into effect, which will be in 2025. So there is a piece of that in here. And as I mentioned, both Massachusetts and New Hampshire has a five-year recovery window.

Got it. Okay. So that kind of goes into that bucket of the filed rate increases to come?

Only, right..

Correct. Yes. Okay. Okay. Very good. And then just high level, the New Hampshire legislation the IDP, what's your thought on how that changes your planning? How that might enhance growth CapEx, give us some high-level thoughts on how that could benefit either your financing plan or your CapEx grow over the next five-plus years?

Yes. We were very pleased. I mean, that legislation goes hand in glove with our entire operation. I mean, the integrated planning and the type of clarity that's needed as we begin to advance our investments. I think that was really a very, very positive step for us, and it's something that -- it's what we're all about. We're about collaboration. And that's what's still refreshing there in New Hampshire as well as Massachusetts around collaboration that we understand what's important to those administrations, and that's what we're delivering on.

Okay, great. I appreciate the thoughts.

As I mentioned, Travis, our New Hampshire customers have experienced the benefit from those investments that we've made.

Sure, sure. Okay, thank you.

Thank you.

Thank you. The final question comes from the line of Ryan Levine with Citi. Your line is now open.

Good morning, Ryan. They must have saved the best for wasp.

Thank you. Just two quick clarifying questions. In terms of the GIP deal, in your comments, should we assume that there's no earn out or callback that will be triggered based on the cost estimates that you laid out? And then in terms of the free cash flow metrics, a lot of disclosure talks about gross proceeds. Is there any material adjustments that we should be looking at to get to a net number that would actually reflect the actual FFO to debt metrics?

Yes. No, as I mentioned in my formal remarks, Ryan, as we saw with the Sunrise we have to reconcile to the CapEx that was embedded in the original purchase price. But that in and of itself will not have any impact on our financing plan. We spend less than what we thought the purchase price comes down. We spend more than what we had agreed to the purchase price increases. So really, no impact whatsoever. And as it relates to the revolution as we've been saying right along, there is a potential contingency that we would be subject to from a construction standpoint that we have to be mindful. But as I mentioned, so far, the construction activity has gone pretty well.

Okay. And then in terms of the gross versus net receipt disclosure in your FFO to debt targets for the next three years or three-year window there, is there any material adjustment to the gross proceeds that could be reflected?

Not as of right now. We don't see that. No. No, no, nothing.

Okay.

Because once we close the transaction, the funding obligation flips to GIP.

Okay. So there's no tax, taxes or anything along those lines. Appreciate it.

Okay.

Thank you.

Thank you. There are no additional questions waiting at this time. So, I would now like to pass the conference back over to Matthew for closing remarks.

Yes. Thank you, everybody, for joining us this morning, and I know you had a lot of opportunities for the earnings call, and I'm grateful you join the Eversource earnings call, and I hope you all get a chance to recharge the batteries, and I get a chance to see all of you at EEI in the fall. Have a great day.

That concludes today's conference call. Thank you for your participation. You may now disconnect your lines.