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UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 |
| FORM | 10-Q |
☒ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
| For the Quarterly Period Ended | June 30, 2023March 31, 2024 |
| or |
☐ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
| For the transition period from ____________ to ____________ |
Registrant; State of Incorporation; Address; Telephone Number;
Commission File Number; and I.R.S. Employer Identification No.
EVERSOURCE ENERGY
(a Massachusetts voluntary association)
300 Cadwell Drive, Springfield, Massachusetts 01104
Telephone: (800) 286-5000
Commission File Number: 001-05324
I.R.S. Employer Identification No. 04-2147929
THE CONNECTICUT LIGHT AND POWER COMPANY
(a Connecticut corporation)
107 Selden Street, Berlin, Connecticut 06037-1616
Telephone: (800) 286-5000
Commission File Number: 000-00404
I.R.S. Employer Identification No. 06-0303850
NSTAR ELECTRIC COMPANY
(a Massachusetts corporation)
800 Boylston Street, Boston, Massachusetts 02199
Telephone: (800) 286-5000
Commission File Number: 001-02301
I.R.S. Employer Identification No. 04-1278810
PUBLIC SERVICE COMPANY OF NEW HAMPSHIRE
(a New Hampshire corporation)
Energy Park
780 North Commercial Street, Manchester, New Hampshire 03101-1134
Telephone: (800) 286-5000
Commission File Number: 001-06392
I.R.S. Employer Identification No. 02-0181050
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Securities registered pursuant to Section 12(b) of the Act: |
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Title of each class | | Trading Symbol(s) | | Name of each exchange on which registered |
Common Shares, $5.00 par value per share | | ES | | New York Stock Exchange |
Indicate by check mark whether the registrants (1) have filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrants were required to file such reports), and (2) have been subject to such filing requirements for the past 90 days.
Indicate by check mark whether the registrants have submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrants were required to submit such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
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Eversource Energy | Large accelerated filer | ☒ | | Accelerated filer | ☐ | | Non-accelerated filer | ☐ | | Smaller reporting company | ☐ | | Emerging growth company | ☐ |
The Connecticut Light and Power Company | Large accelerated filer | ☐ | | Accelerated filer | ☐ | | Non-accelerated filer | ☒ | | Smaller reporting company | ☐ | | Emerging growth company | ☐ |
NSTAR Electric Company | Large accelerated filer | ☐ | | Accelerated filer | ☐ | | Non-accelerated filer | ☒ | | Smaller reporting company | ☐ | | Emerging growth company | ☐ |
Public Service Company of New Hampshire | Large accelerated filer | ☐ | | Accelerated filer | ☐ | | Non-accelerated filer | ☒ | | Smaller reporting company | ☐ | | Emerging growth company | ☐ |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨
Indicate by check mark whether the registrants are shell companies (as defined in Rule 12b-2 of the Exchange Act):
| | | | | | | | |
| Yes | No |
| | |
Eversource Energy | ☐ | ☒ |
The Connecticut Light and Power Company | ☐ | ☒ |
NSTAR Electric Company | ☐ | ☒ |
Public Service Company of New Hampshire | ☐ | ☒ |
Indicate the number of shares outstanding of each of the registrant's classes of common stock, as of the latest practicable date.
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Company - Class of Stock | Outstanding as of July 31, 2023April 30, 2024 |
| | |
Eversource Energy Common Shares, $5.00 par value | 349,085,815352,255,238 | | shares |
The Connecticut Light and Power Company Common Stock, $10.00 par value | 6,035,205 | | shares |
NSTAR Electric Company Common Stock, $1.00 par value | 200 | | shares |
Public Service Company of New Hampshire Common Stock, $1.00 par value | 301 | | shares |
Eversource Energy holds all of the 6,035,205 shares, 200 shares, and 301 shares of the outstanding common stock of The Connecticut Light and Power Company, NSTAR Electric Company, and Public Service Company of New Hampshire, respectively.
The Connecticut Light and Power Company, NSTAR Electric Company and Public Service Company of New Hampshire each meet the conditions set forth in General Instruction H(1)(a) and (b) of Form 10-Q, and each is therefore filing this Form 10-Q with the reduced disclosure format specified in General Instruction H(2) of Form 10‑Q.
Eversource Energy, The Connecticut Light and Power Company, NSTAR Electric Company, and Public Service Company of New Hampshire each separately file this combined Form 10-Q. Information contained herein relating to any individual registrant is filed by such registrant on its own behalf. Each registrant makes no representation as to information relating to the other registrants.
GLOSSARY OF TERMS
The following is a glossary of abbreviations and acronyms that are found in this report:
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Current or former Eversource Energy companies, segments or investments: |
Eversource, ES or the Company | Eversource Energy and subsidiaries |
Eversource parent or ES parent | Eversource Energy, a public utility holding company |
ES parent and other companies | ES parent and other companies are comprised of Eversource parent, Eversource Service, and other subsidiaries, which primarily includes our unregulated businesses, HWP Company, The Rocky River Realty Company (a real estate subsidiary), the consolidated operations of CYAPC and YAEC, and Eversource parent's equity ownership interests that are not consolidated |
CL&P | The Connecticut Light and Power Company |
NSTAR Electric | NSTAR Electric Company |
PSNH | Public Service Company of New Hampshire |
PSNH Funding | PSNH Funding LLC 3, a bankruptcy remote, special purpose, wholly-owned subsidiary of PSNH |
NSTAR Gas | NSTAR Gas Company |
EGMA | Eversource Gas Company of Massachusetts |
Yankee Gas | Yankee Gas Services Company |
Aquarion | Aquarion Company and its subsidiaries |
HEEC | Harbor Electric Energy Company, a wholly-owned subsidiary of NSTAR Electric |
Eversource Service | Eversource Energy Service Company |
North East Offshore | North East Offshore, LLC, an offshore wind business being developed jointly by Eversource and Denmark-based Ørsted |
CYAPC | Connecticut Yankee Atomic Power Company |
MYAPC | Maine Yankee Atomic Power Company |
YAEC | Yankee Atomic Electric Company |
Yankee Companies | CYAPC, YAEC and MYAPC |
Regulated companies | The Eversource regulated companies are comprised of the electric distribution and transmission businesses of CL&P, NSTAR Electric and PSNH, the natural gas distribution businesses of Yankee Gas, NSTAR Gas and EGMA, Aquarion’s water distribution businesses, and the solar power facilities of NSTAR Electric |
Regulators and Government Agencies: |
BOEM | U.S. Bureau of Ocean Energy Management |
DEEP | Connecticut Department of Energy and Environmental Protection |
DOE | U.S. Department of Energy |
DOER | Massachusetts Department of Energy Resources |
DPU | Massachusetts Department of Public Utilities |
EPA | U.S. Environmental Protection Agency |
FERC | Federal Energy Regulatory Commission |
ISO-NE | ISO New England, Inc., the New England Independent System Operator |
MA DEP | Massachusetts Department of Environmental Protection |
NHPUC | New Hampshire Public Utilities Commission |
PURA | Connecticut Public Utilities Regulatory Authority |
SEC | U.S. Securities and Exchange Commission |
Other Terms and Abbreviations: |
ADIT | Accumulated Deferred Income Taxes |
AFUDC | Allowance For Funds Used During Construction |
AOCI | Accumulated Other Comprehensive Income |
ARO | Asset Retirement Obligation |
Bcf | Billion cubic feet |
CfD | Contract for Differences |
CWIP | Construction Work in Progress |
EDC | Electric distribution company |
EDIT | Excess Deferred Income Taxes |
EPS | Earnings Per Share |
ERISA | Employee Retirement Income Security Act of 1974 |
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ESOP | Employee Stock Ownership Plan |
Eversource 20222023 Form 10-K | The Eversource Energy and Subsidiaries 20222023 combined Annual Report on Form 10-K as filed with the SEC |
Fitch | Fitch Ratings, Inc. |
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FMCC | Federally Mandated Congestion Charge |
GAAP | Accounting principles generally accepted in the United States of America |
GWh | Gigawatt-Hours |
IPP | Independent Power Producers |
ISO-NE Tariff | ISO-NE FERC Transmission, Markets and Services Tariff |
kV | Kilovolt |
kVa | Kilovolt-ampere |
kW | Kilowatt (equal to one thousand watts) |
LNG | Liquefied natural gas |
LPG | Liquefied petroleum gas |
LRS | Supplier of last resort service |
MG | Million gallons |
MGP | Manufactured Gas Plant |
MMBtu | Million British thermal units |
MMcf | Million cubic feet |
Moody's | Moody's Investors Services, Inc. |
MW | Megawatt |
MWh | Megawatt-Hours |
NETOs | New England Transmission Owners (including Eversource, National Grid and Avangrid) |
OCI | Other Comprehensive Income/(Loss) |
OREC | Offshore Wind Renewable Energy Certificate |
PAM | Pension and PBOP Rate Adjustment Mechanism |
PBOP | Postretirement Benefits Other Than Pension |
PBOP Plan | Postretirement Benefits Other Than Pension Plan |
Pension Plan | Single uniform noncontributory defined benefit retirement plan |
PPA | Power purchase agreement |
PPAM | Pole Plant Adjustment Mechanism |
RECs | Renewable Energy Certificates |
Regulatory ROE | The average cost of capital method for calculating the return on equity related to the distribution business segment excluding the wholesale transmission segment |
ROE | Return on Equity |
RRBs | Rate Reduction Bonds or Rate Reduction Certificates |
RSUs | Restricted share units |
S&P | Standard & Poor's Financial Services LLC |
SERP | Supplemental Executive Retirement Plans and non-qualified defined benefit retirement plans |
SS | Standard service |
UI | The United Illuminating Company |
VIE | Variable Interest Entity |
EVERSOURCE ENERGY AND SUBSIDIARIES
THE CONNECTICUT LIGHT AND POWER COMPANY
NSTAR ELECTRIC COMPANY AND SUBSIDIARY
PUBLIC SERVICE COMPANY OF NEW HAMPSHIRE AND SUBSIDIARIES
TABLE OF CONTENTS
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PART I – FINANCIAL INFORMATION |
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ITEM 1. | Financial Statements (Unaudited) | |
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| Eversource Energy and Subsidiaries (Unaudited) | |
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| Condensed Consolidated Statements of Comprehensive Income | |
| Condensed Consolidated Statements of Common Shareholders' Equity | |
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| The Connecticut Light and Power Company (Unaudited) | |
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| Condensed Statements of Comprehensive Income | |
| Condensed Statements of Common Stockholder's Equity | |
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| NSTAR Electric Company and Subsidiary (Unaudited) | |
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| Condensed Consolidated Statements of Comprehensive Income | |
| Condensed Consolidated Statements of Common Stockholder's Equity | |
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| Public Service Company of New Hampshire and Subsidiaries (Unaudited) | |
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| Condensed Consolidated Statements of Comprehensive Income | |
| Condensed Consolidated Statements of Common Stockholder's Equity | |
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| Eversource Energy and Subsidiaries | |
| Public Service Company of New Hampshire and Subsidiaries | |
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PART II – OTHER INFORMATION |
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ITEM 1A. | Risk Factors | |
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ITEM 2. | Unregistered Sales of Equity Securities and Use of Proceeds | |
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ITEM 3. | Defaults Upon Senior Securities | |
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ITEM 4. | Mine Safety Disclosures | |
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ITEM 5. | Other Information | |
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SIGNATURES | |
EVERSOURCE ENERGY AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited) | (Thousands of Dollars) | (Thousands of Dollars) | As of June 30, 2023 | | As of December 31, 2022 | (Thousands of Dollars) | As of March 31, 2024 | | As of December 31, 2023 |
| ASSETS | ASSETS | | | |
ASSETS | |
ASSETS | | | | |
Current Assets: | Current Assets: | | | | Current Assets: | | | |
Cash | Cash | $ | 42,182 | | | $ | 47,597 | |
Cash Equivalents | — | | | 327,006 | |
Receivables, Net (net of allowance for uncollectible accounts of $532,427 and $486,297 as of June 30, 2023 and December 31, 2022, respectively) | 1,332,314 | | | 1,517,138 | |
| Receivables, Net (net of allowance for uncollectible accounts of $570,134 and $554,455 as of March 31, 2024 and December 31, 2023, respectively) | |
Receivables, Net (net of allowance for uncollectible accounts of $570,134 and $554,455 as of March 31, 2024 and December 31, 2023, respectively) | |
Receivables, Net (net of allowance for uncollectible accounts of $570,134 and $554,455 as of March 31, 2024 and December 31, 2023, respectively) | |
Unbilled Revenues | Unbilled Revenues | 181,100 | | | 238,968 | |
Materials, Supplies, Natural Gas and REC Inventory | Materials, Supplies, Natural Gas and REC Inventory | 405,800 | | | 374,395 | |
Regulatory Assets | Regulatory Assets | 1,382,150 | | | 1,335,491 | |
| | Prepayments and Other Current Assets | |
| Prepayments and Other Current Assets | |
| Prepayments and Other Current Assets | Prepayments and Other Current Assets | 378,007 | | | 382,603 | |
Total Current Assets | Total Current Assets | 3,721,553 | | | 4,223,198 | |
Property, Plant and Equipment, Net | Property, Plant and Equipment, Net | 37,578,203 | | | 36,112,820 | |
Deferred Debits and Other Assets: | Deferred Debits and Other Assets: | | | | Deferred Debits and Other Assets: | | | |
Regulatory Assets | Regulatory Assets | 4,390,816 | | | 4,242,794 | |
Goodwill | Goodwill | 4,522,632 | | | 4,522,632 | |
Investments in Unconsolidated Affiliates | Investments in Unconsolidated Affiliates | 2,227,277 | | | 2,176,080 | |
Prepaid Pension and PBOP | Prepaid Pension and PBOP | 1,183,689 | | | 1,045,524 | |
Marketable Securities | Marketable Securities | 327,401 | | | 366,508 | |
Other Long-Term Assets | Other Long-Term Assets | 588,174 | | | 541,344 | |
Total Deferred Debits and Other Assets | Total Deferred Debits and Other Assets | 13,239,989 | | | 12,894,882 | |
Total Assets | Total Assets | $ | 54,539,745 | | | $ | 53,230,900 | |
| LIABILITIES AND CAPITALIZATION | LIABILITIES AND CAPITALIZATION | | | |
LIABILITIES AND CAPITALIZATION | |
LIABILITIES AND CAPITALIZATION | | | | |
Current Liabilities: | Current Liabilities: | | | | Current Liabilities: | | | |
Notes Payable | Notes Payable | $ | 555,535 | | | $ | 1,442,200 | |
Long-Term Debt – Current Portion | Long-Term Debt – Current Portion | 2,062,464 | | | 1,320,129 | |
Rate Reduction Bonds – Current Portion | Rate Reduction Bonds – Current Portion | 43,210 | | | 43,210 | |
Accounts Payable | Accounts Payable | 1,549,972 | | | 2,113,905 | |
| Regulatory Liabilities | Regulatory Liabilities | 653,808 | | | 890,786 | |
Regulatory Liabilities | |
Regulatory Liabilities | |
Other Current Liabilities | Other Current Liabilities | 929,587 | | | 989,053 | |
Total Current Liabilities | Total Current Liabilities | 5,794,576 | | | 6,799,283 | |
Deferred Credits and Other Liabilities: | Deferred Credits and Other Liabilities: | | | | Deferred Credits and Other Liabilities: | | | |
Accumulated Deferred Income Taxes | Accumulated Deferred Income Taxes | 5,275,036 | | | 5,067,902 | |
Regulatory Liabilities | Regulatory Liabilities | 3,967,426 | | | 3,930,305 | |
Derivative Liabilities | 103,431 | | | 143,929 | |
| Asset Retirement Obligations | |
Asset Retirement Obligations | |
Asset Retirement Obligations | Asset Retirement Obligations | 501,904 | | | 502,713 | |
Accrued Pension, SERP and PBOP | Accrued Pension, SERP and PBOP | 119,611 | | | 135,473 | |
Other Long-Term Liabilities | Other Long-Term Liabilities | 907,226 | | | 888,081 | |
Total Deferred Credits and Other Liabilities | Total Deferred Credits and Other Liabilities | 10,874,634 | | | 10,668,403 | |
Long-Term Debt | Long-Term Debt | 21,771,980 | | | 19,723,994 | |
Rate Reduction Bonds | Rate Reduction Bonds | 388,887 | | | 410,492 | |
Noncontrolling Interest – Preferred Stock of Subsidiaries | Noncontrolling Interest – Preferred Stock of Subsidiaries | 155,570 | | | 155,570 | |
Common Shareholders' Equity: | Common Shareholders' Equity: | | | | Common Shareholders' Equity: | | | |
Common Shares | Common Shares | 1,799,920 | | | 1,799,920 | |
Capital Surplus, Paid In | Capital Surplus, Paid In | 8,428,786 | | | 8,401,731 | |
Retained Earnings | Retained Earnings | 5,562,889 | | | 5,527,153 | |
Accumulated Other Comprehensive Loss | Accumulated Other Comprehensive Loss | (32,103) | | | (39,421) | |
Treasury Stock | Treasury Stock | (205,394) | | | (216,225) | |
Common Shareholders' Equity | Common Shareholders' Equity | 15,554,098 | | | 15,473,158 | |
Commitments and Contingencies (Note 9) | Commitments and Contingencies (Note 9) | | | | Commitments and Contingencies (Note 9) | | | |
Total Liabilities and Capitalization | Total Liabilities and Capitalization | $ | 54,539,745 | | | $ | 53,230,900 | |
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
EVERSOURCE ENERGY AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
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| | | For the Three Months Ended June 30, | | For the Six Months Ended June 30, | | | For the Three Months Ended March 31, |
(Thousands of Dollars, Except Share Information) | (Thousands of Dollars, Except Share Information) | 2023 | | 2022 | | 2023 | | 2022 | (Thousands of Dollars, Except Share Information) | | | | | 2024 | | 2023 |
| Operating Revenues | Operating Revenues | $ | 2,629,342 | | | $ | 2,572,641 | | | $ | 6,424,985 | | | $ | 6,043,951 | |
Operating Revenues | |
Operating Revenues | |
| Operating Expenses: | |
Operating Expenses: | |
Operating Expenses: | Operating Expenses: | | | | | | | | | | | | | | |
Purchased Power, Purchased Natural Gas and Transmission | Purchased Power, Purchased Natural Gas and Transmission | 1,161,067 | | | 940,541 | | | 3,064,313 | | | 2,330,237 | |
Operations and Maintenance | Operations and Maintenance | 427,290 | | | 452,174 | | | 881,852 | | | 924,608 | |
Depreciation | Depreciation | 319,995 | | | 294,238 | | | 632,949 | | | 583,568 | |
Amortization | Amortization | (218,422) | | | 70,409 | | | (294,481) | | | 307,357 | |
Energy Efficiency Programs | Energy Efficiency Programs | 145,823 | | | 136,679 | | | 368,774 | | | 336,163 | |
Taxes Other Than Income Taxes | Taxes Other Than Income Taxes | 232,927 | | | 223,031 | | | 461,344 | | | 443,395 | |
Total Operating Expenses | Total Operating Expenses | 2,068,680 | | | 2,117,072 | | | 5,114,751 | | | 4,925,328 | |
Operating Income | Operating Income | 560,662 | | | 455,569 | | | 1,310,234 | | | 1,118,623 | |
Interest Expense | Interest Expense | 207,313 | | | 160,090 | | | 401,858 | | | 313,334 | |
Impairment of Offshore Wind Investment | 401,000 | | | — | | | 401,000 | | | — | |
| Other Income, Net | |
Other Income, Net | |
Other Income, Net | Other Income, Net | 94,875 | | | 93,861 | | | 183,857 | | | 165,422 | |
Income Before Income Tax Expense | Income Before Income Tax Expense | 47,224 | | | 389,340 | | | 691,233 | | | 970,711 | |
Income Tax Expense | Income Tax Expense | 29,922 | | | 95,598 | | | 180,893 | | | 231,643 | |
Net Income | Net Income | 17,302 | | | 293,742 | | | 510,340 | | | 739,068 | |
Net Income Attributable to Noncontrolling Interests | Net Income Attributable to Noncontrolling Interests | 1,880 | | | 1,880 | | | 3,759 | | | 3,759 | |
Net Income Attributable to Common Shareholders | Net Income Attributable to Common Shareholders | $ | 15,422 | | | $ | 291,862 | | | $ | 506,581 | | | $ | 735,309 | |
| Basic and Diluted Earnings Per Common Share | |
Basic and Diluted Earnings Per Common Share | |
Basic and Diluted Earnings Per Common Share | |
| Basic and Diluted Earnings Per Common Share | $ | 0.04 | | | $ | 0.84 | | | $ | 1.45 | | | $ | 2.13 | |
| Weighted Average Common Shares Outstanding: | |
| Weighted Average Common Shares Outstanding: | |
| | Weighted Average Common Shares Outstanding: | Weighted Average Common Shares Outstanding: | | | | | |
Basic | Basic | 349,462,359 | | | 345,893,714 | | | 349,339,752 | | | 345,525,030 | |
Basic | |
Basic | |
Diluted | Diluted | 349,729,982 | | | 346,295,478 | | | 349,670,996 | | | 345,978,306 | |
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Unaudited)
| | | | | | | | | | | | | | | | | | | | | | | |
| For the Three Months Ended June 30, | | For the Six Months Ended June 30, |
(Thousands of Dollars) | 2023 | | 2022 | | 2023 | | 2022 |
| | | | | | | |
Net Income | $ | 17,302 | | | $ | 293,742 | | | $ | 510,340 | | | $ | 739,068 | |
Other Comprehensive Income/(Loss), Net of Tax: | | | | | | | |
Qualified Cash Flow Hedging Instruments | 5 | | | 5 | | | 10 | | | 10 | |
Changes in Unrealized (Losses)/Gains on Marketable Securities | — | | | (505) | | | 1,254 | | | (1,323) | |
Changes in Funded Status of Pension, SERP and PBOP Benefit Plans | 4,083 | | | (793) | | | 6,054 | | | 724 | |
Other Comprehensive Income/(Loss), Net of Tax | 4,088 | | | (1,293) | | | 7,318 | | | (589) | |
Comprehensive Income Attributable to Noncontrolling Interests | (1,880) | | | (1,880) | | | (3,759) | | | (3,759) | |
Comprehensive Income Attributable to Common Shareholders | $ | 19,510 | | | $ | 290,569 | | | $ | 513,899 | | | $ | 734,720 | |
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| | | For the Three Months Ended March 31, |
(Thousands of Dollars) | | | | | 2024 | | 2023 |
| | | | | | | |
Net Income | | | | | $ | 523,728 | | | $ | 493,039 | |
Other Comprehensive Income, Net of Tax: | | | | | | | |
Qualified Cash Flow Hedging Instruments | | | | | 5 | | | 5 | |
Changes in Unrealized Gains on Marketable Securities | | | | | — | | | 1,254 | |
Changes in Funded Status of Pension, SERP and PBOP Benefit Plans | | | | | 5,198 | | | 1,971 | |
Other Comprehensive Income, Net of Tax | | | | | 5,203 | | | 3,230 | |
Comprehensive Income Attributable to Noncontrolling Interests | | | | | (1,880) | | | (1,880) | |
Comprehensive Income Attributable to Common Shareholders | | | | | $ | 527,051 | | | $ | 494,389 | |
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
EVERSOURCE ENERGY AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF COMMON SHAREHOLDERS' EQUITY
(Unaudited)
| | For the Six Months Ended June 30, 2023 |
| For the Three Months Ended March 31, 2024 | | | For the Three Months Ended March 31, 2024 |
| | Common Shares | Capital Surplus, Paid In | Retained Earnings | Accumulated Other Comprehensive Loss | Treasury Stock | Total Common Shareholders' Equity | | Common Shares | Capital Surplus, Paid In | Retained Earnings | Accumulated Other Comprehensive Loss | Treasury Stock | Total Common Shareholders' Equity |
(Thousands of Dollars, Except Share Information) | (Thousands of Dollars, Except Share Information) | Shares | Amount | (Thousands of Dollars, Except Share Information) | Shares | Amount |
Balance as of January 1, 2023 | 348,443,855 | | $ | 1,799,920 | | $ | 8,401,731 | | $ | 5,527,153 | | $ | (39,421) | | $ | (216,225) | | $ | 15,473,158 | |
Balance as of January 1, 2024 | |
Net Income | Net Income | | | 493,039 | | | 493,039 | |
Dividends on Common Shares - $0.675 Per Share | | | (235,354) | | | (235,354) | |
Dividends on Common Shares - $0.715 Per Share | |
Dividends on Preferred Stock | Dividends on Preferred Stock | | | (1,880) | | | (1,880) | |
Issuance of Common Shares - $5 par value | |
Long-Term Incentive Plan Activity | Long-Term Incentive Plan Activity | | (13,141) | | | | (13,141) | |
Issuance of Treasury Shares | Issuance of Treasury Shares | 364,227 | | | 23,495 | | | 6,824 | | 30,319 | |
| Capital Stock Expense | |
Other Comprehensive Income | Other Comprehensive Income | | | 3,230 | | | 3,230 | |
Balance as of March 31, 2023 | 348,808,082 | | 1,799,920 | | 8,412,085 | | 5,782,958 | | (36,191) | | (209,401) | | 15,749,371 | |
Net Income | | | 17,302 | | | 17,302 | |
Dividends on Common Shares - $0.675 Per Share | | | (235,491) | | | (235,491) | |
Dividends on Preferred Stock | | | (1,880) | | | (1,880) | |
| Long-Term Incentive Plan Activity | | 5,155 | | | 5,155 | |
Issuance of Treasury Shares | 213,854 | | | 11,546 | | | 4,007 | | 15,553 | |
| Other Comprehensive Income | | | | 4,088 | | | 4,088 | |
Balance as of June 30, 2023 | 349,021,936 | | $ | 1,799,920 | | $ | 8,428,786 | | $ | 5,562,889 | | $ | (32,103) | | $ | (205,394) | | $ | 15,554,098 | |
Balance as of March 31, 2024 | |
| |
| | For the Six Months Ended June 30, 2022 |
| For the Three Months Ended March 31, 2023 | | | For the Three Months Ended March 31, 2023 |
| | Common Shares | Capital Surplus, Paid In | Retained Earnings | Accumulated Other Comprehensive Loss | Treasury Stock | Total Common Shareholders' Equity | | Common Shares | Capital Surplus, Paid In | Retained Earnings | Accumulated Other Comprehensive Loss | Treasury Stock | Total Common Shareholders' Equity |
(Thousands of Dollars, Except Share Information) | (Thousands of Dollars, Except Share Information) | Shares | Amount | (Thousands of Dollars, Except Share Information) | Shares | Amount |
Balance as of January 1, 2022 | 344,403,196 | | $ | 1,789,092 | | $ | 8,098,514 | | $ | 5,005,391 | | $ | (42,275) | | $ | (250,878) | | $ | 14,599,844 | |
Balance as of January 1, 2023 | |
Net Income | Net Income | | 445,326 | | | 445,326 | |
Dividends on Common Shares - $0.6375 Per Share | | (219,768) | | | (219,768) | |
Dividends on Common Shares - $0.675 Per Share | |
Dividends on Preferred Stock | Dividends on Preferred Stock | | (1,880) | | | (1,880) | |
Long-Term Incentive Plan Activity | Long-Term Incentive Plan Activity | | (16,538) | | | (16,538) | |
Issuance of Treasury Shares | Issuance of Treasury Shares | 447,076 | | | 20,642 | | | 8,360 | | 29,002 | |
Other Comprehensive Income | Other Comprehensive Income | | 704 | | | 704 | |
Balance as of March 31, 2022 | 344,850,272 | | 1,789,092 | | 8,102,618 | | 5,229,069 | | (41,571) | | (242,518) | | 14,836,690 | |
Net Income | | 293,742 | | | 293,742 | |
Dividends on Common Shares - $0.6375 Per Share | | (219,877) | | | (219,877) | |
Dividends on Preferred Stock | | (1,880) | | | (1,880) | |
Issuance of Common Shares - $5 par value | 1,392,804 | | 6,964 | | 121,142 | | | 128,106 | |
Long-Term Incentive Plan Activity | | 9,070 | | | 9,070 | |
Issuance of Treasury Shares | 167,953 | | | 11,340 | | | 3,141 | | 14,481 | |
Capital Stock Expense | | (1,824) | | | (1,824) | |
Other Comprehensive Loss | | (1,293) | | | (1,293) | |
Balance as of June 30, 2022 | 346,411,029 | | $ | 1,796,056 | | $ | 8,242,346 | | $ | 5,301,054 | | $ | (42,864) | | $ | (239,377) | | $ | 15,057,215 | |
Balance as of March 31, 2023 | |
| |
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
EVERSOURCE ENERGY AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
| | | For the Six Months Ended June 30, | | For the Three Months Ended March 31, |
(Thousands of Dollars) | (Thousands of Dollars) | 2023 | | 2022 | (Thousands of Dollars) | 2024 | | 2023 |
| Operating Activities: | |
Operating Activities: | |
Operating Activities: | Operating Activities: | | | | | | |
Net Income | Net Income | $ | 510,340 | | | $ | 739,068 | |
Adjustments to Reconcile Net Income to Net Cash Flows Provided by Operating Activities: | Adjustments to Reconcile Net Income to Net Cash Flows Provided by Operating Activities: | | | | Adjustments to Reconcile Net Income to Net Cash Flows Provided by Operating Activities: | | | |
Depreciation | Depreciation | 632,949 | | | 583,568 | |
Deferred Income Taxes | Deferred Income Taxes | 155,035 | | | 126,970 | |
Uncollectible Expense | Uncollectible Expense | 24,171 | | | 30,032 | |
Pension, SERP and PBOP Income, Net | Pension, SERP and PBOP Income, Net | (46,600) | | | (80,404) | |
Pension Contributions | Pension Contributions | (2,400) | | | (52,400) | |
Regulatory Under Recoveries, Net | Regulatory Under Recoveries, Net | (112,050) | | | (226,238) | |
Amortization | Amortization | (294,481) | | | 307,357 | |
Cost of Removal Expenditures | Cost of Removal Expenditures | (183,552) | | | (169,863) | |
Customer Credits Distributed in 2022 at CL&P related to PURA Settlement Agreement and Storm Performance Penalty | — | | | (64,909) | |
Payment in 2022 of Withheld Property Taxes | — | | | (78,446) | |
Impairment of Offshore Wind Investment | 401,000 | | | — | |
| Other | |
| Other | |
| Other | Other | (13,423) | | | 2,530 | |
Changes in Current Assets and Liabilities: | Changes in Current Assets and Liabilities: | | | | Changes in Current Assets and Liabilities: | | | |
Receivables and Unbilled Revenues, Net | Receivables and Unbilled Revenues, Net | 137,819 | | | (176,132) | |
| Taxes Receivable/Accrued, Net | |
Taxes Receivable/Accrued, Net | |
Taxes Receivable/Accrued, Net | Taxes Receivable/Accrued, Net | 49,201 | | | 85,071 | |
Accounts Payable | Accounts Payable | (489,132) | | | (83,550) | |
Other Current Assets and Liabilities, Net | Other Current Assets and Liabilities, Net | (121,600) | | | (100,835) | |
Net Cash Flows Provided by Operating Activities | Net Cash Flows Provided by Operating Activities | 647,277 | | | 841,819 | |
| Investing Activities: | Investing Activities: | | | |
Investing Activities: | |
Investing Activities: | | | | |
Investments in Property, Plant and Equipment | Investments in Property, Plant and Equipment | (2,039,512) | | | (1,549,081) | |
Proceeds from Sales of Marketable Securities | Proceeds from Sales of Marketable Securities | 215,570 | | | 168,997 | |
Purchases of Marketable Securities | Purchases of Marketable Securities | (194,786) | | | (152,741) | |
Investments in Unconsolidated Affiliates | Investments in Unconsolidated Affiliates | (390,002) | | | (277,001) | |
| Other Investing Activities | |
Other Investing Activities | |
Other Investing Activities | Other Investing Activities | 11,055 | | | 10,771 | |
Net Cash Flows Used in Investing Activities | Net Cash Flows Used in Investing Activities | (2,397,675) | | | (1,799,055) | |
| Financing Activities: | Financing Activities: | | | |
Financing Activities: | |
Financing Activities: | | | | |
Issuance of Common Shares, Net of Issuance Costs | Issuance of Common Shares, Net of Issuance Costs | — | | | 126,282 | |
Cash Dividends on Common Shares | Cash Dividends on Common Shares | (458,959) | | | (427,931) | |
Cash Dividends on Preferred Stock | Cash Dividends on Preferred Stock | (3,759) | | | (3,759) | |
Decrease in Notes Payable | (589,200) | | | (1,317,950) | |
Increase/(Decrease) in Notes Payable | |
Repayment of Rate Reduction Bonds | Repayment of Rate Reduction Bonds | (21,605) | | | (21,605) | |
Issuance of Long-Term Debt | Issuance of Long-Term Debt | 3,361,000 | | | 3,350,000 | |
Retirement of Long-Term Debt | Retirement of Long-Term Debt | (853,000) | | | (770,000) | |
Other Financing Activities | Other Financing Activities | (27,839) | | | (42,133) | |
Net Cash Flows Provided by Financing Activities | Net Cash Flows Provided by Financing Activities | 1,406,638 | | | 892,904 | |
Net Decrease in Cash, Cash Equivalents and Restricted Cash | (343,760) | | | (64,332) | |
Cash, Cash Equivalents and Restricted Cash - Beginning of Period | 521,752 | | | 221,008 | |
Net Increase/(Decrease) in Cash and Restricted Cash | |
Cash and Restricted Cash - Beginning of Period | |
Cash and Restricted Cash - End of Period | Cash and Restricted Cash - End of Period | $ | 177,992 | | | $ | 156,676 | |
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
THE CONNECTICUT LIGHT AND POWER COMPANY
CONDENSED BALANCE SHEETS
(Unaudited)
| (Thousands of Dollars) | (Thousands of Dollars) | As of June 30, 2023 | | As of December 31, 2022 | (Thousands of Dollars) | As of March 31, 2024 | | As of December 31, 2023 |
| ASSETS | ASSETS | | | |
ASSETS | |
ASSETS | | | | |
Current Assets: | Current Assets: | | | | Current Assets: | | | |
Cash | Cash | $ | 14,181 | | | $ | 11,312 | |
Receivables, Net (net of allowance for uncollectible accounts of $262,790 and $225,320 as of June 30, 2023 and December 31, 2022, respectively) | 546,304 | | | 612,052 | |
Receivables, Net (net of allowance for uncollectible accounts of $307,834 and $296,030 as of March 31, 2024 and December 31, 2023, respectively) | |
Accounts Receivable from Affiliated Companies | Accounts Receivable from Affiliated Companies | 68,375 | | | 46,439 | |
Unbilled Revenues | Unbilled Revenues | 49,785 | | | 59,363 | |
Materials and Supplies | 134,246 | | | 88,157 | |
Taxes Receivable | 122 | | | 65,785 | |
Materials, Supplies and REC Inventory | |
| Regulatory Assets | |
Regulatory Assets | |
Regulatory Assets | Regulatory Assets | 417,824 | | | 314,089 | |
| Prepayments and Other Current Assets | |
Prepayments and Other Current Assets | |
Prepayments and Other Current Assets | Prepayments and Other Current Assets | 42,517 | | | 62,524 | |
Total Current Assets | Total Current Assets | 1,273,354 | | | 1,259,721 | |
Property, Plant and Equipment, Net | Property, Plant and Equipment, Net | 11,818,824 | | | 11,467,024 | |
Deferred Debits and Other Assets: | Deferred Debits and Other Assets: | | | | Deferred Debits and Other Assets: | | | |
Regulatory Assets | Regulatory Assets | 1,601,540 | | | 1,593,693 | |
Prepaid Pension | 172,542 | | | 147,914 | |
Prepaid Pension and PBOP | |
Other Long-Term Assets | Other Long-Term Assets | 305,102 | | | 290,444 | |
Total Deferred Debits and Other Assets | Total Deferred Debits and Other Assets | 2,079,184 | | | 2,032,051 | |
Total Assets | Total Assets | $ | 15,171,362 | | | $ | 14,758,796 | |
| LIABILITIES AND CAPITALIZATION | LIABILITIES AND CAPITALIZATION | | | |
LIABILITIES AND CAPITALIZATION | |
LIABILITIES AND CAPITALIZATION | | | | |
Current Liabilities: | Current Liabilities: | |
Notes Payable to Eversource Parent | Notes Payable to Eversource Parent | $ | 151,535 | | | $ | — | |
| Notes Payable to Eversource Parent | |
Notes Payable to Eversource Parent | |
Long-Term Debt – Current Portion | |
Accounts Payable | Accounts Payable | 458,251 | | | 710,500 | |
Accounts Payable to Affiliated Companies | Accounts Payable to Affiliated Companies | 101,497 | | | 136,277 | |
Obligations to Third Party Suppliers | Obligations to Third Party Suppliers | 68,595 | | | 40,704 | |
Regulatory Liabilities | Regulatory Liabilities | 185,323 | | | 336,048 | |
| Accrued Taxes | 78,550 | | | 13,416 | |
| Derivative Liabilities | |
| Derivative Liabilities | |
| Derivative Liabilities | Derivative Liabilities | 85,238 | | | 81,588 | |
Other Current Liabilities | Other Current Liabilities | 100,391 | | | 109,755 | |
Total Current Liabilities | Total Current Liabilities | 1,229,380 | | | 1,428,288 | |
Deferred Credits and Other Liabilities: | Deferred Credits and Other Liabilities: | | | | Deferred Credits and Other Liabilities: | | | |
Accumulated Deferred Income Taxes | Accumulated Deferred Income Taxes | 1,762,868 | | | 1,640,034 | |
Regulatory Liabilities | Regulatory Liabilities | 1,292,290 | | | 1,263,396 | |
Derivative Liabilities | 103,431 | | | 143,929 | |
| Other Long-Term Liabilities | |
| Other Long-Term Liabilities | |
| Other Long-Term Liabilities | Other Long-Term Liabilities | 161,717 | | | 166,081 | |
Total Deferred Credits and Other Liabilities | Total Deferred Credits and Other Liabilities | 3,320,306 | | | 3,213,440 | |
Long-Term Debt | Long-Term Debt | 4,607,331 | | | 4,216,488 | |
Preferred Stock Not Subject to Mandatory Redemption | Preferred Stock Not Subject to Mandatory Redemption | 116,200 | | | 116,200 | |
Common Stockholder's Equity: | Common Stockholder's Equity: | | | | Common Stockholder's Equity: | | | |
Common Stock | Common Stock | 60,352 | | | 60,352 | |
Capital Surplus, Paid In | Capital Surplus, Paid In | 3,260,765 | | | 3,260,765 | |
Retained Earnings | Retained Earnings | 2,576,830 | | | 2,463,094 | |
Accumulated Other Comprehensive Income | Accumulated Other Comprehensive Income | 198 | | | 169 | |
Common Stockholder's Equity | Common Stockholder's Equity | 5,898,145 | | | 5,784,380 | |
Commitments and Contingencies (Note 9) | Commitments and Contingencies (Note 9) | | | | Commitments and Contingencies (Note 9) | | | |
Total Liabilities and Capitalization | Total Liabilities and Capitalization | $ | 15,171,362 | | | $ | 14,758,796 | |
The accompanying notes are an integral part of these unaudited condensed financial statements.
THE CONNECTICUT LIGHT AND POWER COMPANY
CONDENSED STATEMENTS OF INCOME
(Unaudited)
| | |
| | | For the Three Months Ended June 30, | | For the Six Months Ended June 30, | | | For the Three Months Ended March 31, |
(Thousands of Dollars) | (Thousands of Dollars) | 2023 | | 2022 | | 2023 | | 2022 | (Thousands of Dollars) | | | | | 2024 | | 2023 |
| Operating Revenues | Operating Revenues | $ | 1,034,148 | | | $ | 1,035,682 | | | $ | 2,373,054 | | | $ | 2,321,514 | |
Operating Revenues | |
Operating Revenues | |
| Operating Expenses: | Operating Expenses: | | | | |
Operating Expenses: | |
Operating Expenses: | |
Purchased Power and Transmission | |
Purchased Power and Transmission | |
Purchased Power and Transmission | Purchased Power and Transmission | 626,411 | | | 421,000 | | | 1,476,976 | | | 944,463 | |
Operations and Maintenance | Operations and Maintenance | 166,566 | | | 169,004 | | | 326,882 | | | 326,065 | |
Depreciation | Depreciation | 93,652 | | | 88,233 | | | 185,889 | | | 175,498 | |
Amortization of Regulatory (Liabilities)/Assets, Net | (189,922) | | | 42,772 | | | (312,236) | | | 212,522 | |
Amortization of Regulatory Liabilities, Net | |
Energy Efficiency Programs | Energy Efficiency Programs | 28,137 | | | 29,780 | | | 60,783 | | | 65,177 | |
Taxes Other Than Income Taxes | Taxes Other Than Income Taxes | 94,602 | | | 95,778 | | | 196,184 | | | 186,151 | |
Total Operating Expenses | Total Operating Expenses | 819,446 | | | 846,567 | | | 1,934,478 | | | 1,909,876 | |
Operating Income | Operating Income | 214,702 | | | 189,115 | | | 438,576 | | | 411,638 | |
Interest Expense | Interest Expense | 47,771 | | | 42,175 | | | 92,972 | | | 82,761 | |
Other Income, Net | Other Income, Net | 13,362 | | | 19,800 | | | 28,299 | | | 39,363 | |
Income Before Income Tax Expense | Income Before Income Tax Expense | 180,293 | | | 166,740 | | | 373,903 | | | 368,240 | |
Income Tax Expense | Income Tax Expense | 46,993 | | | 40,902 | | | 92,187 | | | 89,426 | |
Net Income | Net Income | $ | 133,300 | | | $ | 125,838 | | | $ | 281,716 | | | $ | 278,814 | |
The accompanying notes are an integral part of these unaudited condensed financial statements.
CONDENSED STATEMENTS OF COMPREHENSIVE INCOME
(Unaudited)
| | |
| | | For the Three Months Ended June 30, | | For the Six Months Ended June 30, | | | For the Three Months Ended March 31, |
(Thousands of Dollars) | (Thousands of Dollars) | 2023 | | 2022 | | 2023 | | 2022 | (Thousands of Dollars) | | | | | 2024 | | 2023 |
| Net Income | Net Income | $ | 133,300 | | | $ | 125,838 | | | $ | 281,716 | | | $ | 278,814 | |
Net Income | |
Net Income | |
Other Comprehensive (Loss)/Income, Net of Tax: | Other Comprehensive (Loss)/Income, Net of Tax: | | | | | | | | Other Comprehensive (Loss)/Income, Net of Tax: | | | | | | | |
Qualified Cash Flow Hedging Instruments | Qualified Cash Flow Hedging Instruments | (7) | | | (7) | | | (14) | | | (13) | |
Changes in Unrealized (Losses)/Gains on Marketable Securities | — | | | (16) | | | 43 | | | (45) | |
Changes in Unrealized Gains on Marketable Securities | |
Other Comprehensive (Loss)/Income, Net of Tax | Other Comprehensive (Loss)/Income, Net of Tax | (7) | | | (23) | | | 29 | | | (58) | |
Comprehensive Income | Comprehensive Income | $ | 133,293 | | | $ | 125,815 | | | $ | 281,745 | | | $ | 278,756 | |
The accompanying notes are an integral part of these unaudited condensed financial statements.
THE CONNECTICUT LIGHT AND POWER COMPANY
CONDENSED STATEMENTS OF COMMON STOCKHOLDER'S EQUITY
(Unaudited)
| | For the Six Months Ended June 30, 2023 |
| For the Three Months Ended March 31, 2024 | | | For the Three Months Ended March 31, 2024 |
| | Common Stock | | Capital Surplus, Paid In | | Retained Earnings | | Accumulated Other Comprehensive Income | | Total Common Stockholder's Equity | | Common Stock | | Capital Surplus, Paid In | | Retained Earnings | | Accumulated Other Comprehensive Income | | Total Common Stockholder's Equity |
(Thousands of Dollars, Except Stock Information) | (Thousands of Dollars, Except Stock Information) | Stock | | Amount | |
Balance as of January 1, 2023 | 6,035,205 | | | $ | 60,352 | | | $ | 3,260,765 | | | $ | 2,463,094 | | | $ | 169 | | | $ | 5,784,380 | |
Balance as of January 1, 2024 | |
Balance as of January 1, 2024 | |
Balance as of January 1, 2024 | |
Net Income | Net Income | | | | | | | 148,416 | | | | | 148,416 | |
Dividends on Preferred Stock | Dividends on Preferred Stock | | | | | | | (1,390) | | | | | (1,390) | |
Dividends on Common Stock | Dividends on Common Stock | | | | | | | (82,600) | | | | | (82,600) | |
| Other Comprehensive Income | | | | | | | | | 36 | | | 36 | |
Balance as of March 31, 2023 | 6,035,205 | | | 60,352 | | | 3,260,765 | | | 2,527,520 | | | 205 | | | 5,848,842 | |
Net Income | | | | | | | 133,300 | | | | | 133,300 | |
Dividends on Preferred Stock | | | | | | | (1,390) | | | | | (1,390) | |
Dividends on Common Stock | | (82,600) | | | (82,600) | |
Capital Contributions from Eversource Parent | |
| Capital Contributions from Eversource Parent | |
| Capital Contributions from Eversource Parent | |
Other Comprehensive Loss | Other Comprehensive Loss | | | | | | | | | (7) | | | (7) | |
Balance as of June 30, 2023 | 6,035,205 | | | $ | 60,352 | | | $ | 3,260,765 | | | $ | 2,576,830 | | | $ | 198 | | | $ | 5,898,145 | |
Balance as of March 31, 2024 | |
| |
| | For the Six Months Ended June 30, 2022 |
| For the Three Months Ended March 31, 2023 | | | For the Three Months Ended March 31, 2023 |
| | Common Stock | | Capital Surplus, Paid In | | Retained Earnings | | Accumulated Other Comprehensive Income | | Total Common Stockholder's Equity | | Common Stock | | Capital Surplus, Paid In | | Retained Earnings | | Accumulated Other Comprehensive Income | | Total Common Stockholder's Equity |
(Thousands of Dollars, Except Stock Information) | (Thousands of Dollars, Except Stock Information) | Stock | | Amount | |
Balance as of January 1, 2022 | 6,035,205 | | | $ | 60,352 | | | $ | 3,010,765 | | | $ | 2,228,133 | | | $ | 251 | | | $ | 5,299,501 | |
Balance as of January 1, 2023 | |
Balance as of January 1, 2023 | |
Balance as of January 1, 2023 | |
Net Income | Net Income | | | | | | | 152,977 | | | | | 152,977 | |
Dividends on Preferred Stock | Dividends on Preferred Stock | | | | | | | (1,390) | | | | | (1,390) | |
Dividends on Common Stock | Dividends on Common Stock | | | | | | | (73,100) | | | | | (73,100) | |
Capital Contributions from Eversource Parent | | 100,000 | | | 100,000 | |
Other Comprehensive Loss | | | | | | | | | (35) | | | (35) | |
Balance as of March 31, 2022 | 6,035,205 | | | 60,352 | | | 3,110,765 | | | 2,306,620 | | | 216 | | | 5,477,953 | |
Net Income | | | | | | | 125,838 | | | | | 125,838 | |
Dividends on Preferred Stock | | | | | | | (1,390) | | | | | (1,390) | |
Dividends on Common Stock | | (73,100) | | | (73,100) | |
Capital Contributions from Eversource Parent | | 100,000 | | | 100,000 | |
Other Comprehensive Loss | | | | | | | | | (23) | | | (23) | |
Balance as of June 30, 2022 | 6,035,205 | | | $ | 60,352 | | | $ | 3,210,765 | | | $ | 2,357,968 | | | $ | 193 | | | $ | 5,629,278 | |
| Other Comprehensive Income | |
Other Comprehensive Income | |
Other Comprehensive Income | |
Balance as of March 31, 2023 | |
| |
The accompanying notes are an integral part of these unaudited condensed financial statements.
THE CONNECTICUT LIGHT AND POWER COMPANY
CONDENSED STATEMENTS OF CASH FLOWS
(Unaudited)
| | | For the Six Months Ended June 30, | | For the Three Months Ended March 31, |
(Thousands of Dollars) | (Thousands of Dollars) | 2023 | | 2022 | (Thousands of Dollars) | 2024 | | 2023 |
| Operating Activities: | Operating Activities: | | | |
Operating Activities: | |
Operating Activities: | | | | |
Net Income | Net Income | $ | 281,716 | | | $ | 278,814 | |
Adjustments to Reconcile Net Income to Net Cash Flows Provided by Operating Activities: | | | |
Adjustments to Reconcile Net Income to Net Cash Flows Used In Operating Activities: | | Adjustments to Reconcile Net Income to Net Cash Flows Used In Operating Activities: | | | |
Depreciation | Depreciation | 185,889 | | | 175,498 | |
Deferred Income Taxes | Deferred Income Taxes | 105,162 | | | 15,782 | |
Uncollectible Expense | Uncollectible Expense | 4,750 | | | 6,701 | |
Pension, SERP, and PBOP Income, Net | Pension, SERP, and PBOP Income, Net | (9,083) | | | (14,532) | |
| Regulatory Over/(Under) Recoveries, Net | 39,524 | | | (141,830) | |
Customer Credits Distributed in 2022 related to PURA Settlement Agreement and Storm Performance Penalty | — | | | (64,909) | |
Amortization of Regulatory (Liabilities)/Assets, Net | (312,236) | | | 212,522 | |
Regulatory Under Recoveries, Net | |
Regulatory Under Recoveries, Net | |
Regulatory Under Recoveries, Net | |
| Amortization of Regulatory Liabilities, Net | |
Amortization of Regulatory Liabilities, Net | |
Amortization of Regulatory Liabilities, Net | |
Cost of Removal Expenditures | Cost of Removal Expenditures | (36,781) | | | (37,103) | |
Other | Other | (34,571) | | | (23,311) | |
Changes in Current Assets and Liabilities: | Changes in Current Assets and Liabilities: | | | | Changes in Current Assets and Liabilities: | | | |
Receivables and Unbilled Revenues, Net | Receivables and Unbilled Revenues, Net | 20,542 | | | (170,500) | |
Taxes Receivable/Accrued, Net | Taxes Receivable/Accrued, Net | 132,751 | | | 18,735 | |
Accounts Payable | Accounts Payable | (251,326) | | | (20,845) | |
Other Current Assets and Liabilities, Net | Other Current Assets and Liabilities, Net | 2,711 | | | 3,563 | |
Net Cash Flows Provided by Operating Activities | 129,048 | | | 238,585 | |
Net Cash Flows Used In Operating Activities | |
| Investing Activities: | |
Investing Activities: | |
Investing Activities: | Investing Activities: | | | | | | |
Investments in Property, Plant and Equipment | Investments in Property, Plant and Equipment | (499,920) | | | (414,407) | |
Other Investing Activities | Other Investing Activities | 173 | | | 424 | |
Net Cash Flows Used in Investing Activities | Net Cash Flows Used in Investing Activities | (499,747) | | | (413,983) | |
| Financing Activities: | |
Financing Activities: | |
Financing Activities: | Financing Activities: | | | | | | |
Cash Dividends on Common Stock | Cash Dividends on Common Stock | (165,200) | | | (146,200) | |
Cash Dividends on Preferred Stock | Cash Dividends on Preferred Stock | (2,779) | | | (2,779) | |
Capital Contributions from Eversource Parent | Capital Contributions from Eversource Parent | — | | | 200,000 | |
Issuance of Long-Term Debt | Issuance of Long-Term Debt | 500,000 | | | — | |
Retirement of Long-Term Debt | Retirement of Long-Term Debt | (400,000) | | | — | |
| Increase in Notes Payable to Eversource Parent | 449,000 | | | 67,500 | |
(Decrease)/Increase in Notes Payable to Eversource Parent | |
(Decrease)/Increase in Notes Payable to Eversource Parent | |
(Decrease)/Increase in Notes Payable to Eversource Parent | |
Other Financing Activities | Other Financing Activities | (6,521) | | | — | |
Net Cash Flows Provided by Financing Activities | Net Cash Flows Provided by Financing Activities | 374,500 | | | 118,521 | |
Net Increase/(Decrease) in Cash and Restricted Cash | Net Increase/(Decrease) in Cash and Restricted Cash | 3,801 | | | (56,877) | |
Cash and Restricted Cash - Beginning of Period | Cash and Restricted Cash - Beginning of Period | 20,327 | | | 74,788 | |
Cash and Restricted Cash - End of Period | Cash and Restricted Cash - End of Period | $ | 24,128 | | | $ | 17,911 | |
The accompanying notes are an integral part of these unaudited condensed financial statements.
NSTAR ELECTRIC COMPANY AND SUBSIDIARY
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
| (Thousands of Dollars) | (Thousands of Dollars) | As of June 30, 2023 | | As of December 31, 2022 | (Thousands of Dollars) | As of March 31, 2024 | | As of December 31, 2023 |
| ASSETS | ASSETS | | | |
ASSETS | |
ASSETS | | | | |
Current Assets: | Current Assets: | | | Current Assets: | | | |
Cash | Cash | $ | 6,518 | | | $ | 738 | |
Cash Equivalents | — | | | 327,006 | |
Receivables, Net (net of allowance for uncollectible accounts of $97,794 and $94,958 as of June 30, 2023 and December 31, 2022, respectively) | 450,176 | | | 453,371 | |
| Receivables, Net (net of allowance for uncollectible accounts of $97,653 and $97,026 as of March 31, 2024 and December 31, 2023, respectively) | |
Receivables, Net (net of allowance for uncollectible accounts of $97,653 and $97,026 as of March 31, 2024 and December 31, 2023, respectively) | |
Receivables, Net (net of allowance for uncollectible accounts of $97,653 and $97,026 as of March 31, 2024 and December 31, 2023, respectively) | |
Accounts Receivable from Affiliated Companies | Accounts Receivable from Affiliated Companies | 61,834 | | | 35,196 | |
Unbilled Revenues | Unbilled Revenues | 47,173 | | | 39,680 | |
Materials, Supplies and REC Inventory | Materials, Supplies and REC Inventory | 120,750 | | | 138,352 | |
| Regulatory Assets | |
Regulatory Assets | |
Regulatory Assets | Regulatory Assets | 569,697 | | | 492,759 | |
Prepayments and Other Current Assets | Prepayments and Other Current Assets | 28,712 | | | 71,276 | |
Total Current Assets | Total Current Assets | 1,284,860 | | | 1,558,378 | |
Property, Plant and Equipment, Net | Property, Plant and Equipment, Net | 12,109,368 | | | 11,626,968 | |
Deferred Debits and Other Assets: | Deferred Debits and Other Assets: | | | | Deferred Debits and Other Assets: | | | |
Regulatory Assets | Regulatory Assets | 1,230,486 | | | 1,221,619 | |
Prepaid Pension and PBOP | Prepaid Pension and PBOP | 626,904 | | | 576,809 | |
Other Long-Term Assets | Other Long-Term Assets | 119,070 | | | 111,846 | |
Total Deferred Debits and Other Assets | Total Deferred Debits and Other Assets | 1,976,460 | | | 1,910,274 | |
Total Assets | Total Assets | $ | 15,370,688 | | | $ | 15,095,620 | |
| LIABILITIES AND CAPITALIZATION | LIABILITIES AND CAPITALIZATION | | | |
LIABILITIES AND CAPITALIZATION | |
LIABILITIES AND CAPITALIZATION | | | | |
Current Liabilities: | Current Liabilities: | | | | Current Liabilities: | | | |
Notes Payable | Notes Payable | $ | 324,000 | | | $ | — | |
| Long-Term Debt – Current Portion | 80,000 | | | 80,000 | |
| Accounts Payable | |
| Accounts Payable | |
| Accounts Payable | Accounts Payable | 471,416 | | | 559,676 | |
Accounts Payable to Affiliated Companies | Accounts Payable to Affiliated Companies | 115,581 | | | 108,907 | |
Obligations to Third Party Suppliers | Obligations to Third Party Suppliers | 132,083 | | | 142,628 | |
Renewable Portfolio Standards Compliance Obligations | Renewable Portfolio Standards Compliance Obligations | 67,391 | | | 120,239 | |
Regulatory Liabilities | Regulatory Liabilities | 321,153 | | | 373,221 | |
Other Current Liabilities | Other Current Liabilities | 59,199 | | | 83,925 | |
Total Current Liabilities | Total Current Liabilities | 1,570,823 | | | 1,468,596 | |
Deferred Credits and Other Liabilities: | Deferred Credits and Other Liabilities: | | | | Deferred Credits and Other Liabilities: | | | |
Accumulated Deferred Income Taxes | Accumulated Deferred Income Taxes | 1,794,718 | | | 1,700,875 | |
Regulatory Liabilities | Regulatory Liabilities | 1,562,581 | | | 1,548,081 | |
Other Long-Term Liabilities | Other Long-Term Liabilities | 299,561 | | | 289,313 | |
Total Deferred Credits and Other Liabilities | Total Deferred Credits and Other Liabilities | 3,656,860 | | | 3,538,269 | |
Long-Term Debt | Long-Term Debt | 4,346,902 | | | 4,345,085 | |
Preferred Stock Not Subject to Mandatory Redemption | Preferred Stock Not Subject to Mandatory Redemption | 43,000 | | | 43,000 | |
Common Stockholder's Equity: | Common Stockholder's Equity: | | | | Common Stockholder's Equity: | | | |
Common Stock | Common Stock | — | | | — | |
Capital Surplus, Paid In | Capital Surplus, Paid In | 2,891,242 | | | 2,778,942 | |
Retained Earnings | Retained Earnings | 2,861,620 | | | 2,921,444 | |
Accumulated Other Comprehensive Income | Accumulated Other Comprehensive Income | 241 | | | 284 | |
Common Stockholder's Equity | Common Stockholder's Equity | 5,753,103 | | | 5,700,670 | |
Commitments and Contingencies (Note 9) | Commitments and Contingencies (Note 9) | | | | Commitments and Contingencies (Note 9) | | | |
Total Liabilities and Capitalization | Total Liabilities and Capitalization | $ | 15,370,688 | | | $ | 15,095,620 | |
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
NSTAR ELECTRIC COMPANY AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
| | |
| | | For the Three Months Ended June 30, | | For the Six Months Ended June 30, | | | For the Three Months Ended March 31, |
(Thousands of Dollars) | (Thousands of Dollars) | 2023 | | 2022 | | 2023 | | 2022 | (Thousands of Dollars) | | | | | 2024 | | 2023 |
| Operating Revenues | Operating Revenues | $ | 818,968 | | | $ | 783,650 | | | $ | 1,775,251 | | | $ | 1,646,825 | |
Operating Revenues | |
Operating Revenues | |
| Operating Expenses: | |
Operating Expenses: | |
Operating Expenses: | Operating Expenses: | | | | | | | | | | | | |
Purchased Power and Transmission | Purchased Power and Transmission | 266,560 | | | 236,789 | | | 627,485 | | | 550,537 | |
Operations and Maintenance | Operations and Maintenance | 146,852 | | | 149,094 | | | 312,935 | | | 313,956 | |
Depreciation | Depreciation | 92,863 | | | 89,701 | | | 183,292 | | | 178,734 | |
Amortization of Regulatory (Liabilities)/Assets, Net | (1,400) | | | 20,022 | | | 21,385 | | | 49,367 | |
Amortization of Regulatory Assets, Net | |
Energy Efficiency Programs | Energy Efficiency Programs | 70,687 | | | 69,290 | | | 156,904 | | | 149,522 | |
Taxes Other Than Income Taxes | Taxes Other Than Income Taxes | 66,232 | | | 60,891 | | | 119,743 | | | 120,664 | |
Total Operating Expenses | Total Operating Expenses | 641,794 | | | 625,787 | | | 1,421,744 | | | 1,362,780 | |
Operating Income | Operating Income | 177,174 | | | 157,863 | | | 353,507 | | | 284,045 | |
Interest Expense | Interest Expense | 46,761 | | | 38,984 | | | 91,626 | | | 77,206 | |
Other Income, Net | Other Income, Net | 40,909 | | | 34,259 | | | 80,782 | | | 63,490 | |
Income Before Income Tax Expense | Income Before Income Tax Expense | 171,322 | | | 153,138 | | | 342,663 | | | 270,329 | |
Income Tax Expense | Income Tax Expense | 36,579 | | | 33,701 | | | 74,107 | | | 58,152 | |
Net Income | Net Income | $ | 134,743 | | | $ | 119,437 | | | $ | 268,556 | | | $ | 212,177 | |
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Unaudited)
| | |
| | | For the Three Months Ended June 30, | | For the Six Months Ended June 30, | | | For the Three Months Ended March 31, |
(Thousands of Dollars) | (Thousands of Dollars) | 2023 | | 2022 | | 2023 | | 2022 | (Thousands of Dollars) | | | | | 2024 | | 2023 |
| Net Income | Net Income | $ | 134,743 | | | $ | 119,437 | | | $ | 268,556 | | | $ | 212,177 | |
Net Income | |
Net Income | |
Other Comprehensive Loss, Net of Tax: | Other Comprehensive Loss, Net of Tax: | | | | | | | |
Changes in Funded Status of SERP Benefit Plan | Changes in Funded Status of SERP Benefit Plan | (32) | | | (27) | | | (65) | | | (72) | |
Changes in Funded Status of SERP Benefit Plan | |
Changes in Funded Status of SERP Benefit Plan | |
Qualified Cash Flow Hedging Instruments | Qualified Cash Flow Hedging Instruments | 5 | | | 5 | | | 10 | | | 10 | |
Changes in Unrealized (Losses)/Gains on Marketable Securities | — | | | (5) | | | 12 | | | (12) | |
Changes in Unrealized Gains on Marketable Securities | |
Other Comprehensive Loss, Net of Tax | Other Comprehensive Loss, Net of Tax | (27) | | | (27) | | | (43) | | | (74) | |
Comprehensive Income | Comprehensive Income | $ | 134,716 | | | $ | 119,410 | | | $ | 268,513 | | | $ | 212,103 | |
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
NSTAR ELECTRIC COMPANY AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF COMMON STOCKHOLDER'S EQUITY
(Unaudited)
| | For the Six Months Ended June 30, 2023 |
| For the Three Months Ended March 31, 2024 | | | For the Three Months Ended March 31, 2024 |
| | Common Stock | | Capital Surplus, Paid In | | Retained Earnings | | Accumulated Other Comprehensive Income | | Total Common Stockholder's Equity | | Common Stock | | Capital Surplus, Paid In | | Retained Earnings | | Accumulated Other Comprehensive Income | | Total Common Stockholder's Equity |
(Thousands of Dollars, Except Stock Information) | (Thousands of Dollars, Except Stock Information) | Stock | | Amount | |
Balance as of January 1, 2023 | 200 | | | $ | — | | | $ | 2,778,942 | | | $ | 2,921,444 | | | $ | 284 | | | $ | 5,700,670 | |
Balance as of January 1, 2024 | |
Balance as of January 1, 2024 | |
Balance as of January 1, 2024 | |
Net Income | Net Income | | | | | | | 133,813 | | | | | 133,813 | |
Dividends on Preferred Stock | Dividends on Preferred Stock | | | | | | | (490) | | | | | (490) | |
Dividends on Common Stock | Dividends on Common Stock | | | | | | | (327,400) | | | | | (327,400) | |
Capital Contributions from Eversource Parent | Capital Contributions from Eversource Parent | | 31,300 | | | 31,300 | |
Other Comprehensive Loss | Other Comprehensive Loss | | | | | | | | | (16) | | | (16) | |
Balance as of March 31, 2023 | 200 | | | — | | | 2,810,242 | | | 2,727,367 | | | 268 | | | 5,537,877 | |
Net Income | | | | | | | 134,743 | | | | | 134,743 | |
Dividends on Preferred Stock | | | | | | | (490) | | | | | (490) | |
| Capital Contributions from Eversource Parent | | 81,000 | | | 81,000 | |
Other Comprehensive Loss | | | | | | | | | (27) | | | (27) | |
Balance as of June 30, 2023 | 200 | | | $ | — | | | $ | 2,891,242 | | | $ | 2,861,620 | | | $ | 241 | | | $ | 5,753,103 | |
Balance as of March 31, 2024 | |
| |
| | For the Six Months Ended June 30, 2022 |
| For the Three Months Ended March 31, 2023 | | | For the Three Months Ended March 31, 2023 |
| | Common Stock | | Capital Surplus, Paid In | | Retained Earnings | | Accumulated Other Comprehensive Income | | Total Common Stockholder's Equity | | Common Stock | | Capital Surplus, Paid In | | Retained Earnings | | Accumulated Other Comprehensive Income | | Total Common Stockholder's Equity |
(Thousands of Dollars, Except Stock Information) | (Thousands of Dollars, Except Stock Information) | Stock | | Amount | |
Balance as of January 1, 2022 | 200 | | | $ | — | | | $ | 2,253,942 | | | $ | 2,718,576 | | | $ | 501 | | | $ | 4,973,019 | |
Net Income | | | | | | | 92,739 | | | | | 92,739 | |
Dividends on Preferred Stock | | | | | | | (490) | | | | | (490) | |
Dividends on Common Stock | | | | | | | (71,900) | | | | | (71,900) | |
Other Comprehensive Loss | | | | | | | | | (47) | | | (47) | |
Balance as of March 31, 2022 | 200 | | | — | | | 2,253,942 | | | 2,738,925 | | | 454 | | | 4,993,321 | |
Balance as of January 1, 2023 | |
Balance as of January 1, 2023 | |
Balance as of January 1, 2023 | |
Net Income | Net Income | | | | | | | 119,437 | | | | | 119,437 | |
Dividends on Preferred Stock | Dividends on Preferred Stock | | | | | | | (490) | | | | | (490) | |
Dividends on Common Stock | Dividends on Common Stock | | (71,900) | | | (71,900) | |
Capital Contributions from Eversource Parent | Capital Contributions from Eversource Parent | | 50,000 | | | 50,000 | |
Other Comprehensive Loss | Other Comprehensive Loss | | | | | | | | | (27) | | | (27) | |
Balance as of June 30, 2022 | 200 | | | $ | — | | | $ | 2,303,942 | | | $ | 2,785,972 | | | $ | 427 | | | $ | 5,090,341 | |
Balance as of March 31, 2023 | |
| |
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
NSTAR ELECTRIC COMPANY AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
| | | For the Six Months Ended June 30, | | For the Three Months Ended March 31, |
(Thousands of Dollars) | (Thousands of Dollars) | 2023 | | 2022 | (Thousands of Dollars) | 2024 | | 2023 |
| Operating Activities: | |
Operating Activities: | |
Operating Activities: | Operating Activities: | | | | | | |
Net Income | Net Income | $ | 268,556 | | | $ | 212,177 | |
Adjustments to Reconcile Net Income to Net Cash Flows Provided by Operating Activities: | Adjustments to Reconcile Net Income to Net Cash Flows Provided by Operating Activities: | | | | Adjustments to Reconcile Net Income to Net Cash Flows Provided by Operating Activities: | | | |
Depreciation | Depreciation | 183,292 | | | 178,734 | |
Deferred Income Taxes | Deferred Income Taxes | 66,926 | | | 42,476 | |
Uncollectible Expense | Uncollectible Expense | 7,759 | | | 8,688 | |
Pension, SERP and PBOP Income, Net | Pension, SERP and PBOP Income, Net | (20,460) | | | (27,750) | |
Pension Contributions | — | | | (10,000) | |
| Regulatory Under Recoveries, Net | |
Regulatory Under Recoveries, Net | |
Regulatory Under Recoveries, Net | Regulatory Under Recoveries, Net | (126,487) | | | (106,074) | |
Amortization of Regulatory Assets, Net | Amortization of Regulatory Assets, Net | 21,385 | | | 49,367 | |
Cost of Removal Expenditures | Cost of Removal Expenditures | (33,750) | | | (26,337) | |
Payment in 2022 of Withheld Property Taxes | — | | | (76,084) | |
| Other | |
Other | |
Other | Other | (12,211) | | | (24,635) | |
Changes in Current Assets and Liabilities: | Changes in Current Assets and Liabilities: | | | | Changes in Current Assets and Liabilities: | | | |
Receivables and Unbilled Revenues, Net | Receivables and Unbilled Revenues, Net | (9,745) | | | 35,107 | |
| Taxes Receivable/Accrued, Net | |
Taxes Receivable/Accrued, Net | |
Taxes Receivable/Accrued, Net | Taxes Receivable/Accrued, Net | 28,662 | | | 58,289 | |
Accounts Payable | Accounts Payable | (68,720) | | | (98,187) | |
Other Current Assets and Liabilities, Net | Other Current Assets and Liabilities, Net | (71,745) | | | (18,644) | |
Net Cash Flows Provided by Operating Activities | Net Cash Flows Provided by Operating Activities | 233,462 | | | 197,127 | |
| Investing Activities: | Investing Activities: | | | |
Investing Activities: | |
Investing Activities: | | | | |
Investments in Property, Plant and Equipment | Investments in Property, Plant and Equipment | (677,596) | | | (443,978) | |
Other Investing Activities | Other Investing Activities | 48 | | | 118 | |
Net Cash Flows Used in Investing Activities | Net Cash Flows Used in Investing Activities | (677,548) | | | (443,860) | |
| Financing Activities: | Financing Activities: | | | |
Financing Activities: | |
Financing Activities: | | | | |
Cash Dividends on Common Stock | Cash Dividends on Common Stock | (327,400) | | | (143,800) | |
Cash Dividends on Preferred Stock | Cash Dividends on Preferred Stock | (980) | | | (980) | |
Issuance of Long-Term Debt | — | | | 450,000 | |
| | Capital Contributions from Eversource Parent | Capital Contributions from Eversource Parent | 112,300 | | | 50,000 | |
Increase in Notes Payable to Eversource Parent | — | | | 3,200 | |
Increase/(Decrease) in Notes Payable | 324,000 | | | (99,500) | |
| Capital Contributions from Eversource Parent | |
| Capital Contributions from Eversource Parent | |
| Increase in Notes Payable | |
Increase in Notes Payable | |
Increase in Notes Payable | |
Other Financing Activities | Other Financing Activities | 8 | | | (7,642) | |
Net Cash Flows Provided by Financing Activities | 107,928 | | | 251,278 | |
Net (Decrease)/Increase in Cash, Cash Equivalents and Restricted Cash | (336,158) | | | 4,545 | |
Cash, Cash Equivalents and Restricted Cash - Beginning of Period | 345,293 | | | 18,179 | |
Net Cash Flows Provided by/(Used In) Financing Activities | |
Net Increase/(Decrease) in Cash and Restricted Cash | |
Cash and Restricted Cash - Beginning of Period | |
Cash and Restricted Cash - End of Period | Cash and Restricted Cash - End of Period | $ | 9,135 | | | $ | 22,724 | |
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
PUBLIC SERVICE COMPANY OF NEW HAMPSHIRE AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited) | (Thousands of Dollars) | (Thousands of Dollars) | As of June 30, 2023 | | As of December 31, 2022 | (Thousands of Dollars) | As of March 31, 2024 | | As of December 31, 2023 |
| ASSETS | ASSETS | | | |
ASSETS | |
ASSETS | | | | |
Current Assets: | Current Assets: | | | | Current Assets: | | | |
Cash | Cash | $ | 140 | | | $ | 136 | |
Receivables, Net (net of allowance for uncollectible accounts of $12,744 and $29,236 as of June 30, 2023 and December 31, 2022, respectively) | 148,324 | | | 173,337 | |
Receivables, Net (net of allowance for uncollectible accounts of $13,812 and $14,322 as of March 31, 2024 and December 31, 2023, respectively) | |
Accounts Receivable from Affiliated Companies | Accounts Receivable from Affiliated Companies | 20,042 | | | 8,193 | |
Unbilled Revenues | Unbilled Revenues | 56,258 | | | 72,713 | |
Taxes Receivable | Taxes Receivable | 25,236 | | | 27,978 | |
Materials, Supplies and REC Inventory | Materials, Supplies and REC Inventory | 57,982 | | | 34,521 | |
Regulatory Assets | Regulatory Assets | 152,019 | | | 102,240 | |
Special Deposits | Special Deposits | 32,856 | | | 33,140 | |
| Prepayments and Other Current Assets | 23,589 | | | 13,297 | |
Prepayments | |
Prepayments | |
Prepayments | |
Total Current Assets | Total Current Assets | 516,446 | | | 465,555 | |
Property, Plant and Equipment, Net | Property, Plant and Equipment, Net | 4,288,606 | | | 4,060,224 | |
Deferred Debits and Other Assets: | Deferred Debits and Other Assets: | | | | Deferred Debits and Other Assets: | | | |
Regulatory Assets | Regulatory Assets | 731,621 | | | 593,974 | |
Prepaid Pension | 78,552 | | | 66,384 | |
Prepaid Pension and PBOP | |
Other Long-Term Assets | Other Long-Term Assets | 12,179 | | | 16,517 | |
Total Deferred Debits and Other Assets | Total Deferred Debits and Other Assets | 822,352 | | | 676,875 | |
Total Assets | Total Assets | $ | 5,627,404 | | | $ | 5,202,654 | |
| LIABILITIES AND CAPITALIZATION | LIABILITIES AND CAPITALIZATION | | | |
LIABILITIES AND CAPITALIZATION | |
LIABILITIES AND CAPITALIZATION | | | | |
Current Liabilities: | Current Liabilities: | | | | Current Liabilities: | | | |
Notes Payable to Eversource Parent | Notes Payable to Eversource Parent | $ | 226,300 | | | $ | 173,300 | |
Long-Term Debt – Current Portion | 325,000 | | | 29,668 | |
| Rate Reduction Bonds – Current Portion | |
Rate Reduction Bonds – Current Portion | |
Rate Reduction Bonds – Current Portion | Rate Reduction Bonds – Current Portion | 43,210 | | | 43,210 | |
Accounts Payable | Accounts Payable | 229,796 | | | 291,556 | |
Accounts Payable to Affiliated Companies | Accounts Payable to Affiliated Companies | 33,086 | | | 36,231 | |
Regulatory Liabilities | Regulatory Liabilities | 83,215 | | | 161,963 | |
| Other Current Liabilities | Other Current Liabilities | 59,575 | | | 59,616 | |
Other Current Liabilities | |
Other Current Liabilities | |
Total Current Liabilities | Total Current Liabilities | 1,000,182 | | | 795,544 | |
Deferred Credits and Other Liabilities: | Deferred Credits and Other Liabilities: | | | | Deferred Credits and Other Liabilities: | | | |
Accumulated Deferred Income Taxes | Accumulated Deferred Income Taxes | 654,262 | | | 562,802 | |
Regulatory Liabilities | Regulatory Liabilities | 395,652 | | | 391,628 | |
| Other Long-Term Liabilities | |
Other Long-Term Liabilities | |
Other Long-Term Liabilities | Other Long-Term Liabilities | 39,101 | | | 37,087 | |
Total Deferred Credits and Other Liabilities | Total Deferred Credits and Other Liabilities | 1,089,015 | | | 991,517 | |
Long-Term Debt | Long-Term Debt | 1,134,402 | | | 1,134,914 | |
Rate Reduction Bonds | Rate Reduction Bonds | 388,887 | | | 410,492 | |
Common Stockholder's Equity: | Common Stockholder's Equity: | | | | Common Stockholder's Equity: | | | |
Common Stock | Common Stock | — | | | — | |
Capital Surplus, Paid In | Capital Surplus, Paid In | 1,398,134 | | | 1,298,134 | |
Retained Earnings | Retained Earnings | 616,784 | | | 572,126 | |
Accumulated Other Comprehensive Loss | — | | | (73) | |
| Common Stockholder's Equity | |
Common Stockholder's Equity | |
Common Stockholder's Equity | Common Stockholder's Equity | 2,014,918 | | | 1,870,187 | |
Commitments and Contingencies (Note 9) | Commitments and Contingencies (Note 9) | | | | Commitments and Contingencies (Note 9) | | | |
Total Liabilities and Capitalization | Total Liabilities and Capitalization | $ | 5,627,404 | | | $ | 5,202,654 | |
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
PUBLIC SERVICE COMPANY OF NEW HAMPSHIRE AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
| | |
| | | For the Three Months Ended June 30, | | For the Six Months Ended June 30, | | | For the Three Months Ended March 31, |
(Thousands of Dollars) | (Thousands of Dollars) | 2023 | | 2022 | | 2023 | | 2022 | (Thousands of Dollars) | | | | | 2024 | | 2023 |
| Operating Revenues | Operating Revenues | $ | 350,070 | | | $ | 307,055 | | | $ | 770,225 | | | $ | 646,482 | |
Operating Revenues | |
Operating Revenues | |
| Operating Expenses: | |
Operating Expenses: | |
Operating Expenses: | Operating Expenses: | | | | | | | | | | | | |
Purchased Power and Transmission | Purchased Power and Transmission | 144,829 | | | 110,803 | | | 371,514 | | | 236,647 | |
Operations and Maintenance | Operations and Maintenance | 64,503 | | | 66,730 | | | 132,298 | | | 126,303 | |
Depreciation | Depreciation | 34,702 | | | 31,557 | | | 68,790 | | | 62,810 | |
Amortization of Regulatory (Liabilities)/Assets, Net | (19,954) | | | 9,218 | | | (25,271) | | | 36,052 | |
Amortization of Regulatory Assets/(Liabilities), Net | |
Energy Efficiency Programs | Energy Efficiency Programs | 9,149 | | | 8,817 | | | 19,376 | | | 17,535 | |
Taxes Other Than Income Taxes | Taxes Other Than Income Taxes | 25,531 | | | 25,261 | | | 47,636 | | | 48,046 | |
Total Operating Expenses | Total Operating Expenses | 258,760 | | | 252,386 | | | 614,343 | | | 527,393 | |
Operating Income | Operating Income | 91,310 | | | 54,669 | | | 155,882 | | | 119,089 | |
Interest Expense | Interest Expense | 19,106 | | | 14,757 | | | 36,649 | | | 28,402 | |
Other Income, Net | Other Income, Net | 6,301 | | | 7,782 | | | 12,019 | | | 15,292 | |
Income Before Income Tax Expense | Income Before Income Tax Expense | 78,505 | | | 47,694 | | | 131,252 | | | 105,979 | |
Income Tax Expense | Income Tax Expense | 18,143 | | | 10,656 | | | 30,594 | | | 23,355 | |
Net Income | Net Income | $ | 60,362 | | | $ | 37,038 | | | $ | 100,658 | | | $ | 82,624 | |
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Unaudited)
| | |
| | | For the Three Months Ended June 30, | | For the Six Months Ended June 30, | | | For the Three Months Ended March 31, |
(Thousands of Dollars) | (Thousands of Dollars) | 2023 | | 2022 | | 2023 | | 2022 | (Thousands of Dollars) | | | | | 2024 | | 2023 |
| Net Income | Net Income | $ | 60,362 | | | $ | 37,038 | | | $ | 100,658 | | | $ | 82,624 | |
Other Comprehensive (Loss)/Income, Net of Tax: | | | | | | | |
Changes in Unrealized (Losses)/Gains on Marketable Securities | — | | | (30) | | | 73 | | | (78) | |
Other Comprehensive (Loss)/Income, Net of Tax | — | | | (30) | | | 73 | | | (78) | |
Net Income | |
Net Income | |
Other Comprehensive Income, Net of Tax: | | Other Comprehensive Income, Net of Tax: | | | | | | | |
Changes in Unrealized Gains on Marketable Securities | |
Other Comprehensive Income, Net of Tax | |
Comprehensive Income | Comprehensive Income | $ | 60,362 | | | $ | 37,008 | | | $ | 100,731 | | | $ | 82,546 | |
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
PUBLIC SERVICE COMPANY OF NEW HAMPSHIRE AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF COMMON STOCKHOLDER'S EQUITY
(Unaudited)
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| For the Six Months Ended June 30, 2023 |
| Common Stock | | Capital Surplus, Paid In | | Retained Earnings | | Accumulated Other Comprehensive Loss | | Total Common Stockholder's Equity |
(Thousands of Dollars, Except Stock Information) | Stock | | Amount | | | | |
Balance as of January 1, 2023 | 301 | | | $ | — | | | $ | 1,298,134 | | | $ | 572,126 | | | $ | (73) | | | $ | 1,870,187 | |
Net Income | | | | | | | 40,296 | | | | | 40,296 | |
Dividends on Common Stock | | | | | | | (28,000) | | | | | (28,000) | |
| | | | | | | | | | | |
Other Comprehensive Income | | | | | | | | | 73 | | | 73 | |
Balance as of March 31, 2023 | 301 | | | — | | | 1,298,134 | | | 584,422 | | | — | | | 1,882,556 | |
Net Income | | | | | | | 60,362 | | | | | 60,362 | |
Dividends on Common Stock | | | | | | | (28,000) | | | | | (28,000) | |
Capital Contributions from Eversource Parent | | | | | 100,000 | | | | | | | 100,000 | |
| | | | | | | | | | | |
Balance as of June 30, 2023 | 301 | | | $ | — | | | $ | 1,398,134 | | | $ | 616,784 | | | $ | — | | | $ | 2,014,918 | |
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| For the Three Months Ended March 31, 2024 |
| Common Stock | | Capital Surplus, Paid In | | Retained Earnings | | Accumulated Other Comprehensive Loss | | Total Common Stockholder's Equity |
(Thousands of Dollars, Except Stock Information) | Stock | | Amount | | | | |
Balance as of January 1, 2024 | 301 | | | $ | — | | | $ | 1,698,134 | | | $ | 655,785 | | | $ | — | | | $ | 2,353,919 | |
Net Income | | | | | | | 48,356 | | | | | 48,356 | |
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Capital Contributions from Eversource Parent | | | | | 100,000 | | | | | | | 100,000 | |
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Balance as of March 31, 2024 | 301 | | | $ | — | | | $ | 1,798,134 | | | $ | 704,141 | | | $ | — | | | $ | 2,502,275 | |
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| For the Six Months Ended June 30, 2022 |
| Common Stock | | Capital Surplus, Paid In | | Retained Earnings | | Accumulated Other Comprehensive Income/(Loss) | | Total Common Stockholder's Equity |
(Thousands of Dollars, Except Stock Information) | Stock | | Amount | | | | |
Balance as of January 1, 2022 | 301 | | | $ | — | | | $ | 1,088,134 | | | $ | 504,556 | | | $ | 23 | | | $ | 1,592,713 | |
Net Income | | | | | | | 45,586 | | | | | 45,586 | |
Dividends on Common Stock | | | | | | | (26,000) | | | | | (26,000) | |
Other Comprehensive Loss | | | | | | | | | (48) | | | (48) | |
Balance as of March 31, 2022 | 301 | | | — | | | 1,088,134 | | | 524,142 | | | (25) | | | 1,612,251 | |
Net Income | | | | | | | 37,038 | | | | | 37,038 | |
Dividends on Common Stock | | | | | | | (26,000) | | | | | (26,000) | |
Capital Contributions from Eversource Parent | | | | | 180,000 | | | | | | | 180,000 | |
Other Comprehensive Loss | | | | | | | | | (30) | | | (30) | |
Balance as of June 30, 2022 | 301 | | | $ | — | | | $ | 1,268,134 | | | $ | 535,180 | | | $ | (55) | | | $ | 1,803,259 | |
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| For the Three Months Ended March 31, 2023 |
| Common Stock | | Capital Surplus, Paid In | | Retained Earnings | | Accumulated Other Comprehensive Loss | | Total Common Stockholder's Equity |
(Thousands of Dollars, Except Stock Information) | Stock | | Amount | | | | |
Balance as of January 1, 2023 | 301 | | | $ | — | | | $ | 1,298,134 | | | $ | 572,126 | | | $ | (73) | | | $ | 1,870,187 | |
Net Income | | | | | | | 40,296 | | | | | 40,296 | |
Dividends on Common Stock | | | | | | | (28,000) | | | | | (28,000) | |
Other Comprehensive Income | | | | | | | | | 73 | | | 73 | |
Balance as of March 31, 2023 | 301 | | | $ | — | | | $ | 1,298,134 | | | $ | 584,422 | | | $ | — | | | $ | 1,882,556 | |
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The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
PUBLIC SERVICE COMPANY OF NEW HAMPSHIRE AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
| | For the Six Months Ended June 30, |
| For the Three Months Ended March 31, | | | For the Three Months Ended March 31, |
(Thousands of Dollars) | (Thousands of Dollars) | 2023 | | 2022 | (Thousands of Dollars) | 2024 | | 2023 |
| Operating Activities: | Operating Activities: | | | |
Operating Activities: | |
Operating Activities: | | | | |
Net Income | Net Income | $ | 100,658 | | | $ | 82,624 | |
Adjustments to Reconcile Net Income to Net Cash Flows (Used In)/Provided by Operating Activities: | | | |
Adjustments to Reconcile Net Income to Net Cash Flows Provided by/(Used In) Operating Activities: | | Adjustments to Reconcile Net Income to Net Cash Flows Provided by/(Used In) Operating Activities: | | | |
Depreciation | Depreciation | 68,790 | | | 62,810 | |
Deferred Income Taxes | Deferred Income Taxes | 89,761 | | | 3,137 | |
Uncollectible Expense | Uncollectible Expense | (451) | | | 4,544 | |
Pension, SERP and PBOP Income, Net | Pension, SERP and PBOP Income, Net | (5,197) | | | (8,118) | |
Regulatory Under Recoveries, Net | Regulatory Under Recoveries, Net | (244,668) | | | (1,744) | |
Amortization of Regulatory (Liabilities)/Assets, Net | (25,271) | | | 36,052 | |
Amortization of Regulatory Assets/(Liabilities), Net | |
| Cost of Removal Expenditures | |
Cost of Removal Expenditures | |
Cost of Removal Expenditures | Cost of Removal Expenditures | (15,678) | | | (16,560) | |
Other | Other | 3,896 | | | 4,436 | |
Changes in Current Assets and Liabilities: | Changes in Current Assets and Liabilities: | | | | Changes in Current Assets and Liabilities: | | | |
Receivables and Unbilled Revenues, Net | Receivables and Unbilled Revenues, Net | 12,223 | | | (17,306) | |
| Taxes Receivable/Accrued, Net | Taxes Receivable/Accrued, Net | 4,357 | | | 10,138 | |
Taxes Receivable/Accrued, Net | |
Taxes Receivable/Accrued, Net | |
Accounts Payable | Accounts Payable | (45,255) | | | 15,920 | |
Other Current Assets and Liabilities, Net | Other Current Assets and Liabilities, Net | (35,773) | | | (35,559) | |
Net Cash Flows (Used In)/Provided by Operating Activities | (92,608) | | | 140,374 | |
Net Cash Flows Provided by/(Used In) Operating Activities | |
| Investing Activities: | |
Investing Activities: | |
Investing Activities: | Investing Activities: | | | | | | |
Investments in Property, Plant and Equipment | Investments in Property, Plant and Equipment | (276,676) | | | (226,975) | |
Other Investing Activities | Other Investing Activities | 296 | | | 726 | |
Net Cash Flows Used in Investing Activities | Net Cash Flows Used in Investing Activities | (276,380) | | | (226,249) | |
| Financing Activities: | Financing Activities: | | | |
Financing Activities: | |
Financing Activities: | | | | |
Cash Dividends on Common Stock | Cash Dividends on Common Stock | (56,000) | | | (52,000) | |
Capital Contributions from Eversource Parent | Capital Contributions from Eversource Parent | 100,000 | | | 180,000 | |
Issuance of Long-Term Debt | Issuance of Long-Term Debt | 300,000 | | | — | |
| Repayment of Rate Reduction Bonds | Repayment of Rate Reduction Bonds | (21,605) | | | (21,605) | |
Repayment of Rate Reduction Bonds | |
Repayment of Rate Reduction Bonds | |
Increase/(Decrease) in Notes Payable to Eversource Parent | Increase/(Decrease) in Notes Payable to Eversource Parent | 53,000 | | | (21,300) | |
Other Financing Activities | Other Financing Activities | (5,460) | | | (47) | |
Net Cash Flows Provided by Financing Activities | Net Cash Flows Provided by Financing Activities | 369,935 | | | 85,048 | |
Net Increase/(Decrease) in Cash and Restricted Cash | 947 | | | (827) | |
Net Decrease in Cash and Restricted Cash | |
Cash and Restricted Cash - Beginning of Period | Cash and Restricted Cash - Beginning of Period | 36,812 | | | 35,126 | |
Cash and Restricted Cash - End of Period | Cash and Restricted Cash - End of Period | $ | 37,759 | | | $ | 34,299 | |
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
EVERSOURCE ENERGY AND SUBSIDIARIES
THE CONNECTICUT LIGHT AND POWER COMPANY
NSTAR ELECTRIC COMPANY AND SUBSIDIARY
PUBLIC SERVICE COMPANY OF NEW HAMPSHIRE AND SUBSIDIARIES
COMBINED NOTES TO CONDENSED FINANCIAL STATEMENTS (Unaudited)
Refer to the Glossary of Terms included in this combined Quarterly Report on Form 10-Q for abbreviations and acronyms used throughout the combined notes to the unaudited condensed financial statements.
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
A. Basis of Presentation
Eversource Energy is a public utility holding company primarily engaged, through its wholly-owned regulated utility subsidiaries, in the energy delivery business. Eversource Energy's wholly-owned regulated utility subsidiaries consist of CL&P, NSTAR Electric and PSNH (electric utilities), Yankee Gas, NSTAR Gas and EGMA (natural gas utilities), and Aquarion (water utilities). Eversource provides energy delivery and/or water service to approximately 4.4 million electric, natural gas and water customers through twelve regulated utilities in Connecticut, Massachusetts and New Hampshire.
The unaudited condensed consolidated financial statements of Eversource, NSTAR Electric and PSNH include the accounts of each of their respective subsidiaries. Intercompany transactions have been eliminated in consolidation. The accompanying unaudited condensed consolidated financial statements of Eversource, NSTAR Electric and PSNH and the unaudited condensed financial statements of CL&P are herein collectively referred to as the "financial statements."
The combined notes to the financial statements have been prepared pursuant to the rules and regulations of the SEC. Certain information and footnote disclosures included in annual financial statements prepared in accordance with GAAP have been omitted pursuant to such rules and regulations. The accompanying financial statements should be read in conjunction with the Combined Notes to Financial Statements included in Item 8, "Financial Statements and Supplementary Data," of the Eversource 20222023 Form 10-K, which was filed with the SEC on February 15, 2023.14, 2024. The preparation of the financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent liabilities as of the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
The financial statements contain, in the opinion of management, all adjustments (including normal, recurring adjustments) necessary to present fairly Eversource's, CL&P's, NSTAR Electric's and PSNH's financial position as of June 30, 2023March 31, 2024 and December 31, 2022,2023, and the results of operations, comprehensive income, and common shareholders' equity for the three and six months ended June 30, 2023 and 2022, and the cash flows for the sixthree months ended June 30, 2023March 31, 2024 and 2022.2023. The results of operations, and comprehensive income for the three and six months ended June 30, 2023 and 2022 and the cash flows for the sixthree months ended June 30,March 31, 2024 and 2023 and 2022 are not necessarily indicative of the results expected for a full year.
CYAPC and YAEC are inactive regional nuclear power companies engaged in the long-term storage of their spent nuclear fuel. Eversource consolidates the operations of CYAPC and YAEC because CL&P's, NSTAR Electric's and PSNH's combined ownership and voting interests in each of these entities is greater than 50 percent. Intercompany transactions between CL&P, NSTAR Electric, PSNH and the CYAPC and YAEC companies have been eliminated in consolidation of the Eversource financial statements.
Eversource holds several equity ownership interests that are not consolidated and are accounted for under the equity method.method, including 50 percent ownership interests in three offshore wind projects and a tax equity investment in one of the projects. See Note 1E, "Summary of Significant Accounting Policies – Investments in Unconsolidated Affiliates," for further information on Eversource’s equity method investments.
Eversource's utility subsidiaries' electric, natural gas and water distribution and transmission businesses are subject to rate-regulation that is based on cost recovery and meets the criteria for application of accounting guidance for entities with rate-regulated operations, which considers the effect of regulation on the differences in the timing of the recognition of certain revenues and expenses from those of other businesses and industries. See Note 2, "Regulatory Accounting," for further information.
Certain reclassifications of prior period data were made in the accompanying financial statements to conform to the current period presentation.
B. Allowance for Uncollectible Accounts
Receivables, Net on the balance sheets primarily includes trade receivables from retail customers and customers related to wholesale transmission contracts, wholesale market sales, sales of RECs, and property rentals. Receivables, Net also includes customer receivables for the purchase of electricity from a competitive third party supplier, the current portion of customer energy efficiency loans, property damage receivables and other miscellaneous receivables. There is no material concentration of receivables.
Receivables are recorded at amortized cost, net of a credit loss provision (or allowance for uncollectible accounts). The current expected credit loss (CECL) model is applied to receivables for purposes of calculating the allowance for uncollectible accounts. This model is based on expected losses and results in the recognition of estimated expected credit losses, including uncollectible amounts for both billed and unbilled revenues, over the life of the receivable at the time a receivable is recorded.
The allowance for uncollectible accounts is determined based upon a variety of judgments and factors, including an aging-based quantitative assessment that applies an estimated uncollectible percentage to each receivable aging category. Factors in determining credit loss include historical collection, write-off experience, analysis of delinquency statistics, and management's assessment of collectability from customers, including current economic conditions, customer payment trends, the impact on customer bills because of energy usage trends and changes in rates, flexible payment plans and financial hardship arrearage management programs being offered to customers, reasonable forecasts, and expectations of future collectability and collection efforts. Management continuously assesses the collectability of receivables and adjusts estimates based on actual experience and future expectations based on economic conditions, collection efforts and other factors. Management also monitors the aging analysis of receivables to determine if there are changes in the collections of accounts receivable. Receivable balances are written off against the allowance for uncollectible accounts when the customer accounts are no longer in service and these balances are deemed to be uncollectible. Management concluded that the reserve balance as of June 30, 2023March 31, 2024 adequately reflected the collection risk and net realizable value for its receivables.
As of both June 30, 2023 and December 31, 2022, the total amount incurred as a result of COVID-19 included in the allowance for uncollectible accounts was $50.9 million at Eversource, $16.0 million at CL&P, and $4.1 million at NSTAR Electric. At our Connecticut and Massachusetts utilities, the COVID-19 related uncollectible amounts were deferred either as incremental regulatory costs or deferred through existing regulatory tracking mechanisms that recover uncollectible energy supply costs, as management believes it is probable that these costs will ultimately be recovered from customers in future rates. No COVID-19 related uncollectible amounts were deferred at PSNH as a result of a July 2021 NHPUC order. Based on the status of our COVID-19 regulatory dockets, policies and practices in the jurisdictions in which we operate, we believe the state regulatory commissions in Connecticut and Massachusetts will allow us to recover our incremental uncollectible customer receivable costs associated with COVID-19.
The PURA allows CL&P and Yankee Gas to accelerate the recovery of accounts receivable balances attributable to qualified customers under financial or medical duress (uncollectible hardship accounts receivable) outstanding for greater than 180 days and 90 days, respectively. The DPU allows NSTAR Electric, NSTAR Gas and EGMA to recover in rates amounts associated with certain uncollectible hardship accounts receivable. These uncollectible hardship customer account balances are included in Regulatory Assets or Other Long-Term Assets on the balance sheets. Hardship customers are protected from shut-off in certain circumstances, and historical collection experience has reflected a higher default risk as compared to the rest of the receivable population. Management uses a higher credit risk profile for this pool of trade receivables as compared to non-hardship receivables. The allowance for uncollectible hardship accounts is included in the total uncollectible allowance balance.
The total allowance for uncollectible accounts is included in Receivables, Net on the balance sheets. The activity in the allowance for uncollectible accounts by portfolio segment as of June 30March 31thst is as follows:
| | Eversource | | | Eversource | | CL&P | | NSTAR Electric | | PSNH |
(Millions of Dollars) | | (Millions of Dollars) | Hardship Accounts | | Retail (Non-Hardship), Wholesale, and Other | | Total Allowance | | Hardship Accounts | | Retail (Non-Hardship), Wholesale, and Other | | Total Allowance | | Hardship Accounts | | Retail (Non-Hardship), Wholesale, and Other | | Total Allowance | | Total Allowance |
| | | Eversource | | CL&P | | NSTAR Electric | | PSNH |
(Millions of Dollars) | Hardship Accounts | | Retail (Non-Hardship), Wholesale, and Other | | Total Allowance | | Hardship Accounts | | Retail (Non-Hardship), Wholesale, and Other | | Total Allowance | | Hardship Accounts | | Retail (Non-Hardship), Wholesale, and Other | | Total Allowance | | Total Allowance (2) |
Three Months Ended 2023 | | | | | | | | | | | | | | | | | | | |
| Three Months Ended 2024 | |
| Three Months Ended 2024 | |
| Three Months Ended 2024 | |
Beginning Balance | |
Beginning Balance | |
Beginning Balance | Beginning Balance | $ | 318.7 | | | $ | 216.4 | | | $ | 535.1 | | | $ | 216.2 | | | $ | 37.2 | | | $ | 253.4 | | | $ | 42.0 | | | $ | 52.6 | | | $ | 94.6 | | | $ | 33.5 | |
Uncollectible Expense | Uncollectible Expense | — | | | 1.4 | | | 1.4 | | | — | | | 0.9 | | | 0.9 | | | — | | | 3.1 | | | 3.1 | | | (5.5) | |
Uncollectible Costs Deferred (1) | Uncollectible Costs Deferred (1) | 27.0 | | | (5.5) | | | 21.5 | | | 16.6 | | | 3.4 | | | 20.0 | | | 3.7 | | | 3.9 | | | 7.6 | | | (13.5) | |
Write-Offs | Write-Offs | (8.1) | | | (21.8) | | | (29.9) | | | (6.8) | | | (6.7) | | | (13.5) | | | (0.1) | | | (8.6) | | | (8.7) | | | (2.0) | |
Recoveries Collected | Recoveries Collected | 0.6 | | | 3.7 | | | 4.3 | | | 0.5 | | | 1.5 | | | 2.0 | | | — | | | 1.2 | | | 1.2 | | | 0.2 | |
Ending Balance | Ending Balance | $ | 338.2 | | | $ | 194.2 | | | $ | 532.4 | | | $ | 226.5 | | | $ | 36.3 | | | $ | 262.8 | | | $ | 45.6 | | | $ | 52.2�� | | | $ | 97.8 | | | $ | 12.7 | |
| Six Months Ended 2023 | |
Beginning Balance | $ | 284.4 | | | $ | 201.9 | | | $ | 486.3 | | | $ | 188.9 | | | $ | 36.4 | | | $ | 225.3 | | | $ | 43.7 | | | $ | 51.3 | | | $ | 95.0 | | | $ | 29.2 | |
Uncollectible Expense | — | | | 24.2 | | | 24.2 | | | — | | | 4.8 | | | 4.8 | | | — | | | 7.8 | | | 7.8 | | | (0.5) | |
Uncollectible Costs Deferred (1) | 70.8 | | | 8.7 | | | 79.5 | | | 50.9 | | | 6.1 | | | 57.0 | | | 2.4 | | | 9.3 | | | 11.7 | | | (12.2) | |
Write-Offs | (17.8) | | | (48.0) | | | (65.8) | | | (14.1) | | | (13.7) | | | (27.8) | | | (0.5) | | | (18.9) | | | (19.4) | | | (4.2) | |
Recoveries Collected | 0.8 | | | 7.4 | | | 8.2 | | | 0.8 | | | 2.7 | | | 3.5 | | | — | | | 2.7 | | | 2.7 | | | 0.4 | |
Ending Balance | $ | 338.2 | | | $ | 194.2 | | | $ | 532.4 | | | $ | 226.5 | | | $ | 36.3 | | | $ | 262.8 | | | $ | 45.6 | | | $ | 52.2 | | | $ | 97.8 | | | $ | 12.7 | |
| | Eversource | | | Eversource | | CL&P | | NSTAR Electric | | PSNH |
(Millions of Dollars) | | (Millions of Dollars) | Hardship Accounts | | Retail (Non-Hardship), Wholesale, and Other | | Total Allowance | | Hardship Accounts | | Retail (Non-Hardship), Wholesale, and Other | | Total Allowance | | Hardship Accounts | | Retail (Non-Hardship), Wholesale, and Other | | Total Allowance | | Total Allowance |
| | | Eversource | | CL&P | | NSTAR Electric | | PSNH |
(Millions of Dollars) | Hardship Accounts | | Retail (Non-Hardship), Wholesale, and Other | | Total Allowance | | Hardship Accounts | | Retail (Non-Hardship), Wholesale, and Other | | Total Allowance | | Hardship Accounts | | Retail (Non-Hardship), Wholesale, and Other | | Total Allowance | | Total Allowance |
Three Months Ended 2022 | | | | | | | | | | | | | | | | | | | |
| Three Months Ended 2023 | |
| Three Months Ended 2023 | |
| Three Months Ended 2023 | |
Beginning Balance | |
Beginning Balance | |
Beginning Balance | Beginning Balance | $ | 225.5 | | | $ | 206.7 | | | $ | 432.2 | | | $ | 140.1 | | | $ | 40.4 | | | $ | 180.5 | | | $ | 39.7 | | | $ | 55.1 | | | $ | 94.8 | | | $ | 26.2 | |
Uncollectible Expense | Uncollectible Expense | — | | | 12.9 | | | 12.9 | | | — | | | 2.9 | | | 2.9 | | | — | | | 4.0 | | | 4.0 | | | 2.0 | |
Uncollectible Costs Deferred (1) | Uncollectible Costs Deferred (1) | 21.4 | | | 12.6 | | | 34.0 | | | 15.0 | | | 2.2 | | | 17.2 | | | 5.4 | | | 2.4 | | | 7.8 | | | 0.1 | |
Write-Offs | Write-Offs | (4.6) | | | (21.1) | | | (25.7) | | | (3.3) | | | (6.2) | | | (9.5) | | | (0.1) | | | (7.7) | | | (7.8) | | | (1.3) | |
Recoveries Collected | Recoveries Collected | 0.4 | | | 4.0 | | | 4.4 | | | 0.3 | | | 1.3 | | | 1.6 | | | — | | | 1.7 | | | 1.7 | | | 0.3 | |
Ending Balance | Ending Balance | $ | 242.7 | | | $ | 215.1 | | | $ | 457.8 | | | $ | 152.1 | | | $ | 40.6 | | | $ | 192.7 | | | $ | 45.0 | | | $ | 55.5 | | | $ | 100.5 | | | $ | 27.3 | |
| Six Months Ended 2022 | |
Beginning Balance | $ | 226.1 | | | $ | 191.3 | | | $ | 417.4 | | | $ | 144.6 | | | $ | 36.7 | | | $ | 181.3 | | | $ | 43.3 | | | $ | 53.7 | | | $ | 97.0 | | | $ | 24.3 | |
Uncollectible Expense | — | | | 30.0 | | | 30.0 | | | — | | | 6.7 | | | 6.7 | | | — | | | 8.7 | | | 8.7 | | | 4.5 | |
Uncollectible Costs Deferred (1) | 22.4 | | | 27.3 | | | 49.7 | | | 11.0 | | | — | | | 11.0 | | | 2.1 | | | 7.8 | | | 9.9 | | | 1.1 | |
Write-Offs | (6.9) | | | (43.1) | | | (50.0) | | | (4.4) | | | (6.7) | | | (11.1) | | | (0.4) | | | (18.3) | | | (18.7) | | | (3.1) | |
Recoveries Collected | 1.1 | | | 9.6 | | | 10.7 | | | 0.9 | | | 3.9 | | | 4.8 | | | — | | | 3.6 | | | 3.6 | | | 0.5 | |
Ending Balance | $ | 242.7 | | | $ | 215.1 | | | $ | 457.8 | | | $ | 152.1 | | | $ | 40.6 | | | $ | 192.7 | | | $ | 45.0 | | | $ | 55.5 | | | $ | 100.5 | | | $ | 27.3 | |
(1) These expected credit losses are deferred as regulatory costs on the balance sheets, as these amounts are ultimately recovered in rates. Amounts include uncollectible costs for hardship accounts and other customer receivables, including uncollectible amounts related to uncollectible energy supply costs and COVID-19. The increase in the allowance for uncollectible hardship accounts in 2023 at Eversource and CL&P primarily relates to increased customer enrollment in disconnection prevention programs in Connecticut.
(2) In connection with PSNH’s pole purchase agreement on May 1, 2023, the purchase price included the forgiveness of previously reserved receivables for reimbursement of operation and maintenance and vegetation management costs.
C. Fair Value Measurements
Fair value measurement guidance is applied to derivative contracts that are not elected or designated as "normal purchases" or "normal sales" (normal) and to marketable securities held in trusts. Fair value measurement guidance is also applied to valuations of the investments used to calculate the funded status of pension and PBOP plans, the nonrecurring fair value measurements of nonfinancial assets such as goodwill, long-lived assets, equity method investments, AROs, and in the valuation of business combinations and asset acquisitions. The fair value measurement guidance was also applied in estimating the fair value of preferred stock, long-term debt and RRBs.
Fair Value Hierarchy: In measuring fair value, Eversource uses observable market data when available in order to minimize the use of unobservable inputs. Inputs used in fair value measurements are categorized into three fair value hierarchy levels for disclosure purposes. The entire fair value measurement is categorized based on the lowest level of input that is significant to the fair value measurement. Eversource evaluates the classification of assets and liabilities measured at fair value on a quarterly basis.
The levels of the fair value hierarchy are described below:
Level 1 - Inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities as of the reporting date. Active markets are those in which transactions for the asset or liability occur in sufficient frequency and volume to provide pricing information on an ongoing basis.
Level 2 - Inputs are quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active, and model-derived valuations in which all significant inputs are observable.
Level 3 - Quoted market prices are not available. Fair value is derived from valuation techniques in which one or more significant inputs or assumptions are unobservable. Where possible, valuation techniques incorporate observable market inputs that can be validated to external sources such as industry exchanges, including prices of energy and energy-related products.
Uncategorized - Investments that are measured at net asset value are not categorized within the fair value hierarchy.
Determination of Fair Value: The valuation techniques and inputs used in Eversource's fair value measurements are described in Note 1E, “Summary of Significant Accounting Policies - Investments in Unconsolidated Affiliates,” Note 4, "Derivative Instruments," Note 5, "Marketable Securities," and Note 10, "Fair Value of Financial Instruments," to the financial statements.
D. Other Income, Net
The components of Other Income, Net on the statements of income were as follows:
| | |
| | |
| | | | For the Three Months Ended | For the Three Months Ended |
| | June 30, 2023 | | June 30, 2022 | | March 31, 2024 | | March 31, 2023 |
(Millions of Dollars) | (Millions of Dollars) | Eversource | | CL&P | | NSTAR Electric | | PSNH | | Eversource | | CL&P | | NSTAR Electric | | PSNH | (Millions of Dollars) | Eversource | | CL&P | | NSTAR Electric | | PSNH | | Eversource | | CL&P | | NSTAR Electric | | PSNH |
Pension, SERP and PBOP Non-Service Income Components, Net of Deferred Portion | Pension, SERP and PBOP Non-Service Income Components, Net of Deferred Portion | $ | 33.3 | | | $ | 8.4 | | | $ | 14.1 | | | $ | 3.9 | | | $ | 54.9 | | | $ | 16.2 | | | $ | 21.4 | | | $ | 6.7 | |
AFUDC Equity | AFUDC Equity | 19.0 | | | 4.6 | | | 12.0 | | | 1.1 | | | 11.2 | | | 2.8 | | | 6.1 | | | 0.6 | |
Equity in Earnings of Unconsolidated Affiliates (1) | 5.0 | | | — | | | 0.1 | | | — | | | 16.6 | | | — | | | 0.1 | | | — | |
Equity in Earnings of Unconsolidated Affiliates | |
Investment (Loss)/Income | Investment (Loss)/Income | (1.4) | | | (1.1) | | | 0.3 | | | (0.3) | | | 1.3 | | | (0.7) | | | 0.5 | | | 0.1 | |
Interest Income | Interest Income | 21.4 | | | 1.5 | | | 14.4 | | | 1.2 | | | 9.5 | | | 1.5 | | | 6.1 | | | 0.4 | |
| Other (1) | Other (1) | 17.6 | | | — | | | — | | | 0.4 | | | 0.4 | | | — | | | 0.1 | | | — | |
Total Other Income, Net | $ | 94.9 | | | $ | 13.4 | | | $ | 40.9 | | | $ | 6.3 | | | $ | 93.9 | | | $ | 19.8 | | | $ | 34.3 | | | $ | 7.8 | |
| | For the Six Months Ended |
| June 30, 2023 | | June 30, 2022 |
(Millions of Dollars) | Eversource | | CL&P | | NSTAR Electric | | PSNH | | Eversource | | CL&P | | NSTAR Electric | | PSNH |
Pension, SERP and PBOP Non-Service Income Components, Net of Deferred Portion | $ | 68.1 | | | $ | 17.9 | | | $ | 28.8 | | | $ | 8.1 | | | $ | 109.2 | | | $ | 32.1 | | | $ | 42.4 | | | $ | 13.3 | |
AFUDC Equity | 34.5 | | | 8.7 | | | 21.5 | | | 1.8 | | | 21.1 | | | 5.6 | | | 11.0 | | | 1.0 | |
Equity in Earnings of Unconsolidated Affiliates (1) | 8.8 | | | — | | | 0.2 | | | — | | | 17.1 | | | — | | | 0.1 | | | — | |
Investment (Loss)/Income | (3.1) | | | (1.7) | | | (0.2) | | | (0.4) | | | 1.1 | | | (1.1) | | | 0.2 | | | 0.3 | |
Interest Income | 44.5 | | | 3.4 | | | 30.4 | | | 2.1 | | | 16.1 | | | 2.8 | | | 9.6 | | | 0.7 | |
| Other (1) | |
Other (1) | Other (1) | 31.1 | | | — | | | 0.1 | | | 0.4 | | | 0.8 | | | — | | | 0.2 | | | — | |
Total Other Income, Net | Total Other Income, Net | $ | 183.9 | | | $ | 28.3 | | | $ | 80.8 | | | $ | 12.0 | | | $ | 165.4 | | | $ | 39.4 | | | $ | 63.5 | | | $ | 15.3 | |
(1) Eversource’s equity method investment in a renewable energy fund was liquidated in March 2023. Liquidation proceeds in excess of the carrying value were recorded in both the first and second quarters of 2023 within Other in the table above. See Note 1E, "Summary of Significant Accounting Policies - Investments in Unconsolidated Affiliates," for further information. For the three and six months ended June 30, 2022, pre-tax income of $12.2 million associated with this investment was included in Equity in Earnings of Unconsolidated Affiliates within Other Income, Net in the table above.
E. Investments in Unconsolidated Affiliates
Investments in entities that are not consolidated are included in long-term assets on the balance sheets and earnings impacts from these equity investments are included in Other Income, Net on the statements of income. Eversource's investments included the following: | | | | | | | | | | | | | | | | | |
| | | Investment Balance |
(Millions of Dollars) | Ownership Interest | | As of June 30, 2023 | | As of December 31, 2022 |
Offshore Wind Business - North East Offshore | 50 | % | | $ | 2,083.1 | | | $ | 1,947.1 | |
Natural Gas Pipeline - Algonquin Gas Transmission, LLC | 15 | % | | 116.4 | | | 118.8 | |
Renewable Energy Investment Fund | 90 | % | | — | | | 84.1 | |
Other | various | | 27.8 | | | 26.1 | |
Total Investments in Unconsolidated Affiliates | | | $ | 2,227.3 | | | $ | 2,176.1 | |
| | | | | | | | | | | | | | | | | | | | | | | |
| | | | | Investment Balance |
(Millions of Dollars) | Ownership Interest | | As of March 31, 2024 | | As of December 31, 2023 |
Offshore Wind Business | 50% | - | 100% | | $ | 596.4 | | | $ | 515.5 | |
Natural Gas Pipeline - Algonquin Gas Transmission, LLC | 15% | | 115.9 | | | 116.0 | |
| | | | | |
Other | various | | 29.4 | | | 29.0 | |
Total Investments in Unconsolidated Affiliates | | | | | $ | 741.7 | | | $ | 660.5 | |
Offshore Wind Business: Eversource’s offshore wind business includes 50 percent ownership interests in each of North East Offshore and South Fork Class B Member, LLC, which collectively hold three offshore wind projects. North East Offshore holds the Revolution Wind project and the Sunrise Wind project. South Fork Class B Member, LLC holds the South Fork Wind project. Eversource’s offshore wind business also includes a noncontrolling tax equity investment in South Fork Wind through a 100 percent ownership in South Fork Wind Holdings, LLC Class A shares. The offshore wind projects are being developed and constructed through joint and equal partnerships with Ørsted.
On May 25, 2023, Eversource announced that it had completed a strategic review of its offshore wind investments and determined that it would pursue the sale of its offshore wind investments. On September 7, 2023, Eversource completed the sale of its 50 percent interest in an uncommitted lease area consisting of approximately 175,000 developable acres located 25 miles off the south coast of Massachusetts to Ørsted for $625 million in an all-cash transaction.
In September of 2023, Eversource made a contribution of $528 million using the proceeds from the lease area sale to invest in a tax equity interest for South Fork Wind. South Fork Wind was restructured as a tax equity investment, with Eversource purchasing 100 percent ownership of a new Class A tax equity membership interest. As a result of this investment, Eversource expects to receive approximately $400 million of investment tax credits (ITC) after the turbines are placed in service for South Fork Wind and meet the requirements to qualify for the ITC, in addition to other expected future cash flow benefits that aggregate to approximately $100 million. These investment tax credits will be utilized to reduce
Eversource’s federal tax liability or generate tax refunds in future periods through 2026. As of March 31, 2024, six South Fork Wind turbines met the requirements to qualify for the investment tax credits. As a result, $193 million of expected investment tax credits were reclassified from the South Fork Wind tax equity investment balance reported in Investments in Unconsolidated Affiliates as a reduction in current taxes payable of $54 million and an increase in deferred tax assets of $139 million on the Eversource balance sheet as of March 31, 2024. An additional $37 million deferred tax asset was established through a reduction of the tax equity investment balance due to a temporary difference on the related depreciable property as of March 31, 2024. These balance sheet reclassifications represent non-cash transactions.
Expected Sales of Offshore Wind Investments: On January 24, 2024, Ørsted signed an agreement with Eversource to acquire Eversource’s 50 percent share of Sunrise Wind, subject to the successful selection of Sunrise Wind in the New York fourth solicitation for offshore wind capacity, signing of an OREC contract with NYSERDA, finalization of agreements including the equity and asset purchase agreement, receipt of the final approval by BOEM of the Sunrise Wind Construction and Operations Plan (COP), and relevant regulatory approvals. On January 25, 2024, Sunrise Wind submitted a proposal in the New York fourth offshore wind solicitation and was selected by NYSERDA on February 29, 2024 for contract negotiation. Sunrise Wind is currently negotiating an OREC contract with NYSERDA that will include the price proposed by Sunrise Wind in the solicitation. We expect the OREC contract to be finalized in the second quarter of 2024.
On April 18, 2024, Eversource and Ørsted executed the equity and asset purchase agreement to sell Eversource’s 50 percent interest in Sunrise Wind to Ørsted, and upon closing, Ørsted will become the sole owner of Sunrise Wind. Eversource will remain contracted to manage Sunrise Wind’s onshore construction through completion. In accordance with the equity and asset purchase agreement, Ørsted will pay Eversource 50 percent of the negotiated purchase price upon closing the sale transaction, with the remaining 50 percent paid after onshore construction is completed and certain other milestones are achieved. Upon the closing of the transaction, Eversource will not have any ongoing ownership interest in the project, nor any ongoing financial or credit support obligations associated with project costs. The impact of the purchase price from the sale of Sunrise Wind to Ørsted, as compared to the current carrying value of the investment which had assumed an abandonment of the project, will be reflected when the sale of Sunrise Wind is completed. In accordance with accounting guidance, the impairment loss recognized on the Sunrise Wind investment cannot subsequently be reversed for increases in estimated fair value, and therefore the impact will be recognized when the sale occurs. Eversource expects the sale of Sunrise Wind to Ørsted will be completed later this year.
On February 13, 2024, Eversource announced that it executed an agreement to sell its existing 50 percent interests in the South Fork Wind and Revolution Wind projects to Global Infrastructure Partners (GIP). As part of this transaction, Eversource expects to receive approximately $1.1 billion of cash proceeds upon closing, which includes the sales value related to the 10 percent energy community ITC adder of approximately $170 million related to Revolution Wind, and to exit these projects while retaining certain cost sharing obligations for the construction of Revolution Wind. The purchase price is subject to future post-closing adjustment payments based on, among other things, the progress, timing and expense of construction of each project. The cost sharing obligations provide that Eversource would share equally with GIP in GIP’s funding obligations for up to approximately $240 million of incremental capital expenditure overruns incurred during the construction phase for the Revolution Wind project, after which obligations for any additional capital expenditure overruns would be shared equally by Eversource and Ørsted. Additionally, Eversource’s financial exposure will be adjusted by certain purchase price adjustments to be made following commercial operation of the Revolution Wind project and closing of South Fork as a result of final project economics, which includes Eversource’s obligation to maintain GIP’s internal rate of return for each project as specified in the agreement. South Fork Wind construction has been completed and Eversource does not expect any material cost sharing or other purchase price adjustment payments for South Fork Wind.
Factors that could result in Eversource’s total net proceeds from the transaction to be lower or higher include Revolution Wind’s eligibility for federal investment tax credits at other than the anticipated 40 percent level; the ultimate cost of construction and extent of cost overruns for Revolution Wind; delays in constructing Revolution Wind, which would impact the economics associated with the purchase price adjustment; and a benefit due to Eversource if there are lower operation costs or higher availability of the projects through the period that is four years following the commercial operation date of the Revolution Wind project.
Closing the transaction with GIP is subject to customary conditions, including certain regulatory approvals by the New York Public Service Commission, the FERC, and a review under the Hart Scott Rodino Act, as well as other conditions, among which is the completion and execution of the partnership agreements between GIP and Ørsted that will govern GIP’s new ownership interest in those projects following Eversource’s divestiture. The review period under the Hart Scott Rodino Act has expired. Closing of this transaction is currently expected to occur later this year. If closing of the sale is delayed, additional capital contributions made by Eversource would be recovered in the sales price. Under this agreement with GIP, Eversource’s existing credit support obligations are expected to roll off for each project around the time that each project completes its expected capital spend.
Eversource will continue to make future cash expenditures for required cash contributions to its offshore wind investments up to the time of disposition of each of the offshore wind projects. Capital contributions are expected until the sales are completed and changes in the timing and amounts of these contributions would be adjusted in the sales prices and therefore not result in an additional impairment charge. Proceeds from the transactions will be used to pay off parent company debt.
Impairment:Equity method investments are assessed for impairment when conditions exist as of the balance sheet date that indicate that the fair value of the investment ismay be less than book value. Eversource continually monitors and evaluates its equity method investments to determine if there are indicators of an other-than-temporary impairment. If the decline in value is considered to be other-than-temporary, the investment is written down to its estimated fair value, which establishes a new cost basis in the investment. Subsequent declines or recoveries after the reporting date are not considered in the impairment recognized. Investments that are other-than-temporarily impaired and written down to their estimated fair value cannot subsequently be written back up for increases in estimated fair value. Impairment evaluations involve a significant degree of judgment and estimation, including identifying circumstances that indicate an impairment may exist at the equity method investment level, selecting discount rates used to determine fair values, and developing an estimate of discounted future cash flows expected from investment operations or the sale of the investment. In the first quarter of 2024, there were no indicators of an other-than-temporary impairment in Eversource’s equity method investment balance.
Offshore Wind Business: Eversource’s offshore wind business includes a 50 percent ownership interest in North East Offshore, which holds PPAs for the Revolution Wind and South Fork Wind projects and an Offshore Wind Renewable Energy Certificate (OREC) contract for the Sunrise Wind project, as well as an uncommitted offshore lease area. The offshore wind projects are being developed and constructed through a joint and equal partnership with Ørsted. The offshore leases include a 257 square-mile ocean lease off the coasts of Massachusetts and Rhode Island and a separate, adjacent 300-square-mile ocean lease located approximately 25 miles south of the coast of Massachusetts. The offshore wind investment includes capital expenditures for the three offshore wind projects, as well as capitalized costs related to future development, acquisition costs of offshore lease areas, and capitalized interest.
On May 4, 2022, Eversource announced that it had initiated a strategic review of its offshore wind investment portfolio. On May 25, 2023 Eversource announced that it has completed this review. As a result of completing this review, Eversource announced the following updates:
•On May 25, 2023, Eversource entered into a purchase and sale agreement with Ørsted for its 50 percent interest in an uncommitted lease area of approximately 175,000 developable acres located 25 miles off the south coast of Massachusetts for $625 million in an all-cash transaction. Ørsted currently owns the other 50 percent share of the uncommitted lease area. This transaction is expected to close by the end of the third quarter of 2023, subject to regulatory approvals.
•On May 25, 2023, Eversource entered into a binding letter of intent with Ørsted to use $575 million of the proceeds from the lease area sale to provide tax equity for the South Fork Wind project through a new tax equity ownership interest. As a 50 percent joint owner in South Fork Wind at the time of this transaction, half of that amount will be returned to Eversource. Eversource will recover its $575 million tax equity investment primarily in the form of investment tax credits that will be received around the time of the project’s commercial operation date, with the majority used in the fourth quarter of 2023 and the first half of 2024 to lower Eversource’s cash tax obligation. Construction of South Fork Wind commenced in early 2022, with commercial operation expected in late 2023. Eversource’s tax equity investment in South Fork Wind is also expected to close in the third quarter of 2023.
•Eversource has also determined that it will continue to pursue the sale of its existing 50 percent interest in its three jointly-owned, contracted offshore wind projects.
In connection with these developments in the strategic review, Eversource has evaluated its aggregate investment in the projects, uncommitted lease area, and other related capitalized costs and determined that the carrying value of the equity method offshore wind investment exceeded the fair value of the investment and that the decline was other-than-temporary. The current estimate of fair value is based on the expected sale price of Eversource’s 50 percent interest in the three contracted projects based on the most recent bid value, the sale price of the uncommitted lease area included in the purchase and sale agreement, the value of the tax equity ownership interest, and the expectation of a successful repricing of the Sunrise Wind OREC contract. As a result, Eversource recognized a pre-tax other-than-temporary impairment charge of $401.0 million ($331.0 million after-tax, which includes the impact of a $40 million valuation allowance for federal and state capital loss carryforwards) in the second quarter of 2023. The fair value of the investment will be updated based on final sales prices and final sales terms, final OREC pricing for the Sunrise Wind contract, and investment tax credit qualifications (including any investment tax credit adders), and changes to our estimates of these items could result in an adjustment to this impairment charge.
The impairment evaluation involved judgments in developing the estimate and timing of future cash flows arising from the anticipated sale transactions and from expected investment tax credits resulting from the tax equity ownership interest in South Fork Wind, and in the selection of the discount rate used to determine fair value, all of which are Level 3 fair value measurements.
The impairment charge is a non-cash charge and will not impact Eversource’s cash position. Eversource will continue to make future cash expenditures for required cash contributions to North East Offshore up to the time of the sale of the offshore wind projects. Proceeds from the transaction will be used to pay off parent company debt. Eversource’s strategic review of its offshore wind investment does not impact the presentation of the June 30, 2023 financial statements.
Liquidation of Renewable Energy Investment Fund: On March 21, 2023, Eversource’s equity method investment in a renewable energy investment fund was liquidated by the fund’s general partner in accordance with the partnership agreement. Proceeds received from the liquidation totaled $147.0of $123.4 million were received in the first quarter of 2023 and arewere included in Investments in Unconsolidated Affiliates within investing activities on the statement of cash flows. Of this amount, $123.4 million was received in the first quarter of 2023, and $23.6 million was received from escrow in the second quarter of 2023. A portion of the proceeds was used to make a charitable contribution to the Eversource Energy Foundation (a related party) of $20.0 million in the first quarter of 2023. The liquidation benefit received in excess of the investment’s carrying value and the charitable contribution are included in Other Income, Net on the statement of income.
F. Other Taxes
Eversource's companies that serve customers in Connecticut collect gross receipts taxes levied by the state of Connecticut from their customers. These gross receipts taxes are recorded separately with collections in Operating Revenues and with payments in Taxes Other Than Income Taxes on the statements of income as follows:
| | |
| | | For the Three Months Ended | | For the Six Months Ended | | | For the Three Months Ended |
(Millions of Dollars) | (Millions of Dollars) | June 30, 2023 | | June 30, 2022 | | June 30, 2023 | | June 30, 2022 | (Millions of Dollars) | | | | | March 31, 2024 | | March 31, 2023 |
Eversource | Eversource | $ | 44.7 | | | $ | 44.5 | | | $ | 99.7 | | | $ | 93.1 | |
CL&P | CL&P | 38.9 | | | 39.0 | | | 82.0 | | | 76.8 | CL&P | | | | | 43.9 | | | 43.1 | | 43.1 |
As agents for state and local governments, Eversource's companies that serve customers in Connecticut and Massachusetts collect certain sales taxes that are recorded on a net basis with no impact on the statements of income.
G. Supplemental Cash Flow Information
Non-cash investing activities include plant additions included in Accounts Payable as follows:
| (Millions of Dollars) | (Millions of Dollars) | As of June 30, 2023 | | As of June 30, 2022 | (Millions of Dollars) | As of March 31, 2024 | | As of March 31, 2023 |
Eversource | Eversource | $ | 457.5 | | | $ | 357.2 | |
CL&P | CL&P | 104.8 | | | 96.7 | |
NSTAR Electric | NSTAR Electric | 113.4 | | | 75.1 | |
PSNH | PSNH | 59.6 | | | 49.6 | |
The following table reconciles cash and cash equivalents as reported on the balance sheets to the cash cash equivalents and restricted cash balance as reported on the statements of cash flows: | | | As of June 30, 2023 | | As of December 31, 2022 | | As of March 31, 2024 | | As of December 31, 2023 |
(Millions of Dollars) | (Millions of Dollars) | Eversource | | CL&P | | NSTAR Electric | | PSNH | | Eversource | | CL&P | | NSTAR Electric | | PSNH | (Millions of Dollars) | Eversource | | CL&P | | NSTAR Electric | | PSNH | | Eversource | | CL&P | | NSTAR Electric | | PSNH |
Cash and Cash Equivalents as reported on the Balance Sheets | $ | 42.2 | | | $ | 14.2 | | | $ | 6.5 | | | $ | 0.1 | | | $ | 374.6 | | | $ | 11.3 | | | $ | 327.7 | | | $ | 0.1 | |
Cash as reported on the Balance Sheets | |
Restricted cash included in: | Restricted cash included in: | |
Special Deposits | |
Special Deposits | |
Special Deposits | Special Deposits | 75.6 | | | 9.0 | | | 2.3 | | | 32.9 | | | 102.2 | | | 8.8 | | | 17.5 | | | 33.1 | |
Marketable Securities | Marketable Securities | 42.6 | | | 0.9 | | | 0.3 | | | 1.6 | | | 25.4 | | | 0.2 | | | 0.1 | | | 0.4 | |
Other Long-Term Assets | Other Long-Term Assets | 17.6 | | | — | | | — | | | 3.2 | | | 19.6 | | | — | | | — | | | 3.2 | |
Cash, Cash Equivalents and Restricted Cash as reported on the Statements of Cash Flows | $ | 178.0 | | | $ | 24.1 | | | $ | 9.1 | | | $ | 37.8 | | | $ | 521.8 | | | $ | 20.3 | | | $ | 345.3 | | | $ | 36.8 | |
Cash and Restricted Cash as reported on the Statements of Cash Flows | |
Special Deposits represent cash collections related to the PSNH RRB customer charges that are held in trust, required ISO-NE cash deposits, cash held in escrow accounts, and CYAPC and YAEC cash balances. Special Deposits are included in Current Assets on the balance sheets. RestrictedAs of both March 31, 2024 and December 31, 2023, restricted cash included in Marketable Securities representsrepresented money market funds held in trusts to fund certain non-qualified executive benefits and restricted trusts to fund CYAPC and YAEC's spent nuclear fuel storage obligations.
RestrictedEversource’s restricted cash includes an Energy Relief Fund for energy efficiency and clean energy measures in the Merrimack Valley established under the terms of the EGMA 2020 settlement agreement. This restricted cash held in escrow accounts included $20.0 million recorded as short-term in Special Deposits as of both June 30, 2023March 31, 2024 and December 31, 2022,2023, and $14.4$13.3 million and $15.9$14.1 million recorded in Other Long-Term Assets on the balance sheets as of June 30, 2023March 31, 2024 and December 31, 2022,2023, respectively.
2. REGULATORY ACCOUNTING
Eversource's utility companies are subject to rate regulation that is based on cost recovery and meets the criteria for application of accounting guidance for rate-regulated operations, which considers the effect of regulation on the timing of the recognition of certain revenues and expenses. The regulated companies' financial statements reflect the effects of the rate-making process. The rates charged to the customers of Eversource's regulated companies are designed to collect each company's costs to provide service, plus a return on investment.
The application of accounting guidance for rate-regulated enterprises results in recording regulatory assets and liabilities. Regulatory assets represent the deferral of incurred costs that are probable of future recovery in customer rates. Regulatory assets are amortized as the incurred costs are recovered through customer rates. Regulatory liabilities represent either revenues received from customers to fund expected costs that have not yet been incurred or probable future refunds to customers.
Management believes it is probable that each of the regulated companies will recover its respective investments in long-lived assets and the regulatory assets that have been recorded. If management were to determine that it could no longer apply the accounting guidance applicable to rate-regulated enterprises, or if management could not conclude it is probable that costs would be recovered from customers in future rates, the applicable costs would be charged to net income in the period in which the determination is made.
Regulatory Assets: The components of regulatory assets were as follows:
| | | As of June 30, 2023 | | As of December 31, 2022 | | As of March 31, 2024 | | As of December 31, 2023 |
(Millions of Dollars) | (Millions of Dollars) | Eversource | | CL&P | | NSTAR Electric | | PSNH | | Eversource | | CL&P | | NSTAR Electric | | PSNH | (Millions of Dollars) | Eversource | | CL&P | | NSTAR Electric | | PSNH | | Eversource | | CL&P | | NSTAR Electric | | PSNH |
Storm Costs, Net | Storm Costs, Net | $ | 1,680.7 | | | $ | 875.2 | | | $ | 552.9 | | | $ | 252.6 | | | $ | 1,379.1 | | | $ | 799.3 | | | $ | 484.4 | | | $ | 95.4 | |
Regulatory Tracking Mechanisms | Regulatory Tracking Mechanisms | 1,075.7 | | | 286.6 | | | 438.3 | | | 136.9 | | | 1,075.3 | | | 216.8 | | | 391.5 | | | 73.7 | |
Benefit Costs | Benefit Costs | 873.9 | | | 144.1 | | | 282.2 | | | 52.3 | | | 921.7 | | | 156.7 | | | 299.5 | | | 56.6 | |
Income Taxes, Net | Income Taxes, Net | 864.7 | | | 499.8 | | | 121.7 | | | 12.7 | | | 853.3 | | | 491.1 | | | 115.6 | | | 16.0 | |
Securitized Stranded Costs | Securitized Stranded Costs | 414.1 | | | — | | | — | | | 414.1 | | | 435.7 | | | — | | | — | | | 435.7 | |
Goodwill-related | Goodwill-related | 272.5 | | | — | | | 234.0 | | | — | | | 281.0 | | | — | | | 241.2 | | | — | |
Asset Retirement Obligations | |
Derivative Liabilities | Derivative Liabilities | 152.1 | | | 152.1 | | | — | | | — | | | 181.8 | | | 181.8 | | | — | | | — | |
Asset Retirement Obligations | 132.1 | | | 37.1 | | | 69.4 | | | 4.5 | | | 127.9 | | | 35.9 | | | 68.2 | | | 4.4 | |
Other Regulatory Assets | Other Regulatory Assets | 307.2 | | | 24.4 | | | 101.7 | | | 10.5 | | | 322.5 | | | 26.2 | | | 114.0 | | | 14.4 | |
Total Regulatory Assets | Total Regulatory Assets | 5,773.0 | | | 2,019.3 | | | 1,800.2 | | | 883.6 | | | 5,578.3 | | | 1,907.8 | | | 1,714.4 | | | 696.2 | |
Less: Current Portion | Less: Current Portion | 1,382.2 | | | 417.8 | | | 569.7 | | | 152.0 | | | 1,335.5 | | | 314.1 | | | 492.8 | | | 102.2 | |
Total Long-Term Regulatory Assets | Total Long-Term Regulatory Assets | $ | 4,390.8 | | | $ | 1,601.5 | | | $ | 1,230.5 | | | $ | 731.6 | | | $ | 4,242.8 | | | $ | 1,593.7 | | | $ | 1,221.6 | | | $ | 594.0 | |
Regulatory Costs in Other Long-Term Assets: Eversource's regulated companies had $248.3$243.9 million (including $164.4$169.2 million for CL&P, $23.7$21.7 million for NSTAR Electric and $1.1$1.3 million for PSNH) and $210.8$241.7 million (including $135.9$166.7 million for CL&P, $19.8$21.9 million for NSTAR Electric and $1.0$1.2 million for PSNH) of additional regulatory costs not yet specifically approved as of June 30, 2023March 31, 2024 and December 31, 2022,2023, respectively, that were included in long-term assetsOther Long-Term Assets on the balance sheets. These amounts represent incurred costs for which recovery has not yet been specifically approvedwill be reclassified to Regulatory Assets upon approval by the applicable regulatory agency. However, basedBased on regulatory policies or past precedent on similar costs, management believes it is probable that these costs will ultimately be approved and recovered from customers in rates. As of both June 30, 2023March 31, 2024 and December 31, 2022,2023, these regulatory costs included incremental COVID-19 related non-tracked uncollectible expense deferred of $29.8$75.9 million at Eversource, $11.8(including $60.7 million atfor CL&P and $2.2$6.5 million atfor NSTAR Electric.Electric) and $82.1 million (including $64.0 million for CL&P and $7.3 million for NSTAR Electric), respectively, of deferred uncollectible hardship costs.
Regulatory Liabilities: The components of regulatory liabilities were as follows:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| As of June 30, 2023 | | As of December 31, 2022 |
(Millions of Dollars) | Eversource | | CL&P | | NSTAR Electric | | PSNH | | Eversource | | CL&P | | NSTAR Electric | | PSNH |
EDIT due to Tax Cuts and Jobs Act of 2017 | $ | 2,584.1 | | | $ | 976.5 | | | $ | 923.6 | | | $ | 343.7 | | | $ | 2,619.3 | | | $ | 983.6 | | | $ | 944.3 | | | $ | 348.6 | |
Cost of Removal | 660.9 | | | 147.1 | | | 412.8 | | | 19.3 | | | 670.6 | | | 130.8 | | | 405.3 | | | 14.7 | |
Regulatory Tracking Mechanisms | 683.7 | | | 215.4 | | | 290.7 | | | 77.4 | | | 890.8 | | | 361.0 | | | 336.1 | | | 155.0 | |
Deferred Portion of Non-Service Income Components of Pension, SERP and PBOP | 312.7 | | | 42.3 | | | 157.8 | | | 32.7 | | | 270.9 | | | 34.5 | | | 139.7 | | | 28.8 | |
AFUDC - Transmission | 110.2 | | | 51.5 | | | 58.7 | | | — | | | 98.2 | | | 48.2 | | | 50.0 | | | — | |
Benefit Costs | 50.1 | | | 0.6 | | | 25.7 | | | — | | | 55.4 | | | 0.7 | | | 31.4 | | | — | |
Other Regulatory Liabilities | 219.5 | | | 44.2 | | | 14.5 | | | 5.8 | | | 215.9 | | | 40.6 | | | 14.5 | | | 6.5 | |
Total Regulatory Liabilities | 4,621.2 | | | 1,477.6 | | | 1,883.8 | | | 478.9 | | | 4,821.1 | | | 1,599.4 | | | 1,921.3 | | | 553.6 | |
Less: Current Portion | 653.8 | | | 185.3 | | | 321.2 | | | 83.2 | | | 890.8 | | | 336.0 | | | 373.2 | | | 162.0 | |
Total Long-Term Regulatory Liabilities | $ | 3,967.4 | | | $ | 1,292.3 | | | $ | 1,562.6 | | | $ | 395.7 | | | $ | 3,930.3 | | | $ | 1,263.4 | | | $ | 1,548.1 | | | $ | 391.6 | |
Recent Regulatory Development: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| As of March 31, 2024 | | As of December 31, 2023 |
(Millions of Dollars) | Eversource | | CL&P | | NSTAR Electric | | PSNH | | Eversource | | CL&P | | NSTAR Electric | | PSNH |
EDIT due to Tax Cuts and Jobs Act of 2017 | $ | 2,537.0 | | | $ | 966.1 | | | $ | 899.5 | | | $ | 337.5 | | | $ | 2,548.6 | | | $ | 969.2 | | | $ | 905.1 | | | $ | 339.3 | |
Regulatory Tracking Mechanisms | 711.7 | | | 167.5 | | | 384.2 | | | 80.2 | | | 668.3 | | | 154.0 | | | 347.2 | | | 114.4 | |
Cost of Removal | 687.6 | | | 168.2 | | | 431.0 | | | 14.8 | | | 666.6 | | | 157.9 | | | 420.9 | | | 16.2 | |
Deferred Portion of Non-Service Income Components of Pension, SERP and PBOP | 373.2 | | | 53.1 | | | 184.9 | | | 38.2 | | | 354.0 | | | 49.9 | | | 175.9 | | | 36.6 | |
AFUDC - Transmission | 135.5 | | | 58.5 | | | 77.0 | | | — | | | 124.3 | | | 56.1 | | | 68.2 | | | — | |
Benefit Costs | 44.8 | | | 0.5 | | | 18.0 | | | — | | | 51.0 | | | 0.6 | | | 22.2 | | | — | |
Other Regulatory Liabilities | 203.1 | | | 37.3 | | | 13.7 | | | 4.8 | | | 201.9 | | | 30.4 | | | 13.9 | | | 4.6 | |
Total Regulatory Liabilities | 4,692.9 | | | 1,451.2 | | | 2,008.3 | | | 475.5 | | | 4,614.7 | | | 1,418.1 | | | 1,953.4 | | | 511.1 | |
Less: Current Portion | 641.5 | | | 117.3 | | | 405.2 | | | 86.1 | | | 591.8 | | | 102.2 | | | 368.1 | | | 117.5 | |
Total Long-Term Regulatory Liabilities | $ | 4,051.4 | | | $ | 1,333.9 | | | $ | 1,603.1 | | | $ | 389.4 | | | $ | 4,022.9 | | | $ | 1,315.9 | | | $ | 1,585.3 | | | $ | 393.6 | |
PSNH Pole Acquisition Approval:
On November 18, 2022, the NHPUC issued a decision that approved a proposed purchase agreement between PSNH and Consolidated Communications, in which PSNH would acquire both jointly-owned and solely-owned poles and pole assets. The NHPUC also authorized PSNH to recover certain expenses associated with the operation and maintenance of the transferred poles, pole inspections, and vegetation management expenses through a new cost recovery mechanism, the Pole Plant Adjustment Mechanism (PPAM), subject to consummation of the purchase agreement. The purchase agreement was finalized on May 1, 2023 for a purchase price of $23.3 million. Upon consummation of the purchase agreement, PSNH established a regulatory asset of $16.9 million for operation and maintenance expenses and vegetation management expenses associated with the purchased poles incurred from February 10, 2021 through April 30, 2023 that PSNH is authorized to collect through the PPAM regulatory tracking mechanism. The establishment of the PPAM regulatory asset resulted in a pre-tax benefit recorded in Amortization expense on the PSNH statement of income in the second quarter of 2023.
3. PROPERTY, PLANT AND EQUIPMENT AND ACCUMULATED DEPRECIATION
The following tables summarize property, plant and equipment by asset category:
| Eversource | Eversource | As of June 30, 2023 | | As of December 31, 2022 | Eversource | As of March 31, 2024 | | As of December 31, 2023 |
(Millions of Dollars) | (Millions of Dollars) | |
Distribution - Electric | |
Distribution - Electric | |
Distribution - Electric | Distribution - Electric | $ | 18,984.3 | | | $ | 18,326.2 | |
Distribution - Natural Gas | Distribution - Natural Gas | 7,667.0 | | | 7,443.8 | |
Transmission - Electric | Transmission - Electric | 14,106.9 | | | 13,709.3 | |
Distribution - Water | Distribution - Water | 2,158.9 | | | 2,112.6 | |
Solar | Solar | 200.8 | | | 200.8 | |
Utility | Utility | 43,117.9 | | | 41,792.7 | |
Other (1) | Other (1) | 1,856.0 | | | 1,738.1 | |
Property, Plant and Equipment, Gross | Property, Plant and Equipment, Gross | 44,973.9 | | | 43,530.8 | |
Less: Accumulated Depreciation | Less: Accumulated Depreciation | | | | Less: Accumulated Depreciation | | | |
Utility | Utility | (9,483.3) | | | (9,167.4) | |
Other | Other | (783.4) | | | (706.1) | |
Total Accumulated Depreciation | Total Accumulated Depreciation | (10,266.7) | | | (9,873.5) | |
Property, Plant and Equipment, Net | Property, Plant and Equipment, Net | 34,707.2 | | | 33,657.3 | |
Construction Work in Progress | Construction Work in Progress | 2,871.0 | | | 2,455.5 | |
Total Property, Plant and Equipment, Net | Total Property, Plant and Equipment, Net | $ | 37,578.2 | | | $ | 36,112.8 | |
| | | As of June 30, 2023 | | As of December 31, 2022 | | As of March 31, 2024 | | As of December 31, 2023 |
(Millions of Dollars) | (Millions of Dollars) | CL&P | | NSTAR Electric | | PSNH | | CL&P | | NSTAR Electric | | PSNH | (Millions of Dollars) | CL&P | | NSTAR Electric | | PSNH | | CL&P | | NSTAR Electric | | PSNH |
Distribution - Electric | Distribution - Electric | $ | 7,652.7 | | | $ | 8,672.3 | | | $ | 2,699.6 | | | $ | 7,370.1 | | | $ | 8,410.0 | | | $ | 2,586.4 | |
Transmission - Electric | Transmission - Electric | 6,327.6 | | | 5,457.9 | | | 2,323.1 | | | 6,165.1 | | | 5,333.8 | | | 2,212.0 | |
Solar | Solar | — | | | 200.8 | | | — | | | — | | | 200.8 | | | — | |
Property, Plant and Equipment, Gross | Property, Plant and Equipment, Gross | 13,980.3 | | | 14,331.0 | | | 5,022.7 | | | 13,535.2 | | | 13,944.6 | | | 4,798.4 | |
Less: Accumulated Depreciation | Less: Accumulated Depreciation | (2,640.2) | | | (3,480.8) | | | (956.6) | | | (2,567.1) | | | (3,381.2) | | | (912.3) | |
Property, Plant and Equipment, Net | Property, Plant and Equipment, Net | 11,340.1 | | | 10,850.2 | | | 4,066.1 | | | 10,968.1 | | | 10,563.4 | | | 3,886.1 | |
Construction Work in Progress | Construction Work in Progress | 478.7 | | | 1,259.2 | | | 222.5 | | | 498.9 | | | 1,063.6 | | | 174.1 | |
Total Property, Plant and Equipment, Net | Total Property, Plant and Equipment, Net | $ | 11,818.8 | | | $ | 12,109.4 | | | $ | 4,288.6 | | | $ | 11,467.0 | | | $ | 11,627.0 | | | $ | 4,060.2 | |
(1) These assets are primarily comprised of computer software, hardware and equipment at Eversource Service and buildings at The Rocky River Realty Company.
4. DERIVATIVE INSTRUMENTS
The electric and natural gas companies purchase and procure energy and energy-related products, which are subject to price volatility, for their customers. The costs associated with supplying energy to customers are recoverable from customers in future rates. These regulated companies manage the risks associated with the price volatility of energy and energy-related products through the use of derivative and non-derivative contracts.
Many of the derivative contracts meet the definition of, and are designated as, normal and qualify for accrual accounting under the applicable accounting guidance. The costs and benefits of derivative contracts that meet the definition of normal are recognized in Operating Expenses on the statements of income as electricity or natural gas is delivered.
Derivative contracts that are not designated as normal are recorded at fair value as currentderivative assets or long-term Derivative Assets or Derivative Liabilitiesliabilities on the balance sheets. For the electric and natural gas companies, regulatory assets or regulatory liabilities are recorded to offset the fair values of derivatives, as contract settlement amounts are recovered from, or refunded to, customers in their respective energy supply rates.
The gross fair values of derivative assets and liabilities with the same counterparty are offset and reported as net Derivative Assets or Derivative Liabilities, with current and long-term portions, on the balance sheets. The following table presents the gross fair values of contracts, categorized by risk type, and the net amounts recorded as current or long-term derivative assets or liabilities:
| | | | As of June 30, 2023 | | As of December 31, 2022 | | | | As of March 31, 2024 | | As of December 31, 2023 |
CL&P (Millions of Dollars) | CL&P (Millions of Dollars) | Fair Value Hierarchy | | Commodity Supply and Price Risk Management | | Netting (1) | | Net Amount Recorded as a Derivative | | Commodity Supply and Price Risk Management | | Netting (1) | | Net Amount Recorded as a Derivative | CL&P (Millions of Dollars) | Fair Value Hierarchy | | Commodity Supply and Price Risk Management | | Netting (1) | | Net Amount Recorded as a Derivative | | Commodity Supply and Price Risk Management | | Netting (1) | | Net Amount Recorded as a Derivative |
Current Derivative Assets | Current Derivative Assets | Level 3 | | $ | 17.0 | | | $ | (0.5) | | | $ | 16.5 | | | $ | 16.3 | | | $ | (0.5) | | | $ | 15.8 | |
Long-Term Derivative Assets | Long-Term Derivative Assets | Level 3 | | 20.6 | | | (0.6) | | | 20.0 | | | 28.8 | | | (0.9) | | | 27.9 | |
Current Derivative Liabilities | Current Derivative Liabilities | Level 3 | | (85.2) | | | — | | | (85.2) | | | (81.6) | | | — | | | (81.6) | |
Long-Term Derivative Liabilities | Long-Term Derivative Liabilities | Level 3 | | (103.4) | | | — | | | (103.4) | | | (143.9) | | | — | | | (143.9) | |
(1) Amounts represent derivative assets and liabilities that Eversource elected to record net on the balance sheets. These amounts are subject to master netting agreements or similar agreements for which the right of offset exists.
Derivative Contracts at Fair Value with Offsetting Regulatory Amounts
Commodity Supply and Price Risk Management: As required by regulation, CL&P, along with UI, has capacity-related contracts with generation facilities. CL&P has a sharing agreement with UI, with 80 percent of the costs or benefits of each contract borne by or allocated to CL&P and 20 percent borne by or allocated to UI. The combined capacities of these contracts as of both June 30, 2023March 31, 2024 and December 31, 20222023 were 674682 MW. The capacity contracts extend through 2026 and obligate both CL&P and UI to make or receive payments on a monthly basis to or from the generation facilities based on the difference between a set capacity price and the capacity market price received in the ISO-NE capacity markets.
For the three months ended March 31, 2024 and 2023, there were losses of $1.0 million and $1.9 million, respectively, deferred as regulatory costs, which reflect the change in fair value associated with CL&P’s derivative contracts.
Fair Value Measurements of Derivative Instruments
The fair value of derivative contracts classified as Level 3 utilizes both significant observable and unobservable inputs. The fair value is modeled using income techniques, such as discounted cash flow valuations adjusted for assumptions related to exit price. Valuations of derivative contracts using a discounted cash flow methodology include assumptions regarding the timing and likelihood of scheduled capacity payments and also reflect non-performance risk, including credit, using the default probability approach based on the counterparty's credit rating for assets and the Company's credit rating for liabilities. Significant observable inputs for valuations of these contracts include energy-related product prices in future years for which quoted prices in an active market exist. Valuations incorporate estimates of premiums or discounts that would be required by a market participant to arrive at an exit price, using historical market transactions adjusted for the terms of the contract. Fair value measurements categorized in Level 3 of the fair value hierarchy arewere prepared by individuals with expertise in valuation techniques, pricing of energy-related products, and accounting requirements.
The following is a summary of the significant unobservable inputs utilized in the valuations of the All derivative contracts were classified as Level 3:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| As of June 30, 2023 | | As of December 31, 2022 | | |
CL&P | Range | | Average | | | | Period Covered | | Range | | Average | | | | Period Covered |
Forward Reserve Prices | $ | 0.44 | | | — | | $7.50 | | $ | 3.97 | | | per kW-Month | | 2023 - 2024 | | $ | 0.44 | | | — | | $0.50 | | $ | 0.47 | | | per kW-Month | | 2023 - 2024 |
Exit price premiums of 1.8 percent through 6.1 percent, or a weighted average of 5.0 percent, are also Level 3 significant unobservable inputs applied to these contracts and reflect the uncertainty and illiquidity premiums that would be required based on the most recent market activity available for similar type contracts. The risk premium was weighted by the relative fair value of the net derivative instruments.
Significant increases or decreases2 in future capacity or forward reserve prices in isolation would decrease or increase, respectively, the fair value hierarchy as of the derivative liability. Any increases in risk premiums would increase the fair value of the derivative liability. Changes in these fair values are recorded as a regulatory asset or liabilityboth March 31, 2024 and do not impact net income. December 31, 2023.
The following table presents changes in the Level 3 category of derivative assets and derivative liabilities measured at fair value on a recurring basis. The derivative assets and liabilities are presented on a net basis.
| | | | | | | | | | | | | | | | | | | | | | | |
CL&P | For the Three Months Ended June 30, | | For the Six Months Ended June 30, |
(Millions of Dollars) | 2023 | | 2022 | | 2023 | | 2022 |
Derivatives, Net: | | | | | | | |
Fair Value as of Beginning of Period | $ | (168.8) | | | $ | (229.4) | | | $ | (181.8) | | | $ | (249.2) | |
Net Realized/Unrealized Gains/(Losses) Included in Regulatory Assets | 1.8 | | | 2.6 | | | (0.1) | | | 8.8 | |
Settlements | 14.9 | | | 13.5 | | | 29.8 | | | 27.1 | |
Fair Value as of End of Period | $ | (152.1) | | | $ | (213.3) | | | $ | (152.1) | | | $ | (213.3) | |
| | | | | | | | | | | |
CL&P | | | | | For the Three Months Ended March 31, 2023 |
(Millions of Dollars) | | | | | | |
Derivatives, Net: | | | | | | | |
Fair Value as of Beginning of Period | | | | | | | $ | (181.8) | |
Net Realized/Unrealized Losses Included in Regulatory Assets | | | | | | | (1.9) | |
Settlements | | | | | | | 14.9 | |
Fair Value as of End of Period | | | | | | | $ | (168.8) | |
5. MARKETABLE SECURITIES
Eversource holds marketable securities that are primarily used to fund certain non-qualified executive benefits. The trusts that hold these marketable securities are not subject to regulatory oversight by state or federal agencies. Eversource’s marketable securities also include the CYAPC and YAEC legally restricted trusts that each hold equity and available-for-sale debt securities to fund the spent nuclear fuel removal obligations of their nuclear fuel storage facilities. Eversource also holds trusts that are not subject to regulatory oversight by state or federal agencies that are primarily used to fund certain non-qualified executive benefits. The marketable securities within the non-qualified executive benefit trusts were sold in 2023. Equity and available-for-sale debt marketable securities are recorded at fair value, with the current portion recorded in Prepayments and Other Current Assets and the long-term portion recorded in Marketable Securities on the balance sheets.
Equity Securities: Unrealized gains and losses on equity securities held in Eversource's non-qualified executive benefit trust are recorded in Other Income, Net on the statements of income. The fair value of these equity securities as of June 30, 2023 and December 31, 2022 was $3.1 million and $20.0 million, respectively. For each of the three months ended June 30, 2023 and 2022, there were unrealized losses of $4.7 million recorded in Other Income, Net related to these equity securities. For the six months ended June 30, 2023 and 2022, there were unrealized losses of $3.9 million and $9.1 million recorded in Other Income, Net related to these equity securities, respectively.
Eversource's equity securities also include CYAPC's and YAEC's marketable securities held in spent nuclear fuel trusts, which had fair values of $161.6$172.3 million and $170.1$173.6 million as of June 30, 2023March 31, 2024 and December 31, 2022,2023, respectively. Unrealized gains and losses for these spent nuclear fuel trusts are subject to regulatory accounting treatment and are recorded in long-term Marketable Securities with the corresponding offset to long-term liabilities on the balance sheets, with no impact on the statements of income.
Unrealized gains and losses on equity securities held in Eversource's trusts are recorded in Other Income, Net on the statements of income. The equity securities within Eversource’s non-qualified executive benefits trusts were sold during 2023. The fair value of equity securities held in Eversource’s trusts as of March 31, 2024 and December 31, 2023 were $3.7 million and $3.3 million, respectively. For the three months ended March 31, 2024 and 2023, there were unrealized gains of $0.4 million and $0.8 million recorded in Other Income, Net related to these equity securities.
Available-for-Sale Debt Securities: The following is a summary of the available-for-sale debt securities:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| As of June 30, 2023 | | As of December 31, 2022 |
Eversource (Millions of Dollars) | Amortized Cost | | Pre-Tax Unrealized Gains | | Pre-Tax Unrealized Losses | | Fair Value | | Amortized Cost | | Pre-Tax Unrealized Gains | | Pre-Tax Unrealized Losses | | Fair Value |
Debt Securities | $ | 203.6 | | | $ | 0.1 | | | $ | (10.9) | | | $ | 192.8 | | | $ | 201.6 | | | $ | 0.1 | | | $ | (16.2) | | | $ | 185.5 | |
| | | | | | | | | | | | | | | |
Unrealized gains and losses on available-for-sale debt securities held in Eversource's non-qualified executive benefit trust are recorded in Accumulated Other Comprehensive Income, excluding amounts related to credit losses or losses on securities intended to be sold, which are recorded in Other Income, Net. There were $1.2 million of unrealized losses recorded on securities intended to be sold for the six months ended June 30, 2023 that were included in Other Income, Net. There have been no credit losses for the three and six months ended June 30, 2023 and 2022, and no allowance for credit losses as of June 30, 2023. Factors considered in determining whether a credit loss exists include adverse conditions specifically affecting the issuer, the payment history, ratings and rating changes of the security, and the severity of the impairment. For asset-backed debt securities, underlying collateral and expected future cash flows are also evaluated. Debt securities included in Eversource's non-qualified benefit trust portfolio are investment-grade bonds with a lower default risk based on their credit quality. | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| As of March 31, 2024 | | As of December 31, 2023 |
Eversource (Millions of Dollars) | Amortized Cost | | Pre-Tax Unrealized Gains | | Pre-Tax Unrealized Losses | | Fair Value | | Amortized Cost | | Pre-Tax Unrealized Gains | | Pre-Tax Unrealized Losses | | Fair Value |
Debt Securities | $ | 170.5 | | | $ | 0.2 | | | $ | (8.7) | | | $ | 162.0 | | | $ | 169.5 | | | $ | 1.4 | | | $ | (6.6) | | | $ | 164.3 | |
| | | | | | | | | | | | | | | |
Eversource's debt securities also include CYAPC's and YAEC's marketable securities held in spent nuclear fuel trusts in the amounts of $165.8$162.0 million and $163.2$164.3 million as of June 30, 2023March 31, 2024 and December 31, 2022,2023, respectively. Unrealized gains and losses for available-for-sale debt securities included in the CYAPC and YAEC spent nuclear fuel trusts are subject to regulatory accounting treatment and are recorded in Marketable Securities with the corresponding offset to long-term liabilities on the balance sheets, with no impact on the statements of income. Pre-taxCYAPC and YAEC’s spent nuclear fuel trusts are restricted and are classified in long-term Marketable Securities on the balance sheets.
The debt securities within Eversource’s non-qualified executive benefits trusts were sold during 2023. Any unrealized gains and losses on available-for-sale debt securities held in Eversource's trusts are recorded in Accumulated Other Comprehensive Income, excluding amounts related to credit losses or losses on securities intended to be sold, which are recorded in Other Income, Net. There were no credit losses for the three months ended March 31, 2024 and 2023, and no allowance for credit losses as of June 30, 2023March 31, 2024. Factors considered in determining whether a credit loss exists include adverse conditions specifically affecting the issuer, the payment history, ratings and December 31, 2022 primarily relate torating changes of the security, and the severity of the impairment. For asset-backed debt securities, included in CYAPC'sunderlying collateral and YAEC's spent nuclear fuel trusts.expected future cash flows are also evaluated.
As of June 30, 2023,March 31, 2024, the contractual maturities of available-for-sale debt securities were as follows:
| | | | | | | | | | | |
Eversource (Millions of Dollars) | Amortized Cost | | Fair Value |
Less than one year (1) | $ | 46.6 | | | $ | 46.6 | |
One to five years | 31.5 | | | 30.6 | |
Six to ten years | 39.3 | | | 37.4 | |
Greater than ten years | 86.2 | | | 78.2 | |
Total Debt Securities | $ | 203.6 | | | $ | 192.8 | |
(1) Amounts in the Less than one year category include securities in the CYAPC and YAEC spent nuclear fuel trusts, which are restricted and are classified in long-term Marketable Securities on the balance sheets. Amounts also include securities in Eversource’s non-qualified executive benefit trust, which are intended to be sold in 2023. | | | | | | | | | | | |
Eversource (Millions of Dollars) | Amortized Cost | | Fair Value |
Less than one year | $ | 19.4 | | | $ | 19.4 | |
One to five years | 31.5 | | | 31.0 | |
Six to ten years | 37.7 | | | 36.4 | |
Greater than ten years | 81.9 | | | 75.2 | |
Total Debt Securities | $ | 170.5 | | | $ | 162.0 | |
Realized Gains and Losses: Realized gains and losses are recorded in Other Income, Net for Eversource's benefit trusttrusts and are offset in long-term liabilities for CYAPC and YAEC. Eversource utilizes the specific identification basis method for the Eversource non-qualified benefit trust,trusts, and the average cost basis method for the CYAPC and YAEC spent nuclear fuel trusts to compute the realized gains and losses on the sale of marketable securities.
Fair Value Measurements: The following table presents the marketable securities recorded at fair value on a recurring basis by the level in which they are classified within the fair value hierarchy:
| Eversource (Millions of Dollars) | Eversource (Millions of Dollars) | As of June 30, 2023 | | As of December 31, 2022 | Eversource (Millions of Dollars) | As of March 31, 2024 | | As of December 31, 2023 |
Level 1: | Level 1: | | | | Level 1: | | | |
Mutual Funds and Equities | Mutual Funds and Equities | $ | 164.7 | | | $ | 190.1 | |
Money Market Funds | Money Market Funds | 42.6 | | | 25.4 | |
Total Level 1 | Total Level 1 | $ | 207.3 | | | $ | 215.5 | |
Level 2: | Level 2: | | | | Level 2: | | | |
U.S. Government Issued Debt Securities (Agency and Treasury) | U.S. Government Issued Debt Securities (Agency and Treasury) | $ | 81.9 | | | $ | 82.3 | |
Corporate Debt Securities | Corporate Debt Securities | 41.5 | | | 46.1 | |
Asset-Backed Debt Securities | Asset-Backed Debt Securities | 6.4 | | | 8.6 | |
Municipal Bonds | Municipal Bonds | 9.7 | | | 12.7 | |
Other Fixed Income Securities | Other Fixed Income Securities | 10.7 | | | 10.4 | |
Total Level 2 | Total Level 2 | $ | 150.2 | | | $ | 160.1 | |
Total Marketable Securities | Total Marketable Securities | $ | 357.5 | | | $ | 375.6 | |
U.S. government issued debt securities are valued using market approaches that incorporate transactions for the same or similar bonds and adjustments for yields and maturity dates. Corporate debt securities are valued using a market approach, utilizing recent trades of the same or similar instruments and also incorporating yield curves, credit spreads and specific bond terms and conditions. Asset-backed debt securities include collateralized mortgage obligations, commercial mortgage backed securities, and securities collateralized by auto loans, credit card loans or receivables. Asset-backed debt securities are valued using recent trades of similar instruments, prepayment assumptions, yield curves, issuance and maturity dates, and tranche information. Municipal bonds are valued using a market approach that incorporates reported trades and benchmark yields. Other fixed income securities are valued using pricing models, quoted prices of securities with similar characteristics, and discounted cash flows.
6. SHORT-TERM AND LONG-TERM DEBT
Short-Term Debt - Commercial Paper Programs and Credit Agreements: Eversource parent has a $2.00 billion commercial paper program allowing Eversource parent to issue commercial paper as a form of short-term debt. Eversource parent, CL&P, PSNH, NSTAR Gas, Yankee Gas, EGMA and Aquarion Water Company of Connecticut are parties to a five-year $2.00 billion revolving credit facility, which terminates on October 15, 2027.13, 2028. This revolving credit facility serves to backstop Eversource parent's $2.00 billion commercial paper program.
NSTAR Electric has a $650 million commercial paper program allowing NSTAR Electric to issue commercial paper as a form of short-term debt. NSTAR Electric is also a party to a five-year $650 million revolving credit facility, which terminates on October 15, 2027, and13, 2028, that serves to backstop NSTAR Electric's $650 million commercial paper program.
The amount of borrowings outstanding and available under the commercial paper programs were as follows:
| | Borrowings Outstanding as of | | Available Borrowing Capacity as of | | Weighted-Average Interest Rate as of |
| June 30, 2023 | | December 31, 2022 | | June 30, 2023 | | December 31, 2022 | | June 30, 2023 | | December 31, 2022 |
| Borrowings Outstanding as of | | | Borrowings Outstanding as of | | Available Borrowing Capacity as of | | Weighted-Average Interest Rate as of |
| March 31, 2024 | | | March 31, 2024 | | December 31, 2023 | | March 31, 2024 | | December 31, 2023 | | March 31, 2024 | | December 31, 2023 |
(Millions of Dollars) | (Millions of Dollars) | June 30, 2023 | | December 31, 2022 | | June 30, 2023 | | December 31, 2022 | | June 30, 2023 | | December 31, 2022 |
Eversource Parent Commercial Paper Program | Eversource Parent Commercial Paper Program | |
Eversource Parent Commercial Paper Program | |
Eversource Parent Commercial Paper Program | | $ | 1,934.9 | | | $ | 1,771.9 | | | $ | 65.1 | | | $ | 228.1 | | | 5.66 | % | | 5.60 | % |
NSTAR Electric Commercial Paper Program | NSTAR Electric Commercial Paper Program | 324.0 | | | — | | | 326.0 | | | 650.0 | | | 5.17 | % | | — | % | NSTAR Electric Commercial Paper Program | 419.0 | | | 365.8 | | 365.8 | | | 231.0 | | 231.0 | | | 284.2 | | 284.2 | | | 5.38 | | 5.38 | % | | 5.40 | % |
There were no borrowings outstanding on the revolving credit facilities as of June 30, 2023March 31, 2024 or December 31, 2022.2023.
CL&P and PSNH have uncommitted line of credit agreements totaling $375 million and $250 million, respectively, which will expire on May 10,in 2024. There are no borrowings outstanding on either the CL&P or PSNH uncommitted line of credit agreements as of June 30, 2023.March 31, 2024.
Amounts outstanding under the commercial paper programs are included in Notes Payable and classified in current liabilities on the Eversource and NSTAR Electric balance sheets, as all borrowings are outstanding for no more than 364 days at one time. As a result of the CL&P long-term debt issuance in July 2023, $297.5January 2024, $207.3 million of commercial paper borrowings under the Eversource parent commercial paper program were reclassified asto Long-Term Debt on Eversource’sEversource parent’s balance sheet as of June 30,December 31, 2023. As a result of the PSNH long-term debt issuance in April 2024, $251.0 million of commercial paper borrowings under the Eversource parent commercial paper program were reclassified to Long-Term Debt on Eversource parent’s balance sheet as of March 31, 2024.
Intercompany Borrowings: Eversource parent uses its available capital resources to provide loans to its subsidiaries to assist in meeting their short-term borrowing needs. Eversource parent records intercompany interest income from its loans to subsidiaries, which is eliminated in consolidation. Intercompany loans from Eversource parent to its subsidiaries are eliminated in consolidation on Eversource's balance sheets. As of June 30,March 31, 2024, there were intercompany loans from Eversource parent to CL&P of $426.1 million and to PSNH of $251.0 million. As of December 31, 2023, there were intercompany loans from Eversource parent to CL&P of $449.0$457.0 million and to PSNH of $226.3 million. As of December 31, 2022, there were intercompany loans from Eversource parent to PSNH of $173.3$233.0 million. Eversource parent charges interest on these intercompany loans at the same weighted-average interest rate as its commercial paper program. Intercompany loans from Eversource parent are included in Notes Payable to Eversource Parent and classified in current liabilities on the respective subsidiary's balance sheets, as these intercompany borrowings are outstanding for no more than 364 days at one time. As a result of the CL&P long-term debt issuance in July 2023, $297.5January 2024, $207.3 million of CL&P's&P’s intercompany borrowings were reclassified to Long-Term Debt on CL&P’s balance sheet as of June 30,December 31, 2023. As a result of the PSNH long-term debt issuance in April 2024, $251.0 million of PSNH’s intercompany borrowings were reclassified to Long-Term Debt on PSNH’s balance sheet as of March 31, 2024.
Sources and Uses of Cash: The Company expects the future operating cash flows of Eversource, CL&P, NSTAR Electric and PSNH, along with existing borrowing availability and access to both debt and equity markets, will be sufficient to meet any working capital and future operating requirements, and capital investment forecasted opportunities.
Availability under Long-Term Debt Issuance Authorizations: On June 7, 2023, PURAFebruary 8, 2024, the NHPUC approved Yankee Gas’PSNH’s request for authorization to issue up to $350$300 million in long-term debt through December 31, 2024. On May 1, 2024, the DPU approved NSTAR Electric’s request for authorization to issue up to $2.4 billion in long-term debt through December 31, 2026.
Long-Term Debt Issuances and Repayments: The following table summarizes long-term debt issuances and repayments:
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(Millions of Dollars) | Interest Rate | | Issuance/(Repayment) | | Issue Date or Repayment Date | | Maturity Date | | Use of Proceeds for Issuance/ Repayment Information |
CL&P 2023 Series A First Mortgage Bonds | 5.25 | % | | $ | 500.0 | | | January 2023 | | January 2053 | | Repaid 2013 Series A Bonds at maturity and short-term debt, and paid capital expenditures and working capital |
CL&P 2023 Series B First Mortgage Bonds | 4.90 | % | | 300.0 | | | July 2023 | | July 2033 | | Repaid short-term debt, paid capital expenditures and working capital |
CL&P 2013 Series A First Mortgage Bonds | 2.50 | % | | (400.0) | | | January 2023 | | January 2023 | | Paid at maturity |
PSNH Series W First Mortgage Bonds | 5.15 | % | | 300.0 | | | January 2023 | | January 2053 | | Repaid short-term debt, paid capital expenditures and working capital |
Eversource Parent Series Z Senior Notes | 5.45 | % | | 750.0 | | | March 2023 | | March 2028 | | Repaid Series F Senior Notes at maturity and short-term debt |
Eversource Parent Series F Senior Notes | 2.80 | % | | (450.0) | | | May 2023 | | May 2023 | | Paid at maturity |
Eversource Parent Series Z Senior Notes | 5.45 | % | | 550.0 | | | May 2023 | | March 2028 | | Repay Series T Senior Notes and Series N Senior Notes at maturity and short-term debt |
Eversource Parent Series AA Senior Notes | 4.75 | % | | 450.0 | | | May 2023 | | May 2026 | | Repay Series T Senior Notes and Series N Senior Notes at maturity and short-term debt |
Eversource Parent Series BB Senior Notes | 5.125 | % | | 800.0 | | | May 2023 | | May 2033 | | Repay Series T Senior Notes and Series N Senior Notes at maturity and short-term debt |
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(Millions of Dollars) | Interest Rate | | Issuance/(Repayment) | | Issue Date or Repayment Date | | Maturity Date | | Use of Proceeds for Issuance/ Repayment Information |
CL&P 2024 Series A First Mortgage Bonds | 4.65 | % | | $ | 350.0 | | | January 2024 | | January 2029 | | Repaid short-term debt, paid capital expenditures and working capital |
PSNH Series X First Mortgage Bonds | 5.35 | % | | 300.0 | | | April 2024 | | October 2033 | | Repaid short-term debt, paid capital expenditures and working capital |
Eversource Parent Series DD Senior Notes | 5.00 | % | | 350.0 | | | January 2024 | | January 2027 | | Repaid short-term debt |
Eversource Parent Series EE Senior Notes | 5.50 | % | | 650.0 | | | January 2024 | | January 2034 | | Repaid short-term debt |
Eversource Parent Series FF Senior Notes | 5.85 | % | | 700.0 | | | April 2024 | | April 2031 | | Repay Series X Senior Notes and Aquarion’s 2014 Senior Notes at maturity and short-term debt |
Eversource Parent Series GG Senior Notes | 5.95 | % | | 700.0 | | | April 2024 | | July 2034 | | Repay Series X Senior Notes and Aquarion’s 2014 Senior Notes at maturity and short-term debt |
As a result of the Eversource parent long-term debt issuances in April 2024, $1.39 billion of current portion of long-term debt was reclassified to Long-Term Debt on Eversource parent’s balance sheet as of March 31, 2024.
In March 2024, NSTAR Gas closed on two First Mortgage Bonds, Series W and Series X for $160.0 million and $40.0 million, respectively, and these bonds will be issued in June 2024.
7. RATE REDUCTION BONDS AND VARIABLE INTEREST ENTITIES
Rate Reduction Bonds: In May 2018, PSNH Funding, a wholly-owned subsidiary of PSNH, issued $635.7 million of securitized RRBs in multiple tranches with a weighted average interest rate of 3.66 percent, and final maturity dates ranging from 2026 to 2035. The RRBs are expected to be repaid by February 1, 2033. RRB payments consist of principal and interest and are paid semi-annually, beginning on February 1, 2019. The RRBs were issued pursuant to a finance order issued by the NHPUC in January 2018 to recover remaining costs resulting from the divestiture of PSNH’s generation assets.
PSNH Funding was formed solely to issue RRBs to finance PSNH's unrecovered remaining costs associated with the divestiture of its generation assets. PSNH Funding is considered a VIE primarily because the equity capitalization is insufficient to support its operations. PSNH has the power to direct the significant activities of the VIE and is most closely associated with the VIE as compared to other interest holders. Therefore, PSNH is considered the primary beneficiary and consolidates PSNH Funding in its consolidated financial statements.
The following tables summarize the impact of PSNH Funding on PSNH's balance sheets and income statements:
| (Millions of Dollars) | (Millions of Dollars) | |
PSNH Balance Sheets: | PSNH Balance Sheets: | As of June 30, 2023 | | As of December 31, 2022 |
Restricted Cash - Current Portion (included in Current Assets) | $ | 31.3 | | | $ | 32.4 | |
PSNH Balance Sheets: | |
PSNH Balance Sheets: | | As of March 31, 2024 | | As of December 31, 2023 |
Restricted Cash - Current Portion (included in Special Deposits) | |
Restricted Cash - Long-Term Portion (included in Other Long-Term Assets) | Restricted Cash - Long-Term Portion (included in Other Long-Term Assets) | 3.2 | | | 3.2 | |
Securitized Stranded Cost (included in Regulatory Assets) | Securitized Stranded Cost (included in Regulatory Assets) | 414.1 | | | 435.7 | |
Other Regulatory Liabilities (included in Regulatory Liabilities) | Other Regulatory Liabilities (included in Regulatory Liabilities) | 6.5 | | | 6.0 | |
Accrued Interest (included in Other Current Liabilities) | Accrued Interest (included in Other Current Liabilities) | 6.6 | | | 6.9 | |
Rate Reduction Bonds - Current Portion | Rate Reduction Bonds - Current Portion | 43.2 | | | 43.2 | |
Rate Reduction Bonds - Long-Term Portion | Rate Reduction Bonds - Long-Term Portion | 388.9 | | | 410.5 | |
| (Millions of Dollars) PSNH Income Statements: | (Millions of Dollars) PSNH Income Statements: | For the Three Months Ended | | For the Six Months Ended |
June 30, 2023 | | June 30, 2022 | | June 30, 2023 | | June 30, 2022 |
Amortization of RRB Principal (included in Amortization of Regulatory Assets, Net) | $ | 10.8 | | | $ | 10.8 | | | $ | 21.6 | | | $ | 21.6 | |
(Millions of Dollars) PSNH Income Statements: | | (Millions of Dollars) PSNH Income Statements: | | | For the Three Months Ended |
| | | | | March 31, 2024 | | March 31, 2023 |
Amortization of RRB Principal (included in Amortization of Regulatory Assets/(Liabilities), Net) | |
Interest Expense on RRB Principal (included in Interest Expense) | Interest Expense on RRB Principal (included in Interest Expense) | 3.9 | | | 4.3 | | | 8.0 | | | 8.7 | |
8. PENSION BENEFITS AND POSTRETIREMENT BENEFITS OTHER THAN PENSION
Eversource provides defined benefit retirement plans (Pension Plans) that cover eligible employees. In addition to the Pension Plans, Eversource maintains non-qualified defined benefit retirement plans (SERP Plans), which provide benefits in excess of Internal Revenue Code limitations to eligible participants consisting of current and retired employees. Eversource also provides defined benefit postretirement plans (PBOP Plans) that provide life insurance and a health reimbursement arrangement created for the purpose of reimbursing retirees and dependents for health insurance premiums and certain medical expenses to eligible employees that meet certain age and service eligibility requirements.
The components of net periodic benefit plan expense/(income) for the Pension, SERP and PBOP Plans, prior to amounts capitalized as Property, Plant and Equipment or deferred as regulatory assets/(liabilities) for future recovery or refund, are shown below. The service cost component of net periodic benefit plan expense/(income), less the capitalized portion, is included in Operations and Maintenance expense on the statements of income. The remaining components of net periodic benefit plan expense/(income), less the deferred portion, are included in Other Income, Net on the statements of income. Pension, SERP and PBOP expense reflected in the statements of cash flows for CL&P, NSTAR Electric and PSNH does not include intercompany allocations of net periodic benefit plan expense/(income), as these amounts are cash settled on a short-term basis. | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
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| Pension and SERP | | PBOP |
| For the Three Months Ended June 30, 2023 | | For the Three Months Ended June 30, 2023 |
(Millions of Dollars) | Eversource | | CL&P | | NSTAR Electric | | PSNH | | Eversource | | CL&P | | NSTAR Electric | | PSNH |
Service Cost | $ | 10.7 | | | $ | 3.1 | | | $ | 1.9 | | | $ | 1.1 | | | $ | 2.0 | | | $ | 0.3 | | | $ | 0.3 | | | $ | 0.2 | |
Interest Cost | 63.5 | | | 12.7 | | | 13.5 | | | 6.8 | | | 8.4 | | | 1.5 | | | 2.3 | | | 0.9 | |
Expected Return on Plan Assets | (116.5) | | | (23.7) | | | (28.5) | | | (12.5) | | | (19.5) | | | (2.3) | | | (9.3) | | | (1.4) | |
Actuarial Loss | 11.6 | | | 0.6 | | | 4.0 | | | 0.4 | | | — | | | — | | | — | | | — | |
Prior Service Cost/(Credit) | 0.3 | | | — | | | 0.1 | | | — | | | (5.4) | | | 0.3 | | | (4.3) | | | 0.1 | |
Settlement Loss | 3.7 | | | — | | | — | | | — | | | — | | | — | | | — | | | — | |
Total Net Periodic Benefit Plan Income | $ | (26.7) | | | $ | (7.3) | | | $ | (9.0) | | | $ | (4.2) | | | $ | (14.5) | | | $ | (0.2) | | | $ | (11.0) | | | $ | (0.2) | |
Intercompany Income Allocations | N/A | | (0.6) | | | (0.4) | | | (0.1) | | | N/A | | (0.4) | | | (0.5) | | | (0.1) | |
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| Pension and SERP | | PBOP |
| For the Six Months Ended June 30, 2023 | | For the Six Months Ended June 30, 2023 |
(Millions of Dollars) | Eversource | | CL&P | | NSTAR Electric | | PSNH | | Eversource | | CL&P | | NSTAR Electric | | PSNH |
Service Cost | $ | 21.7 | | | $ | 6.1 | | | $ | 4.0 | | | $ | 2.2 | | | $ | 3.8 | | | $ | 0.6 | | | $ | 0.6 | | | $ | 0.4 | |
Interest Cost | 127.2 | | | 25.3 | | | 27.0 | | | 13.6 | | | 16.9 | | | 3.1 | | | 4.6 | | | 1.8 | |
Expected Return on Plan Assets | (232.4) | | | (47.1) | | | (56.9) | | | (24.8) | | | (38.6) | | | (4.7) | | | (18.5) | | | (2.8) | |
Actuarial Loss | 24.1 | | | 1.4 | | | 8.9 | | | 0.8 | | | — | | | — | | | — | | | — | |
Prior Service Cost/(Credit) | 0.6 | | | — | | | 0.2 | | | — | | | (10.8) | | | 0.6 | | | (8.5) | | | 0.2 | |
Settlement Loss | 3.7 | | | — | | | — | | | — | | | — | | | — | | | — | | | — | |
Total Net Periodic Benefit Plan Income | $ | (55.1) | | | $ | (14.3) | | | $ | (16.8) | | | $ | (8.2) | | | $ | (28.7) | | | $ | (0.4) | | | $ | (21.8) | | | $ | (0.4) | |
Intercompany Income Allocations | N/A | | (2.6) | | | (2.1) | | | (0.6) | | | N/A | | (0.9) | | | (1.1) | | | (0.3) | |
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| Pension and SERP | | PBOP |
| For the Three Months Ended June 30, 2022 | | For the Three Months Ended June 30, 2022 |
(Millions of Dollars) | Eversource | | CL&P | | NSTAR Electric | | PSNH | | Eversource | | CL&P | | NSTAR Electric | | PSNH |
Service Cost | $ | 17.5 | | | $ | 4.7 | | | $ | 3.4 | | | $ | 1.7 | | | $ | 3.0 | | | $ | 0.5 | | | $ | 0.5 | | | $ | 0.3 | |
Interest Cost | 38.6 | | | 7.8 | | | 8.2 | | | 4.2 | | | 5.1 | | | 0.9 | | | 1.3 | | | 0.6 | |
Expected Return on Plan Assets | (130.7) | | | (26.5) | | | (32.1) | | | (14.0) | | | (22.6) | | | (2.8) | | | (10.6) | | | (1.7) | |
Actuarial Loss | 28.4 | | | 4.0 | | | 8.1 | | | 1.9 | | | — | | | — | | | — | | | — | |
Prior Service Cost/(Credit) | 0.3 | | | — | | | 0.1 | | | — | | | (5.4) | | | 0.3 | | | (4.2) | | | 0.1 | |
Total Net Periodic Benefit Plan Income | $ | (45.9) | | | $ | (10.0) | | | $ | (12.3) | | | $ | (6.2) | | | $ | (19.9) | | | $ | (1.1) | | | $ | (13.0) | | | $ | (0.7) | |
Intercompany Income Allocations | N/A | | $ | (4.1) | | | $ | (3.2) | | | $ | (0.9) | | | N/A | | $ | (0.9) | | | $ | (0.9) | | | $ | (0.3) | |
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| Pension and SERP | | PBOP |
| For the Six Months Ended June 30, 2022 | | For the Six Months Ended June 30, 2022 |
(Millions of Dollars) | Eversource | | CL&P | | NSTAR Electric | | PSNH | | Eversource | | CL&P | | NSTAR Electric | | PSNH |
Service Cost | $ | 35.2 | | | $ | 9.2 | | | $ | 7.0 | | | $ | 3.5 | | | $ | 5.8 | | | $ | 1.0 | | | $ | 1.0 | | | $ | 0.5 | |
Interest Cost | 77.2 | | | 15.6 | | | 16.3 | | | 8.4 | | | 10.1 | | | 1.8 | | | 2.6 | | | 1.1 | |
Expected Return on Plan Assets | (262.4) | | | (53.1) | | | (64.1) | | | (28.1) | | | (45.0) | | | (5.6) | | | (21.2) | | | (3.3) | |
Actuarial Loss | 59.1 | | | 8.2 | | | 16.6 | | | 4.1 | | | — | | | — | | | — | | | — | |
Prior Service Cost/(Credit) | 0.7 | | | — | | | 0.2 | | | — | | | (10.8) | | | 0.5 | | | (8.5) | | | 0.2 | |
Total Net Periodic Benefit Plan Income | $ | (90.2) | | | $ | (20.1) | | | $ | (24.0) | | | $ | (12.1) | | | $ | (39.9) | | | $ | (2.3) | | | $ | (26.1) | | | $ | (1.5) | |
Intercompany Income Allocations | N/A | | $ | (7.9) | | | $ | (6.1) | | | $ | (1.7) | | | N/A | | $ | (1.8) | | | $ | (1.8) | | | $ | (0.6) | |
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| Pension and SERP | | PBOP |
| For the Three Months Ended March 31, 2024 | | For the Three Months Ended March 31, 2024 |
(Millions of Dollars) | Eversource | | CL&P | | NSTAR Electric | | PSNH | | Eversource | | CL&P | | NSTAR Electric | | PSNH |
Service Cost | $ | 10.8 | | | $ | 2.9 | | | $ | 2.1 | | | $ | 1.0 | | | $ | 1.7 | | | $ | 0.3 | | | $ | 0.3 | | | $ | 0.1 | |
Interest Cost | 62.0 | | | 12.4 | | | 13.1 | | | 6.7 | | | 8.0 | | | 1.4 | | | 2.2 | | | 0.9 | |
Expected Return on Plan Assets | (115.6) | | | (23.3) | | | (28.3) | | | (12.2) | | | (20.4) | | | (2.4) | | | (9.9) | | | (1.4) | |
Actuarial Loss/(Gain) | 19.8 | | | 2.5 | | | 6.4 | | | 1.1 | | | (0.1) | | | — | | | — | | | — | |
Prior Service Cost/(Credit) | 0.3 | | | — | | | 0.1 | | | — | | | (5.4) | | | 0.3 | | | (4.2) | | | 0.1 | |
Settlement Loss | 4.3 | | | — | | | — | | | — | | | — | | | — | | | — | | | — | |
Total Net Periodic Benefit Plan Income | $ | (18.4) | | | $ | (5.5) | | | $ | (6.6) | | | $ | (3.4) | | | $ | (16.2) | | | $ | (0.4) | | | $ | (11.6) | | | $ | (0.3) | |
Intercompany Expense/(Income) Allocations | N/A | | $ | 0.3 | | | $ | 0.4 | | | $ | 0.1 | | | N/A | | $ | (0.6) | | | $ | (0.7) | | | $ | (0.2) | |
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| Pension and SERP | | PBOP |
| For the Three Months Ended March 31, 2023 | | For the Three Months Ended March 31, 2023 |
(Millions of Dollars) | Eversource | | CL&P | | NSTAR Electric | | PSNH | | Eversource | | CL&P | | NSTAR Electric | | PSNH |
Service Cost | $ | 11.0 | | | $ | 3.0 | | | $ | 2.1 | | | $ | 1.1 | | | $ | 1.8 | | | $ | 0.3 | | | $ | 0.3 | | | $ | 0.2 | |
Interest Cost | 63.7 | | | 12.6 | | | 13.5 | | | 6.8 | | | 8.5 | | | 1.6 | | | 2.3 | | | 0.9 | |
Expected Return on Plan Assets | (115.9) | | | (23.4) | | | (28.4) | | | (12.3) | | | (19.1) | | | (2.4) | | | (9.2) | | | (1.4) | |
Actuarial Loss | 12.5 | | | 0.8 | | | 4.9 | | | 0.4 | | | — | | | — | | | — | | | — | |
Prior Service Cost/(Credit) | 0.3 | | | — | | | 0.1 | | | — | | | (5.4) | | | 0.3 | | | (4.2) | | | 0.1 | |
Total Net Periodic Benefit Plan Income | $ | (28.4) | | | $ | (7.0) | | | $ | (7.8) | | | $ | (4.0) | | | $ | (14.2) | | | $ | (0.2) | | | $ | (10.8) | | | $ | (0.2) | |
Intercompany Income Allocations | N/A | | $ | (2.0) | | | $ | (1.7) | | | $ | (0.5) | | | N/A | | $ | (0.5) | | | $ | (0.6) | | | $ | (0.2) | |
9. COMMITMENTS AND CONTINGENCIES
A. Environmental Matters
Eversource, CL&P, NSTAR Electric and PSNH are subject to environmental laws and regulations intended to mitigate or remove the effect of past operations and improve or maintain the quality of the environment. These laws and regulations require the removal or the remedy of the effect on the environment of the disposal or release of certain specified hazardous substances at current and former operating sites. Eversource, CL&P, NSTAR Electric and PSNH have an active environmental auditing and training program and each believes it is substantially in compliance with all enacted laws and regulations.
The number of environmental sites and related reserves for which remediation or long-term monitoring, preliminary site work or site assessment is being performed are as follows:
| | | | | | | | | | | | | | | | | | | | | | | |
| As of June 30, 2023 | | As of December 31, 2022 |
| Number of Sites | | Reserve (in millions) | | Number of Sites | | Reserve (in millions) |
Eversource | 62 | | | $ | 130.9 | | | 59 | | | $ | 122.6 | |
CL&P | 13 | | | 12.3 | | | 13 | | | 13.9 | |
NSTAR Electric | 12 | | | 5.5 | | | 10 | | | 3.4 | |
PSNH | 8 | | | 7.7 | | | 8 | | | 6.1 | |
The increase in the reserve balance was due primarily to the addition of one environmental site at NSTAR Gas, two additional environmental sites at NSTAR Electric, and changes in cost estimates at certain MGP sites at our natural gas companies and PSNH for which additional remediation will be required. | | | | | | | | | | | | | | | | | | | | | | | |
| As of March 31, 2024 | | As of December 31, 2023 |
| Number of Sites | | Reserve (in millions) | | Number of Sites | | Reserve (in millions) |
Eversource | 66 | | | $ | 128.0 | | | 65 | | | $ | 128.2 | |
CL&P | 16 | | | 13.8 | | | 16 | | | 13.8 | |
NSTAR Electric | 13 | | | 5.9 | | | 12 | | | 5.4 | |
PSNH | 8 | | | 7.7 | | | 8 | | | 7.6 | |
Included in the number of sites and reserve amounts above are former MGP sites that were operated several decades ago and manufactured natural gas from coal and other processes, which resulted in certain by-products remaining in the environment that may pose a potential risk to human health and the environment, for which Eversource may have potential liability. TheEversource’s reserve balances related to these former MGP sites were $121.1$116.1 million and $112.6$117.1 million as of June 30, 2023March 31, 2024 and December 31, 2022,2023, respectively, and related primarily to the natural gas business segment.
These reserve estimates are subjective in nature as they take into consideration several different remediation options at each specific site. The reliability and precision of these estimates can be affected by several factors, including new information concerning either the level of contamination at the site, the extent of Eversource's, CL&P's, NSTAR Electric's and PSNH's responsibility for remediation or the extent of remediation required, recently enacted laws and regulations or changes in cost estimates due to certain economic factors. It is possible that new information or future developments could require a reassessment of the potential exposure to required environmental remediation. As this information becomes available, management will continue to assess the potential exposure and adjust the reserves accordingly.
B. Long-Term Contractual Arrangements
PSNH’s estimated future annual costs of long-term renewable energy purchase contracts related to the purchase of capacity, energy and RECs from a New Hampshire generation plant and totaled $503.2 million as of December 31, 2023. The NHPUC approved the termination of the PPA related to this generation plant effective February 29, 2024. As of March 31, 2024, there are no remaining long-term renewable energy purchase contracts at PSNH.
C. Guarantees and Indemnifications
In the normal course of business, Eversource parent provides credit assurances on behalf of its subsidiaries, including CL&P, NSTAR Electric and PSNH, in the form of guarantees. Management does not anticipate a material impact to net income or cash flows as a result of these various guarantees and indemnifications.
Guarantees issued on behalf of unconsolidated entities, including equity method offshore wind investments, for which Eversource parent is the guarantor, are recorded at fair value as a liability on the balance sheet at the inception of the guarantee. The fair value of guarantees issued on behalf of unconsolidated entities are recorded within Other Long-Term Liabilities on the balance sheet, and were $2.6 million and $4.4 million as of March 31, 2024 and December 31, 2023, respectively. Eversource regularly reviews performance risk under these guarantee arrangements, and inbelieves the likelihood of payments being required under the guarantees is remote. In the event it becomes probable that Eversource parent will be required to perform under the guarantee, the amount of probable payment will be recorded. The fair value of guarantees issued on behalf of unconsolidated entities are recorded within Other Long-Term Liabilities on the balance sheet, and were $4.4 million and $4.2 million as of June 30, 2023 and December 31, 2022, respectively.
The following table summarizes Eversource parent's exposure to guarantees and indemnifications of its subsidiaries and affiliates to external parties, and primarily relates to its offshore wind business:
| | | | | | | | | | | | | | | | | | | | |
As of June 30, 2023 |
Company (Obligor) | | Description | | Maximum Exposure (in millions) | | Expiration Dates |
North East Offshore | | Construction-related purchase agreements with third-party contractors (1) | | $ | 726.4 | | | (1) |
Sunrise Wind LLC | | Construction-related purchase agreements with third-party contractors (2) | | 742.8 | | | 2025 - 2028 |
Revolution Wind, LLC | | Construction-related purchase agreements with third-party contractors (3) | | 405.1 | | | 2024 - 2027 |
South Fork Wind, LLC | | Construction-related purchase agreements with third-party contractors (4) | | 83.9 | | | 2023 - 2026 |
Eversource Investment LLC | | Funding and indemnification obligations of North East Offshore (5) | | 53.5 | | | (5) |
South Fork Wind, LLC | | Power Purchase Agreement Security (6) | | 7.1 | | | (6) |
Sunrise Wind LLC | | OREC capacity production (7) | | 11.0 | | | (7) |
Bay State Wind LLC | | Real estate purchase | | 2.5 | | | 2024 |
South Fork Wind, LLC | | Transmission interconnection | | 1.2 | | | — |
Eversource Investment LLC | | Letters of Credit (8) | | 14.2 | | | — |
Various | | Surety bonds (9) | | 38.2 | | | 2023 - 2024 |
Eversource Service | | Lease payments for real estate | | 0.3 | | | 2024 |
| | | | | | | | | | | | | | |
As of March 31, 2024 |
Company (Obligor) | | Description | | Maximum Exposure (in millions) |
North East Offshore, LLC, Sunrise Wind LLC, Revolution Wind, LLC and South Fork Wind, LLC | | Offshore wind construction-related purchase agreements with third-party contractors (1) | | $ | 1,824.3 | |
Eversource Investment LLC and South Fork Class B Member, LLC | | Funding and indemnification obligations of South Fork Wind and North East Offshore, LLC (2) | | 458.5 | |
Sunrise Wind LLC | | OREC capacity production (3) | | 15.4 | |
South Fork Wind, LLC | | Power Purchase Agreement Security (4) | | 7.1 | |
Eversource Investment LLC | | Letters of Credit (5) | | 23.2 | |
Eversource TEI LLC | | South Fork Wind Tax Equity (6) | | 50.0 | |
Various Eversource subsidiaries | | Surety bonds (7) | | 38.8 | |
Sunrise Wind LLC | | Surety bonds (8) | | 48.2 | |
(1) Eversource parent issued guarantees on behalf of its 50 percent-owned affiliate,affiliates, North East Offshore, LLC (NEO), Sunrise Wind LLC, Revolution Wind, LLC and South Fork Wind, LLC, under which Eversource parent agreed to guarantee 50 percent of NEO’seach entity’s performance of obligations under certain construction-related purchase agreements with third-party contractors, in an aggregate amount not to exceed $1.3 billion with an expiration date in 2025.$3.02 billion. Eversource parent’s obligations under the guarantees expire upon the earlier of (i) dates ranging between May 2024 and October 2028 and (ii) full performance of the guaranteed obligations. Eversource parent also issued a separate guarantee to Ørsted on behalf of NEO, under which Eversource parent agreed to guarantee 50 percent of NEO’s payment obligations under certain offshore wind project construction-related agreements with Ørsted in an aggregate amount not to exceed $62.5 million and expiring upon full performance of the guaranteed obligation. Any amounts paid under this guarantee to Ørsted will count toward, but not increase, the maximum amount of the Funding Guarantee described in Note 5, below.
(2) Eversource parent issued guarantees on behalf of its 50 percent-owned affiliate, Sunrise Windwholly-owned subsidiary Eversource Investment LLC whereby Eversource parent will guarantee Sunrise Wind LLC's performance of certain obligations,(EI), which holds Eversource's investments in an aggregate amount not to exceed $925.6 million, in connection with construction-related purchase agreements. Eversource parent’s obligations under the guarantees expire upon the earlier of (i) dates ranging from March 2025offshore wind-related equity method investments, and October 2028 and (ii) full performance of the guaranteed obligations.
(3) Eversource parent issued guarantees on behalf of its 50 percent-owned affiliate, Revolution Wind, LLC, whereby Eversource parent will guarantee Revolution Wind, LLC's performance of certain obligations, in an aggregate amount not to exceed $547.2 million, in connection with construction-related purchase agreements. Eversource parent’s obligations under the guarantees expire upon the earlier of (i) dates ranging from May 2024 and November 2027 and (ii) full performance of the guaranteed obligations.
(4) Eversource parent issued guarantees on behalf of its 50 percent-owned affiliate, South Fork Wind,Class B Member, LLC, whereby Eversource parent will guarantee South Fork Wind, LLC'seach entity’s performance of certain obligations in connection with construction-related purchase agreements. Under these guarantees, Eversource parent will guarantee South Fork Wind, LLC's performance of certain obligations, in a total aggregate amount not to exceed $171.5 million. Eversource parent’s obligations under these guarantees expire upon the earlier of (i) dates ranging from September 2023 and August 2026 and (ii) full performance of the guaranteed obligations.
(5) Eversource parent issued a guarantee (Funding Guarantee) on behalf of Eversource Investment LLC (EI), its wholly-owned subsidiary that holds a 50 percent ownership interest in NEO, under which Eversource parent agreed to guarantee certain funding obligations and certain indemnification payments of EI under the operating agreement of NEO, in an amount not to exceed $910 million. The guaranteed obligations include payment of EI'scapital expenditure funding obligations during the construction phasephases of the South Fork Wind project and NEO’s underlying offshore wind projects andprojects. Eversource parent also guaranteed certain indemnification obligations of EI associated with third party credit support for itsEI’s investment in NEO. Eversource parent’s obligations under the Funding GuaranteeThese guarantees will not exceed $1.52 billion and expire upon the full performance of the guaranteed obligations.
(6) Eversource parent issued a guarantee on behalf of its 50 percent-owned affiliate, South Fork Wind, LLC, whereby Eversource parent will guarantee South Fork Wind, LLC's performance of certain obligations, in an amount not to exceed $7.1 million, under a Power Purchase Agreement between the Long Island Power Authority and South Fork Wind, LLC (the Agreement). The guarantee expires upon the later of (i) the end of the Agreement term and (ii) full performance of the guaranteed obligations.
(7)(3) Eversource parent issued a guarantee on behalf of its 50 percent-owned affiliate, Sunrise Wind LLC, whereby Eversource parent will guarantee Sunrise Wind LLC's performance of certain obligations, in an amount not to exceed $15.4 million, under the Offshore Wind Renewable Energy Certificate Purchase and Sale Agreement (the Agreement). The Agreement was executed by and between the New York State Energy Research and Development Authority (NYSERDA) and Sunrise Wind LLC. The guarantee expires upon the full performance of the guaranteed obligations.
31(4) Eversource parent issued a guarantee on behalf of its 50 percent-owned affiliate, South Fork Wind, LLC, whereby Eversource parent will guarantee South Fork Wind, LLC's performance of certain obligations, in an amount not to exceed $7.1 million, under a Power Purchase Agreement between the Long Island Power Authority and South Fork Wind, LLC (the Agreement). The guarantee expires upon the later of (i) the end of the Agreement term and (ii) full performance of the guaranteed obligations.
(8)(5) On September 16, 2020, Eversource parent entered into a guarantee on behalf of EI, which holds Eversource's investments in offshore wind-related equity method investments, under which Eversource parent would guarantee EI's obligations under a letter of credit facility with a financial institution that EI may request in an aggregate amount of up to approximately $25 million. In January 2022,As of March 31, 2024, EI has issued two letters of credit on behalf of South Fork Wind, LLC, related to future decommissioning obligations of certain onshore transmission assets totaling $4.3 million. In June 2023, EI issued an additional letter of credit on behalf of Sunrise Wind LLC related to future environmental remediationand Revolution Wind, LLC totaling $23.2 million. The guarantee will remain in effect until full performance of the amount of $9.9 million.guaranteed obligations.
(9)(6) Eversource parent issued a guarantee on behalf of its wholly-owned subsidiary, Eversource TEI LLC, whereby Eversource parent will guarantee Eversource TEI LLC’s performance of certain obligations, in an amount not to exceed $50.0 million, in connection with any remaining obligations under the LLC agreement. Eversource parent’s obligations expire upon the full performance of the guaranteed obligations.
(7) Surety bond expirationbonds expire in 2024 and 2025. Expiration dates reflect termination dates, the majority of which will be renewed or extended. Certain surety bonds contain credit ratings triggers that would require Eversource parent to post collateral in the event that the unsecured debt credit ratings of Eversource parent are downgraded.
Third Quarter 2023 Guarantees(8) : In the third quarter of 2023, Eversource parent issued an additional guaranty on behalf of Sunrise Wind LLC issued surety bonds related to future remediation obligations of certain onshore transmission assets totaling $143.0 million, whereby Eversource parent$48.2 million. One surety bond expires in March 2025 and the other surety bonds will guarantee Sunrise Wind LLC’sremain outstanding until full performance of certain constructionthe related obligations.
D. Spent Nuclear Fuel Obligations - Yankee Companies
CL&P, NSTAR Electric and PSNH have plant closure and fuel storage cost obligations to the Yankee Companies, which have each completed the physical decommissioning of their respective nuclear power facilities and are now engaged in the long-term storage of their spent fuel. The Yankee Companies fund these costs through litigation proceeds received from the DOE and, to the extent necessary, through wholesale, FERC-approved rates charged under power purchase agreements with several New England utilities, including CL&P, NSTAR Electric and PSNH. CL&P, NSTAR Electric and PSNH, in turn recover these costs from their customers through state regulatory commission-approved retail rates. The Yankee Companies collect amounts that management believes are adequate to recover the remaining plant closure and fuel storage cost estimates for the respective plants. Management believes CL&P and NSTAR Electric will recover their shares of these obligations from their customers. PSNH has recovered its total share of these costs from its customers.
Spent Nuclear Fuel Litigation:
The Yankee Companies have filed complaints against the DOE in the Court of Federal Claims seeking monetary damages resulting from the DOE's failure to accept delivery of, and provide for a permanent facility to store, spent nuclear fuel pursuant to the terms of the 1983 spent fuel and high-level waste disposal contracts between the Yankee Companies and the DOE. The court previously awarded the Yankee Companies damages for Phases I, II, III and IV of litigation resulting from the DOE's failure to meet its contractual obligations. These Phases covered damages incurred in the years 1998 through 2016, and the awarded damages have been received by the Yankee Companies with certain amounts of the damages refunded to their customers.
DOE Phase V Damages - On March 25, 2021, each of the Yankee Companies filed a fifth set of lawsuits against the DOE in the Court of Federal Claims resulting from the DOE's failure to begin accepting spent nuclear fuel for disposal covering the years from 2017 to 2020. The Yankee Companies filed claims seeking monetary damages totaling $120.4 million for CYAPC, YAEC and MYAPC. Pursuant to a June 2, 2022 court order, the Yankee Companies were subsequently permitted to include monetary damages relating to the year 2021 in the DOE Phase V complaint. The Yankee Companies submitted a supplemental filing to include these costs of $33.1 million on June 8, 2022. TheOn March 13, 2024, the court issued an order establishing a schedule to resolve pending discovery issues by June 10, 2024, after which the court will set dates for further proceedings in the DOE Phase V trial is now expected to begin in the fourth quarter of 2023.trial.
D.E. FERC ROE Complaints
Four separate complaints were filed at the FERC by combinations of New England state attorneys general, state regulatory commissions, consumer advocates, consumer groups, municipal parties and other parties (collectively, the Complainants). In each of the first three complaints, filed on October 1, 2011, December 27, 2012, and July 31, 2014, respectively, the Complainants challenged the NETOs' base ROE of 11.14 percent that had been utilized since 2005 and sought an order to reduce it prospectively from the date of the final FERC order and for the separate 15-month complaint periods. In the fourth complaint, filed April 29, 2016, the Complainants challenged the NETOs' base ROE billed of 10.57 percent and the maximum ROE for transmission incentive (incentive cap) of 11.74 percent, asserting that these ROEs were unjust and unreasonable.
The ROE originally billed during the period October 1, 2011 (beginning of the first complaint period) through October 15, 2014 consisted of a base ROE of 11.14 percent and incentives up to 13.1 percent. On October 16, 2014, FERC issued Opinion No. 531-A and set the base ROE at 10.57 percent and the incentive cap at 11.74 percent for the first complaint period. This was also effective for all prospective billings to customers beginning October 16, 2014. This FERC order was vacated on April 14, 2017 by the U.S. Court of Appeals for the D.C. Circuit (the Court).
All amounts associated with the first complaint period have been refunded, which totaled $38.9 million (pre-tax and excluding interest) at Eversource and reflected both the base ROE and incentive cap prescribed by the FERC order. The refund consisted of $22.4 million for CL&P, $13.7 million for NSTAR Electric and $2.8 million for PSNH.
Eversource has recorded a reserve of $39.1 million (pre-tax and excluding interest) for the second complaint period as of both June 30, 2023March 31, 2024 and December 31, 2022.2023. This reserve represents the difference between the billed rates during the second complaint period and a 10.57 percent base ROE and 11.74 percent incentive cap. The reserve consisted of $21.4 million for CL&P, $14.6 million for NSTAR Electric and $3.1 million for PSNH as of both June 30, 2023March 31, 2024 and December 31, 2022.2023.
On October 16, 2018, FERC issued an order on all four complaints describing how it intends to address the issues that were remanded by the Court. FERC proposed a new framework to determine (1) whether an existing ROE is unjust and unreasonable and, if so, (2) how to calculate a replacement ROE. Initial briefs were filed by the NETOs, Complainants and FERC Trial Staff on January 11, 2019 and reply briefs were filed on March 8, 2019. The NETOs' brief was supportive of the overall ROE methodology determined in the October 16, 2018 order provided the FERC does not change the proposed methodology or alter its implementation in a manner that has a material impact on the results.
The FERC order included illustrative calculations for the first complaint using FERC's proposed frameworks with financial data from that complaint. Those illustrative calculations indicated that for the first complaint period, for the NETOs, which FERC concludes are of average financial risk, the preliminary just and reasonable base ROE is 10.41 percent and the preliminary incentive cap on total ROE is 13.08 percent.
If the results of the illustrative calculations were included in a final FERC order for each of the complaint periods, then a 10.41 percent base ROE and a 13.08 percent incentive cap would not have a significant impact on our financial statements for all of the complaint periods. These preliminary calculations are not binding and do not represent what we believe to be the most likely outcome of a final FERC order.
On November 21, 2019, FERC issued Opinion No. 569 affecting the two pending transmission ROE complaints against the Midcontinent ISO (MISO) transmission owners, in which FERC adopted a new methodology for determining base ROEs. Various parties sought rehearing. On December 23, 2019, the NETOs filed supplementary materials in the NETOs' four pending cases to respond to this new methodology because of the uncertainty of the applicability to the NETOs' cases. On May 21, 2020, the FERC issued its order in Opinion No. 569-A on the rehearing of
the MISO transmission owners' cases, in which FERC again changed its methodology for determining the MISO transmission owners' base ROEs. On November 19, 2020, the FERC issued Opinion No. 569-B denying rehearing of Opinion No. 569-A and reaffirmed the methodology previously adopted in Opinion No. 569-A. The new methodology differs significantly from the methodology proposed by FERC in its October 16, 2018 order to determine the NETOs' base ROEs in its four pending cases. FERC Opinion Nos. 569-A and 569-B were appealed to the Court. On August 9, 2022, the Court issued its decision vacating MISO ROE FERC Opinion Nos. 569, 569-A and 569-B and remanded to FERC to reopen the proceedings. The Court found that FERC’s development of the new return methodology was arbitrary and capricious due to FERC’s failure to offer a reasonable explanation for its decision to reintroduce the risk-premium financial model in its new methodology for calculating a just and reasonable return. At this time, Eversource cannot predict how and when FERC will address the Court’s findings on the remand of the MISO FERC opinions or any potential associated impact on the NETOs’ four pending ROE complaint cases.
Given the significant uncertainty regarding the applicability of the FERC opinions in the MISO transmission owners’ two complaint cases to the NETOs’ pending four complaint cases, Eversource concluded that there is no reasonable basis for a change to the reserve or recognized ROEs for any of the complaint periods at this time. As well, Eversource cannot reasonably estimate a range of loss for any of the four complaint proceedings at this time.
Eversource, CL&P, NSTAR Electric and PSNH currently record revenues at the 10.57 percent base ROE and incentive cap at 11.74 percent established in the October 16, 2014 FERC order.
A change of 10 basis points to the base ROE used to establish the reserves would impact Eversource’s after-tax earnings by an average of approximately $3 million for each of the four 15-month complaint periods.
10. FAIR VALUE OF FINANCIAL INSTRUMENTS
The following methods and assumptions were used to estimate the fair value of each of the following financial instruments:
Preferred Stock, Long-Term Debt and Rate Reduction Bonds: The fair value of CL&P's and NSTAR Electric's preferred stock is based upon pricing models that incorporate interest rates and other market factors, valuations or trades of similar securities and cash flow projections. The fair value of long-term debt and RRB debt securities is based upon pricing models that incorporate quoted market prices for those issues or similar issues adjusted for market conditions, credit ratings of the respective companies and treasury benchmark yields. The fair values provided in the table below are classified as Level 2 within the fair value hierarchy. Carrying amounts and estimated fair values are as follows:
| | | Eversource | | CL&P | | NSTAR Electric | | PSNH | | Eversource | | CL&P | | NSTAR Electric | | PSNH |
(Millions of Dollars) | (Millions of Dollars) | Carrying Amount | | Fair Value | | Carrying Amount | | Fair Value | | Carrying Amount | | Fair Value | | Carrying Amount | | Fair Value | (Millions of Dollars) | Carrying Amount | | Fair Value | | Carrying Amount | | Fair Value | | Carrying Amount | | Fair Value | | Carrying Amount | | Fair Value |
As of June 30, 2023: | | | | | | | | | | | | | | | |
As of March 31, 2024: | | As of March 31, 2024: | | | | | | | | | |
Preferred Stock Not Subject to Mandatory Redemption | Preferred Stock Not Subject to Mandatory Redemption | $ | 155.6 | | | $ | 136.5 | | | $ | 116.2 | | | $ | 99.3 | | | $ | 43.0 | | | $ | 37.2 | | | $ | — | | | $ | — | |
Long-Term Debt | Long-Term Debt | 23,834.4 | | | 21,761.1 | | | 4,607.3 | | | 4,252.5 | | | 4,426.9 | | | 4,106.7 | | | 1,459.4 | | | 1,281.1 | |
Rate Reduction Bonds | Rate Reduction Bonds | 432.1 | | | 407.9 | | | — | | | — | | | — | | | — | | | 432.1 | | | 407.9 | |
| As of December 31, 2022: | | | | | | | | | | | | | | |
As of December 31, 2023: | |
As of December 31, 2023: | |
As of December 31, 2023: | | | | | | |
Preferred Stock Not Subject to Mandatory Redemption | Preferred Stock Not Subject to Mandatory Redemption | $ | 155.6 | | | $ | 136.7 | | | $ | 116.2 | | | $ | 99.2 | | | $ | 43.0 | | | $ | 37.5 | | | $ | — | | | $ | — | |
Long-Term Debt | Long-Term Debt | 21,044.1 | | | 18,891.3 | | | 4,216.5 | | | 3,828.3 | | | 4,425.1 | | | 4,091.8 | | | 1,164.6 | | | 970.5 | |
Rate Reduction Bonds | Rate Reduction Bonds | 453.7 | | | 424.7 | | | — | | | — | | | — | | | — | | | 453.7 | | | 424.7 | |
Derivative Instruments and Marketable Securities: Derivative instruments and investments in marketable securities are carried at fair value. For further information, see Note 4, "Derivative Instruments," and Note 5, "Marketable Securities," to the financial statements.
See Note 1C, "Summary of Significant Accounting Policies – Fair Value Measurements," for the fair value measurement policy and the fair value hierarchy.
11. ACCUMULATED OTHER COMPREHENSIVE INCOME/(LOSS)
The changes in accumulated other comprehensive income/(loss) by component, net of tax, are as follows:
| | For the Six Months Ended June 30, 2023 | | For the Six Months Ended June 30, 2022 |
| For the Three Months Ended March 31, 2024 | | | For the Three Months Ended March 31, 2024 | | For the Three Months Ended March 31, 2023 |
Eversource (Millions of Dollars) | Eversource (Millions of Dollars) | Qualified Cash Flow Hedging Instruments | | Unrealized Gains/(Losses) on Marketable Securities | | Defined Benefit Plans | | Total | | Qualified Cash Flow Hedging Instruments | | Unrealized Gains/(Losses) on Marketable Securities | | Defined Benefit Plans | | Total | Eversource (Millions of Dollars) | Qualified Cash Flow Hedging Instruments | | Defined Benefit Plans | | Total | | Qualified Cash Flow Hedging Instruments | | Unrealized Gains/(Losses) on Marketable Securities | | Defined Benefit Plans | | Total |
Balance as of Beginning of Period | Balance as of Beginning of Period | $ | (0.4) | | | $ | (1.2) | | | $ | (37.8) | | | $ | (39.4) | | | $ | (0.4) | | | $ | 0.4 | | | $ | (42.3) | | | $ | (42.3) | |
| OCI Before Reclassifications | — | | | — | | | 0.1 | | | 0.1 | | | — | | | (1.3) | | | (2.5) | | | (3.8) | |
| Amounts Reclassified from AOCI | |
| Amounts Reclassified from AOCI | |
| Amounts Reclassified from AOCI | Amounts Reclassified from AOCI | — | | | 1.2 | | | 6.0 | | | 7.2 | | | — | | | — | | | 3.2 | | | 3.2 | |
Net OCI | Net OCI | — | | | 1.2 | | | 6.1 | | | 7.3 | | | — | | | (1.3) | | | 0.7 | | | (0.6) | |
Balance as of End of Period | Balance as of End of Period | $ | (0.4) | | | $ | — | | | $ | (31.7) | | | $ | (32.1) | | | $ | (0.4) | | | $ | (0.9) | | | $ | (41.6) | | | $ | (42.9) | |
Defined benefit plan OCI amounts before reclassificationsreclassified from AOCI relate to actuarial gains and losses that arose during the year and were recognized in AOCI. The unamortized actuarial gains and losses and prior service costs on the defined benefit plans are amortized from AOCI into Other Income, Net over the average future employee service period, and are reflected in amounts reclassified from AOCI.period.
12. COMMON SHARES
The following table sets forth the Eversource parent common shares and the shares of common stock of CL&P, NSTAR Electric and PSNH that were authorized and issued, as well as the respective per share par values:
| | | Shares | | Shares |
| | | Authorized as of | | Issued as of | | | | Authorized as of March 31, 2024 and December 31, 2023 | | Issued as of |
| | Par Value | | June 30, 2023 | | December 31, 2022 | | June 30, 2023 | | December 31, 2022 | | Par Value | | | March 31, 2024 | | December 31, 2023 |
Eversource | Eversource | $ | 5 | | | 410,000,000 | | | 380,000,000 | | | 359,984,073 | | | 359,984,073 | |
CL&P | CL&P | $ | 10 | | | 24,500,000 | | | 24,500,000 | | | 6,035,205 | | | 6,035,205 | |
NSTAR Electric | NSTAR Electric | $ | 1 | | | 100,000,000 | | | 100,000,000 | | | 200 | | | 200 | |
PSNH | PSNH | $ | 1 | | | 100,000,000 | | | 100,000,000 | | | 301 | | | 301 | |
Common Share Issuances and Equity Distribution Agreement: On May 11, 2022, Eversource entered into an equity distribution agreement pursuant to which it may offer and sell up to $1.2 billion of its common shares from time to time through an “at-the-market” (ATM) equity offering program. Eversource may issue and sell its common shares through its sales agents during the term of this agreement. Shares may be offered in transactions on the New York Stock Exchange, in the over-the-counter market, through negotiated transactions or otherwise. Sales may be made at either market prices prevailing at the time of sale, at prices related to such prevailing market prices or at negotiated prices. In the first quarter of 2024, Eversource issued 1,292,892 common shares, which resulted in proceeds of $75.4 million, net of issuance costs. Eversource used the net proceeds received for general corporate purposes. In 2023, no shares were issued under this agreement.
Treasury Shares: As of June 30, 2023March 31, 2024 and December 31, 2022,2023, there were 10,962,1379,897,551 and 11,540,21810,443,807 Eversource common shares held as treasury shares, respectively. As of June 30, 2023March 31, 2024 and December 31, 2022,2023, there were 349,021,936351,379,414 and 348,443,855349,540,266 Eversource common shares outstanding, respectively.
Eversource issues treasury shares to satisfy awards under the Company's incentive plans, shares issued under the dividend reinvestment and share purchase plan, and matching contributions under the Eversource 401k Plan. Eversource also issued treasury shares for its October 2022 water business acquisition. The issuance of treasury shares represents a non-cash transaction, as the treasury shares were used to fulfill Eversource's obligations that require the issuance of common shares.
On May 3, 2023, shareholders voted to increase the authorized common shares from 380,000,000 shares to 410,000,000 shares.
13. COMMON SHAREHOLDERS' EQUITY AND NONCONTROLLING INTERESTS
Dividends on the preferred stock of CL&P and NSTAR Electric totaled $1.9 million for each of the three months ended June 30, 2023March 31, 2024 and 2022 and $3.8 million for each of the six months ended June 30, 2023 and 2022.2023. These dividends were presented as Net Income Attributable to Noncontrolling Interests on the Eversource statements of income. Noncontrolling Interest – Preferred Stock of Subsidiaries on the Eversource balance sheets totaled $155.6 million as of June 30, 2023March 31, 2024 and December 31, 2022.2023. On the Eversource balance sheets, Common Shareholders' Equity was fully attributable to Eversource parent and Noncontrolling Interest – Preferred Stock of Subsidiaries was fully attributable to the noncontrolling interest.
14. EARNINGS PER SHARE
Basic EPS is computed based upon the weighted average number of common shares outstanding during each period. Diluted EPS is computed on the basis of the weighted average number of common shares outstanding plus the potential dilutive effect of certain share-based compensation awards as if they were converted into outstanding common shares. The dilutive effect of unvested RSU and performance share awards is calculated using the treasury stock method. RSU and performance share awards are included in basic weighted average common shares outstanding as of the date that all necessary vesting conditions have been satisfied. For the three and six months ended June 30,March 31, 2024 and 2023, and 2022, there were no antidilutive share awards excluded from the computation of diluted EPS.
The following table sets forth the components of basic and diluted EPS:
| Eversource (Millions of Dollars, except share information) | |
| Eversource (Millions of Dollars, except share information) | Eversource (Millions of Dollars, except share information) | For the Three Months Ended | | For the Six Months Ended | Eversource (Millions of Dollars, except share information) | | | For the Three Months Ended |
June 30, 2023 | | June 30, 2022 | | June 30, 2023 | | June 30, 2022 | | | | | March 31, 2024 | | March 31, 2023 |
Net Income Attributable to Common Shareholders | Net Income Attributable to Common Shareholders | $ | 15.4 | | | $ | 291.9 | | | $ | 506.6 | | | $ | 735.3 | |
Weighted Average Common Shares Outstanding: | Weighted Average Common Shares Outstanding: | | | | | | | | Weighted Average Common Shares Outstanding: | | | | | | | |
Basic | Basic | 349,462,359 | | | 345,893,714 | | | 349,339,752 | | | 345,525,030 | |
Dilutive Effect | Dilutive Effect | 267,623 | | | 401,764 | | | 331,244 | | | 453,276 | |
Diluted | Diluted | 349,729,982 | | | 346,295,478 | | | 349,670,996 | | | 345,978,306 | |
Basic and Diluted EPS | |
| Basic and Diluted EPS | $ | 0.04 | | | $ | 0.84 | | | $ | 1.45 | | | $ | 2.13 | |
15. REVENUES
The following tables present operating revenues disaggregated by revenue source: | | | For the Three Months Ended June 30, 2023 |
| | For the Three Months Ended March 31, 2024 | |
| | For the Three Months Ended March 31, 2024 | |
| | For the Three Months Ended March 31, 2024 | |
Eversource (Millions of Dollars) | Eversource (Millions of Dollars) | Electric Distribution | | Natural Gas Distribution | | Electric Transmission | | Water Distribution | | Other | | Eliminations | | Total | Eversource (Millions of Dollars) | Electric Distribution | | Natural Gas Distribution | | Electric Transmission | | Water Distribution | | Other | | Eliminations | | Total |
Revenues from Contracts with Customers | Revenues from Contracts with Customers | | | | | | | | | | | | | |
Retail Tariff Sales | Retail Tariff Sales | |
Retail Tariff Sales | |
Retail Tariff Sales | |
Residential | |
Residential | |
Residential | Residential | $ | 1,142.2 | | | $ | 198.4 | | | $ | — | | | $ | 38.9 | | | $ | — | | | $ | — | | | $ | 1,379.5 | |
Commercial | Commercial | 692.1 | | | 129.9 | | | — | | | 18.2 | | | — | | | (1.2) | | | 839.0 | |
Industrial | Industrial | 84.9 | | | 41.9 | | | — | | | 1.1 | | | — | | | (4.7) | | | 123.2 | |
Total Retail Tariff Sales Revenues | Total Retail Tariff Sales Revenues | 1,919.2 | | | 370.2 | | | — | | | 58.2 | | | — | | | (5.9) | | | 2,341.7 | |
Wholesale Transmission Revenues | Wholesale Transmission Revenues | — | | | — | | | 403.0 | | | — | | | — | | | (303.8) | | | 99.2 | |
Wholesale Market Sales Revenues | Wholesale Market Sales Revenues | 112.3 | | | 39.8 | | | — | | | 1.0 | | | — | | | — | | | 153.1 | |
Other Revenues from Contracts with Customers | Other Revenues from Contracts with Customers | 21.0 | | | 1.1 | | | 4.5 | | | 2.0 | | | 408.8 | | | (405.8) | | | 31.6 | |
| Total Revenues from Contracts with Customers | Total Revenues from Contracts with Customers | 2,052.5 | | | 411.1 | | | 407.5 | | | 61.2 | | | 408.8 | | | (715.5) | | | 2,625.6 | |
Alternative Revenue Programs | (3.0) | | | (3.1) | | | 72.5 | | | (3.4) | | | — | | | (65.7) | | | (2.7) | |
Other Revenues | 4.9 | | | 1.1 | | | 0.1 | | | 0.3 | | | — | | | — | | | 6.4 | |
Total Operating Revenues | $ | 2,054.4 | | | $ | 409.1 | | | $ | 480.1 | | | $ | 58.1 | | | $ | 408.8 | | | $ | (781.2) | | | $ | 2,629.3 | |
| | For the Six Months Ended June 30, 2023 |
Eversource (Millions of Dollars) | Electric Distribution | | Natural Gas Distribution | | Electric Transmission | | Water Distribution | | Other | | Eliminations | | Total |
Revenues from Contracts with Customers | | | | | | | | | | | | | |
Retail Tariff Sales | |
Residential | $ | 2,606.2 | | | $ | 774.9 | | | $ | — | | | $ | 67.9 | | | $ | — | | | $ | — | | | $ | 3,449.0 | |
Commercial | 1,480.5 | | | 450.0 | | | — | | | 33.7 | | | — | | | (2.3) | | | 1,961.9 | |
Industrial | 174.1 | | | 111.4 | | | — | | | 2.1 | | | — | | | (9.7) | | | 277.9 | |
Total Retail Tariff Sales Revenues | 4,260.8 | | | 1,336.3 | | | — | | | 103.7 | | | — | | | (12.0) | | | 5,688.8 | |
Wholesale Transmission Revenues | — | | | — | | | 838.1 | | | — | | | — | | | (629.1) | | | 209.0 | |
Wholesale Market Sales Revenues | 329.6 | | | 88.9 | | | — | | | 1.8 | | | — | | | — | | | 420.3 | |
Other Revenues from Contracts with Customers | 39.2 | | | 2.7 | | | 9.1 | | | 4.0 | | | 822.7 | | | (818.3) | | | 59.4 | |
| Total Revenues from Contracts with Customers | |
Total Revenues from Contracts with Customers | Total Revenues from Contracts with Customers | 4,629.6 | | | 1,427.9 | | | 847.2 | | | 109.5 | | | 822.7 | | | (1,459.4) | | | 6,377.5 | |
Alternative Revenue Programs | Alternative Revenue Programs | 3.1 | | | 24.3 | | | 91.2 | | | (1.7) | | | — | | | (82.7) | | | 34.2 | |
Other Revenues | Other Revenues | 10.3 | | | 2.1 | | | 0.4 | | | 0.5 | | | — | | | — | | | 13.3 | |
Total Operating Revenues | Total Operating Revenues | $ | 4,643.0 | | | $ | 1,454.3 | | | $ | 938.8 | | | $ | 108.3 | | | $ | 822.7 | | | $ | (1,542.1) | | | $ | 6,425.0 | |
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| For the Three Months Ended March 31, 2023 |
Eversource (Millions of Dollars) | Electric Distribution | | Natural Gas Distribution | | Electric Transmission | | Water Distribution | | Other | | Eliminations | | Total |
Revenues from Contracts with Customers | | | | | | | | | | | | | |
Retail Tariff Sales | | | | | | | | | | | | | |
Residential | $ | 1,464.0 | | | $ | 576.6 | | | $ | — | | | $ | 28.9 | | | $ | — | | | $ | — | | | $ | 2,069.5 | |
Commercial | 788.4 | | | 320.0 | | | — | | | 15.5 | | | — | | | (1.0) | | | 1,122.9 | |
Industrial | 89.1 | | | 69.6 | | | — | | | 1.1 | | | — | | | (5.1) | | | 154.7 | |
Total Retail Tariff Sales Revenues | 2,341.5 | | | 966.2 | | | — | | | 45.5 | | | — | | | (6.1) | | | 3,347.1 | |
Wholesale Transmission Revenues | — | | | — | | | 435.0 | | | — | | | — | | | (325.3) | | | 109.7 | |
Wholesale Market Sales Revenues | 217.3 | | | 49.1 | | | — | | | 0.8 | | | — | | | — | | | 267.2 | |
Other Revenues from Contracts with Customers | 18.3 | | | 1.5 | | | 4.7 | | | 2.1 | | | 413.8 | | | (412.6) | | | 27.8 | |
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Total Revenues from Contracts with Customers | 2,577.1 | | | 1,016.8 | | | 439.7 | | | 48.4 | | | 413.8 | | | (744.0) | | | 3,751.8 | |
Alternative Revenue Programs | 6.0 | | | 27.4 | | | 18.7 | | | 1.7 | | | — | | | (16.9) | | | 36.9 | |
Other Revenues | 5.5 | | | 1.0 | | | 0.2 | | | 0.2 | | | — | | | — | | | 6.9 | |
Total Operating Revenues | $ | 2,588.6 | | | $ | 1,045.2 | | | $ | 458.6 | | | $ | 50.3 | | | $ | 413.8 | | | $ | (760.9) | | | $ | 3,795.6 | |
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| For the Three Months Ended March 31, 2024 | | For the Three Months Ended March 31, 2023 |
(Millions of Dollars) | CL&P | | NSTAR Electric | | PSNH | | CL&P | | NSTAR Electric | | PSNH |
Revenues from Contracts with Customers | | | | | | | | | | | |
Retail Tariff Sales | | | | | | | | | | | |
Residential | $ | 626.8 | | | $ | 462.2 | | | $ | 165.1 | | | $ | 762.2 | | | $ | 467.8 | | | $ | 234.0 | |
Commercial | 252.4 | | | 373.5 | | | 82.0 | | | 295.3 | | | 384.3 | | | 108.6 | |
Industrial | 33.3 | | | 29.9 | | | 24.5 | | | 33.9 | | | 32.6 | | | 22.6 | |
Total Retail Tariff Sales Revenues | 912.5 | | | 865.6 | | | 271.6 | | | 1,091.4 | | | 884.7 | | | 365.2 | |
Wholesale Transmission Revenues | 200.7 | | | 188.8 | | | 84.6 | | | 195.8 | | | 167.8 | | | 71.4 | |
Wholesale Market Sales Revenues | 121.2 | | | 31.6 | | | 12.5 | | | 154.6 | | | 41.1 | | | 21.6 | |
Other Revenues from Contracts with Customers | 16.4 | | | 11.1 | | | 5.2 | | | 10.0 | | | 10.8 | | | 2.9 | |
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Total Revenues from Contracts with Customers | 1,250.8 | | | 1,097.1 | | | 373.9 | | | 1,451.8 | | | 1,104.4 | | | 461.1 | |
Alternative Revenue Programs | 27.4 | | | 7.8 | | | 7.6 | | | 24.6 | | | (9.5) | | | 9.6 | |
Other Revenues | 2.9 | | | 2.0 | | | 0.8 | | | 2.2 | | | 2.5 | | | 1.0 | |
Eliminations | (159.8) | | | (159.3) | | | (56.2) | | | (139.7) | | | (141.1) | | | (51.5) | |
Total Operating Revenues | $ | 1,121.3 | | | $ | 947.6 | | | $ | 326.1 | | | $ | 1,338.9 | | | $ | 956.3 | | | $ | 420.2 | |
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| For the Three Months Ended June 30, 2022 |
Eversource (Millions of Dollars) | Electric Distribution | | Natural Gas Distribution | | Electric Transmission | | Water Distribution | | Other | | Eliminations | | Total |
Revenues from Contracts with Customers | | | | | | | | | | | | | |
Retail Tariff Sales | | | | | | | | | | | | | |
Residential | $ | 1,004.8 | | | $ | 218.5 | | | $ | — | | | $ | 35.3 | | | $ | — | | | $ | — | | | $ | 1,258.6 | |
Commercial | 664.1 | | | 122.6 | | | — | | | 16.7 | | | — | | | (1.4) | | | 802.0 | |
Industrial | 88.9 | | | 43.5 | | | — | | | 1.1 | | | — | | | (5.1) | | | 128.4 | |
Total Retail Tariff Sales Revenues | 1,757.8 | | | 384.6 | | | — | | | 53.1 | | | — | | | (6.5) | | | 2,189.0 | |
Wholesale Transmission Revenues | — | | | — | | | 334.5 | | | — | | | 25.1 | | | (266.4) | | | 93.2 | |
Wholesale Market Sales Revenues | 212.6 | | | 33.2 | | | — | | | 0.9 | | | — | | | — | | | 246.7 | |
Other Revenues from Contracts with Customers | 24.9 | | | 1.2 | | | 3.9 | | | 1.9 | | | 310.6 | | | (309.8) | | | 32.7 | |
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Total Revenues from Contracts with Customers | 1,995.3 | | | 419.0 | | | 338.4 | | | 55.9 | | | 335.7 | | | (582.7) | | | 2,561.6 | |
Alternative Revenue Programs | 6.8 | | | (3.0) | | | 119.0 | | | (1.4) | | | — | | | (113.2) | | | 8.2 | |
Other Revenues | 2.3 | | | 0.2 | | | 0.2 | | | 0.1 | | | — | | | — | | | 2.8 | |
Total Operating Revenues | $ | 2,004.4 | | | $ | 416.2 | | | $ | 457.6 | | | $ | 54.6 | | | $ | 335.7 | | | $ | (695.9) | | | $ | 2,572.6 | |
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| For the Six Months Ended June 30, 2022 |
Eversource (Millions of Dollars) | Electric Distribution | | Natural Gas Distribution | | Electric Transmission | | Water Distribution | | Other | | Eliminations | | Total |
Revenues from Contracts with Customers | | | | | | | | | | | | | |
Retail Tariff Sales | | | | | | | | | | | | | |
Residential | $ | 2,191.0 | | | $ | 775.3 | | | $ | — | | | $ | 63.4 | | | $ | — | | | $ | — | | | $ | 3,029.7 | |
Commercial | 1,325.5 | | | 380.1 | | | — | | | 31.3 | | | — | | | (2.5) | | | 1,734.4 | |
Industrial | 178.5 | | | 111.6 | | | — | | | 2.2 | | | — | | | (9.6) | | | 282.7 | |
Total Retail Tariff Sales Revenues | 3,695.0 | | | 1,267.0 | | | — | | | 96.9 | | | — | | | (12.1) | | | 5,046.8 | |
Wholesale Transmission Revenues | — | | | — | | | 780.7 | | | — | | | 49.6 | | | (631.1) | | | 199.2 | |
Wholesale Market Sales Revenues | 578.1 | | | 66.7 | | | — | | | 1.7 | | | — | | | — | | | 646.5 | |
Other Revenues from Contracts with Customers | 36.1 | | | 2.2 | | | 7.0 | | | 4.2 | | | 669.7 | | | (662.9) | | | 56.3 | |
Amortization of/(Reserve for) Revenues Subject to Refund (1) | 64.9 | | | — | | | 0.7 | | | (0.7) | | | — | | | — | | | 64.9 | |
Total Revenues from Contracts with Customers | 4,374.1 | | | 1,335.9 | | | 788.4 | | | 102.1 | | | 719.3 | | | (1,306.1) | | | 6,013.7 | |
Alternative Revenue Programs | 11.5 | | | 7.2 | | | 104.0 | | | 0.8 | | | — | | | (99.6) | | | 23.9 | |
Other Revenues | 5.1 | | | 0.7 | | | 0.4 | | | 0.2 | | | — | | | — | | | 6.4 | |
Total Operating Revenues | $ | 4,390.7 | | | $ | 1,343.8 | | | $ | 892.8 | | | $ | 103.1 | | | $ | 719.3 | | | $ | (1,405.7) | | | $ | 6,044.0 | |
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| For the Three Months Ended June 30, 2023 | | For the Three Months Ended June 30, 2022 |
(Millions of Dollars) | CL&P | | NSTAR Electric | | PSNH | | CL&P | | NSTAR Electric | | PSNH |
Revenues from Contracts with Customers | | | | | | | | | | | |
Retail Tariff Sales | | | | | | | | | | | |
Residential | $ | 593.7 | | | $ | 370.5 | | | $ | 178.0 | | | $ | 526.1 | | | $ | 326.9 | | | $ | 151.8 | |
Commercial | 255.0 | | | 347.2 | | | 90.2 | | | 255.3 | | | 327.8 | | | 81.7 | |
Industrial | 31.3 | | | 31.1 | | | 22.5 | | | 36.0 | | | 30.6 | | | 22.3 | |
Total Retail Tariff Sales Revenues | 880.0 | | | 748.8 | | | 290.7 | | | 817.4 | | | 685.3 | | | 255.8 | |
Wholesale Transmission Revenues | 172.5 | | | 166.9 | | | 63.6 | | | 115.8 | | | 163.6 | | | 55.1 | |
Wholesale Market Sales Revenues | 62.9 | | | 32.5 | | | 16.9 | | | 143.4 | | | 47.8 | | | 21.4 | |
Other Revenues from Contracts with Customers | 8.8 | | | 12.9 | | | 4.4 | | | 14.7 | | | 11.8 | | | 3.0 | |
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Total Revenues from Contracts with Customers | 1,124.2 | | | 961.1 | | | 375.6 | | | 1,091.3 | | | 908.5 | | | 335.3 | |
Alternative Revenue Programs | 52.6 | | | (5.0) | | | 21.9 | | | 92.2 | | | 14.3 | | | 19.3 | |
Other Revenues | 2.5 | | | 1.8 | | | 0.7 | | | 0.2 | | | 1.6 | | | 0.7 | |
Eliminations | (145.2) | | | (138.9) | | | (48.1) | | | (148.0) | | | (140.7) | | | (48.2) | |
Total Operating Revenues | $ | 1,034.1 | | | $ | 819.0 | | | $ | 350.1 | | | $ | 1,035.7 | | | $ | 783.7 | | | $ | 307.1 | |
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| For the Six Months Ended June 30, 2023 | | For the Six Months Ended June 30, 2022 |
(Millions of Dollars) | CL&P | | NSTAR Electric | | PSNH | | CL&P | | NSTAR Electric | | PSNH |
Revenues from Contracts with Customers | | | | | | | | | | | |
Retail Tariff Sales | | | | | | | | | | | |
Residential | $ | 1,355.9 | | | $ | 838.3 | | | $ | 412.0 | | | $ | 1,125.2 | | | $ | 731.5 | | | $ | 334.3 | |
Commercial | 550.3 | | | 731.5 | | | 198.8 | | | 497.5 | | | 659.1 | | | 170.1 | |
Industrial | 65.2 | | | 63.8 | | | 45.1 | | | 69.5 | | | 64.7 | | | 44.3 | |
Total Retail Tariff Sales Revenues | 1,971.4 | | | 1,633.6 | | | 655.9 | | | 1,692.2 | | | 1,455.3 | | | 548.7 | |
Wholesale Transmission Revenues | 368.3 | | | 334.7 | | | 135.1 | | | 325.0 | | | 328.8 | | | 126.9 | |
Wholesale Market Sales Revenues | 217.6 | | | 73.6 | | | 38.4 | | | 423.4 | | | 105.6 | | | 49.1 | |
Other Revenues from Contracts with Customers | 17.0 | | | 23.6 | | | 7.3 | | | 15.3 | | | 23.4 | | | 5.7 | |
Amortization of Revenues Subject to Refund (1) | 1.7 | | | — | | | — | | | 65.6 | | | — | | | — | |
Total Revenues from Contracts with Customers | 2,576.0 | | | 2,065.5 | | | 836.7 | | | 2,521.5 | | | 1,913.1 | | | 730.4 | |
Alternative Revenue Programs | 77.3 | | | (14.5) | | | 31.5 | | | 93.4 | | | 6.1 | | | 16.0 | |
Other Revenues | 4.7 | | | 4.3 | | | 1.7 | | | 0.3 | | | 3.6 | | | 1.6 | |
Eliminations | (284.9) | | | (280.0) | | | (99.7) | | | (293.7) | | | (276.0) | | | (101.5) | |
Total Operating Revenues | $ | 2,373.1 | | | $ | 1,775.3 | | | $ | 770.2 | | | $ | 2,321.5 | | | $ | 1,646.8 | | | $ | 646.5 | |
(1) Amortization of/(Reserve for) Revenues Subject to Refund within the Electric Distribution segment in the first half of 2022 represents customer credits being distributed to CL&P’s customers on retail electric bills as a result of the October 2021 CL&P settlement agreement and the 2021 civil penalty for non-compliance with storm performance standards. Total customer credits as a result of the 2021 settlement and civil penalty were $93.4 million. The settlement amount of $65 million was refunded over a two-month billing period from December 1, 2021 to January 31, 2022 and the civil penalty of $28.4 million was refunded over a one year billing period, which began September 1, 2021.
16. SEGMENT INFORMATION
Eversource is organized into the Electric Distribution, Electric Transmission, Natural Gas Distribution and Water Distribution reportable segments and Other based on a combination of factors, including the characteristics of each segments' services, the sources of operating revenues and expenses and the regulatory environment in which each segment operates. These reportable segments represent substantially all of Eversource's total consolidated revenues. Revenues from the sale of electricity, natural gas and water primarily are derived from residential, commercial and industrial customers and are not dependent on any single customer. The Electric Distribution reportable segment includes the results of NSTAR Electric's solar power facilities. Eversource's reportable segments are determined based upon the level at which Eversource's chief operating decision maker assesses performance and makes decisions about the allocation of company resources.
The remainder of Eversource's operations is presented as Other in the tables below and primarily consists of 1) the equity in earnings of Eversource parent from its subsidiaries and intercompany interest income, both of which are eliminated in consolidation, and interest expense related to the debt of Eversource parent, 2) the revenues and expenses of Eversource Service, most of which are eliminated in consolidation, 3) the operations of CYAPC and YAEC, 4) the results of other unregulated subsidiaries, which are not part of its core business, and 5) Eversource parent's equity ownership interests that are not consolidated, which primarily include the offshore wind business, a natural gas pipeline owned by Enbridge, Inc., and a renewable energy investment fund that was liquidated in the first quarter of 2023.
In the ordinary course of business, Yankee Gas, NSTAR Gas and EGMA purchase natural gas transmission services from the Enbridge, Inc. natural gas pipeline project described above. These affiliate transaction costs total $77.7 million annually and are classified as Purchased Power, Purchased Natural Gas and Transmission on the Eversource statements of income.
Each of Eversource's subsidiaries, including CL&P, NSTAR Electric and PSNH, has one reportable segment.
Cash flows used for investments in plant included in the segment information below are cash capital expenditures that do not include amounts incurred on capital projects but not yet paid, cost of removal, AFUDC related to equity funds, and the capitalized and deferred portions of pension and PBOP income/expense.
Eversource's segment information is as follows:
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| For the Three Months Ended March 31, 2024 |
Eversource (Millions of Dollars) | Electric Distribution | | Natural Gas Distribution | | Electric Transmission | | Water Distribution | | Other | | Eliminations | | Total |
Operating Revenues | $ | 2,261.7 | | | $ | 906.0 | | | $ | 507.8 | | | $ | 50.1 | | | $ | 443.6 | | | $ | (836.6) | | | $ | 3,332.6 | |
Depreciation and Amortization | (109.8) | | | (83.0) | | | (101.0) | | | (0.6) | | | (45.7) | | | 2.5 | | | (337.6) | |
Other Operating Expenses | (1,905.1) | | | (554.6) | | | (141.9) | | | (32.0) | | | (349.5) | | | 834.1 | | | (2,149.0) | |
Operating Income | $ | 246.8 | | | $ | 268.4 | | | $ | 264.9 | | | $ | 17.5 | | | $ | 48.4 | | | $ | — | | | $ | 846.0 | |
Interest Expense | $ | (82.5) | | | $ | (24.5) | | | $ | (40.9) | | | $ | (11.4) | | | $ | (146.1) | | | $ | 54.7 | | | $ | (250.7) | |
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Other Income, Net | 56.6 | | | 10.1 | | | 14.1 | | | 1.7 | | | 622.6 | | | (614.1) | | | 91.0 | |
Net Income Attributable to Common Shareholders | 168.1 | | | 190.6 | | | 176.7 | | | 5.4 | | | 540.4 | | | (559.4) | | | 521.8 | |
Cash Flows Used for Investments in Plant | 471.3 | | | 244.8 | | | 358.4 | | | 31.9 | | | 43.0 | | | — | | | 1,149.4 | |
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| For the Three Months Ended June 30, 2023 |
Eversource (Millions of Dollars) | Electric Distribution | | Natural Gas Distribution | | Electric Transmission | | Water Distribution | | Other | | Eliminations | | Total |
Operating Revenues | $ | 2,054.4 | | | $ | 409.1 | | | $ | 480.1 | | | $ | 58.1 | | | $ | 408.8 | | | $ | (781.2) | | | $ | 2,629.3 | |
Depreciation and Amortization | 82.1 | | | (41.7) | | | (92.0) | | | (14.1) | | | (38.0) | | | 2.2 | | | (101.5) | |
Other Operating Expenses | (1,905.2) | | | (339.4) | | | (136.2) | | | (28.6) | | | (337.2) | | | 779.5 | | | (1,967.1) | |
Operating Income | $ | 231.3 | | | $ | 28.0 | | | $ | 251.9 | | | $ | 15.4 | | | $ | 33.6 | | | $ | 0.5 | | | $ | 560.7 | |
Interest Expense | $ | (68.2) | | | $ | (21.5) | | | $ | (42.2) | | | $ | (9.2) | | | $ | (100.6) | | | $ | 34.4 | | | $ | (207.3) | |
Impairment of Offshore Wind Investment | — | | | — | | | — | | | — | | | (401.0) | | | — | | | (401.0) | |
Other Income, Net | 47.9 | | | 9.7 | | | 9.5 | | | 1.5 | | | 100.9 | | | (74.6) | | | 94.9 | |
Net Income Attributable to Common Shareholders | 165.5 | | | 11.7 | | | 161.0 | | | 9.3 | | | (292.4) | | | (39.7) | | | 15.4 | |
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| For the Six Months Ended June 30, 2023 |
Eversource (Millions of Dollars) | Electric Distribution | | Natural Gas Distribution | | Electric Transmission | | Water Distribution | | Other | | Eliminations | | Total |
Operating Revenues | $ | 4,643.0 | | | $ | 1,454.3 | | | $ | 938.8 | | | $ | 108.3 | | | $ | 822.7 | | | $ | (1,542.1) | | | $ | 6,425.0 | |
Depreciation and Amortization | 60.0 | | | (118.7) | | | (181.9) | | | (27.4) | | | (74.8) | | | 4.3 | | | (338.5) | |
Other Operating Expenses | (4,247.4) | | | (1,069.8) | | | (264.5) | | | (56.5) | | | (676.9) | | | 1,538.8 | | | (4,776.3) | |
Operating Income | $ | 455.6 | | | $ | 265.8 | | | $ | 492.4 | | | $ | 24.4 | | | $ | 71.0 | | | $ | 1.0 | | | $ | 1,310.2 | |
Interest Expense | $ | (137.6) | | | $ | (42.7) | | | $ | (83.7) | | | $ | (18.6) | | | $ | (185.7) | | | $ | 66.4 | | | $ | (401.9) | |
Impairment of Offshore Wind Investment | — | | | — | | | — | | | — | | | (401.0) | | | — | | | (401.0) | |
Other Income, Net | 102.1 | | | 18.7 | | | 18.9 | | | 2.7 | | | 666.8 | | | (625.3) | | | 183.9 | |
Net Income Attributable to Common Shareholders | 331.0 | | | 181.9 | | | 316.1 | | | 10.8 | | | 224.7 | | | (557.9) | | | 506.6 | |
Cash Flows Used for Investments in Plant | 817.3 | | | 371.5 | | | 636.9 | | | 74.7 | | | 139.1 | | | — | | | 2,039.5 | |
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| For the Three Months Ended June 30, 2022 |
Eversource (Millions of Dollars) | Electric Distribution | | Natural Gas Distribution | | Electric Transmission | | Water Distribution | | Other | | Eliminations | | Total |
Operating Revenues | $ | 2,004.4 | | | $ | 416.2 | | | $ | 457.6 | | | $ | 54.6 | | | $ | 335.7 | | | $ | (695.9) | | | $ | 2,572.6 | |
Depreciation and Amortization | (198.1) | | | (39.1) | | | (83.3) | | | (12.5) | | | (33.2) | | | 1.6 | | | (364.6) | |
Other Operating Expenses | (1,636.1) | | | (360.7) | | | (141.3) | | | (27.0) | | | (279.4) | | | 692.1 | | | (1,752.4) | |
Operating Income | $ | 170.2 | | | $ | 16.4 | | | $ | 233.0 | | | $ | 15.1 | | | $ | 23.1 | | | $ | (2.2) | | | $ | 455.6 | |
Interest Expense | $ | (60.3) | | | $ | (16.7) | | | $ | (37.5) | | | $ | (8.4) | | | $ | (53.5) | | | $ | 16.3 | | | $ | (160.1) | |
Other Income, Net | 53.0 | | | 10.6 | | | 9.3 | | | 2.1 | | | 354.3 | | | (335.4) | | | 93.9 | |
Net Income Attributable to Common Shareholders | 129.0 | | | 7.7 | | | 151.5 | | | 9.0 | | | 316.0 | | | (321.3) | | | 291.9 | |
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| For the Six Months Ended June 30, 2022 |
Eversource (Millions of Dollars) | Electric Distribution | | Natural Gas Distribution | | Electric Transmission | | Water Distribution | | Other | | Eliminations | | Total |
Operating Revenues | $ | 4,390.7 | | | $ | 1,343.8 | | | $ | 892.8 | | | $ | 103.1 | | | $ | 719.3 | | | $ | (1,405.7) | | | $ | 6,044.0 | |
Depreciation and Amortization | (549.7) | | | (91.1) | | | (165.3) | | | (24.8) | | | (63.4) | | | 3.3 | | | (891.0) | |
Other Operating Expenses | (3,481.7) | | | (1,018.0) | | | (270.5) | | | (54.1) | | | (610.9) | | | 1,400.8 | | | (4,034.4) | |
Operating Income | $ | 359.3 | | | $ | 234.7 | | | $ | 457.0 | | | $ | 24.2 | | | $ | 45.0 | | | $ | (1.6) | | | $ | 1,118.6 | |
Interest Expense | $ | (119.8) | | | $ | (32.5) | | | $ | (70.6) | | | $ | (16.5) | | | $ | (100.3) | | | $ | 26.4 | | | $ | (313.3) | |
Other Income, Net | 100.5 | | | 20.8 | | | 18.2 | | | 4.2 | | | 850.2 | | | (828.5) | | | 165.4 | |
Net Income Attributable to Common Shareholders | 269.9 | | | 171.7 | | | 300.0 | | | 12.7 | | | 784.7 | | | (803.7) | | | 735.3 | |
Cash Flows Used for Investments in Plant | 541.8 | | | 275.4 | | | 543.6 | | | 65.6 | | | 122.7 | | | — | | | 1,549.1 | |
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| For the Three Months Ended March 31, 2023 |
Eversource (Millions of Dollars) | Electric Distribution | | Natural Gas Distribution | | Electric Transmission | | Water Distribution | | Other | | Eliminations | | Total |
Operating Revenues | $ | 2,588.6 | | | $ | 1,045.2 | | | $ | 458.6 | | | $ | 50.3 | | | $ | 413.8 | | | $ | (760.9) | | | $ | 3,795.6 | |
Depreciation and Amortization | (22.0) | | | (77.0) | | | (89.9) | | | (13.3) | | | (36.8) | | | 2.1 | | | (236.9) | |
Other Operating Expenses | (2,342.3) | | | (730.4) | | | (128.2) | | | (27.9) | | | (339.6) | | | 759.3 | | | (2,809.1) | |
Operating Income | $ | 224.3 | | | $ | 237.8 | | | $ | 240.5 | | | $ | 9.1 | | | $ | 37.4 | | | $ | 0.5 | | | $ | 749.6 | |
Interest Expense | $ | (69.3) | | | $ | (21.2) | | | $ | (41.5) | | | $ | (9.4) | | | $ | (85.1) | | | $ | 32.0 | | | $ | (194.5) | |
Other Income, Net | 54.3 | | | 9.0 | | | 9.4 | | | 1.1 | | | 565.8 | | | (550.6) | | | 89.0 | |
Net Income Attributable to Common Shareholders | 165.5 | | | 170.3 | | | 155.1 | | | 1.5 | | | 516.9 | | | (518.1) | | | 491.2 | |
Cash Flows Used for Investments in Plant | 371.9 | | | 165.5 | | | 336.6 | | | 37.9 | | | 65.2 | | | — | | | 977.1 | |
The following table summarizes Eversource's segmented total assets:
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Eversource (Millions of Dollars) | Electric Distribution | | Natural Gas Distribution | | Electric Transmission | | Water Distribution | | Other | | Eliminations | | Total |
As of June 30, 2023 | $ | 27,932.6 | | | $ | 8,089.8 | | | $ | 14,054.2 | | | $ | 2,817.2 | | | $ | 27,475.0 | | | $ | (25,829.1) | | | $ | 54,539.7 | |
As of December 31, 2022 | 27,365.0 | | | 8,084.9 | | | 13,369.5 | | | 2,783.8 | | | 26,365.2 | | | (24,737.5) | | | 53,230.9 | |
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Eversource (Millions of Dollars) | Electric Distribution | | Natural Gas Distribution | | Electric Transmission | | Water Distribution | | Other | | Eliminations | | Total |
As of March 31, 2024 | $ | 30,437.0 | | | $ | 8,948.5 | | | $ | 15,129.8 | | | $ | 2,972.2 | | | $ | 28,358.1 | | | $ | (28,523.4) | | | $ | 57,322.2 | |
As of December 31, 2023 | 29,426.4 | | | 8,775.3 | | | 14,806.5 | | | 2,944.8 | | | 26,337.7 | | | (26,678.5) | | | 55,612.2 | |
EVERSOURCE ENERGY AND SUBSIDIARIES
Management's Discussion and Analysis of Financial Condition and Results of Operations
The following discussion and analysis should be read in conjunction with our unaudited condensed consolidated financial statements and related combined notes included in this combined Quarterly Report on Form 10-Q, the combined Quarterly Report on Form 10-Q for the quarter ended March 31, 2023, as well as the Eversource 20222023 combined Annual Report on Form 10-K. References in this combined Quarterly Report on Form 10-Q to "Eversource," the "Company," "we," "us," and "our" refer to Eversource Energy and its consolidated subsidiaries. All per-share amounts are reported on a diluted basis. The unaudited condensed consolidated financial statements of Eversource, NSTAR Electric and PSNH and the unaudited condensed financial statements of CL&P are herein collectively referred to as the "financial statements."
Refer to the Glossary of Terms included in this combined Quarterly Report on Form 10-Q for abbreviations and acronyms used throughout this Management's Discussion and Analysis of Financial Condition and Results of Operations.
The only common equity securities that are publicly traded are common shares of Eversource. Our earnings discussion includes a financial measuresmeasure that areis not recognized under GAAP (non-GAAP) referencing our earnings and EPS excluding the impairment charge for the offshore wind investment, a loss on the disposition of land that was initially acquired to construct the Northern Pass Transmission project and was subsequently abandoned, and certain transaction and transition costs., EPS by business, is also a non-GAAP financial measure andwhich is calculated by dividing the Net Income Attributable to Common Shareholders of each business by the weighted average diluted Eversource common shares outstanding for the period. The earnings and EPS of each business do not represent a direct legal interest in the assets and liabilities of such business, but rather represent a direct interest in our assets and liabilities as a whole.
We use thesethis non-GAAP financial measuresmeasure to evaluate and provide details of earnings results by business and to more fully compare and explain our results without including these items.business. This information is among the primary indicators we use as a basis for evaluating performance and planning and forecasting of future periods. We believe the impacts of the impairment charge for the offshore wind investment, the loss on the disposition of land associated with an abandoned project, and transaction and transition costs are not indicative of our ongoing costs and performance. We view these charges as not directly related to the ongoing operations of the business and therefore not an indicator of baseline operating performance. Due to the nature and significance of the effect of these items on Net Income Attributable to Common Shareholders and EPS, we believe that the non-GAAP presentation is a more meaningful representation of our financial performance and provides additional and useful information to readers of this report in analyzing historical and future performance of our business. These non-GAAP financial measuresmeasure should not be considered as alternativesan alternative to reported Net Income Attributable to Common Shareholders or EPS determined in accordance with GAAP as indicatorsan indicator of operating performance.
We make statements concerning our expectations, beliefs, plans, objectives, goals, strategies, assumptions of future events, future financial performance or growth and other statements that are not historical facts. These statements are "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. You can generally identify our forward-looking statements through the use of words or phrases such as "estimate," "expect," "anticipate," "intend," "plan," "project," "believe," "forecast," "should," "could," and other similar expressions. Forward-looking statements involve risks and uncertainties that may cause actual results or outcomes to differ materially from those included in our forward-looking statements. Forward-looking statements are based on the current expectations, estimates, assumptions or projections of management and are not guarantees of future performance. These expectations, estimates, assumptions or projections may vary materially from actual results. Accordingly, any such statements are qualified in their entirety by reference to, and are accompanied by, the following important factors that may cause our actual results or outcomes to differ materially from those contained in our forward-looking statements, including, but not limited to:
•cyberattacks or breaches, including those resulting in the compromise of the confidentiality of our proprietary information and the personal information of our customers,
,•our ability to complete the offshore wind investments sales process on the timelines, terms and pricing we expect; if we and the counterparties are unable to satisfy all closing conditions and consummate the purchase and sale transactions with respect to our offshore wind assets; if we are unable to qualify for investment tax credits related to these projects; if we experience variability in the projected construction costs of the offshore wind projects, if there is a deterioration of market conditions in the offshore wind industry; and if the projects do not commence operation as scheduled or within budget or are not completed,
•disruptions in the capital markets or other events that make our access to necessary capital more difficult or costly,
• changes in economic conditions, including impact on interest rates, tax policies, and customer demand and payment ability,
• ability or inability to commence and complete our major strategic development projects and opportunities,
• the ability to sell Eversource’s 50 percent interest in three offshore wind projects under development on the timeline we expect, to satisfy the investment tax credit qualifications related to the tax equity investment in the South Fork Wind project, and the ability of the Revolution Wind and Sunrise Wind projects to qualify for the investment tax credit adders, and to successfully reprice the Sunrise Wind OREC contract,
• acts of war or terrorism, physical attacks or grid disturbances that may damage and disrupt our electric transmission and electric, natural gas, and water distribution systems,
• actions or inaction of local, state and federal regulatory, public policy and taxing bodies,
• substandard performance of third-party suppliers and service providers,
• fluctuations in weather patterns, including extreme weather due to climate change,
• changes in business conditions, which could include disruptive technology or development of alternative energy sources related to our current or future business model,
• contamination of, or disruption in, our water supplies,
• changes in levels or timing of capital expenditures,
• changes in laws, regulations or regulatory policy, including compliance with environmental laws and regulations,
• changes in accounting standards and financial reporting regulations,
• actions of rating agencies, and
• other presently unknown or unforeseen factors.
Other risk factors are detailed in our reports filed with the SEC and updated as necessary, and we encourage you to consult such disclosures.
All such factors are difficult to predict and contain uncertainties that may materially affect our actual results, many of which are beyond our control. You should not place undue reliance on the forward-looking statements, as each speaks only as of the date on which such statement is made, and, except as required by federal securities laws, we undertake no obligation to update any forward-looking statement or statements to reflect events or circumstances after the date on which such statement is made or to reflect the occurrence of unanticipated events. New factors emerge from time to time and it is not possible for us to predict all of such factors, nor can we assess the impact of each such factor on the business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements. For more information, see Item 1A, Risk Factors, included in this combined Quarterly Report on Form 10-Q and in
Eversource's 20222023 combined Annual Report on Form 10-K. This combined Quarterly Report on Form 10-Q and Eversource's 20222023 combined Annual Report on Form 10-K also describe material contingencies and critical accounting policies in the accompanying Management's Discussion and Analysis of Financial Condition and Results of Operations and Combined Notes to Financial Statements. We encourage you to review these items.
Financial Condition and Business Analysis
Executive Summary
Eversource Energy is a public utility holding company primarily engaged, through its wholly-owned regulated utility subsidiaries, in the energy delivery business. Eversource Energy's wholly-owned regulated utility subsidiaries consist of CL&P, NSTAR Electric and PSNH (electric utilities), Yankee Gas, NSTAR Gas and EGMA (natural gas utilities) and Aquarion (water utilities). Eversource is organized into the electric distribution, electric transmission, natural gas distribution, and water distribution reportable segments.
The following items in this executive summary are explained in more detail in this combined Quarterly Report on Form 10-Q:
Earnings Overview and Future Outlook:
•We earned $15.4$521.8 million, or $0.04 per share, in the second quarter of 2023, and $506.6 million, or $1.45$1.49 per share, in the first halfquarter of 2023,2024, compared with $291.9$491.2 million, or $0.84 per share, in the second quarter of 2022, and $735.3 million, or $2.13$1.41 per share, in the first half of 2022. Results for the second quarter and first half of 2023 include an after-tax impairment charge of $331.0 million or $0.95 per share, related to our offshore wind investment recorded at Eversource parent. Our results also include after-tax transaction, transition and other charges recorded at Eversource parent of $6.2 million in the second quarter of 2023 and $6.7 million in the first half of 2023, compared with $5.5 million in the second quarter of 2022 and $10.8 million in the first half of 2022. Excluding the offshore wind impairment and these other charges, our non-GAAP earnings were $352.6 million, or $1.00 per share, in the second quarter of 2023, and $844.3 million, or $2.41 per share, in the first half of 2023, compared with $297.4 million, or $0.86 per share, in the second quarter of 2022, and $746.1 million, or $2.16 per share, in the first half of 2022.2023.
•We reaffirmed our projection to earn within a 20232024 non-GAAP EPSearnings guidance range of $4.25between $4.50 per share to $4.43and $4.67 per share, which excludes the impact of the strategic reviewexpected sales of our 50 percent interests in three jointly-owned offshore wind investment portfolioprojects and associated impairment charge, the loss on disposition of land, andrelated transaction costs. We also reaffirmed our projection of our long-term EPS growth rate through 2027 from our regulated utility businesses in the upper half of the2028 within a 5 to 7 percent range.
Liquidity:
•Cash flows provided by operating activities totaled $647.3$291.3 million in the first halfquarter of 2023,2024, compared with $841.8$69.2 million in the first halfquarter of 2022.2023. Investments in property, plant and equipment totaled $2.04$1.15 billion in the first halfquarter of 2023,2024, compared with $1.55 billion$977.1 million in the first halfquarter of 2022.2023.
•Cash and Cash Equivalents totaled $42.2$259.2 million as of June 30, 2023,March 31, 2024, compared with $374.6$53.9 million as of December 31, 2022.2023. Our available borrowing capacity under our commercial paper programs totaled $1.80 billion$296.1 million as of June 30, 2023.March 31, 2024.
•In the first halfquarter of 2023,2024, we issued $3.36$1.35 billion of new long-term debt and we repaid $853 million of long-term debt.
•On May 3, 2023,1, 2024, our Board of Trustees approved a common share dividend payment of $0.675$0.715 per share, paidpayable on June 30, 202328, 2024 to shareholders of record as of May 18, 2023.16, 2024. On January 31, 2024, our Board of Trustees approved a common share dividend payment of $0.715 per share, paid on March 29, 2024 to shareholders of record as of March 5, 2024.
•On February 13, 2024, we initiated an exploratory assessment of a potential sale of our water distribution business.
Strategic Developments:
•On May 25, 2023, weFebruary 13, 2024, Eversource announced that we have completed the strategic review of ourit executed an agreement to sell its existing 50 percent ownership interestinterests in the offshore wind investment portfolio. As a result of completing this review, we announced that we entered into a purchase and sale agreement with Ørsted for our 50 percent interest in an uncommitted lease area of approximately 175,000 developable acres for $625 million in an all-cash transaction; we entered into a binding letter of intent with Ørsted to use $575 million of the proceeds from the lease area sale to provide tax equity for the South Fork Wind and Revolution Wind projects to Global Infrastructure Partners (GIP). As part of this transaction, Eversource expects to receive approximately $1.1 billion of cash proceeds upon closing, which includes the sales value related to the 10 percent energy community ITC adder of approximately $170 million related to Revolution Wind, and to exit these projects while retaining certain cost sharing obligations for the construction of Revolution Wind. The purchase price is subject to future post-closing adjustment payments based on, among other things, the progress, timing and expense of construction of each project. The cost sharing obligations provide that Eversource would share equally with GIP in GIP’s funding obligations for up to approximately $240 million of incremental capital expenditure overruns incurred during the construction phase for the Revolution Wind project, throughafter which obligations for any additional capital expenditure overruns would be shared equally by Eversource and Ørsted. Additionally, Eversource’s financial exposure will be adjusted by certain purchase price adjustments to be made following commercial operation of the Revolution Wind project and closing of South Fork as a new tax equity ownership interest;result of final project economics, which includes Eversource’s obligation to maintain GIP’s internal rate of return for each project as specified in the agreement. South Fork Wind construction has been completed and we determined that we will continueEversource does not expect any material cost sharing or other purchase price adjustment payments for South Fork Wind. Closing of the transaction is currently expected to pursue the sale of our existingoccur later this year.
•On January 24, 2024, Ørsted signed an agreement with Eversource to acquire Eversource’s 50 percent interestshare of Sunrise Wind, subject to the successful selection of Sunrise Wind in the three jointly-owned contractedNew York fourth solicitation for offshore wind projects. In connectioncapacity, signing of an OREC contract with these developmentsNYSERDA, finalization of agreements including the equity and asset purchase agreement, receipt of the final approval by BOEM of the Sunrise Wind COP, and relevant regulatory approvals. On January 25, 2024, Sunrise Wind submitted a proposal in the strategic review, we evaluated our aggregate investmentNew York fourth offshore wind solicitation and was selected by NYSERDA on February 29, 2024 for contract negotiation. Sunrise Wind is currently negotiating an OREC contract with NYSERDA that will include the price proposed by Sunrise Wind in the projects, uncommitted lease area, and othersolicitation. We expect the OREC contract to be finalized in the second quarter of 2024.
related capitalized costsOn April 18, 2024, Eversource and determined thatØrsted executed the equity and asset purchase agreement to sell Eversource’s 50 percent interest in Sunrise Wind to Ørsted, and upon closing, Ørsted will become the sole owner of Sunrise Wind. Eversource will remain contracted to manage Sunrise Wind’s onshore construction through completion. In accordance with the equity and asset purchase agreement, Ørsted will pay Eversource 50 percent of the negotiated purchase price upon closing the sale transaction, with the remaining 50 percent paid after onshore construction is completed and certain other milestones are achieved. Upon the closing of the transaction, Eversource will not have any ongoing ownership interest in the project, nor any ongoing financial or credit support obligations associated with project costs. The impact of the purchase price from the sale of Sunrise Wind to Ørsted, as compared to the current carrying value of the equity method offshore wind investment exceeded the fair valuewhich had assumed an abandonment of the investment and that the decline was other-than-temporary. The current estimate of fair value is based on the expected sale price of our 50 percent interest in the three contracted projects based on the most recent bid value,project, will be reflected when the sale priceof Sunrise Wind is completed. Eversource expects the sale of Sunrise Wind to Ørsted will be completed later this year.
•As of January 1, 2024, four of South Fork Wind’s twelve turbines were placed into service and met the project commercial operation date requirements under the power purchase agreement with LIPA. Installation of the uncommitted lease area includedproject’s twelve 11-megawatt wind turbines was completed in the purchaseFebruary 2024 and sale agreement, the value of the tax equity ownership interest,all are now producing power. Final commissioning, including warranty testing and the expectation of a successful repricing of the Sunrise Wind OREC contract. As a result, we recognized a pre-tax other-than-temporary impairment charge of $401.0 million ($331.0 million after-tax) in the second quarter of 2023. The fair value of the investment will be updated based on final sales prices and final sales terms, final OREC pricing for the Sunrise Windconstruction contract and investment tax credit qualifications (including any investment tax credit adders), and changes to our estimates of these items could result in an adjustment to this impairment charge.close-out, is underway.
Earnings Overview
Consolidated: Below is a summary of our earnings by business, which also reconciles the non-GAAP financial measuresmeasure of consolidated non-GAAP earnings and EPS, as well as EPS by business to the most directly comparable GAAP measuresmeasure of consolidated Net Income Attributable to Common Shareholders and diluted EPS.
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| For the Three Months Ended June 30, | | For the Six Months Ended June 30, |
| 2023 | | 2022 | | 2023 | | 2022 |
(Millions of Dollars, Except Per Share Amounts) | Amount | | Per Share | | Amount | | Per Share | | Amount | | Per Share | | Amount | | Per Share |
Net Income Attributable to Common Shareholders (GAAP) | $ | 15.4 | | | $ | 0.04 | | | $ | 291.9 | | | $ | 0.84 | | | $ | 506.6 | | | $ | 1.45 | | | $ | 735.3 | | | $ | 2.13 | |
| | | | | | | | | | | | | | | |
Regulated Companies | $ | 347.5 | | | $ | 0.99 | | | $ | 297.2 | | | $ | 0.86 | | | $ | 839.8 | | | $ | 2.40 | | | $ | 754.3 | | | $ | 2.18 | |
Eversource Parent and Other Companies (Non-GAAP) | 5.1 | | | 0.01 | | | 0.2 | | | — | | | 4.5 | | | 0.01 | | | (8.2) | | | (0.02) | |
Non-GAAP Earnings | $ | 352.6 | | | $ | 1.00 | | | $ | 297.4 | | | $ | 0.86 | | | $ | 844.3 | | | $ | 2.41 | | | $ | 746.1 | | | $ | 2.16 | |
Impairment of Offshore Wind Investment (after-tax) (1) | (331.0) | | | (0.95) | | | — | | | — | | | (331.0) | | | (0.95) | | | — | | | — | |
Loss on Land Disposition (after-tax) (2) | (4.8) | | | (0.01) | | | — | | | — | | | (4.8) | | | (0.01) | | | — | | | — | |
Transaction and Transition Costs (after-tax) (3) | (1.4) | | | — | | | (5.5) | | | (0.02) | | | (1.9) | | | — | | | (10.8) | | | (0.03) | |
Net Income Attributable to Common Shareholders (GAAP) | $ | 15.4 | | | $ | 0.04 | | | $ | 291.9 | | | $ | 0.84 | | | $ | 506.6 | | | $ | 1.45 | | | $ | 735.3 | | | $ | 2.13 | |
(1) In the second quarter of 2023, Eversource recorded an impairment charge associated with its equity method investment in its offshore wind business resulting from the completion of the strategic review of its offshore wind investment portfolio.
(2) In the second quarter of 2023, Eversource recorded a loss on the disposition of land. The land was initially acquired to construct the Northern Pass Transmission project and was subsequently abandoned.
(3) The transaction costs are for the strategic review of our offshore wind investment portfolio and our water business acquisitions. The costs in 2022 also include costs associated with the transition of systems as a result of our purchase of the assets of Columbia Gas of Massachusetts (CMA) on October 9, 2020 and integrating the CMA assets onto Eversource’s systems. | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | For the Three Months Ended March 31, |
| | | | | 2024 | | 2023 |
(Millions of Dollars, Except Per Share Amounts) | | | | | | | | | Amount | | Per Share | | Amount | | Per Share |
| | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | |
Regulated Companies | | | | | | | | | $ | 540.8 | | | $ | 1.53 | | | $ | 492.4 | | | $ | 1.41 | |
Eversource Parent and Other Companies | | | | | | | | | (19.0) | | | (0.04) | | | (1.2) | | | — | |
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| | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | |
Net Income Attributable to Common Shareholders | | | | | | | | | $ | 521.8 | | | $ | 1.49 | | | $ | 491.2 | | | $ | 1.41 | |
Regulated Companies: Our regulated companies comprise the electric distribution, electric transmission, natural gas distribution, and water distribution segments. A summary of our segment earnings and EPS is as follows:
| | | For the Three Months Ended June 30, | | For the Six Months Ended June 30, |
| | 2023 | | 2022 | | 2023 | | 2022 |
| | | | For the Three Months Ended March 31, |
| | | | | 2024 | | | | | | | 2024 | | 2023 |
(Millions of Dollars, Except Per Share Amounts) | (Millions of Dollars, Except Per Share Amounts) | Amount | | Per Share | | Amount | | Per Share | | Amount | | Per Share | | Amount | | Per Share | (Millions of Dollars, Except Per Share Amounts) | | | | | | | | | Amount | | Per Share | | Amount | | Per Share |
| | Electric Distribution | |
| Electric Distribution | |
| Electric Distribution | Electric Distribution | $ | 165.5 | | | $ | 0.47 | | | $ | 129.0 | | | $ | 0.37 | | | $ | 331.0 | | | $ | 0.95 | | | $ | 269.9 | | | $ | 0.78 | |
Electric Transmission | Electric Transmission | 161.0 | | | 0.46 | | | 151.5 | | | 0.44 | | | 316.1 | | | 0.90 | | | 300.0 | | | 0.87 | |
Natural Gas Distribution | Natural Gas Distribution | 11.7 | | | 0.03 | | | 7.7 | | | 0.02 | | | 181.9 | | | 0.52 | | | 171.7 | | | 0.49 | |
Water Distribution | Water Distribution | 9.3 | | | 0.03 | | | 9.0 | | | 0.03 | | | 10.8 | | | 0.03 | | | 12.7 | | | 0.04 | |
| Net Income - Regulated Companies | Net Income - Regulated Companies | $ | 347.5 | | | $ | 0.99 | | | $ | 297.2 | | | $ | 0.86 | | | $ | 839.8 | | | $ | 2.40 | | | $ | 754.3 | | | $ | 2.18 | |
| Net Income - Regulated Companies | |
| Net Income - Regulated Companies | |
Our electric distribution segment earnings increased $36.5$2.6 million in the secondfirst quarter of 2023,2024, as compared to the secondfirst quarter of 2022,2023, due primarily to the impact of a new regulatory tracking mechanism at PSNH that allows for the recovery of previously incurred operating expenses associated with poles acquired on May 1, 2023, lower operations and maintenance due primarily to lower storm costs and lower employee-related costs,higher revenues from a base distribution rate increase effective January 1, 20232024 at NSTAR Electric higher earningsand from CL&P's capital tracking mechanism due to increased electric system improvements, and an increase in interest income primarily on regulatory deferrals. Those earnings increases were partially offset by higher interest expense, higher pensiondepreciation expense, in Connecticuthigher operations and New Hampshire, higher depreciationmaintenance expense, and higher property tax expense.
Our electric distribution segment earnings increased $61.1 million in the first half of 2023, as compared to the first half of 2022, due primarily to higher revenues at NSTAR Electric as a result of a rate design change approved by the DPU in the 2022 rate case that shifted the recovery of quarterly revenues and a base distribution rate increase effective January 1, 2023. As part of the 2022 NSTAR Electric rate case decision, certain customer rates changed from seasonal demand charges to a single annual demand charge effective January 1, 2023, resulting in a shift in the timing of revenues and earnings recognized quarterly in 2023, as compared to 2022, but with no impact on an annual basis. This rate design change will result in higher revenues in each of the first and fourth quarters of 2023 of approximately $21 million, offset by lower revenues in the third quarter
of 2023 of approximately $42 million, as compared to the same periods in 2022. Electric distribution segment earnings were also favorably impacted by higher earnings from CL&P's capital tracking mechanism due to increased electric system improvements, the impact of a new regulatory tracking mechanism at PSNH that allows for the recovery of previously incurred operating expenses associated with poles acquired on May 1, 2023, an increase in interest income primarily on regulatory deferrals, and higher AFUDC equity income. Those earnings increases were partially offset by higher interest expense, higher pension expense in Connecticut and New Hampshire, higher property and other tax expense, and higher depreciation expense.
Our electric transmission segment earnings increased $9.5 million and $16.1$21.6 million in the secondfirst quarter and the first half of 2023, respectively,2024, as compared to the secondfirst quarter and the first half of 2022,2023, due primarily to a higher transmission rate base as a result of our continued investment in our transmission infrastructure.infrastructure and higher AFUDC equity income.
Our natural gas distribution segment earnings increased $4.0 million and $10.2$20.3 million in the secondfirst quarter and the first half of 2023, respectively,2024, as compared to the secondfirst quarter and the first half of 2022,2023, due primarily to higher earningsrevenues from capital tracking mechanisms due to continued investments in natural gas infrastructure and from a base distribution rate increasesincrease effective November 1, 20222023 at NSTAR Gas, and EGMA, lower operations and maintenance expense, and an increase in interest income primarily on regulatory deferrals.lower property tax expense. Those earnings increases were partially offset by higher depreciation expense higher interest expense, and higher property taxinterest expense.
Our water distribution segment earnings increased $0.3 million and decreased $1.9$3.9 million in the secondfirst quarter and the first half of 2023, respectively,2024, as compared to the secondfirst quarter and theof 2023. Higher first half of 2022. Lower first halfquarter earnings were due primarily to an after-tax benefit of $5.2 million recorded to recognize the impacts of the Aquarion Water Company of Connecticut’s rate case decision from PURA from the effective date of the order on March 15, 2023 through March 31, 2024. The adjustment was recorded as a result of the State of Connecticut Superior Court’s decision on the rate case appeal on March 25, 2024. The impacts primarily include a reserve recorded for revenues subject to refund as a result of the lower authorized revenues not yet reflected in current rates, offset by a reduction to depreciation expense to reflect lower depreciation rates ordered by PURA in its final decision. Earnings were also unfavorably impacted by higher interest expense and higher operations and maintenance expense and higher interest expense.
Eversource Parent and Other Companies: Eversource parent and other companies’ earnings decreased $326.8 million and $314.2losses increased $17.8 million in the secondfirst quarter and the first half of 2023, respectively,2024, as compared to the secondfirst quarter and the first half of 2022,2023, due primarily to the impairment of Eversource Parent’s offshore wind investment, which resulted in an after-tax charge of $331.0 million, or $0.95 per share. Earnings were also unfavorably impacted by higher interest expense and a loss on the dispositionabsence of land in the second quarter of 2023 that was initially acquired to construct the Northern Pass Transmission project and was subsequently abandoned. The earnings decreases were partially offset by a benefit in both the first and second quarter of 2023 from the liquidation of Eversource Parent’sparent’s equity method investment in a renewable energy fund, partially offset by the absence of a charitable contribution made with a portion of the proceeds from the liquidation in the first quarter of 2023. Additionally, earnings in both periodsParent and other companies also benefited from a lower effective tax rate and a decrease in after-tax transaction and transition costs of $4.1 million and $8.9 million in the second quarter and the first half of 2023, respectively, as compared to the second quarter and first half of 2022.rate.
Liquidity
Sources and Uses of Cash: Eversource’s regulated business is capital intensive and requires considerable capital resources. Eversource’s regulated companies’ capital resources are provided by cash flows generated from operations, short-term borrowings, long-term debt issuances, capital contributions from Eversource parent, and existing cash, and are used to fund their liquidity and capital requirements. Eversource’s regulated companies typically maintain minimal cash balances and use short-term borrowings to meet their working capital needs and other cash requirements. Short-term borrowings are also used as a bridge to long-term debt financings. The levels of short-term borrowing may vary significantly over the course of the year due to the impact of fluctuations in cash flows from operations (including timing of storm costs and regulatory recoveries), dividends paid, capital contributions received and the timing of long-term debt financings.
Eversource, CL&P, NSTAR Electric and PSNH each uses its available capital resources to fund its respective construction expenditures, meet debt requirements, pay operating costs, including storm-related costs, pay dividends, and fund other corporate obligations, such as pension contributions. Eversource's regulated companies recover their electric, natural gas and water distribution construction expenditures as the related project costs are depreciated over the life of the assets. This impacts the timing of the revenue stream designed to fully recover the total investment plus a return on the equity and debt used to finance the investments. Eversource's regulated companies spend a significant amount of cash on capital improvements and construction projects that have a long-term return on investment and recovery period. In addition, Eversource uses its capital resources to fund investments in its offshore wind business, which are recognized as long-term assets.
We expect the future operating cash flows of Eversource, CL&P, NSTAR Electric and PSNH, along with our existing borrowing availability and access to both debt and equity markets, will be sufficient to meet any working capital and future operating requirements, and capital investment forecasted opportunities.
Cash and Cash Equivalents totaled $42.2$259.2 million as of June 30, 2023,March 31, 2024, compared with $374.6$53.9 million as of December 31, 2022.2023.
Short-Term Debt - Commercial Paper Programs and Credit Agreements: Eversource parent has a $2.00 billion commercial paper program allowing Eversource parent to issue commercial paper as a form of short-term debt. Eversource parent, CL&P, PSNH, NSTAR Gas, Yankee Gas, EGMA and Aquarion Water Company of Connecticut are parties to a five-year $2.00 billion revolving credit facility, which terminates on October 15, 2027.13, 2028. This revolving credit facility serves to backstop Eversource parent's $2.00 billion commercial paper program.
NSTAR Electric has a $650 million commercial paper program allowing NSTAR Electric to issue commercial paper as a form of short-term debt. NSTAR Electric is also a party to a five-year $650 million revolving credit facility, which terminates on October 15, 2027, and13, 2028, that serves to backstop NSTAR Electric's $650 million commercial paper program.
The amount of borrowings outstanding and available under the commercial paper programs were as follows:
| | Borrowings Outstanding as of | | Available Borrowing Capacity as of | | Weighted-Average Interest Rate as of |
| June 30, 2023 | | December 31, 2022 | | June 30, 2023 | | December 31, 2022 | | June 30, 2023 | | December 31, 2022 |
| Borrowings Outstanding as of | | | Borrowings Outstanding as of | | Available Borrowing Capacity as of | | Weighted-Average Interest Rate as of |
| March 31, 2024 | | | March 31, 2024 | | December 31, 2023 | | March 31, 2024 | | December 31, 2023 | | March 31, 2024 | | December 31, 2023 |
(Millions of Dollars) | (Millions of Dollars) | June 30, 2023 | | December 31, 2022 | | June 30, 2023 | | December 31, 2022 | | June 30, 2023 | | December 31, 2022 |
Eversource Parent Commercial Paper Program | Eversource Parent Commercial Paper Program | |
Eversource Parent Commercial Paper Program | |
Eversource Parent Commercial Paper Program | | $ | 1,934.9 | | | $ | 1,771.9 | | | $ | 65.1 | | | $ | 228.1 | | | 5.66 | % | | 5.60 | % |
NSTAR Electric Commercial Paper Program | NSTAR Electric Commercial Paper Program | 324.0 | | | — | | | 326.0 | | | 650.0 | | | 5.17 | % | | — | % | NSTAR Electric Commercial Paper Program | 419.0 | | | 365.8 | | 365.8 | | | 231.0 | | 231.0 | | | 284.2 | | 284.2 | | | 5.38 | | 5.38 | % | | 5.40 | % |
There were no borrowings outstanding on the revolving credit facilities as of June 30, 2023March 31, 2024 or December 31, 2022.2023.
CL&P and PSNH have uncommitted line of credit agreements totaling $375 million and $250 million, respectively, which will expire on May 10,in 2024. There are no borrowings outstanding on either the CL&P or PSNH uncommitted line of credit agreements as of June 30, 2023.March 31, 2024.
Amounts outstanding under the commercial paper programs are included in Notes Payable and classified in current liabilities on the Eversource and NSTAR Electric balance sheets, as all borrowings are outstanding for no more than 364 days at one time. As a result of the CL&P long-term debt issuance in July 2023, $297.5January 2024, $207.3 million of commercial paper borrowings under the Eversource parent commercial paper program were reclassified asto Long-Term Debt on Eversource’sEversource parent’s balance sheet as of June 30,December 31, 2023. As a result of the PSNH long-term debt issuance in April 2024, $251.0 million of commercial paper borrowings under the Eversource parent commercial paper program were reclassified to Long-Term Debt on Eversource parent’s balance sheet as of March 31, 2024.
Intercompany Borrowings: Eversource parent uses its available capital resources to provide loans to its subsidiaries to assist in meeting their short-term borrowing needs. Eversource parent records intercompany interest income from its loans to subsidiaries, which is eliminated in consolidation. Intercompany loans from Eversource parent to its subsidiaries are eliminated in consolidation on Eversource's balance sheets. As of June 30,March 31, 2024, there were intercompany loans from Eversource parent to CL&P of $426.1 million and to PSNH of $251.0 million. As of December 31, 2023, there were intercompany loans from Eversource parent to CL&P of $449.0$457.0 million and to PSNH of $226.3 million. As of December 31, 2022, there were intercompany loans from Eversource parent to PSNH of $173.3$233.0 million. Eversource parent charges interest on these intercompany loans at the same weighted-average interest rate as its commercial paper program. Intercompany loans from Eversource parent are included in Notes Payable to Eversource Parent and classified in current liabilities on the
respective subsidiary's balance sheets, as these intercompany borrowings are outstanding for no more than 364 days at one time. As a result of the CL&P long-term debt issuance in July 2023, $297.5January 2024, $207.3 million of CL&P's&P’s intercompany borrowings were reclassified to Long-Term Debt on CL&P’s balance sheet as of June 30,December 31, 2023. As a result of the PSNH long-term debt issuance in April 2024, $251.0 million of PSNH’s intercompany borrowings were reclassified to Long-Term Debt on PSNH’s balance sheet as of March 31, 2024.
Availability under Long-Term Debt Issuance Authorizations: On June 7, 2023, PURAFebruary 8, 2024, the NHPUC approved Yankee Gas’PSNH’s request for authorization to issue up to $350$300 million in long-term debt through December 31, 2024. On May 1, 2024, the DPU approved NSTAR Electric’s request for authorization to issue up to $2.4 billion in long-term debt through December 31, 2026.
Long-Term Debt Issuances and Repayments: The following table summarizes long-term debt issuances and repayments:
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(Millions of Dollars) | Interest Rate | | Issuance/(Repayment) | | Issue Date or Repayment Date | | Maturity Date | | Use of Proceeds for Issuance/ Repayment Information |
CL&P 2024 Series A First Mortgage Bonds | 4.65 | % | | $ | 350.0 | | | January 2024 | | January 2029 | | Repaid short-term debt, paid capital expenditures and working capital |
PSNH Series X First Mortgage Bonds | 5.35 | % | | 300.0 | | | April 2024 | | October 2033 | | Repaid short-term debt, paid capital expenditures and working capital |
Eversource Parent Series DD Senior Notes | 5.00 | % | | 350.0 | | | January 2024 | | January 2027 | | Repaid short-term debt |
Eversource Parent Series EE Senior Notes | 5.50 | % | | 650.0 | | | January 2024 | | January 2034 | | Repaid short-term debt |
Eversource Parent Series FF Senior Notes | 5.85 | % | | 700.0 | | | April 2024 | | April 2031 | | Repay Series X Senior Notes and Aquarion’s 2014 Senior Notes at maturity and short-term debt |
Eversource Parent Series GG Senior Notes | 5.95 | % | | 700.0 | | | April 2024 | | July 2034 | | Repay Series X Senior Notes and Aquarion’s 2014 Senior Notes at maturity and short-term debt |
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(Millions of Dollars) | Interest Rate | | Issuance/(Repayment) | | Issue Date or Repayment Date | | Maturity Date | | Use of Proceeds for Issuance/ Repayment Information |
CL&P 2023 Series A First Mortgage Bonds | 5.25 | % | | $ | 500.0 | | | January 2023 | | January 2053 | | Repaid 2013 Series A Bonds at maturity and short-term debt, and paid capital expenditures and working capital |
CL&P 2023 Series B First Mortgage Bonds | 4.90 | % | | 300.0 | | | July 2023 | | July 2033 | | Repaid short-term debt, paid capital expenditures and working capital |
CL&P 2013 Series A First Mortgage Bonds | 2.50 | % | | (400.0) | | | January 2023 | | January 2023 | | Paid at maturity |
PSNH Series W First Mortgage Bonds | 5.15 | % | | 300.0 | | | January 2023 | | January 2053 | | Repaid short-term debt, paid capital expenditures and working capital |
Eversource Parent Series Z Senior Notes | 5.45 | % | | 750.0 | | | March 2023 | | March 2028 | | Repaid Series F Senior Notes at maturity and short-term debt |
Eversource Parent Series F Senior Notes | 2.80 | % | | (450.0) | | | May 2023 | | May 2023 | | Paid at maturity |
Eversource Parent Series Z Senior Notes | 5.45 | % | | 550.0 | | | May 2023 | | March 2028 | | Repay Series T Senior Notes and Series N Senior Notes at maturity and short-term debt |
Eversource Parent Series AA Senior Notes | 4.75 | % | | 450.0 | | | May 2023 | | May 2026 | | Repay Series T Senior Notes and Series N Senior Notes at maturity and short-term debt |
Eversource Parent Series BB Senior Notes | 5.125 | % | | 800.0 | | | May 2023 | | May 2033 | | Repay Series T Senior Notes and Series N Senior Notes at maturity and short-term debt |
As a result of the Eversource parent long-term debt issuances in April 2024, $1.39 billion of current portion of long-term debt was reclassified to Long-Term Debt on Eversource parent’s balance sheet as of March 31, 2024.
In March 2024, NSTAR Gas closed on two First Mortgage Bonds, Series W and Series X for $160.0 million and $40.0 million, respectively, and these bonds will be issued in June 2024.
Rate Reduction Bonds: PSNH's RRB payments consist of principal and interest and are paid semi-annually. PSNH paid $21.6 million of RRB principal payments and $8.3$7.6 million of interest payments in the first halfquarter of 2023,2024, and paid $21.6 million of RRB principal payments and $9.0$8.3 million of interest payments in the first halfquarter of 2022.2023.
Common Share Issuances and Equity Distribution Agreement: On May 11, 2022, Eversource entered into an equity distribution agreement pursuant to which it may offer and sell up to $1.2 billion of its common shares from time to time through an “at-the-market” (ATM) equity offering program. In the first quarter of 2024, Eversource issued 1,292,892 common shares, which resulted in proceeds of $75.4 million, net of issuance costs. Eversource used the net proceeds received for general corporate purposes.
Cash Flows: Cash flows from operating activities primarily result from the transmission and distribution of electricity, and the distribution of natural gas and water. Cash flows provided by operating activities totaled $647.3$291.3 million in the first halfquarter of 2023,2024, compared with $841.8$69.2 million in the first halfquarter of 2022.2023. Operating cash flows were unfavorablyfavorably impacted by anthe timing of cash payments made on our accounts payable, a $66.6 million increase in operating cash flows due to income tax refunds received in 2024 compared to income tax payments made in 2023, a decrease in regulatory under-recoveries driven primarily by the timing of collections for the CL&P non-bypassable FMCC and other regulatoryregulatory tracking mechanisms, including energy supply, the timing of cash payments madecollections on our accounts payable, an increasereceivable, and a $13.2 million decrease in cost of removal expenditures, and the timing of other working capital items. In 2023, CL&P increased the flow back to customers of net revenues generated by long-term state-approved energy contracts by providing these credits to customers through the non-bypassable FMCC retail rate.expenditures. The reduction in the CL&P non-bypassable FMCC retail rate decreased the regulatory over-recovery balance, which resulted in a decrease to amortization expense of $507.0 millionincreased in the first halfquarter of 2023,2024, as compared to the first halfquarter of 2022,2023, which lowered the regulatory under-recovery deferral adjustment and is presented as aresulted in an improvement to operating cash outflow in Amortization on the statementflows of cash flows.$53.1 million. The impactimpacts of regulatory collections are included in
both Regulatory Recoveries and Amortization on the statements of cash flows. These unfavorablefavorable impacts were partially offset by the timingtiming of cash collections on our accounts receivable, the absence in 2023 of $78.4 million of payments in 2022 related to withheld property taxes at our Massachusetts companies, the absence in 2023 of $64.9 million of customer credits distributed in 2022 at CL&P as a result of the October 2021 settlement agreement and the 2021 storm performance penalty for CL&P’s response to Tropical Storm Isaias, a decrease of $50.0 million in pension contributions made in 2023 compared to 2022, a $34.2 million increase due to income tax refunds received in 2023 compared to income tax payments in 2022,other working capital items and a $27.7$42.6 million decreaseincrease in cash payments to vendors for storm costs.
EffectiveOn April 17, 2024, PURA issued an interim decision in CL&P’s Rate Adjustment Mechanisms (RAM) filing and approved rates for the six RAM components, with rates effective July 1, 2024 through April 30, 2025. The rate approvals include the recovery of NBFMCC and SBC net under-recoveries as of December 31, 2023 CL&P’s non-bypassable FMCC retailof $264.9 million and $86.2 million, respectively, and the recovery of expected net costs of $388.5 million for the NBFMCC and $254.4 million for the SBC for the period July 1, 2024 through April 30, 2025. The NBFMCC rate changed to $0.00000 per kWh, as compared to a credit of $0.01524 per kWh from January 1, 2023 to June 30, 2023. The increase inadjustment is primarily driven by long-term nuclear power purchase agreements required by state policy and the retailSBC rate will result in higher cash collections in the second half of 2023, as compared to the first half of 2023.adjustment is primarily driven by costs associated with accounts receivable hardship customer protection.
On May 3, 2023,1, 2024, our Board of Trustees approved a common share dividend payment of $0.675$0.715 per share, paidpayable on June 30, 202328, 2024 to shareholders of record as of May 18, 2023.16, 2024. On January 31, 2024, our Board of Trustees approved a common share dividend payment of $0.715 per share, paid on March 29, 2024 to shareholders of record as of March 5, 2024. In the first halfquarter of 2023,2024, we paid cash dividends of $459.0$244.8 million and issued non-cash dividends of $11.8$6.0 million in the form of treasury shares, totaling dividends of $470.8$250.8 million. In the first halfquarter of 2022,2023, we paid cash dividends of $427.9$229.4 million and issued non-cash dividends of $11.7$6.0 million in the form of treasury shares, totaling dividends of $439.6$235.4 million.
Eversource issues treasury shares to satisfy awards under the Company's incentive plans, shares issued under the dividend reinvestment and share purchase plan, and matching contributions under the Eversource 401k Plan.
In the first halfquarter of 2023,2024, CL&P and NSTAR Electric and PSNH paid $165.2 million, $327.4$82.5 million and $56.0$96.7 million, respectively, in common stock dividends to Eversource parent.
Investments in Property, Plant and Equipment on the statements of cash flows do not include amounts incurred on capital projects but not yet paid, cost of removal, AFUDC related to equity funds, and the capitalized and deferred portions of pension and PBOP income/expense. In the first halfquarter of 2023,2024, investments for Eversource, CL&P, NSTAR Electric, and PSNH were $2.04$1.15 billion, $499.9$285.9 million, $677.6$394.9 million, and $276.7$148.9 million, respectively. Capital expenditures were primarily for continuing projects to maintain and improve infrastructure and operations, including enhancing reliability to the transmission and distribution systems.
Investments in Unconsolidated Affiliates within investing activities on the statements of cash flows includes proceeds received from the liquidation of an equity method investment in a renewable energy investment fund of $147.0 million in the first half of 2023.
Contractual Obligations: Our cash requirements from contractual obligations were reported in Item 7, "Management’s Discussion and Analysis of Financial Condition and Results of Operations," of the Eversource 20222023 Form 10-K. ThereSee Note 9B, “Commitments and Contingencies - Long-Term Contractual Arrangements,” to the financial statements for discussion of material changes to our cash requirements from contractual obligations. Other than as described in the footnote, there have been no material changes to our cash requirements from contractual obligations and payment schedules previously disclosed in our 20222023 Form 10-K.
Credit RatingsRatings:: On May 22, 2023,March 5, 2024, S&P changed CL&P’srevised the outlook from positivewatch negative to stable.negative for Eversource parent, CL&P, NSTAR Electric, and PSNH.
Impact of COVID-19
The financial impacts of COVID-19 as it relates to our businesses primarily relate to collectability of customer receivables and the outcome of future proceedings before our state regulatory commissions to recover our incremental uncollectible customer receivable costs associated with COVID-19. As of both June 30, 2023 and December 31, 2022, the total amount incurred as a result of COVID-19 included in the allowance for uncollectible accounts was $50.9 million at Eversource, $16.0 million at CL&P, and $4.1 million at NSTAR Electric. At our Connecticut and Massachusetts utilities, the COVID-19 related uncollectible amounts were deferred either as incremental regulatory costs or deferred through existing regulatory tracking mechanisms that recover uncollectible energy supply costs, as management believes it is probable that these costs will ultimately be recovered from customers in future rates.
Business Development and Capital Expenditures
Our consolidated capital expenditures, including amounts incurred but not paid, cost of removal, AFUDC, and the capitalized and deferred portions of pension and PBOP income/expense (all of which are non-cash factors), totaled $1.98$1.09 billion in the first halfquarter of 2023,2024, compared to $1.56 billion$789.2 million in the first halfquarter of 2022.2023. These amounts included $119.175.6 million and $103.8$42.9 million in the first halfquarter of 20232024 and 2022,2023, respectively, related to information technology and facilities upgrades and enhancements, primarily at Eversource Service and The Rocky River Realty Company.
Electric Transmission Business: Our consolidated electric transmission business capital expenditures increased by $55.2$116.0 million in the first halfquarter of 2023,2024, as compared to the first halfquarter of 2022.2023. A summary of electric transmission capital expenditures by company is as follows:
| | | For the Six Months Ended June 30, | | For the Three Months Ended March 31, |
(Millions of Dollars) | (Millions of Dollars) | 2023 | | 2022 | (Millions of Dollars) | 2024 | | 2023 |
CL&P | CL&P | $ | 162.9 | | | $ | 187.6 | |
NSTAR Electric | NSTAR Electric | 227.4 | | | 175.0 | |
PSNH | PSNH | 168.1 | | | 140.6 | |
Total Electric Transmission | Total Electric Transmission | $ | 558.4 | | | $ | 503.2 | |
Our transmission projects are designed to improve the reliability of the electric grid, meet customer demand for power, and increases in electrification of municipal infrastructure, strengthen the electric grid's resilience against extreme weather and other safety and security threats, and enable integration of increasing amounts of clean power generation from renewable sources, such as solar, battery storage, and offshore wind.threats. In Connecticut, Massachusetts and New Hampshire, our transmission projects include transmission line upgrades, the installation of new transmission interconnection facilities, substations and lines, and transmission substation enhancements.
Our transmission projects in Massachusetts include electric transmission upgrades in the greater Boston metropolitan area. Two of these upgrades, the Mystic-Woburn and the Wakefield-Woburn reliability projects, are under construction and are expected to be placed in service by the fourth quarter of 2023. Construction on the last remaining upgrade, the Sudbury-Hudson Reliability Project, commenced in the fourth quarter of 2022. We spent $37.4 million during the first half of 2023 and we now expect to make additional capital expenditures of approximately $215 million on these remaining transmission upgrades.
Distribution Business: A summary of distribution capital expenditures is as follows:
| | For the Six Months Ended June 30, |
| For the Three Months Ended March 31, | | | For the Three Months Ended March 31, |
(Millions of Dollars) | (Millions of Dollars) | CL&P | | NSTAR Electric | | PSNH | | Total Electric | | Natural Gas | | Water | | Total | (Millions of Dollars) | CL&P | | NSTAR Electric | | PSNH | | Total Electric | | Natural Gas | | Water | | Total |
2023 | | | | | | | | | | | | | |
2024 | |
Basic Business | |
Basic Business | |
Basic Business | Basic Business | $ | 135.9 | | | $ | 172.1 | | | $ | 38.7 | | | $ | 346.7 | | | $ | 93.9 | | | $ | 7.7 | | | $ | 448.3 | |
Aging Infrastructure | Aging Infrastructure | 120.8 | | | 146.7 | | | 40.3 | | | 307.8 | | | 305.4 | | | 60.2 | | | 673.4 | |
Load Growth and Other | Load Growth and Other | 62.1 | | | 80.0 | | | 11.9 | | | 154.0 | | | 26.9 | | | 0.3 | | | 181.2 | |
Total Distribution | Total Distribution | $ | 318.8 | | | $ | 398.8 | | | $ | 90.9 | | | $ | 808.5 | | | $ | 426.2 | | | $ | 68.2 | | | $ | 1,302.9 | |
2022 | | | | | | | | | | | | | |
2023 | |
Basic Business | |
Basic Business | |
Basic Business | Basic Business | $ | 124.1 | | | $ | 67.7 | | | $ | 30.0 | | | $ | 221.8 | | | $ | 101.3 | | | $ | 5.4 | | | $ | 328.5 | |
Aging Infrastructure | Aging Infrastructure | 89.9 | | | 95.9 | | | 33.3 | | | 219.1 | | | 209.7 | | | 53.5 | | | 482.3 | |
Load Growth and Other | Load Growth and Other | 30.6 | | | 82.3 | | | 10.8 | | | 123.7 | | | 20.1 | | | 0.3 | | | 144.1 | |
Total Distribution | Total Distribution | $ | 244.6 | | | $ | 245.9 | | | $ | 74.1 | | | $ | 564.6 | | | $ | 331.1 | | | $ | 59.2 | | | $ | 954.9 | |
For the electric distribution business, basic business includes the purchase of meters, tools, vehicles, information technology, transformer replacements, equipment facilities, and the relocation of plant. Aging infrastructure relates to reliability and the replacement of overhead lines, plant substations, underground cable replacement, and equipment failures. Load growth and other includes requests for new business and capacity additions on distribution lines and substation additions and expansions.
For the natural gas distribution business, basic business addresses daily operational needs including meters, pipe relocations due to public works projects, vehicles, and tools. Aging infrastructure projects seek to improve the reliability of the system through enhancements related to cast iron and bare steel replacement of main and services, corrosion mediation, and station upgrades. Load growth and other reflects growth in existing service territories including new developments, installation of services, and expansion.
For the water distribution business, basic business addresses daily operational needs including periodic meter replacement, water main relocation, facility maintenance, and tools. Aging infrastructure relates to reliability and the replacement of water mains, regulators, storage tanks, pumping stations, wellfields, reservoirs, and treatment facilities. Load growth and other reflects growth in our service territory, including improvements of acquisitions, installation of new services, and interconnections of systems.
Offshore Wind Business:Our Eversource’s offshore wind business includes a 50 percent ownership interestinterests in North East Offshore,wind partnerships, which holds PPAs forcollectively hold the Revolution Wind, and South Fork Wind and Sunrise Wind projects, and an OREC contract for the Sunrise Wind project, as well as an uncommitted offshore lease area. Oura tax equity investment in South Fork Wind. The offshore wind projects are being developed and constructed through a joint and equal partnershippartnerships with Ørsted. The offshore leases include a 257 square-mile ocean lease off the coasts of Massachusetts and Rhode Island and a separate, adjacent 300-square-mile ocean lease located approximately 25 miles south of the coast of Massachusetts.
As of June 30, 2023March 31, 2024 and December 31, 2022,2023, Eversource's total equity investment balance in its offshore wind business was $2.08 billion$596.4 million and $1.95 billion,$515.5 million, respectively. This equity investment includes capital expenditures for the three offshore wind projects, as well as capitalized costs related to future development, acquisition costs of offshore lease areas, and capitalized interest.
Strategic Review of Offshore Wind Investment: On May 4, 2022, Eversource announced that it had initiated a strategic review of its offshore wind investment portfolio. On May 25, 2023, Eversource announced that it hashad completed this review. As a resultstrategic review of completing this review, Eversource announcedits offshore wind investments and determined that it would pursue the following updates:
•sale of its offshore wind investments. On May 25,September 7, 2023, Eversource entered into a purchase andcompleted the sale agreement with Ørsted forof its 50 percent interest in an uncommitted lease area consisting of approximately 175,000 developable acres located 25 miles off the south coast of Massachusetts to Ørsted for $625 million in an all-cash transaction. Ørsted currently owns the other 50 percent share of the uncommitted lease area. This transaction is expected to close by the end of the third quarter
In September of 2023, subject to regulatory approvals.
•On May 25, 2023, Eversource entered intomade a binding lettercontribution of intent with Ørsted to use $575$528 million ofusing the proceeds from the lease area sale to provideinvest in a tax equity interest for South Fork Wind. South Fork Wind was restructured as a tax equity investment, with Eversource purchasing 100 percent ownership of a new Class A tax equity membership interest. As a result of this investment, Eversource expects to receive approximately $400 million of investment tax credits (ITC) after the turbines are placed in service for South Fork Wind and meet the requirements to qualify for the ITC, in addition to other expected future cash flow benefits that aggregate to approximately $100 million. These investment tax credits will be utilized to reduce Eversource’s federal tax liability or generate tax refunds in future periods through 2026. As of March 31, 2024, six South Fork Wind turbines met the requirements to qualify for the investment tax credits. As a result, $193 million of expected investment tax credits were reclassified from the South Fork Wind projecttax equity investment balance reported in Investments in Unconsolidated Affiliates as a reduction in current taxes payable of $54 million and an increase in deferred tax assets of $139 million on the Eversource balance sheet as of March 31, 2024. An additional $37 million deferred tax asset was established through a newreduction of the tax equity ownership interest. investment balance due to a temporary difference on the related depreciable property as of March 31, 2024. These balance sheet reclassifications represent non-cash transactions.
As a result of expected tax credits generated from our wind investments, Eversource expects lower federal income tax payments, which will improve operating cash flows between 2024 through 2026.
Expected Sales of Offshore Wind Investments: On January 24, 2024, Ørsted signed an agreement with Eversource to acquire Eversource’s 50 percent jointshare of Sunrise Wind, subject to the successful selection of Sunrise Wind in the New York fourth solicitation for offshore wind capacity, signing of an OREC contract with NYSERDA, finalization of agreements including the equity and asset purchase agreement, receipt of the final approval by BOEM of the Sunrise Wind COP, and relevant regulatory approvals. On January 25, 2024, Sunrise Wind submitted a proposal in the New York fourth offshore wind solicitation and was selected by NYSERDA on February 29, 2024 for contract negotiation. Sunrise Wind is currently negotiating an OREC contract with NYSERDA that will include the price proposed by Sunrise Wind in the solicitation. We expect the OREC contract to be finalized in the second quarter of 2024.
On April 18, 2024, Eversource and Ørsted executed the equity and asset purchase agreement to sell Eversource’s 50 percent interest in Sunrise Wind to Ørsted, and upon closing, Ørsted will become the sole owner of Sunrise Wind. Eversource will remain contracted to manage Sunrise Wind’s onshore construction through completion. In accordance with the equity and asset purchase agreement, Ørsted will pay Eversource 50 percent of the negotiated purchase price upon closing the sale transaction, with the remaining 50 percent paid after onshore construction is completed and certain other milestones are achieved. Upon the closing of the transaction, Eversource will not have any ongoing ownership interest in the project, nor any ongoing financial or credit support obligations associated with project costs. The impact of the purchase price from the sale of Sunrise Wind to Ørsted, as compared to the current carrying value of the investment which had assumed an abandonment of the project, will be reflected when the sale of Sunrise Wind is completed. In accordance with accounting guidance, the impairment loss recognized on the Sunrise Wind investment cannot subsequently be reversed for increases in estimated fair value, and therefore the impact will be recognized when the sale occurs. Eversource expects the sale of Sunrise Wind to Ørsted will be completed later this year.
On February 13, 2024, Eversource announced that it executed an agreement to sell its existing 50 percent interests in the South Fork Wind at the timeand Revolution Wind projects to Global Infrastructure Partners (GIP). As part of this transaction, halfEversource expects to receive approximately $1.1 billion of cash proceeds upon closing, which includes the sales value related to the 10 percent energy community ITC adder of approximately $170 million related to Revolution Wind, and to exit these projects while retaining certain cost sharing obligations for the construction of Revolution Wind. The purchase price is subject to future post-closing adjustment payments based on, among other things, the progress, timing and expense of construction of each project. The cost sharing obligations provide that amountEversource would share equally with GIP in GIP’s funding obligations for up to approximately $240 million of incremental capital expenditure overruns incurred during the construction phase for the Revolution Wind project, after which obligations for any additional capital expenditure overruns would be shared equally by Eversource and Ørsted. Additionally, Eversource’s financial exposure will be returnedadjusted by certain purchase price adjustments to Eversource. Eversource will recover its $575 million tax equity investment primarily in the form of investment tax credits that will be received around the timemade following commercial operation of the project’sRevolution Wind project and closing of South Fork as a result of final project economics, which includes Eversource’s obligation
commercial operation date, with the majority usedto maintain GIP’s internal rate of return for each project as specified in the fourth quarter of 2023 and the first half of 2024 to lower Eversource’s cash tax obligation. Construction ofagreement. South Fork Wind commenced in early 2022, with commercial operation expected in late 2023. Eversource’s tax equity investment inconstruction has been completed and Eversource does not expect any material cost sharing or other purchase price adjustment payments for South Fork Wind is also expected to close in the third quarter of 2023.
•Eversource has also determined that it will continue to pursue the sale of its existing 50 percent interest in its three jointly-owned, contracted offshore wind projects. This process continues to progress, and Eversource anticipates an announcement inthe near term.Wind.
In connection with these developments in the strategic review, Eversource has evaluated its aggregate investment in the projects, uncommitted lease area, and other related capitalized costs and determinedFactors that the carrying value of the equity method offshore wind investment exceeded the fair value of the investment and that the decline was other-than-temporary. The current estimate of fair value is based on the expected sale price of Eversource’s 50 percent interest in the three contracted projects based on the most recent bid value, the sale price of the uncommitted lease area included in the purchase and sale agreement, the value of the tax equity ownership interest, and the expectation of a successful repricing of the Sunrise Wind OREC contract. As a result, Eversource recognized a pre-tax other-than-temporary impairment charge of $401.0 million ($331.0 million after-tax, which includes the impact of a $40 million valuation allowance for federal and state capital loss carryforwards) in the second quarter of 2023. The fair value of the investment will be updated based on final sales prices and final sales terms, final OREC pricing for the Sunrise Wind contract, and investment tax credit qualifications (including any investment tax credit adders), and changes to our estimates of these items could result in an adjustmentEversource’s total net proceeds from the transaction to this impairment charge.be lower or higher include Revolution Wind’s eligibility for federal investment tax credits at other than the anticipated 40 percent level; the ultimate cost of construction and extent of cost overruns for Revolution Wind; delays in constructing Revolution Wind, which would impact the economics associated with the purchase price adjustment; and a benefit due to Eversource if there are lower operation costs or higher availability of the projects through the period that is four years following the commercial operation date of the Revolution Wind project.
Closing the transaction with GIP is subject to customary conditions, including certain regulatory approvals by the New York Public Service Commission, the FERC, and a review under the Hart Scott Rodino Act, as well as other conditions, among which is the completion and execution of the partnership agreements between GIP and Ørsted that will govern GIP’s new ownership interest in those projects following Eversource’s divestiture. The impairment chargereview period under the Hart Scott Rodino Act has expired. Closing of this transaction is a non-cash charge and will not impactcurrently expected to occur later this year. If closing of the sale is delayed, additional capital contributions made by Eversource would be recovered in the sales price. Under this agreement with GIP, Eversource’s cash position. existing credit support obligations are expected to roll off for each project around the time that each project completes its expected capital spend.
Eversource will continue to make future cash expenditures for required cash contributions to North East Offshoreits offshore wind investments up to the time of the saledisposition of each of the offshore wind projects. Capital contributions are expected until the sales are completed and changes in the timing and amounts of these contributions would be adjusted in the sales prices and therefore not result in an additional impairment charge. Proceeds from the transactiontransactions will be used to pay off parent company debt.
Contracts, Impairment: Equity method investments are assessed for impairment when conditions exist as of the balance sheet date that indicate that the fair value of the investment may be less than book value. Eversource continually monitors and evaluates its equity method investments to determine if there are indicators of an other-than-temporary impairment. If the decline in value is considered to be other-than-temporary, the investment is written down to its estimated fair value, which establishes a new cost basis in the investment. Subsequent declines or recoveries after the reporting date are not considered in the impairment recognized. Investments that are other-than-temporarily impaired and written down to their estimated fair value cannot subsequently be written back up for increases in estimated fair value. Impairment evaluations involve a significant degree of judgment and estimation, including identifying circumstances that indicate an impairment may exist at the equity method investment level, selecting discount rates used to determine fair values, and developing an estimate of discounted future cash flows expected from investment operations or the sale of the investment. In the first quarter of 2024, there were no indicators of an other-than-temporary impairment in Eversource’s equity method investment balance.
Permitting and Construction of Offshore Wind Projects:Projects: The following table provides a summary of the Eversource and Ørsted majoroffshore wind projects with announced contracts:
| | | | | | | | | | | | | | | | | | | | |
Wind Project | State Servicing | Size (MW) | Term (Years) | Price per MWh | Pricing Terms | Contract Status |
Revolution Wind | Rhode Island | 400 | 20 | $98.43 | Fixed price contract; no price escalation | Approved |
Revolution Wind | Connecticut | 304 | 20 | $98.43 - $99.50 | Fixed price contracts; no price escalation | Approved |
South Fork Wind | New York (LIPA) | 90 | 20 | $160.33 | 2 percent average price escalation | Approved |
South Fork Wind | New York (LIPA) | 40 | 20 | $86.25 | 2 percent average price escalation | Approved |
Sunrise Wind | New York (NYSERDA) | 924 | 25 | $110.37 (1) | Fixed price contract; no price escalation | Approved |
(1) Index OREC strike price. In June 2023, Sunrise Wind filed a petition with the New York State Public Service Commission for an order authorizing NYSERDA to amend the Sunrise Wind OREC contract to incorporate interconnection cost inflation adjustments.
Revolution Wind and Sunrise Wind projects are subject torequire receipt of federal, state and local approvals necessary to construct and operate the projects. The federal permitting process is led by BOEM, and state approvals are required from New York, Rhode Island and Massachusetts. Significant delays in the siting and permitting process resulting from the timeline for obtaining approval from BOEM and the state and local agencies could adversely impact the timing of these projects'Sunrise Wind’s in-service dates.date.
Federal Siting and Permitting Process: The federal siting and permitting process for each of our offshore wind projects commencecommences with the filing of a Construction and Operations Plan (COP) application with BOEM. The first major milestone in the BOEM review process is an issuance of a Notice of Intent (NOI) to complete an Environmental Impact Statement (EIS). BOEM then provides a review schedule for the project’s COP approval. BOEMapproval and conducts environmental and technical reviews of the COP. The EISBOEM issues an Environmental Impact Statement (EIS) that assesses the environmental, social, and economic impacts of constructing the project and recommends measures to minimize impacts. The Final EIS will inform BOEM in deciding whether to approve the project or to approve with modifications and BOEM will then issue its Record of Decision. BOEM issues its final approval of the COP following the Record of Decision. South Fork Wind and Revolution Wind have received final approval from BOEM.
Revolution Wind and Sunrise Wind filed theirits COP applicationsapplication with BOEM in March 2020 and September 2020, respectively. BOEM released its Draft EIS on September 2, 2022 and its Final EIS on July 17, 2023 for2020. For the RevolutionSunrise Wind project, andBOEM released its Draft EIS on December 16, 2022 for the Sunrise Wind project. The EISs for Revolution Wind and Sunrise Wind include an impact assessment of alternative project configurations. Each of the identified alternative configurations in the Revolution Windits Final EIS and Sunrise Wind Draft EIS had a similar level of environmental impacts, and if an alternative configuration was selected, the Revolution Wind project and the Sunrise Wind project would each still meet their respective contractual output requirements. For Revolution Wind, theon December 15, 2023. The Record of Decision was received on March 26, 2024 and final approval of Sunrise Wind is expected in the thirdsecond quarter of 2023, and final approval is expected in the fourth quarter of 2023. For Sunrise Wind, a Final EIS and Record of Decision are expected in the fourth quarter of 2023, and final approval is expected in the first quarter of 2024.
South Fork Wind, Revolution Wind and Sunrise Wind are each designated as a “Covered Project” pursuant to Title 41 of the Fixing America’s Surface Transportation Act (FAST41) and a Major Infrastructure Project under Section 3(e) of Executive Order 13807, which provides greater federal attention on meeting the projects’ permitting timelines.
State and Local Siting and Permitting Process: State permitting applications in Rhode Island for Revolution Wind and in New York for Sunrise Wind were filed in December 2020. On July 8, 2022, the Rhode Island Energy Facilities Siting Board issued a Final Decision and Order approving the Revolution Wind project and granting a license to construct and operate.
On September 23, 2022, Sunrise Wind filed a Joint Proposal to the New York State Public Service Commission. Among other things, the Joint Proposal includes proposed mitigation for certain environmental, community and construction impacts associated with constructing the project. The Joint Proposal was signed by the New York Departments of Public Service, Environmental Conservation, Transportation and State as well as the Office of Agriculture and Markets and the Long Island Commercial Fisheries Association. On November 17, 2022, the New York Public Service Commission approved an order adopting the Joint Proposal and granting a Certificate of Environmental Compatibility and Public Need. On November 18, 2022, Sunrise Wind filed its Phase 1 Environmental Management and Construction Plan (EM&CP) with the New York Public Service Commission, which details the plans on limited onshore construction activities subject toAll state and local jurisdiction. On March 27, 2023,approvals have been received for South Fork and Revolution Wind. For Sunrise Wind, filed its EM&CP for Phase 2, which covers the remainder of the project components. On June 22, 2023, Sunrise Wind received approval of the Phase 1 EM&CP. On July 13, 2023, the New York State Public Service Commission approved Sunrise Wind’s notice for authorizationall state and local approvals required to proceed withstart construction for Phase 1.
have been received.
On November 9, 2022, the Towns of Brookhaven and Suffolk County executed the easements and other real estate rights necessary to construct the Sunrise Wind project. On November 28, 2022, the Town of North Kingstown and the Quonset Development Corporation approved Revolution Wind’s real estate PILOT terms and the personal property PILOT agreement necessary to construct the Revolution Wind project.
Construction Process: South Fork Wind received all required approvals to start construction and the project entered the construction phase in early 2022. Onshore2022 and construction activities forhave been completed. As of January 1, 2024, four of South Fork Wind’s twelve turbines were placed into service and met the project commercial operation date requirements under the power purchase agreement with LIPA. Installation of the project’s underground onshore transmission line were completed in the first quarter of 2023. Onshore activities for the construction of the onshore interconnection facility located in East Hampton, New York continue and are expected to be completed in the third quarter of 2023. Offshore construction activities began in the fourth quarter of 2022 and continue, with the installation of the subsea transmission cable largely complete. The remainder of the marine construction activities, including the project’s monopile foundations,twelve 11-megawatt wind turbines was completed in February 2024 and offshore substation,all are expected to continue throughout the rest of 2023. Construction-related purchase agreements with third-party contractorsnow producing power. Final commissioning, including warranty testing and materials contracts have largely been secured.construction contract close-out, is underway. South Fork Wind faces several challenges and appeals of New York State and federal agency approvals, however it believeswe believe it is probable itwe will be able to overcome these challenges.
For Revolution Wind, on October 31, 2023, the joint venture made its final investment decision to advance to full onshore and Sunrise Wind,offshore construction and installation, and major construction is expected to beginbegan in the second halffourth quarter of 2023 or early 2024 onceupon receipt of all necessary federal, state and local approvalsapprovals. Construction of the project’s onshore substation, onshore interconnection facility, and duct bank for the onshore underground transmission cable is underway. Offshore construction activities have also begun, with boulder clearance underway to prepare for offshore transmission cable installation. Other marine construction activities, including installation of the wind turbine foundations, 11-megawatt wind
turbines, transmission cable, and offshore substations, are receivedexpected to occur in 2024 and 2025. We expect the Revolution Wind project to be in-service in late 2025.
For Sunrise Wind, on March 26, 2024, the joint venture has made its final investment decision to proceed with the project. Construction of the direct current to alternating current onshore converter station and 18-mile onshore duct bank for each project.
Projected In-Service Dates: We expect the South Forkonshore underground transmission cable is now underway. In addition, expansion of the onshore substation where Sunrise Wind projectwill interconnect into the New York power grid has begun. Marine construction activities for Sunrise Wind are expected to be in-service by the end of 2023.begin later this year. For Revolution Wind and Sunrise Wind, based on the updated BOEM permit schedules outlining when BOEM will complete its reviewcurrent expected timing of BOEM’s final approval and the COP,start of offshore construction, we currently expect an in-service datesdate in 2025 for both projects.
Projected Investments: For Revolution Wind and Sunrise Wind, we are preparing our final project designs and advancing the appropriate federal, state, and local siting and permitting processes along with our offshore wind partner, Ørsted. Construction of South Fork Wind is underway. Construction-related purchase agreements with third-party contractors and materials contracts have largely been secured. Subject to advancing our final project designs and federal, state and local permitting processes and construction schedules, we currently expect to make investments in our offshore wind business between $1.4 billion and $1.6 billion in 2023 and expect to make investments for our three projects in total between $2.1 billion and $2.4 billion from 2024 through 2026. These estimates assume that the three projects are completed and are in-service by the end of 2025, as planned. These projected investments are expected to be impacted by the completion of the strategic review of our offshore wind investment.
FERC Regulatory Matters
FERC ROE Complaints: Four separate complaints were filed at the FERC by combinations of New England state attorneys general, state regulatory commissions, consumer advocates, consumer groups, municipal parties and other parties (collectively, the Complainants). In each of the first three complaints, filed on October 1, 2011, December 27, 2012, and July 31, 2014, respectively, the Complainants challenged the NETOs' base ROE of 11.14 percent that had been utilized since 2005 and sought an order to reduce it prospectively from the date of the final FERC order and for the separate 15-month complaint periods. In the fourth complaint, filed April 29, 2016, the Complainants challenged the NETOs' base ROE billed of 10.57 percent and the maximum ROE for transmission incentive (incentive cap) of 11.74 percent, asserting that these ROEs were unjust and unreasonable.
The ROE originally billed during the period October 1, 2011 (beginning of the first complaint period) through October 15, 2014 consisted of a base ROE of 11.14 percent and incentives up to 13.1 percent. On October 16, 2014, FERC issued Opinion No. 531-A and set the base ROE at 10.57 percent and the incentive cap at 11.74 percent for the first complaint period. This was also effective for all prospective billings to customers beginning October 16, 2014. This FERC order was vacated on April 14, 2017 by the U.S. Court of Appeals for the D.C. Circuit (the Court).
All amounts associated with the first complaint period have been refunded. Eversource has recorded a reserve of $39.1 million (pre-tax and excluding interest) for the second complaint period as of both June 30, 2023March 31, 2024 and December 31, 2022.2023. This reserve represents the difference between the billed rates during the second complaint period and a 10.57 percent base ROE and 11.74 percent incentive cap. The reserve consisted of $21.4 million for CL&P, $14.6 million for NSTAR Electric and $3.1 million for PSNH as of both June 30, 2023March 31, 2024 and December 31, 2022.2023.
On October 16, 2018, FERC issued an order on all four complaints describing how it intends to address the issues that were remanded by the Court. FERC proposed a new framework to determine (1) whether an existing ROE is unjust and unreasonable and, if so, (2) how to calculate a replacement ROE. Initial briefs were filed by the NETOs, Complainants and FERC Trial Staff on January 11, 2019 and reply briefs were filed on March 8, 2019. The NETOs' brief was supportive of the overall ROE methodology determined in the October 16, 2018 order provided the FERC does not change the proposed methodology or alter its implementation in a manner that has a material impact on the results.
The FERC order included illustrative calculations for the first complaint using FERC's proposed frameworks with financial data from that complaint. Those illustrative calculations indicated that for the first complaint period, for the NETOs, which FERC concludes are of average financial risk, the preliminary just and reasonable base ROE is 10.41 percent and the preliminary incentive cap on total ROE is 13.08 percent.
If the results of the illustrative calculations were included in a final FERC order for each of the complaint periods, then a 10.41 percent base ROE and a 13.08 percent incentive cap would not have a significant impact on our financial statements for all of the complaint periods. These preliminary calculations are not binding and do not represent what we believe to be the most likely outcome of a final FERC order.
On November 21, 2019, FERC issued Opinion No. 569 affecting the two pending transmission ROE complaints against the Midcontinent ISO (MISO) transmission owners, in which FERC adopted a new methodology for determining base ROEs. Various parties sought rehearing. On December 23, 2019, the NETOs filed supplementary materials in the NETOs' four pending cases to respond to this new methodology because of the uncertainty of the applicability to the NETOs' cases. On May 21, 2020, the FERC issued its order in Opinion No. 569-A on the rehearing of the MISO transmission owners' cases, in which FERC again changed its methodology for determining the MISO transmission owners' base ROEs. On November 19, 2020, the FERC issued Opinion No. 569-B denying rehearing of Opinion No. 569-A and reaffirmed the methodology previously adopted in Opinion No. 569-A. The new methodology differs significantly from the methodology proposed by FERC in its October 16, 2018 order to determine the NETOs' base ROEs in its four pending cases. FERC Opinion Nos. 569-A and 569-B were appealed to the Court. On August 9, 2022, the Court issued its decision vacating MISO ROE FERC Opinion Nos. 569, 569-A and 569-B and remanded to FERC to reopen the proceedings. The Court found that FERC’s development of the new return methodology was arbitrary and capricious due to FERC’s failure to offer a reasonable explanation for its decision to reintroduce the risk-premium financial model in its new methodology for calculating a just and reasonable return. At this time, Eversource cannot predict how and when FERC will address the Court’s findings on the remand of the MISO FERC opinions or any potential associated impact on the NETOs’ four pending ROE complaint cases.
Given the significant uncertainty regarding the applicability of the FERC opinions in the MISO transmission owners’ two complaint cases to the NETOs’ pending four complaint cases, Eversource concluded that there is no reasonable basis for a change to the reserve or recognized ROEs for any of the complaint periods at this time. As well, Eversource cannot reasonably estimate a range of loss for any of the four complaint proceedings at this time.
Eversource, CL&P, NSTAR Electric and PSNH currently record revenues at the 10.57 percent base ROE and incentive cap at 11.74 percent established in the October 16, 2014 FERC order.
A change of 10 basis points to the base ROE used to establish the reserves would impact Eversource’s after-tax earnings by an average of approximately $3 million for each of the four 15-month complaint periods. Prospectively from the date of a final FERC order implementing a new base ROE, based off of actual 2022estimated 2023 rate base, a change of 10 basis points to the base ROE would impact Eversource’s future annual after-tax earnings by approximately $5.5 million per year, and will increase slightly over time as we continue to invest in our transmission infrastructure.
FERC Notice of Inquiry on ROE: On March 21, 2019, FERC issued a Notice of Inquiry (NOI) seeking comments from all stakeholders on FERC's policies for evaluating ROEs for electric public utilities, and interstate natural gas and oil pipelines. On June 26, 2019, the NETOs jointly filed comments supporting the methodology established in the FERC’s October 16, 2018 order with minor enhancements going forward. The NETOs jointly filed reply comments in the FERC ROE NOI on July 26, 2019. On May 12, 2020, the NETOs filed supplemental comments in the NOI ROE docket. At this time, Eversource cannot predict how this proceeding will affect its transmission ROEs.
FERC Notice of Inquiry and Proposed Rulemaking on Transmission Incentives: On March 21, 2019, FERC issued an NOI seeking comments on FERC's policies for implementing electric transmission incentives. On June 26, 2019, Eversource filed comments requesting that FERC retain policies that have been effective in encouraging new transmission investment and remain flexible enough to attract investment in new and emerging transmission technologies. Eversource filed reply comments on August 26, 2019. On March 20, 2020, FERC issued a Notice of Proposed Rulemaking (NOPR) on transmission incentives. The NOPR intends to revise FERC’s electric transmission incentive policies to reflect competing uses of transmission due to generation resource mix, technological innovation and shifts in load patterns. FERC proposes to grant transmission incentives based on measurable project economics and reliability benefits to consumers rather than its current project risks and challenges framework. On July 1, 2020, Eversource filed comments generally supporting the NOPR.
On April 15, 2021, FERC issued a Supplemental NOPR that proposes to eliminate the existing 50 basis point return on equity for utilities that have been participating in a regional transmission organization (RTO ROE incentive) for more than three years. On June 25, 2021, the NETOs jointly filed comments strongly opposing FERC’s proposal. On July 26, 2021, the NETOs filed Supplemental NOPR reply comments responding to various parties advocating for the elimination of the RTO Adder. If FERC issues a final order eliminating the RTO ROE incentive as proposed in the Supplemental NOPR, the estimated annual impact (using 2022 actual2023 estimated rate base) on Eversource's after-tax earnings is approximately $18$19.5 million. The Supplemental NOPR contemplates an effective date 30 days from the final order.
At this time, Eversource cannot predict the ultimate outcome of these proceedings, including possible appellate review, and the resulting impact on its transmission incentives.
Regulatory Developments and Rate Matters
Electric, Natural Gas and Water Utility Base Distribution Rates: The regulated companies’ distribution rates are set by their respective state regulatory commissions, and their tariffs include mechanisms for periodically adjusting their rates for the recovery of specific incurred costs. Other than as described below, for the first halfquarter of 2023,2024, changes made to the regulated companies’ rates did not have a material impact on their earnings. For further information, see "Financial Condition and Business Analysis – Regulatory Developments and Rate Matters" included in Item 7, "Management’s Discussion and Analysis of Financial Condition and Results of Operations," of the Eversource 20222023 Form 10-K.
Energy Supply Retail Rates: CL&P, NSTAR Electric and PSNH have finalized full requirements energy supply procurement contracts for its customers that choose to purchase power from the electric distribution company (standard offer, basic service or default energy service, respectively) for the second half of 2023 and new energy supply rates for residential customers were established effective July 1, 2023 at CL&P and NSTAR Electric and effective August 1, 2023 at PSNH. Energy supply rates are approved by the respective state regulatory commission and are re-set every six months for residential customers. CL&P’s standard service rate for residential customers decreased to 13.82 cents per kWh effective July 1, 2023, as compared to 24.17 cents effective January 1, 2023. NSTAR Electric’s basic service rate for residential customers in eastern Massachusetts decreased to 16.08 cents per kWh and for western Massachusetts customers to 14.85 cents per kWh effective July 1, 2023, as compared to 25.78 cents and 21.99 cents effective January 1, 2023, respectively. PSNH’s default energy service rate for residential customers decreased to 12.58 cents per kWh effective August 1, 2023, as compared to 20.22 cents effective February 1, 2023. Decreases in energy supply retail rates will result in decreases in both energy supply procurement revenues and purchased power expenses, with no impact on earnings.
Connecticut:
CL&P Performance BasedPerformance-Based Rate Making: On May 26, 2021, in accordance with an October 2020 Connecticut law, PURA opened a proceeding to begin to evaluate and eventually implement performance-based regulation (PBR) for electric distribution companies. PURA will conductis conducting the proceeding in two phases. On January 25, 2023, PURA staff issued a proposal outlining a suggested portfolio of performance-based regulationPBR elements for further exploration and potential implementation in the second phase of the proceeding. On April 26, 2023, PURA issued a final decision on the first phase and identified various objectives to guide PBR development and evaluate adoption of a PBR framework. The decision commenced Phase 2 by initiating three reopener dockets focused on revenue adjustment mechanisms, performance metrics and integrated distribution system planning with final decisions expected in May2025.
On November 16, 2023, PURA issued a straw proposal in the first reopener that focused on revenue adjustment mechanisms. The proposal outlines potential additions and Augustreforms to the current revenue adjustment mechanisms, such as multi-year rate plans, earnings sharing mechanisms and the revenue decoupling mechanism. On March 14, 2024, PURA issued a straw proposal in the second reopener docket which concentrates on performance mechanisms in a PBR framework. The proposal suggests the development of 2024. Atperformance incentive mechanisms, reported metrics and scorecards. These straw proposals are not authoritative and additional technical sessions, hearings and testimony will continue prior to a final decision, which will not be applied until the time of CL&P’s next distribution rate case.
We continue to monitor developments in this proceeding, and at this time, we cannot predict the ultimate outcome of this proceeding and the resulting impact to CL&P.
CL&P Storm Filing: On December 22, 2023, CL&P initiated a docket seeking a prudency review of approximately $634 million of catastrophic storm costs for twenty-four weather events from January 1, 2018 to December 31, 2021. In the filing, CL&P requested PURA establish a rate to collect $50 million annually from customers from the date of the final decision in this proceeding. On March 1, 2024, PURA declined this request stating that a rate amendment should be conducted as part of a rate case. CL&P re-filed this request but removed the rate aspect and is seeking just the prudency review of the storm costs. On March 28, 2024, PURA established a proceeding for the purpose of receiving and reviewing evidence of the costs reported by CL&P in response to catastrophic storms and pre-staging events occurring between 2018 and 2021. PURA established a partial procedural schedule with hearings scheduled in the third quarter of 2025. Although we cannot predict the ultimate outcome of this matter, we continue to believe these deferred storm restoration costs were prudently incurred and are probable of recovery. As a result, management does not expect the storm cost review by PURA to have a material impact on the financial position or results of operations of CL&P.
CL&P Advanced Metering Infrastructure Filing: On July 31, 2020, CL&P submitted to PURA its proposed $512 million Advanced Metering Infrastructure (AMI) investment and implementation plan. On August 17, 2021, PURA issued a Notice of Request for an Amended EDC Advanced Metering Infrastructure Proposal. On November 8, 2021, CL&P submitted an Amended Proposal in response to this request with an updated schedule for the years 2022 through 2028, which included additional information as required by PURA. As required, the plan includes a full deployment of advanced metering functionality and a composite business case in support of the Advanced Metering Infrastructure plan. On January 3, 2024, PURA issued a final decision regarding CL&P’s Advanced Metering Infrastructure investment and implementation plan, which CL&P most recently estimated at $766.4 million for capital costs and operating expenses. In CL&P’s view, the final decision does not provide a
reasonable path for cost recovery and delays implementation by at least a year during the pendency of the cost recovery proceeding. In addition, the final decision modifies the prudence standard for recovery of costs expended on the project, improperly linking recovery to outcomes not known at the outset of the project. On January 18, 2024, CL&P submitted a motion for reconsideration to PURA asking that the agency modify these aspects of the decision, which PURA subsequently denied on February 14, 2024. On March 6, 2024, CL&P filed written comments citing four major problems associated with PURA’s guidelines for recovery of the costs of AMI implementation, which if not addressed, represent obstacles to AMI implementation in Connecticut. On April 16, 2024, PURA issued a procedural order directing Eversource and inviting all parties and intervenors to submit pre-filed testimony pertaining to AMI by May 14, 2024, and rebuttal testimony by May 29, 2024. A final decision is expected in the fourth quarter of 2024.
Aquarion Water Company of Connecticut Distribution Rate Case: On August 29, 2022, Aquarion Water Company of Connecticut (AWC-CT) filed an application with PURA to amend its existing rate schedules to address an operating revenue deficiency. AWC-CT’s rate application requested approval of rate increases of $27.5 million, an additional $13.6 million, and an additional $8.8 million, effective March 15, 2023, 2024, and 2025, respectively. On March 15, 2023, PURA issued a final decision that rejected this request. In this decision, PURA ordered a base distribution rate decrease to total authorized revenues of $2.0$4.0 million effective March 15, 2023. The decision allows an authorized regulatory ROE of 8.70 percent. On March 30, 2023, AWC-CT filed an appeal on the decision and requested a stay of the decision with the State of Connecticut Superior Court. On April 5, 2023, the Court temporarily granted AWC-CT’s request to stay and on May 25, 2023 granted a permanent stay of certain orders affecting base rates, which will keep existing rates in place until the appeal is completed. The stay included the condition that AWC-CT place any revenue received from customers above the rates and amounts authorized in the March 15, 2023 decision in a separate, interest bearing account until further order. A hearingOn March 25, 2024, the State of Connecticut Superior Court issued a decision on the meritsappeal which dismissed nine, remanded back to PURA two, and partially remanded one of AWC-CT’s twelve claims of error in its appeal. On March 28, 2024, AWC-CT filed an appeal of the Connecticut Superior Court decision to the Connecticut Appellate Court and on April 8, 2024, requested the appeal move directly to the Connecticut Supreme Court for review. A ruling on the appeal is pending. On April 18, 2024, PURA initiated a docket in which PURA will address the matters on remand. PURA's final decision is scheduled for December 14, 2023.July 31, 2024.
Although previous rates continue to remain in effect until PURA issues an updated final order, as a result of the State of Connecticut Superior Court’s decision on the appeal, AWC-CT recorded the impacts of the PURA rate case decision from the effective date of the order on March 15, 2023 through March 31, 2024. The impacts primarily include a reserve recorded for revenues subject to refund as a result of the lower authorized revenues not yet reflected in current rates, offset by a reduction to depreciation expense to reflect lower depreciation rates ordered by PURA in its final decision. These adjustments resulted in an after-tax benefit of $5.2 million recorded in the first quarter of 2024.
Massachusetts:
Termination of Commonwealth Wind Power Purchase AgreementNSTAR Electric Distribution Rates: NSTAR Electric’s PBR mechanism allows for an annual adjustment to base distribution rates for inflation, exogenous events and future capital additions based on a historical five-year average of total capital additions. On July 13,December 26, 2023, Commonwealth Wind, LLC,the DPU approved a subsidiary$104.9 million increase to base distribution rates effective January 1, 2024. The base distribution rate increase was comprised of Avangrid Renewables,a $50.6 million inflation-based adjustment and NSTAR Electric signed an agreement to terminatea $54.3 million K-bar adjustment for capital additions based on the Commonwealth Wind offshore wind generation PPA, atdifference between the requesthistorical five-year average of Commonwealth Wind, LLC. Commonwealth Wind, LLC will pay a termination payment of $25.9 million to NSTAR Electric resulting fromtotal capital additions and the termination of the PPA, which NSTAR Electric will return to customers. The termination agreement is effective upon DPU approval, which has been requested within 30 days.base capital revenue requirement.
New Hampshire:
PSNH Pole Acquisition Approval:NSTAR Gas Distribution Rates: On November 18, 2022,NSTAR Gas’ PBR mechanism allows for an annual adjustment to base distribution rates for inflation and exogenous events. NSTAR Gas submitted its third annual PBR Adjustment filing on September 15, 2023 and on October 30, 2023, the NHPUC issued a decision thatDPU approved a proposed purchase agreement between PSNH and Consolidated Communications, in$25.4 million increase to base distribution rates, of which, PSNH would acquire both jointly-owned and solely-owned poles and pole assets. The NHPUC also authorized PSNH to recover certain expenses$15.5 million was associated with a base rate adjustment and the operation and maintenance of the transferred poles, pole inspections, and vegetation management expenses through a new cost recovery mechanism, the PPAM, subject to consummation of the purchase agreement. The purchase agreement was finalized on May 1, 2023remainder for a purchase price of $23.3 million. Upon consummation of the purchase agreement, PSNH established a regulatory asset of $16.9 millionprior period exogenous cost adjustment, for operation and maintenance expenses and vegetation management expenses associated with the purchased poles incurred from February 10, 2021 through April 30, 2023 that PSNH is authorized to collect through the PPAM regulatory tracking mechanism. The establishment of the PPAM regulatory asset resulted in a pre-tax benefit recorded in Amortization expenseeffect on the PSNH statement of income in the second quarter ofNovember 1, 2023.
Future of Gas Docket: In October 2020, the DPU opened Docket “DPU 20-80 The Future of Gas” to examine the role of Massachusetts natural gas local distribution companies (LDCs) in helping to meet the state’s 2050 climate goals. In December 2023, the DPU issued an order for this docket. The DPU will consider and, in some cases, require new processes and analysis for traditional natural gas investments, which may require significant changes to the LDC planning process and business models. The DPU intends to put policies and structures in place that would protect customers as Massachusetts works to decarbonize the building sector, which may involve subsequent dockets and regulatory proceedings and potentially recasting the role of LDCs in Massachusetts. The DPU preserved customer choice for energy needs and encouraged further development of decarbonized alternatives, such as the networked geothermal systems that NSTAR Gas is piloting in Framingham, Massachusetts. On December 29, 2023, Eversource and other LDCs sought formal clarity from the DPU to fully understand the resulting impact to their natural gas businesses and the associated timing of any impacts. On April 2, 2024, the DPU issued an order responding to the request for clarification indicating that the LDCs shall implement the inclusion of a Non-Gas Pipeline Alternatives (NPA) analysis on all project authorizations effective immediately. Existing NPA analysis processes will be used until such time a formal stakeholder-based NPA analysis framework is established and approved by the DPU. The DPU also indicated that NSTAR Gas and EGMA are not required to provide climate compliance performance metrics in the next PBR filing, however would be expected to propose metrics at the latest in the next base distribution rate proceeding. Greenhouse gas emissions reporting was not changed from the order. Eversource does not believe there is any indication of an inability to recover costs or risk of impairment of NSTAR Gas’ and EGMA’s natural gas assets at this time.
Legislative and Policy MattersMatters:
Connecticut:Federal: On June 29, 2023, Connecticut enacted Public Act No. 23-102 (Substitute Senate Bill No. 7) (the Act) that encompasses 40 sections.April 10, 2024, the U.S. Environmental Protection Agency announced the final regulation setting drinking water standards for six per- and polyfluoroalkyl substances (PFAS) compounds. The Act prohibits recoveryregulation requires compliance under a phased approach in retail rateswhich systems will need to complete the initial monitoring requirements for each PFAS within three years, and when warranted, take steps to assure compliance within five years. Beginning in 2027, systems will need to report results of certain costs incurred by utilities, including costsinitial monitoring and regular monitoring and issue public notifications for consultantsany monitoring and outside counselreporting violations. Starting in 2029, systems must comply with all maximum contaminant levels (MCL) and provide public notification for rate cases, membership dues, and lobbying. None ofMCL violations. Eversource is currently evaluating the rate-setting provisions will result in an immediate changeimpacts to rates, as all will require some future process, primarily a general distribution rate proceeding before PURA.comply with the regulation for its water business.
The Act also makes prospective adjustments to the timing and procedures used in the retail rate setting process, including (1) requiring additional procedural steps to be satisfied for proposed settlements of cases; (2) increasing the deadline to issue a final decision on an application from a water company to amend base rates from 200 days to 270 days; (3) authorizing PURA to elect to evaluate if rates should be reduced on an interim basis if a utility earns an ROE that exceeds its authorized ROE by 50 basis points over a rolling 12-month period ending with the two most recent consecutive financial quarters (instead of the current standard of 100 basis points); and (4) authorizing PURA to elect to convene a general rate hearing at an interval of less than four years unless prohibited from doing so by an agency decision or other law. The Act is prospective, not retroactive and therefore does not change obligations or rate provisions established by settlements implemented prior to the Act.
The Act also prohibits CL&P’s electric system improvements (ESI) capital tracking mechanism from being reauthorized in the next general distribution proceeding. The ESI will therefore remain in place until base distribution rates are adjusted in CL&P’s next general distribution rate proceeding. The Act also excludes storms and other emergencies affecting 70 percent or more of an electric distribution company’s customers from the 2020 law requiring credits for residential customers who are without power for 96 or more consecutive hours.
Lastly, the Act was amended by Public Act No. 23-204 (House Bill No. 6941) to require the Governor to designate the chairperson of PURA from among the sitting commissioners by June 30, 2023 and every two years thereafter; and to delete the changes in Section 21 of the Act to the duties and powers of PURA commissioners. Designation of the chairperson does not constitute a renomination for a full commission term, as otherwise provided by law.
Critical Accounting Policies
The preparation of financial statements in conformity with GAAP requires management to make estimates, assumptions and, at times, difficult, subjective or complex judgments. Changes in these estimates, assumptions and judgments, in and of themselves, could materially impact our financial position, results of operations or cash flows. Our management discusses with the Audit Committee of our Board of Trustees significant matters relating to critical accounting policies. Our critical accounting policies that we believed were the most critical in nature were reported in the Eversource 20222023 Form 10-K. There have been no material changes with regard to these critical accounting policies.
Refer to Note 1E, “Summary of Significant Accounting Policies - Investments in Unconsolidated Affiliates,” to the financial statements for further discussion of the critical accounting estimates surrounding impairment analysis.
Other Matters
Web Site: Additional financial information is available through our website at www.eversource.com. We make available through our website a link to the SEC's EDGAR website (http://www.sec.gov/edgar/searchedgar/companysearch.html), at which site Eversource's, CL&P's, NSTAR Electric's and PSNH's combined Annual Reports on Form 10-K, combined Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and any amendments to those reports may be reviewed. Information contained on the Company's website or that can be accessed through the website is not incorporated into and does not constitute a part of this combined Quarterly Report on Form 10-Q.
RESULTS OF OPERATIONS – EVERSOURCE ENERGY AND SUBSIDIARIES
The following provides the amounts and variances in operating revenues and expense line items in the statements of income for Eversource for the three and six months ended June 30,March 31, 2024 and 2023 and 2022 included in this combined Quarterly Report on Form 10-Q:
| | For the Three Months Ended June 30, | | For the Six Months Ended June 30, |
| | | For the Three Months Ended March 31, | |
| | | For the Three Months Ended March 31, | |
| | | For the Three Months Ended March 31, | |
(Millions of Dollars) | (Millions of Dollars) | 2023 | | 2022 | | Increase/(Decrease) | | 2023 | | 2022 | | Increase/(Decrease) | (Millions of Dollars) | | | | | | | 2024 | | 2023 | | Increase/(Decrease) |
Operating Revenues | Operating Revenues | $ | 2,629.3 | | | $ | 2,572.6 | | | $ | 56.7 | | | $ | 6,425.0 | | | $ | 6,044.0 | | | $ | 381.0 | |
Operating Expenses: | Operating Expenses: | | | | | | | | | Operating Expenses: | | | | | | | | | |
Purchased Power, Purchased Natural Gas and Transmission | Purchased Power, Purchased Natural Gas and Transmission | 1,161.1 | | | 940.5 | | | 220.6 | | | 3,064.3 | | | 2,330.2 | | | 734.1 | |
Operations and Maintenance | Operations and Maintenance | 427.3 | | | 452.2 | | | (24.9) | | | 881.9 | | | 924.6 | | | (42.7) | |
Depreciation | Depreciation | 320.0 | | | 294.2 | | | 25.8 | | | 632.9 | | | 583.6 | | | 49.3 | |
Amortization | Amortization | (218.5) | | | 70.4 | | | (288.9) | | | (294.5) | | | 307.4 | | | (601.9) | |
Energy Efficiency Programs | Energy Efficiency Programs | 145.8 | | | 136.7 | | | 9.1 | | | 368.8 | | | 336.2 | | | 32.6 | |
Taxes Other Than Income Taxes | Taxes Other Than Income Taxes | 232.9 | | | 223.0 | | | 9.9 | | | 461.4 | | | 443.4 | | | 18.0 | |
Total Operating Expenses | Total Operating Expenses | 2,068.6 | | | 2,117.0 | | | (48.4) | | | 5,114.8 | | | 4,925.4 | | | 189.4 | |
Operating Income | Operating Income | 560.7 | | | 455.6 | | | 105.1 | | | 1,310.2 | | | 1,118.6 | | | 191.6 | |
Interest Expense | Interest Expense | 207.4 | | | 160.1 | | | 47.3 | | | 401.8 | | | 313.3 | | | 88.5 | |
Impairment of Offshore Wind Investment | 401.0 | | | — | | | 401.0 | | | 401.0 | | | — | | | 401.0 | |
| Other Income, Net | |
Other Income, Net | |
Other Income, Net | Other Income, Net | 94.9 | | | 93.9 | | | 1.0 | | | 183.9 | | | 165.4 | | | 18.5 | |
Income Before Income Tax Expense | Income Before Income Tax Expense | 47.2 | | | 389.4 | | | (342.2) | | | 691.3 | | | 970.7 | | | (279.4) | |
Income Tax Expense | Income Tax Expense | 29.9 | | | 95.6 | | | (65.7) | | | 180.9 | | | 231.6 | | | (50.7) | |
Net Income | Net Income | 17.3 | | | 293.8 | | | (276.5) | | | 510.4 | | | 739.1 | | | (228.7) | |
Net Income Attributable to Noncontrolling Interests | Net Income Attributable to Noncontrolling Interests | 1.9 | | | 1.9 | | | — | | | 3.8 | | | 3.8 | | | — | |
Net Income Attributable to Common Shareholders | Net Income Attributable to Common Shareholders | $ | 15.4 | | | $ | 291.9 | | | $ | (276.5) | | | $ | 506.6 | | | $ | 735.3 | | | $ | (228.7) | |
Operating Revenues
Sales Volumes: A summary of our retail electric GWh sales volumes, our firm natural gas MMcf sales volumes, and our water MG sales volumes, and percentage changes, is as follows:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Electric | | Firm Natural Gas | | Water |
| Sales Volumes (GWh) | | Percentage Decrease | | Sales Volumes (MMcf) | | Percentage Decrease | | Sales Volumes (MG) | | Percentage Increase |
Three Months Ended June 30: | 2023 | | 2022 | | | 2023 | | 2022 | | | 2023 | | 2022 | |
Traditional | 1,745 | | | 1,795 | | | (2.8) | % | | — | | | — | | | — | % | | 370 | | | 346 | | | 6.9 | % |
Decoupled and Special Contracts (1) | 9,419 | | | 9,840 | | | (4.3) | % | | 23,751 | | | 24,894 | | | (4.6) | % | | 6,000 | | | 5,244 | | | 14.4 | % |
Total Sales Volumes | 11,164 | | | 11,635 | | | (4.0) | % | | 23,751 | | | 24,894 | | | (4.6) | % | | 6,370 | | | 5,590 | | | 14.0 | % |
| | | | | | | | | | | | | | | | | |
Six Months Ended June 30: | | | | | | | | | | | | | | | | | |
Traditional | 3,645 | | | 3,787 | | | (3.7) | % | | — | | | — | | | — | % | | 679 | | | 670 | | | 1.3 | % |
Decoupled and Special Contracts (1) | 19,717 | | | 20,813 | | | (5.3) | % | | 83,534 | | | 93,413 | | | (10.6) | % | | 10,592 | | | 9,586 | | | 10.5 | % |
Total Sales Volumes | 23,362 | | | 24,600 | | | (5.0) | % | | 83,534 | | | 93,413 | | | (10.6) | % | | 11,271 | | | 10,256 | | | 9.9 | % |
(1) Special contracts are unique to Yankee Gas natural gas distribution customers who take service under such an arrangement and generally specify the amount of distribution revenue to be paid to Yankee Gas regardless of the customers' usage. | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Electric | | Firm Natural Gas | | Water |
| Sales Volumes (GWh) | | Percentage Increase | | Sales Volumes (MMcf) | | Percentage Increase | | Sales Volumes (MG) | | Percentage Increase |
Three Months Ended March 31: | 2024 | | 2023 | | | 2024 | | 2023 | | | 2024 | | 2023 | |
| | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | |
Traditional | 1,948 | | | 1,900 | | | 2.5 | % | | — | | | — | | | — | % | | 344 | | | 313 | | | 9.9 | % |
Decoupled | 10,587 | | | 10,298 | | | 2.8 | % | | 61,535 | | | 59,783 | | | 2.9 | % | | 4,807 | | | 4,592 | | | 4.7 | % |
Total Sales Volumes | 12,535 | | | 12,198 | | | 2.8 | % | | 61,535 | | | 59,783 | | | 2.9 | % | | 5,151 | | | 4,905 | | | 5.0 | % |
Weather, fluctuations in energy supply costs,rates, conservation measures (including utility-sponsored energy efficiency programs), and economic conditions affect customer energy usage and water consumption. Industrial sales volumes are less sensitive to temperature variations than residential and commercial sales volumes. In our service territories, weather impacts both electric and water sales volumes during the summer and both electric and natural gas sales volumes during the winter; however, natural gas sales volumes are more sensitive to temperature variations than electric sales volumes. Customer heating or cooling usage may not directly correlate with historical levels or with the level of degree-days that occur.
Fluctuations in retail electric sales volumes at PSNH impact earnings ("Traditional" in the table above). For CL&P, NSTAR Electric, NSTAR Gas, EGMA, Yankee Gas, and our Connecticut water distribution business, fluctuations in retail sales volumes do not materially impact earnings due to their respective regulatory commission-approved distribution revenue decoupling mechanisms ("Decoupled" in the table above). These distribution revenues are decoupled from their customer sales volumes, which breaks the relationship between sales volumes and revenues recognized.
Operating Revenues: The variance in Operating Revenues by segment is as follows:
| | | | | | | |
(Millions of Dollars) | | | Three Months Ended |
Electric Distribution | | | $ | (326.9) | |
Natural Gas Distribution | | | (139.2) | |
Electric Transmission | | | 49.2 | |
Water Distribution | | | (0.2) | |
Other | | | 29.8 | |
Eliminations | | | (75.7) | |
Total Operating Revenues | | | $ | (463.0) | |
Operating Revenues: Operating Revenues by segment increased/(decreased) for the three and six months ended June 30, 2023, as compared to the same periods in 2022, as follows:
| | | | | | | | | | | |
(Millions of Dollars) | Three Months Ended | | Six Months Ended |
Electric Distribution | $ | 50.0 | | | $ | 252.3 | |
Natural Gas Distribution | (7.1) | | | 110.5 | |
Electric Transmission | 22.5 | | | 46.0 | |
Water Distribution | 3.5 | | | 5.2 | |
Other | 73.1 | | | 103.4 | |
Eliminations | (85.3) | | | (136.4) | |
Total Operating Revenues | $ | 56.7 | | | $ | 381.0 | |
Electric and Natural Gas Distribution Revenues:
Base Distribution Revenues:
•Base electric distribution revenues increased $7.2 million and $36.1$28.0 million for the three and six months ended June 30, 2023, as compared to the same periods in 2022. The increase for the three month period was due primarily to a base distribution rate increase at NSTAR Electric effective January 1, 2023 at NSTAR Electric. The increase for the six month period was due primarily to the result of a rate design change at NSTAR Electric approved by the DPU in the 2022 rate case that shifted the recovery of quarterly revenues (increase of $20.2 million in 2023, as compared to 2022) and a base distribution rate increase effective January 1, 2023 at NSTAR Electric (increase of $17.9 million in 2023, as compared to 2022). As part of the 2022 NSTAR Electric rate case decision, certain customer rates changed from seasonal demand charges to a single annual demand charge effective January 1, 2023, resulting in a shift in the timing of revenues and earnings recognized quarterly in 2023, as compared to 2022, but with no impact on an annual basis. This rate design change will result in higher revenues in each of the first and fourth quarters of 2023 of approximately $21 million, offset by lower revenues in the third quarter of 2023 of approximately $42 million, as compared to the same periods in 2022.
2024.
•Base natural gas distribution revenues increased $2.1 million and $13.1$9.6 million for the three and six months ended June 30, 2023, as compared to the same periods in 2022,month period due primarily to the impact ofa base distribution rate increasesincrease at NSTAR Gas and EGMA effective November 1, 2022.2023.
Tracked Distribution Revenues: Tracked distribution revenues consist of certain costs that are recovered from customers in retail rates through regulatory commission-approved cost tracking mechanisms and therefore, recovery of these costs has no impact on earnings. Revenues from certain of these cost tracking mechanisms also include certain incentives earned, return on capital tracking mechanisms, and carrying charges that are billed in rates to customers, which do impact earnings. Costs recovered through cost tracking mechanisms include, among others, energy supply and natural gas supply procurement and other energy-related costs, electric retail transmission charges, energy efficiency program costs, electric restructuring and stranded cost recovery revenues (including securitized RRB charges), certain capital tracking mechanisms for infrastructure improvements, and additionally for the Massachusetts utilities, pension and PBOP benefits, net metering for distributed generation, and solar-related programs. Tracked revenues also include wholesale market sales transactions, such as sales of energy and energy-related products into the ISO-NE wholesale electricity market, sales of natural gas to third party marketers, and the sale of RECs to various counterparties.
Customers have the choice to purchase electricity from eachtheir Eversource electric utility or from a competitive third party supplier. For customers who have contracted separately with these competitive suppliers, revenue is not recorded for the sale of the electricity commodity, as the utility is acting as an agent on behalf of the third party supplier. For customers that choose to purchase electric generation from CL&P, NSTAR Electric or PSNH, each utility purchases power on behalf of, and is permitted to recover the related energy supply cost without mark-up from, its customers, and records offsetting amounts in revenues and purchased power related to this energy supply procurement. CL&P, NSTAR Electric and PSNH each remain as the distribution service provider for all customers and charge a regulated rate for distribution delivery service recorded in revenues. Certain eligible natural gas customers may elect to purchase natural gas from eachtheir Eversource natural gas utility or may contract separately with a gas supply operator. Revenue is not recorded for the sale of the natural gas commodity to customers who have contracted separately with these operators, only the delivery to a customer, as the utility is acting as an agent on behalf of the gas supply operator.
TrackedThe variance in tracked distribution revenues increased/(decreased) for the three and six months ended June 30, 2023, as compared to the same periods in 2022,month period is due primarily to the following:
| | Electric Distribution | | Natural Gas Distribution |
| | | Electric Distribution | |
| | | Electric Distribution | |
| | | Electric Distribution | | | | | Natural Gas Distribution |
(Millions of Dollars) | (Millions of Dollars) | Three Months Ended | | Six Months Ended | | Three Months Ended | | Six Months Ended | (Millions of Dollars) | | | Three Months Ended | | | | Three Months Ended |
Retail Tariff Tracked Revenues: | Retail Tariff Tracked Revenues: | | | | | | | |
Energy supply procurement | Energy supply procurement | $ | 297.5 | | | $ | 772.4 | | | $ | (35.6) | | | $ | 28.3 | |
Energy supply procurement | |
Energy supply procurement | |
CL&P FMCC | CL&P FMCC | (128.9) | | | (268.3) | | | — | | | — | |
Retail transmission | Retail transmission | (29.1) | | | (48.4) | | | — | | | — | |
Energy efficiency | 4.6 | | | 14.7 | | | 10.0 | | | 28.3 | |
| Other distribution tracking mechanisms | |
Other distribution tracking mechanisms | |
Other distribution tracking mechanisms | Other distribution tracking mechanisms | (0.8) | | | (4.5) | | | 9.8 | | | 20.1 | |
Wholesale Market Sales Revenue | Wholesale Market Sales Revenue | (100.3) | | | (248.5) | | | 6.6 | | | 22.2 | |
The increasedecrease in energy supply procurement within electric distribution for the three and six months ended June 30, 2023, as compared to the same periods in 2022,month period was driven by higherlower average prices partially offset byand lower average supply-related sales volumes. The decrease in energy supply procurement within natural gas distribution for the three months ended June 30, 2023, as compared to the samemonth period in 2022, was driven by lower average supply-related sales volumes and lower average prices. The increase in energy supply procurement within natural gas distribution for the six months ended June 30, 2023, as compared to the same period in 2022, was driven by higher average prices, partially offset by lowerhigher average supply-related sales volumes. Fluctuations in retail transmission revenues are driven by the recovery of the costs of our wholesale transmission business, such as those billed by ISO-NE and Local and Regional Network Service charges. For further information, see "Purchased Power, Purchased Natural Gas and Transmission ExpenseTransmission” "expense below.
The decreaseincrease in CL&P’s FMCC revenues was driven by a decreasean increase in the retail Non-Bypassable Federally Mandated Congestion Charge (NBFMCC) rate. The CL&P NBFMCC rate which reflectsincludes the impactrecovery of returningcosts incurred under long-term state approved energy contracts with the Millstone and Seabrook nuclear power plants, net of the benefits received from selling this energy into the ISO-NE wholesale market. Effective January 1, 2023, CL&P reduced the average NBFMCC rate to a credit of $0.01524 per kWh. The rate reduction returned to customers the net benefits of higher wholesale market sales received in the ISO-NE market for long-term state approvedthese energy contracts at CL&P, which are then credited back to customers throughcontracts. Effective July 1, 2023, the retail NBFMCC rate. CL&P’s average NBFMCC rate in effect from January 1, 2022 through April 30, 2022 was $0.01423 per kWh and from May 1 through August 31, 2022 was $0.01251changed to $0.00000 per kWh. As a result of the 2023 CL&P RAM proceeding in Docket No. 22-01-03, CL&P reduceddecision, the average NBFMCC rate effective September 1, 2022 from $0.01251 per kWh to $0.00000 per kWh. As part of a November 2022 rate relief plan, CL&P further reduced the average NBFMCC rate effective January 1, 2023 to a credit of $0.01524 per kWh. These rate reductions returned to customers the net revenues generated by long-term state-approved energy contracts with the Millstone and Seabrook nuclear power plants. The average NBFMCC rate changed to $0.00000$0.00293 per kWh effective JulySeptember 1, 2023.
The decrease in electric distribution wholesale market sales revenue for the three and six months ended June 30, 2023, as compared to the same periods in 2022,month period was due primarily to lower average electricity market prices received for wholesale sales at CL&P, NSTAR Electric and PSNH. ISO-NE average market prices received for CL&P’s wholesale sales decreased to an average price of $27.05 per MWh and $42.15$39.65 per MWh for the three and six months ended June 30, 2023,March 31, 2024, as compared to $65.90 per MWh and $89.01$48.95 per MWh for the same periodsperiod in 2022,2023, driven primarily by lower natural gas prices in New England. Volumes sold into the market were primarily from the sale of output generated by the Millstone PPA and Seabrook PPA that CL&P entered into in 2019, as required by regulation. CL&P sells the energy purchased from Millstone and Seabrook into the wholesale market and uses the proceeds from the energy sales to offset the contract costs. The net sales or net cost amount is refunded to, or recovered from, customers in the non-bypassable component of the CL&P FMCC rate.
Electric Transmission Revenues: Electric transmission revenues increased $22.5 million and $46.0$49.2 million for the three and six months ended June 30, 2023, as compared to the same periods in 2022,month period due primarily to a higher transmission rate base as a result of our continued investment in our transmission infrastructure.
Other Revenues and Eliminations: Other revenues primarily include the revenues of Eversource's service company, most of which are eliminated in consolidation. Eliminations are also primarily related to the Eversource electric transmission revenues that are derived from ISO-NE regional transmission charges to the distribution businesses of CL&P, NSTAR Electric and PSNH that recover the costs of the wholesale transmission business in rates charged to their customers.
Purchased Power, Purchased Natural Gas and Transmission expense includes costs associated with purchasing electricityproviding electric generation service supply and natural gas on behalf of ourto all customers who have not migrated to third party suppliers, the cost of energy purchase contracts entered into as required by regulation, and transmission costs. These electric and natural gas supply procurement costs, other energy-related costs, and transmission costs are recovered from customers in rates through commission-approved cost tracking mechanisms, which have no impact on earnings (tracked costs). The variance in Purchased Power, Purchased Natural Gas and Transmission expense increased for the three and six months ended June 30, 2023, as compared to the same periods in 2022,is due primarily to the following:
| | | | | | | | | | | |
(Millions of Dollars) | Three Months Ended | | Six Months Ended |
Energy supply procurement costs | $ | 300.1 | | | $ | 778.4 | |
Other electric distribution costs | (9.8) | | | (8.2) | |
Natural gas costs | (27.9) | | | 28.2 | |
Transmission costs | (24.1) | | | (31.0) | |
Eliminations | (17.7) | | | (33.3) | |
Total Purchased Power, Purchased Natural Gas and Transmission | $ | 220.6 | | | $ | 734.1 | |
| | | | | | | |
(Millions of Dollars) | | | Three Months Ended |
Energy supply procurement costs | | | $ | (514.3) | |
Other electric distribution costs | | | 11.8 | |
Natural gas supply costs | | | (153.4) | |
Transmission costs | | | 34.5 | |
Eliminations | | | (45.8) | |
Total Purchased Power, Purchased Natural Gas and Transmission | | | $ | (667.2) | |
The increasevariance in purchased power expense at the electric distribution business for the three and six months ended June 30, 2023, as compared to the same periods in 2022, was driven primarily by higher energy supply procurement costs resulting fromis offset in Operating Revenues (tracked energy supply procurement revenues). The variance in other electric distribution costs for the three month period was primarily the result of higher average prices, partially offset by lower average supply-related sales volumes. The increase wasnet metering costs at NSTAR Electric, partially offset by a decrease in long-term renewable energy purchase contract costs and lower net metering costs at NSTAR Electric for the three and six month periods.PSNH.
The decrease in costsCosts at the natural gas distribution segment relate to supply procurement costs for retail customers. Total natural gas costs decreased for the three months ended June 30, 2023, as compared to the samemonth period in 2022, was due primarily to lower average supply-related sales volumesa decrease in the retail cost deferral and lower average prices. The increase in costs at the natural gas distribution segment for the six months ended June 30, 2023, as compared to the same period in 2022, was due primarily to higher average prices, partially offset by lowerhigher average supply-related salespurchased volumes.
The decreaseincrease in transmission costs for the three and six months ended June 30, 2023, as compared to the same periods in 2022,month period was primarily the result of a decreasean increase in costs billedLocal Network Service charges, which reflect the cost of transmission service provided by ISO-NE that support regional grid investments and a decreaseEversource over our local transmission network, an increase in the retail transmission cost deferral, which reflects the actual cost of transmission service compared to estimated amounts billed to customers. This decrease was partially offset bycustomers, and an
increase in Local Network Service charges, which reflect the cost of transmission service providedcosts billed by Eversource over our local transmission network.ISO-NE that support regional grid investments.
Operations and Maintenance expense includes tracked costs and costs that are part of base electric, natural gas and water distribution rates with changes impacting earnings (non-tracked costs). The variance in Operations and Maintenance expense decreased for the three and six months ended June 30, 2023, as compared to the same periods in 2022,is due primarily to the following:
| | | | | | | | | | | |
(Millions of Dollars) | Three Months Ended | | Six Months Ended |
Base Electric Distribution (Non-Tracked Costs): | | | |
Employee-related expenses, including labor and benefits | $ | (12.4) | | | $ | (9.8) | |
Storm costs | (9.5) | | | (9.6) | |
Operations-related expenses (including vendor services and vehicles) | (4.1) | | | 1.5 | |
Vegetation management | 2.1 | | | (3.2) | |
Shared corporate costs (including computer software depreciation at Eversource Service) | 8.1 | | | 17.6 | |
General costs (including vendor services in corporate areas, bad debt expense, insurance, fees and assessments) | 2.5 | | | 10.9 | |
Other non-tracked operations and maintenance | (3.3) | | | (11.5) | |
Total Base Electric Distribution (Non-Tracked Costs) | (16.6) | | | (4.1) | |
Tracked Electric Costs (Electric Distribution and Electric Transmission) | 9.7 | | | 9.8 | |
Total Electric Distribution and Electric Transmission | (6.9) | | | 5.7 | |
Natural Gas Distribution: | | | |
Base (Non-Tracked Costs) - Decreases due primarily to lower general costs (including vendor services in corporate areas, bad debt expense, insurance, fees and assessments) and lower employee-related expenses; six month decrease partially offset by higher shared corporate costs | (7.1) | | | (10.8) | |
Tracked Costs | (0.5) | | | (2.1) | |
Total Natural Gas Distribution | (7.6) | | | (12.9) | |
Water Distribution | 1.5 | | | 2.2 | |
Parent and Other Companies and Eliminations: | | | |
Eversource Parent and Other Companies - other operations and maintenance | 63.1 | | | 77.9 | |
Transaction and Transition Costs | (5.6) | | | (12.1) | |
Eliminations | (69.4) | | | (103.5) | |
Total Operations and Maintenance | $ | (24.9) | | | $ | (42.7) | |
| | | |
| | | | | | | |
(Millions of Dollars) | | | Three Months Ended |
Base Electric Distribution (Non-Tracked Costs): | | | |
Vegetation management | | | $ | 3.7 | |
General costs (including vendor services in corporate areas, uncollectible expense, insurance, fees and assessments) | | | 3.0 | |
Shared corporate costs (including IT system depreciation at Eversource Service) | | | 2.6 | |
Employee-related expenses (including labor and benefits) | | | (0.8) | |
Total Base Electric Distribution (Non-Tracked Costs) | | | 8.5 | |
Tracked Electric Costs (Electric Distribution and Electric Transmission) - Increase due primarily to higher transmission expense | | | 26.5 | |
Total Electric Distribution and Electric Transmission | | | 35.0 | |
Natural Gas Distribution: | | | |
Base (Non-Tracked Costs) - Decrease due primarily to lower employee-related expenses and lower uncollectible expenses | | | (11.1) | |
Tracked Costs | | | 0.3 | |
Total Natural Gas Distribution | | | (10.8) | |
Water Distribution | | | 3.5 | |
| | | |
Eversource Parent and Other Companies - other operations and maintenance | | | 9.9 | |
Eliminations | | | (29.2) | |
Total Operations and Maintenance | | | $ | 8.4 | |
| | | |
Depreciation expense increased for the three and six months ended June 30, 2023, as compared to the same periods in 2022,month period due primarily to higher utilitynet plant in service balances, partially offset by a decrease in approved depreciation rates as part of the rate case decision effective January 1, 2023 at NSTAR Electric.balances.
Amortization expense includes the deferral of energy-related costs and other costs that are included in certain regulatory commission-approved cost tracking mechanisms. This deferral adjusts expense to match the corresponding revenues compared to the actual costs incurred. These costs are recovered from customers in rates and have no impact on earnings. Amortization expense also includes the amortization of certain costs as those costs are collected in rates.
The variance in Amortizationn decreased for the three and six months ended June 30, 2023, as compared to the same periods in 2022,month period is due primarily to the deferral adjustment of energy-related and other tracked costs at CL&P (included in the non-bypassable component of the FMCC mechanism), NSTAR Electric and PSNH, which can fluctuate from period to period based on the timing of costs incurred and related rate changes to recover these costs. The decrease in the CL&P FMCC mechanism was driven primarily by the November 2022 rate relief plan, which reduced the non-bypassable FMCC rate effective January 1, 2023. The reduction in the CL&P non-bypassable FMCC retail rate decreased the regulatory over-recovery balance, which resulted in a decrease to amortization expense of $220.3 million in the second quarter of 2023, as compared to the second quarter of 2022 and $507.0 millionincreased in the first halfquarter of 2023,2024, as compared to the first halfquarter of 2022. The decrease was also driven by2023, and the impact of a newhigher collections lowered the regulatory tracking mechanism at PSNH that allows for the recovery of previously incurred operating expenses associated with poles acquired from Consolidated Communications on May 1, 2023. The establishment of the PPAM regulatory asset resulted in a pre-tax benefit of $16.9 millionunder-recovery deferral adjustment recorded in the first quarter of 2024 as compared to the deferral adjustment in the first quarter of 2023, resulting in an increase to amortization expense of $53.1 million. Amortization expense on the PSNH statement of income in the second quarter of 2023. The decrease was partially offset by the amortization of historical exogenous property taxes that were approved for recovery effective January 1, 2023 in the November 2022also increased at NSTAR Electric distribution rate case decision and effective November 1, 2022 at NSTAR Gas and EGMA.as a result of an increase in storm costs recovered in rates.
Energy Efficiency Programs expenseincludes costs of various state energy policy initiatives and expanded energy efficiency programs that are recovered from customers in rates, most of which have no impact on earnings. Energy Efficiency Programs expense increased fincludes a or the three and six months ended June 30, 2023, as compared to the same periods in 2022, due primarily to the deferral adjustment at NSTAR Electric, NSTAR Gas and EGMA, whichthat reflects the actual costs of energy efficiency programs compared to the amounts billed to customers, andwhich can fluctuate from period to period based on the timing of costs incurred and related rate changes to recover these costs. Energy Efficiency Programs expense decreased for the recovery of energy efficiency costs. The costs forthree month period due primarily to the majority of the state energy policy initiatives and expanded energy efficiency programs are recovered from customers in rates and have no impact on earnings.deferral adjustment, partially offset by higher program spending.
Taxes Other Than Income Taxes expense increased for the three months ended June 30, 2023, as compared to the same month period in 2022, due primarily to higher property taxes as a result of higher assessments and higher utility plant balances. For the six months ended June 30, 2023, as compared to the same period in 2022, the increase was due primarily to higherbalances, partially offset by lower Connecticut gross earnings taxes and higher property taxes as a result of higher utility plant balances.taxes.
Interest Expense increased for the three and six months ended June 30, 2023, as compared to the same periods in 2022,month period due primarily to an increase in interest on long-term debt as a result of new debt issuances ($57.9 million and $102.5 million, respectively)55.5 million), an increase inhigher interest on short-term notes payable due to increased borrowings ($5.7 million8.1 million), and $19.8 million, respectively), an increase in interest expense on regulatory deferrals ($1.3 million and $3.9 million, respectively), and higher amortization of debt discounts and premiums, net ($1.1 million and $2.4 million, respectively)4.1 million), partially offset by an increase in capitalized AFUDC related to debt funds and other capitalized interest ($18.3 million and $32.2 million, respectively), a decrease in RRB interest expense ($0.3 million and $0.7 million, respectively) and lower interest resulting from the payment of withheld property taxes in the second quarter of 2022 at NSTAR Electric for the six month period ($1.715.2 million).
Impairment of Offshore Wind Investment relates to an impairment charge associated with Eversource’s equity method investment in its offshore wind business resulting from the completion of the strategic review of its offshore wind investment portfolio. See "Business Development and Capital Expenditures – Offshore Wind Business" included in this Management's Discussion and Analysis of Financial Condition and Results of Operations.
Other Income, Netincreased for the three and six months ended June 30, 2023, as compared to the same periods in 2022,month period due primarily to an increase in capitalized AFUDC related to equity funds ($11.3 million), an increase in interest income primarily from regulatory deferrals ($11.9 million and $28.4 million, respectively) and 6.9 million), an increase in capitalized AFUDCequity in earnings related to Eversource's equity fundsmethod investments ($7.8 million 4.0 million), and $13.4 million, respectively)a decrease in investment losses driven by market volatility ($0.9 million), partially offset by a decrease related to pension, SERP and PBOP non-service income components ($21.6 million and $41.1 million, respectively), a decrease in equity in earnings related to Eversource's equity method investments ($11.6 million and $8.3 million, respectively), a loss on the disposition of land in the second quarter of 2023 ($6.57.0 million), and investment losses in 2023 compared to investment income in 2022 driven by market volatility ($2.7 million and $4.2 million, respectively). Other Income, Net also increased in both periodsdecreased for the three month period due to the absence in 2024 of a benefit in both the first and second quarter of 2023 from the liquidation of Eversource’s equity method investment in a renewable energy fund in excess of its carrying value, partially offset by a charitable contribution made with a portion of the proceeds from the liquidation in the first quarter of 2023.
Income Tax Expense decreased increased for the three months ended June 30, 2023, as compared to the samemonth period in 2022, due primarily to lowerhigher pre-tax earnings ($71.98.9 million), higher state taxes ($6.6 million), a decrease in amortization of EDIT ($4.6 million), and a higher share-based payment tax deficiency ($1.8 million), partially offset by a decrease in items that impact our tax rate as a result of regulatory treatment (flow-through items) and permanent differences ($11.8 million), lower state taxes ($26.2 million), and higher share-based payment excess tax benefits ($0.1 million), partially offset by a decrease in amortization of EDIT ($1.4 million), and an increase in valuation allowances primarily related to the impairment of Eversource’s offshore wind investment ($42.9 million).
Income Tax Expense decreased for the six months ended June 30, 2023, as compared to the same period in 2022, due primarily to lower pre-tax earnings ($58.7 million), a decrease in items that impact our tax rate as a result of regulatory treatment (flow-through items) and permanent differences ($10.8 million), and lower state taxes ($29.5 million), partially offset by lower share-based payment excess tax benefits ($2.5 million), a decrease in amortization of EDIT ($2.9 million) and an increase in valuation allowances primarily related to the impairment of Eversource’s offshore wind investment ($42.910.4 million).
RESULTS OF OPERATIONS –
THE CONNECTICUT LIGHT AND POWER COMPANY
NSTAR ELECTRIC COMPANY AND SUBSIDIARY
PUBLIC SERVICE COMPANY OF NEW HAMPSHIRE AND SUBSIDIARIES
The following provides the amounts and variances in operating revenues and expense line items in the statements of income for CL&P, NSTAR Electric and PSNH for the sixthree months ended June 30,March 31, 2024 and 2023 and 2022 included in this combined Quarterly Report on Form 10-Q:
| | | For the Six Months Ended June 30, | | For the Three Months Ended March 31, |
| CL&P | | NSTAR Electric | | PSNH |
| CL&P | | | CL&P | | NSTAR Electric | | PSNH |
(Millions of Dollars) | (Millions of Dollars) | 2023 | | 2022 | | Increase/ (Decrease) | | 2023 | | 2022 | | Increase/ (Decrease) | | 2023 | | 2022 | | Increase/ (Decrease) | (Millions of Dollars) | 2024 | | 2023 | | Increase/ (Decrease) | | 2024 | | 2023 | | Increase/ (Decrease) | | 2024 | | 2023 | | Increase/ (Decrease) |
Operating Revenues | Operating Revenues | $ | 2,373.1 | | | $ | 2,321.5 | | | $ | 51.6 | | | $ | 1,775.3 | | | $ | 1,646.8 | | | $ | 128.5 | | | $ | 770.2 | | | $ | 646.5 | | | $ | 123.7 | |
Operating Expenses: | Operating Expenses: | | | | | | | | | | Operating Expenses: | | | | | | | | | |
Purchased Power and Transmission | Purchased Power and Transmission | 1,477.0 | | | 944.5 | | | 532.5 | | | 627.5 | | | 550.5 | | | 77.0 | | | 371.5 | | | 236.6 | | | 134.9 | |
Operations and Maintenance | Operations and Maintenance | 326.9 | | | 326.1 | | | 0.8 | | | 312.9 | | | 314.0 | | | (1.1) | | | 132.3 | | | 126.3 | | | 6.0 | |
Depreciation | Depreciation | 185.9 | | | 175.5 | | | 10.4 | | | 183.3 | | | 178.7 | | | 4.6 | | | 68.8 | | | 62.8 | | | 6.0 | |
Amortization of Regulatory (Liabilities)/Assets, Net | Amortization of Regulatory (Liabilities)/Assets, Net | (312.2) | | | 212.5 | | | (524.7) | | | 21.4 | | | 49.4 | | | (28.0) | | | (25.3) | | | 36.1 | | | (61.4) | |
Energy Efficiency Programs | Energy Efficiency Programs | 60.8 | | | 65.2 | | | (4.4) | | | 156.9 | | | 149.5 | | | 7.4 | | | 19.4 | | | 17.5 | | | 1.9 | |
Taxes Other Than Income Taxes | Taxes Other Than Income Taxes | 196.1 | | | 186.1 | | | 10.0 | | | 119.8 | | | 120.7 | | | (0.9) | | | 47.6 | | | 48.1 | | | (0.5) | |
Total Operating Expenses | Total Operating Expenses | 1,934.5 | | | 1,909.9 | | | 24.6 | | | 1,421.8 | | | 1,362.8 | | | 59.0 | | | 614.3 | | | 527.4 | | | 86.9 | |
Operating Income | Operating Income | 438.6 | | | 411.6 | | | 27.0 | | | 353.5 | | | 284.0 | | | 69.5 | | | 155.9 | | | 119.1 | | | 36.8 | |
Interest Expense | Interest Expense | 93.0 | | | 82.8 | | | 10.2 | | | 91.6 | | | 77.1 | | | 14.5 | | | 36.6 | | | 28.4 | | | 8.2 | |
Other Income, Net | Other Income, Net | 28.3 | | | 39.4 | | | (11.1) | | | 80.8 | | | 63.5 | | | 17.3 | | | 12.0 | | | 15.3 | | | (3.3) | |
Income Before Income Tax Expense | Income Before Income Tax Expense | 373.9 | | | 368.2 | | | 5.7 | | | 342.7 | | | 270.4 | | | 72.3 | | | 131.3 | | | 106.0 | | | 25.3 | |
Income Tax Expense | Income Tax Expense | 92.2 | | | 89.4 | | | 2.8 | | | 74.1 | | | 58.2 | | | 15.9 | | | 30.6 | | | 23.4 | | | 7.2 | |
Net Income | Net Income | $ | 281.7 | | | $ | 278.8 | | | $ | 2.9 | | | $ | 268.6 | | | $ | 212.2 | | | $ | 56.4 | | | $ | 100.7 | | | $ | 82.6 | | | $ | 18.1 | |
Operating Revenues
Sales Volumes: A summary of our retail electric GWh sales volumes is as follows:
| | |
| | | For the Six Months Ended June 30, | For the Three Months Ended March 31, |
| | 2023 | | 2022 | | | Percentage Decrease | | 2024 | | 2023 | | | | Percentage Increase |
CL&P | CL&P | 9,138 | | | 9,919 | | | | (7.9) | % | CL&P | 5,001 | | | 4,802 | | 4,802 | | | | | 4.1 | | | | 4.1 | % |
NSTAR Electric | NSTAR Electric | 10,579 | | | 10,894 | | | | (2.9) | % | NSTAR Electric | 5,586 | | | 5,496 | | 5,496 | | | | | 1.6 | | | | 1.6 | % |
PSNH | PSNH | 3,645 | | | 3,787 | | | | (3.7) | % | PSNH | 1,948 | | | 1,900 | | 1,900 | | | | | 2.5 | | | | 2.5 | % |
Fluctuations in retail electric sales volumes at PSNH impact earnings. For CL&P and NSTAR Electric, fluctuations in retail electric sales volumes do not impact earnings due to their respective regulatory commission-approved distribution revenue decoupling mechanisms.
Operating Revenues: Operating Revenues, which consist of base distribution revenues and tracked revenues further described below, increased $51.6decreased $217.6 million at CL&P, $128.5$8.7 million at NSTAR Electric, and $123.7$94.1 million at PSNH for the six months ended June 30, 2023, as compared to the same period in 2022.three month period.
Base Distribution Revenues:
•CL&P's distribution revenues were flat.
•NSTAR Electric's distribution revenues increased $38.1$26.0 million for the three month period due primarily to the result of a rate design change approved by the DPU in the 2022 rate case that shifted the recovery of quarterly revenues (increase of $20.2 million in 2023, as compared to 2022) and a base distribution rate increase effective January 1, 2023 (increase of $17.9 million in 2023, as compared to 2022). As part of the 2022 NSTAR Electric rate case decision, certain customer rates changed from seasonal demand charges to a single annual demand charge effective January 1, 2023, resulting in a shift in the timing of revenues and earnings recognized quarterly in 2023, as compared to 2022, but with no impact on an annual basis. This rate design change will result in higher revenues in each of the first and fourth quarters of 2023 of approximately $21 million, offset by lower revenues in the third quarter of 2023 of approximately $42 million, as compared to the same periods in 2022.2024.
•PSNH's distribution revenues decreasedincreased $2.0 million for the three month period due primarily to a decreasean increase in sales volumes as a result of milder weather for the six months ended June 30, 2023, asin 2024 compared to the same period in 2022.2023.
Tracked Distribution Revenues: Tracked distribution revenues consist of certain costs that are recovered from customers in retail rates through regulatory commission-approved cost tracking mechanisms and therefore, recovery of these costs has no impact on earnings. Revenues from certain of these cost tracking mechanisms also include certain incentives earned, return on capital tracking mechanisms, and carrying charges that are billed in rates to customers, which do impact earnings. Costs recovered through cost tracking mechanisms include, among others, energy supply procurement and other energy-related costs, retail transmission charges, energy efficiency program costs, electric restructuring and stranded cost recovery revenues (including securitized RRB charges), certain capital tracking mechanisms for infrastructure improvements, and additionally for NSTAR Electric, pension and PBOP benefits, net metering for distributed generation, and solar-related programs. Tracked revenues also include wholesale market sales transactions, such as sales of energy and energy-related products into the ISO-NE wholesale electricity market and the sale of RECs to various counterparties.
Customers have the choice to purchase electricity from eachtheir Eversource electric utility or from a competitive third party supplier. For customers who have contracted separately with these competitive suppliers, revenue is not recorded for the sale of the electricity commodity, as the utility is acting as an agent on behalf of the third party supplier. For customers that choose to purchase electric generation from CL&P, NSTAR Electric or PSNH, each utility purchases power on behalf of, and is permitted to recover the related energy supply cost without mark-up from, its customers, and records offsetting amounts in revenues and purchased power related to this energy supply procurement. CL&P, NSTAR Electric and PSNH each remain as the distribution service provider for all customers and charge a regulated rate for distribution delivery service recorded in revenues.
TrackedThe variance in tracked distribution revenues increased/(decreased) for the six months ended June 30, 2023, as compared to the samethree month period in 2022,is due primarily to the following:
| (Millions of Dollars) | (Millions of Dollars) | CL&P | | NSTAR Electric | | PSNH | (Millions of Dollars) | CL&P | | NSTAR Electric | | PSNH |
Retail Tariff Tracked Revenues: | Retail Tariff Tracked Revenues: | | | | | |
Energy supply procurement | |
Energy supply procurement | |
Energy supply procurement | Energy supply procurement | $ | 493.9 | | | $ | 152.4 | | | $ | 126.1 | |
CL&P FMCC | CL&P FMCC | (268.3) | | | — | | | — | |
Retail transmission | Retail transmission | 9.5 | | | (31.8) | | | (26.1) | |
Other distribution tracking mechanisms | Other distribution tracking mechanisms | 5.1 | | | (2.7) | | | 7.8 | |
Wholesale Market Sales Revenue | Wholesale Market Sales Revenue | (205.8) | | | (32.0) | | | (10.7) | |
The increasedecrease in energy supply procurement at CL&P, NSTAR Electric and PSNH for the three month period was driven by higherlower average prices partially offset byand lower average supply-related sales volumes. Fluctuations in retail transmission revenues are driven by the recovery of the costs of our wholesale transmission business, such as those billed by ISO-NE and Local and Regional Network Service charges. For further information, see "Purchased Power and Transmission ExpenseTransmission”" expense below.
The decreaseincrease in CL&P’s FMCC revenues was driven by a decreasean increase in the retail Non-Bypassable Federally Mandated Congestion Charge (NBFMCC) rate. The CL&P NBFMCC rate which reflectsincludes the impactrecovery of returningcosts incurred under long-term state approved energy contracts with the Millstone and Seabrook nuclear power plants, net of the benefits received from selling this energy into the ISO-NE wholesale market. Effective January 1, 2023, CL&P reduced the average NBFMCC rate to a credit of $0.01524 per kWh. The rate reduction returned to customers the net benefits of higher wholesale market sales received in the ISO-NE market for long-term state approvedthese energy contracts at CL&P, which are then credited back to customers throughcontracts. Effective July 1, 2023, the retail NBFMCC rate. CL&P’s average NBFMCC rate in effect from January 1, 2022 through April 30, 2022 was $0.01423 per kWh and from May 1 through August 31, 2022 was $0.01251changed to $0.00000 per kWh. As a result of the 2023 CL&P RAM proceeding in Docket No. 22-01-03, CL&P reduceddecision, the average NBFMCC rate effective September 1, 2022 from $0.01251 per kWh to $0.00000 per kWh. As part of a November 2022 rate relief plan, CL&P further reduced the average NBFMCC rate effective January 1, 2023 to a credit of $0.01524 per kWh. These rate reductions returned to customers the net revenues generated by long-term state-approved energy contracts with the Millstone and Seabrook nuclear power plants. The average NBFMCC rate changed to $0.00000$0.00293 per kWh effective JulySeptember 1, 2023.
The decrease in wholesale market sales revenue for the six months ended June 30, 2023, as compared to the samethree month period in 2022, was due primarily to lower average electricity market prices received for wholesale sales at CL&P, NSTAR Electric and PSNH. ISO-NE average market prices received for CL&P’s wholesale sales decreased to an average price of $42.15$39.65 per MWh for the sixthree months ended June 30, 2023,March 31, 2024, as compared to $89.01$48.95 per MWh for the same period in 2022,2023, driven primarily by lower natural gas prices in New England. CL&P’s volumes sold into the market were primarily from the sale of output generated by the Millstone PPA and Seabrook PPA that CL&P entered into in 2019, as required by regulation. CL&P sells the energy purchased from Millstone and Seabrook into the wholesale market and uses the proceeds from the energy sales to offset the contract costs. The net sales or net cost amount is refunded to, or recovered from, customers in the non-bypassable component of the CL&P FMCC rate.
Transmission Revenues: Transmission revenues increased $8.4$16.1 million at CL&P, $12.3$22.7 million at NSTAR Electric, and $25.3$10.4 million at PSNH for the six months ended June 30, 2023, as compared to the samethree month period, in 2022, due primarily to a higher transmission rate base as a result of our continued investment in our transmission infrastructure.
Eliminations: Eliminations are primarily related to the Eversource electric transmission revenues that are derived from ISO-NE regional transmission charges to the distribution businesses of CL&P, NSTAR Electric and PSNH that recover the costs of the wholesale transmission business in rates charged to their customers. The impact of eliminations increaseddecreased revenues by $8.8$20.1 million at CL&P, and $1.8 million at PSNH and decreased revenues by $4.0$18.2 million at NSTAR Electric, and $4.7 million at PSNH for the six months ended June 30, 2023, as compared to the same period in 2022.three month period.
Purchased Power and Transmission expense includes costs associated with purchasing electricity on behalf of CL&P, NSTAR Electric and PSNH'sproviding electric generation service supply to all customers who have not migrated to third party suppliers, the cost of energy purchase contracts entered into as required by regulation, and transmission costs. These energy supply procurement costs, other energy-related costs, and transmission costs are recovered from customers in rates through commission-approved cost tracking mechanisms, which have no impact on earnings (tracked costs). The variance in Purchased Power and Transmission expense increased for the six months ended June 30, 2023, as compared to the same period in 2022,is due primarily to the following:
| (Millions of Dollars) | (Millions of Dollars) | CL&P | | NSTAR Electric | | PSNH | (Millions of Dollars) | CL&P | | NSTAR Electric | | PSNH |
Energy supply procurement costs | Energy supply procurement costs | $ | 491.4 | | | $ | 161.7 | | | $ | 125.3 | |
Other electric distribution costs | Other electric distribution costs | 13.7 | | | (48.9) | | | 27.0 | |
Transmission costs | Transmission costs | 20.1 | | | (31.9) | | | (19.2) | |
Eliminations | Eliminations | 7.3 | | | (3.9) | | | 1.8 | |
Total Purchased Power and Transmission | Total Purchased Power and Transmission | $ | 532.5 | | | $ | 77.0 | | | $ | 134.9 | |
Purchased Power Costs: IncludedThe variance in purchased power costs are the costs associated with providing electric generation service supply to all customers who have not migrated to third party suppliers, and the cost of energy purchase contracts entered into as required by regulation.
•The increase at CL&P was due primarily to higher energy supply procurement costs resulting from higher average prices, partiallyis offset by lower average supply-related sales volumes.
•in Operating Revenues (tracked energy supply procurement revenues). The increasevariance in other electric distribution costs at NSTAR Electric wasis due to an increase in net metering costs and the variance at PSNH is due primarily to higher energy supply procurement costs resulting from higher average prices, partially offset by lower average supply-related sales volumes. This was partially offset by a decrease in long-term renewable energy purchase contract costs and a decrease in net metering costs.
•The increase at PSNH was due primarily to higher energy supply procurement costs resulting from higher average prices, partially offset by lower average supply-related sales volumes.
Transmission Costs: Included in transmission costs are charges that recover the cost of transporting electricity over high-voltage lines from generation facilities to substations, including costs allocated by ISO-NE to maintain the wholesale electric market.
•The increase in transmission costs at CL&P and PSNH was due primarily to an increase in Local Network Service charges, which reflect the cost of transmission service provided by Eversource over our local transmission network, and an increase resulting from the retail transmission cost deferral, which reflects the actual costs of transmission service compared to estimated amounts billed to customers. Thiscustomers, and an increase in costs billed by ISO-NE that support regional grid investments.
•The increase in transmission costs at NSTAR Electric was due primarily to an increase in Local Network Service charges and an increase resulting from the retail transmission cost deferral. These increases were partially offset by a decrease in costs billed by ISO-NE that support regional investments.
•The decrease in transmission costs at NSTAR Electric and PSNH was due primarily to a decrease resulting from the retail transmission cost deferral and a decrease in costs billed by ISO-NE. This was partially offset by an increase in Local Network Service charges.
Operations and Maintenance expense includes tracked costs and costs that are part of base distribution rates with changes impacting earnings (non-tracked costs). The variance in Operations and Maintenance expense increased/(decreased) for the six months ended June 30, 2023, as compared to the same period in 2022,is due primarily to the following:
| | | | | | | | | | | | | | | | | |
(Millions of Dollars) | CL&P | | NSTAR Electric | | PSNH |
Base Electric Distribution (Non-Tracked Costs): | | | | | |
Vegetation management | $ | (6.8) | | | $ | 5.2 | | | $ | (1.6) | |
Employee-related expenses, including labor and benefits | (6.1) | | | (3.9) | | | 0.2 | |
Operations-related expenses (including storm costs, vendor services and vehicles) | (3.3) | | | (4.1) | | | (0.7) | |
Shared corporate costs (including computer software depreciation at Eversource Service) | 5.7 | | | 9.9 | | | 2.0 | |
General costs (including vendor services in corporate areas, bad debt expense, insurance, fees and assessments) | 4.6 | | | 3.1 | | | 3.2 | |
Other non-tracked operations and maintenance | (3.7) | | | (5.1) | | | (2.7) | |
Total Base Electric Distribution (Non-Tracked Costs) | (9.6) | | | 5.1 | | | 0.4 | |
Tracked Costs: | | | | | |
Transmission expenses | (1.6) | | | (2.8) | | | 0.9 | |
Other tracked operations and maintenance | 12.0 | | | (3.4) | | | 4.7 | |
Total Tracked Costs | 10.4 | | | (6.2) | | | 5.6 | |
Total Operations and Maintenance | $ | 0.8 | | | $ | (1.1) | | | $ | 6.0 | |
| | | | | | | | | | | | | | | | | |
(Millions of Dollars) | CL&P | | NSTAR Electric | | PSNH |
Base Electric Distribution (Non-Tracked Costs): | | | | | |
Vegetation management | $ | 6.8 | | | $ | (1.9) | | | $ | (1.2) | |
Storm costs | 2.2 | | | 0.8 | | | (2.9) | |
Employee-related expenses (including labor and benefits) | 2.0 | | | (2.7) | | | (0.1) | |
General costs (including vendor services in corporate areas, uncollectible expense, insurance, fees and assessments) | 1.9 | | | 0.5 | | | 0.5 | |
Shared corporate costs (including IT system depreciation at Eversource Service) | 1.3 | | | 0.9 | | | 0.4 | |
Total Base Electric Distribution (Non-Tracked Costs) | 14.2 | | | (2.4) | | | (3.3) | |
Total Tracked Costs - Increase due primarily to higher transmission expense | 12.3 | | 10.0 | | 4.2 |
Total Operations and Maintenance | $ | 26.5 | | | $ | 7.6 | | | $ | 0.9 | |
Depreciation expense increased for the six months ended June 30, 2023, as compared to the samethree month period in 2022, for CL&P, NSTAR Electric and PSNH due to higher net plant in service balances. The increase at NSTAR Electric was partially offset by a decrease in approved depreciation rates as part of the rate case decision effective January 1, 2023.
Amortization of Regulatory (Liabilities)/Assets, Net expense includes the deferral of energy-related costs and other costs that are included in certain regulatory commission-approved cost tracking mechanisms. This deferral adjusts expense to match the corresponding revenues compared to the actual costs incurred. These costs are recovered from customers in rates and have no impact on earnings. Amortization expense also includes the amortization of certain costs as those costs are collected in rates. The variance in Amortization of Regulatory (Liabilities)/Assets, Net decreased for the six months ended June 30, 2023, as compared to the samethree month period in 2022,is due primarily to the following:
•The decreasevariance at CL&P was due primarily to the deferral adjustment of energy-related and other tracked costs that are included in the non-bypassable component of the FMCC mechanism, which can fluctuate from period to period based on the timing of costs incurred and related rate changes to recover these costs. The decrease in the FMCC mechanism was driven primarily by the CL&P November 2022 rate relief plan, which reduced the non-bypassable FMCC rate effective January 1, 2023. The reduction in the CL&P non-bypassable FMCC retail rate decreased the regulatory over-recovery balance, which resulted in a decrease to amortization expense of $507.0 millionincreased in the first halfquarter of 2023,2024, as compared to the first halfquarter of 2022.2023, and the higher collections lowered the regulatory under-recovery deferral adjustment recorded in the first quarter of 2024 as compared to the deferral adjustment in the first quarter of 2023, resulting in an increase to amortization expense of $53.1 million.
•The decreaseincrease in expense at NSTAR Electric was due to the deferral adjustment of energy-related costs and other tracked costs partially offset by an increase due tothat are included in the transition and solar facilities regulatory mechanisms, and higher amortization of historical exogenous property taxes that were approved for recovery effective January 1, 2023storm costs recovered in the November rates2022 NSTAR Electric distribution rate case decision..
•The decreaseincrease in expense at PSNH was due to the deferral adjustment of energy-related and other tracked costs as well as the impact of a new regulatory tracking mechanism at PSNH that allows for the recovery of previously incurred operating expenses associated with poles acquired from Consolidated Communications on May 1, 2023. The establishment of the PPAM regulatory asset resulted in a pre-tax benefit of $16.9 million recorded in Amortization expense on the PSNH statement of incomeare included in the second quarter of 2023.stranded cost recovery charge regulatory mechanism.
Energy Efficiency Programs expense includes costs of various state energy policy initiatives and expanded energy efficiency programs that are recovered from customers in rates, most of which have no impact on earnings. Energy Efficiency Programs expense includes a increased/decreased fordeferral adjustment that reflects the six months ended June 30, 2023, asactual costs of energy efficiency programs compared to the sameamounts billed to customers, which can fluctuate from period to period based on the timing of costs incurred and related rate changes to recover these costs. The variance in 2022,Energy Efficiency Programs expense for the three month period is due primarily to the following:
•The decreaseincrease at CL&P was due to the deferral adjustment, which reflects actual costs of energy efficiency programs compared to the estimated amounts billed to customers, and the timing of the recovery of energy efficiency costs.partially offset by lower program spending.
•The increasesdecrease at NSTAR Electric and PSNH werewas due to the deferral adjustment, andpartially offset by higher program spending.
•The increase at PSNH was due to higher program spending, partially offset by the timing of the recovery of energy efficiency costs.deferral adjustment.
Taxes Other Than Income Taxesincreased- the variance is due primarily to the following:
•The increase at CL&P for the six months ended June 30, 2023, as compared to the same period in 2022,was due primarily to higher gross earnings taxes and higher property taxes as a result of higher utility plant balances.
•The increase at NSTAR Electric was due primarily to higher property taxes as a result of higher assessments and higher utility plant balances.
•The increase at PSNH was due primarily to higher property taxes as a result of higher utility plant balances, partially offset by lower mill rates.
Interest Expense increased for- the variance is due the six months ended June 30, 2023, as compared to the same period in 2022, due primarily to the following:
•The increase at CL&P was due to higher interest on long-term debt ($7.9as a result of new debt issuances ($7.0 million) and, higher interest on short-term notes payable due to increased borrowings ($4.73.5 million), and higher amortization of debt discounts and premiums, net ($0.2 million), partially offset by an increase in capitalized AFUDC related to debt funds ($1.60.6 million) and a decrease in interest expense on regulatory deferrals ($0.4 million).
•The increase at NSTAR Electric was due to higher interest on long-term debtshort-term notes payable due to increased borrowings ($12.95.2 million), an increase in interest expense on regulatory deferrals ($3.73.3 million), and higher interest on short-term notes payablelong-term debt as a result of a new debt issuance ($2.71.3 million), partially offset by an increase in capitalized AFUDC related to debt funds ($3.3 million) and lower interest resulting from the payment of withheld property taxes in the second quarter of 2022 ($1.75.4 million).
•The increase at PSNH was due to higher interest on long-term debtshort-term notes payable ($7.32.8 million), and higher interest on short-term notes payable ($2.1 million), andlong-term debt due to higher interest expense on regulatory deferralsrates ($0.71.6 million), partially offset by an increase in capitalized AFUDC related to debt funds ($1.31.7 million) and, a decrease in interest expense on regulatory deferrals ($0.7 million), a decrease in RRB interest expense ($0.70.3 million) and lower amortization of debt discounts and premiums, net ($0.2 million).
Other Income, Netincreased/decreased for the six months ended June 30, 2023, as compared to the same period in 2022, due primarily to the following:
•The decrease at CL&P was due primarily to a decrease related to pension, SERP and PBOP non-service income components ($14.2 million) and higher investment losses driven by market volatility ($0.6 million), partially offset by an increase in capitalized AFUDC related to equity funds ($3.1 million) and an increase in interest income primarily on regulatory deferrals ($0.6 million).
•The increase at NSTAR Electric was due primarily to an increase in interest income primarily on regulatory deferrals ($20.8 million), and an increase in capitalized AFUDC related to equity funds ($10.5 million), partially offset by a decrease related to pension, SERP and PBOP non-service income components ($13.6 million) and investment losses in 2023 compared to investment income in 2022 driven by market volatility ($0.4 million).
•The decrease at PSNH was due primarily to a decrease related to pension, SERP and PBOP non-service income components ($5.2 million) and investment losses in 2023 compared to investment income in 2022 driven by market volatility ($0.7 million), partially offset by an increase in interest income primarily on regulatory deferrals ($1.4 million) and an increase in capitalized AFUDC related to equity funds ($0.8 million).
Income Tax Expense increased for- the six months ended June 30, 2023, as compared to the same period in 2022,variance is due primarily to the following:
•The increase at CL&P was due primarily to higher pre-tax earningsan increase in interest income primarily on regulatory deferrals ($1.22.8 million), higher state taxes ($0.7 million), lower share-based payment excess tax benefits ($0.9 million), and an increase in valuation allowancescapitalized AFUDC related to equity funds ($2.81.9 million), partially offset by a decrease related to pension, SERP and PBOP non-service income components ($3.0 million).
•The increase at NSTAR Electric was due primarily to an increase in capitalized AFUDC related to equity funds ($6.7 million), an increase in interest income primarily on regulatory deferrals ($2.0 million) and investment income in 2024 compared to investment loss in 2023 driven by market volatility ($0.9 million), partially offset by a decrease related to pension, SERP and PBOP non-service income components ($2.4 million).
•The increase at PSNH was due primarily to an increase in capitalized AFUDC related to equity funds ($1.2 million) and an increase in interest income primarily on regulatory deferrals ($0.9 million), partially offset by a decrease related to pension, SERP and PBOP non-service income components ($0.6 million).
Income Tax Expense - the variance is due primarily to the following:
•The increase at CL&P was due primarily to a higher share-based payment tax deficiency ($0.6 million), a decrease in amortization of EDIT ($0.3 million), higher state taxes ($0.1 million), and a decreasean increase in items that impact our tax rate as a result of regulatory treatment (flow-through items) and permanent differences ($2.51.5 million), partially offset by lower pre-tax earnings ($2.0 million).
•The increase at NSTAR Electric was due primarily to higher pre-tax earnings ($15.28.3 million), higher state taxes ($3.32.2 million), lowera higher share-based payment excess tax benefitsdeficiency ($1.00.6 million), and a decrease in amortization of EDIT ($1.33.5 million), partially offset by a decrease in items that impact our tax rate as a result of regulatory treatment (flow-through items) and permanent differences ($4.91.4 million).
•The increase at PSNH was due primarily to higher pre-tax earnings ($5.32.4 million), higher state taxes ($1.20.6 million), and a decrease in amortization of EDIT ($0.90.5 million), partially offset by a decrease in items that impact our tax rate as a result of regulatory treatment (flow-through items) and permanent differences ($0.2 million).
EARNINGS SUMMARY
CL&P's earnings increased $2.9decreased $10.0 millionfor the six months ended June 30, 2023, as compared to the samethree month period in 2022, due primarily to higher operations and maintenance expense, higher interest expense, and higher depreciation expense, partially offset by higher earnings from its capital tracking mechanism due to increased electric system improvements and lower operations and maintenance expense. Thean increase in transmission earnings increase was partially offsetdriven by a higher pension plan expense, higher interest expense, higher depreciation expense, and higher property and other tax expense.transmission rate base.
NSTAR Electric's earnings increased $56.4$26.2 million for the six months ended June 30, 2023, as compared to the samethree month period in 2022, due primarily to higher revenues as a result of the rate design change approved by the DPU in the 2022 rate case that shifted the recovery of quarterly revenues and the base distribution rate increase effective January 1, 2023. Earnings were also favorably impacted by2024, an increase in transmission earnings driven by a higher transmission rate base, an increase in interest income primarily on regulatory deferrals, and higher AFUDC equity income,lower operations and maintenance expense. The earnings increase was partially offset by higher property and other taxinterest expense, higher interestproperty tax expense, and higher operations and maintenancedepreciation expense.
PSNH's earnings increased $18.1$8.1 million for the six months ended June 30, 2023, as compared to the samethree month period in 2022, due primarily to the impact of a new regulatory tracking mechanism at PSNH that allows for the recovery of previously incurred operating expenses associated with poles acquired on May 1, 2023 and an increase in transmission earnings driven by a higher transmission rate base.base, lower operations and maintenance expense, and higher sales volumes. The earnings increase was partially offset by higher interest expense, higher pension plandepreciation expense and lower sales volumes.higher interest expense.
LIQUIDITY
Cash Flows: CL&P had cash flows provided byused in operating activities of $129.0$26.6 million for the sixthree months ended June 30, 2023,March 31, 2024, as compared to $238.6$73.6 million in the same period of 2022.2023. The decreaseimprovement in operating cash flows was due primarily to an increasethe timing of cash payments made on our accounts payable and a decrease in regulatory under-recoveries driven primarily by the timing of collections for the non-bypassable FMCC and other regulatory tracking mechanism, the timing of cash payments made on our accounts payable, and the timing of other working capital items. In 2023,mechanisms. The CL&P increased the flow back to customers of net revenues generated by long-term state-approved energy contracts by providing these credits to customers through the non-bypassable FMCC retail rate. The reduction in the non-bypassable FMCC retail rate decreased the regulatory over-recovery balance, which resulted in a decrease to amortization expense of $507.0 millionincreased in the first halfquarter of 2023,2024, as compared to the first halfquarter of 2022,2023, which lowered the regulatory under-recovery deferral adjustment and is presented as aresulted in an improvement to operating cash outflow in Amortizationflows of Regulatory (Liabilities)/Assets on the statement of cash flows. $53.1 million. The impactimpacts of regulatory collections are included in both Regulatory Recoveries and Amortization of Regulatory (Liabilities)/AssetsLiabilities, Net on the statements of cash flows. These unfavorablefavorable impacts were partially offset by the timing of other working capital items, an $11.8 million increase in cash payments to vendors for storm costs, a $4.7 million increase in cost of removal expenditures, the timing of cash collections on our accounts receivable, and a $189.8$3.0 million increase due todecrease in income tax refunds received in 20232024 compared to income tax payments in 2022, the absence in 2023 of $64.9 million of customer credits distributed in 2022 as a result of the October 2021 settlement agreement and the 2021 storm performance penalty for CL&P’s response to Tropical Storm Isaias, and a $36.5 million decrease in cash payments for storm costs.
Effective July 1, 2023, CL&P’s non-bypassable FMCC retail rate changed to $0.00000 per kWh, as compared to a credit of $0.01524 per kWh from January 1, 2023 to June 30, 2023. The increase in the retail rate will result in higher cash collections in the second half of 2023, as compared to the first half of 2023.
NSTAR Electric had cash flows provided by operating activities of $233.5$152.6 million for the sixthree months ended June 30, 2023,March 31, 2024, as compared to $197.1$140.8 million in the same period of 2022.2023. The increase in operating cash flows was due primarily to the absence in 2023 of $76.1 million of payments in 2022 related to withheld property taxes, a $71.7 million decrease in cash payments for storm costs, the timing of cash payments made on our accounts payable, and the absence in 2023 of pension contributions of $10.0 million made in 2022. These favorable impacts were partially offset by an increase in regulatory under-recoveries driven by the timing of collections for regulatory tracking mechanisms including net metering and energy efficiency costs, the timing of cash collections on our accounts receivable, a $20.7 million decrease in income tax refunds received in 2023 compared to 2022, and the timing of other working capital items. The impactimpacts of regulatory collections are included in both Regulatory Recoveries and Amortization of Regulatory Assets, Net on the statements of cash flows. These favorable impacts were partially offset by a $43.8 million increase in cash payments to vendors for storm costs, a $39.4 million decrease in operating cash flows due to income tax payments made in 2024 compared to income tax refunds received in 2023, and the timing of cash payments made on our accounts payable.
PSNH had cash flows provided by operating activities of $51.8 million for the three months ended March 31, 2024, as compared to cash flows used in operating activities of $92.6 million for the six months ended June 30, 2023, as compared to cash flows provided by operating activities of $140.4$72.9 million in the same period of 2022.2023. The decreaseincrease in operating cash flows was due primarily to an increasea decrease in regulatory under-recoveries driven by the timing of collections for regulatory tracking mechanisms primarily theincluding energy supply tracking mechanism resulted in an unfavorable impact of $49.3 million, an $80.6 million increase in cash payments for stormand stranded costs, and the timing of cash payments madecollections on our accounts payable.receivable, and a $12.9 million decrease in cash payments to vendors for storm costs. The impactimpacts of regulatory collections are included in both Regulatory Recoveries and Amortization of Regulatory Assets/(Liabilities)/Assets, Net on the statements of cash flows. These unfavorablefavorable impacts were partially offset by a $73.6the timing of cash payments made on our accounts payable, an $11.7 million increase due todecrease in income tax refunds received in 20232024 compared to income tax payments2023, and an $8.0 million increase in 2022, and the timingcost of cash collections on our accounts receivable.removal expenditures.
For further information on CL&P's, NSTAR Electric's and PSNH's liquidity and capital resources, see "Liquidity" and "Business Development and Capital Expenditures" included in this Management's Discussion and Analysis of Financial Condition and Results of Operations.
RESULTS OF OPERATIONS – THE CONNECTICUT LIGHT AND POWER COMPANY
The following provides the amounts and variances in operating revenues and expense line items in the statements of income for CL&P for the three months ended June 30, 2023 and 2022 included in this combined Quarterly Report on Form 10-Q:
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| For the Three Months Ended June 30, |
(Millions of Dollars) | 2023 | | 2022 | | Increase/(Decrease) |
Operating Revenues | $ | 1,034.1 | | | $ | 1,035.7 | | | $ | (1.6) | |
Operating Expenses: | | | | | |
Purchased Power and Transmission | 626.4 | | | 421.0 | | | 205.4 | |
Operations and Maintenance | 166.6 | | | 169.0 | | | (2.4) | |
Depreciation | 93.7 | | | 88.2 | | | 5.5 | |
Amortization of Regulatory (Liabilities)/ Assets, Net | (189.9) | | | 42.8 | | | (232.7) | |
Energy Efficiency Programs | 28.1 | | | 29.8 | | | (1.7) | |
Taxes Other Than Income Taxes | 94.5 | | | 95.8 | | | (1.3) | |
Total Operating Expenses | 819.4 | | | 846.6 | | | (27.2) | |
Operating Income | 214.7 | | | 189.1 | | | 25.6 | |
Interest Expense | 47.8 | | | 42.2 | | | 5.6 | |
Other Income, Net | 13.4 | | | 19.8 | | | (6.4) | |
Income Before Income Tax Expense | 180.3 | | | 166.7 | | | 13.6 | |
Income Tax Expense | 47.0 | | | 40.9 | | | 6.1 | |
Net Income | $ | 133.3 | | | $ | 125.8 | | | $ | 7.5 | |
Operating Revenues
Sales Volumes: CL&P's retail electric GWh sales volumes were 4,337 and 4,656 for the three months ended June 30, 2023 and 2022, respectively, resulting in a decrease of 6.9 percent. Fluctuations in retail electric sales volumes do not impact earnings due to its PURA-approved distribution revenue decoupling mechanism.
Operating Revenues: Operating Revenues, which consist of base distribution revenues and tracked revenues further described below, decreased $1.6 million for the three months ended June 30, 2023, as compared to the same period in 2022.
Base Distribution Revenues: CL&P's base distribution revenues were flat.
Tracked Revenues: Tracked revenues increased/(decreased) for the three months ended June 30, 2023, as compared to the same period in 2022, due primarily to the following:
| | | | | |
(Millions of Dollars) | |
Retail Tariff Tracked Revenues: | |
Energy supply procurement | $ | 197.4 | |
FMCC | (128.9) | |
Other distribution tracking mechanisms | 3.2 | |
Wholesale Market Sales Revenue | (80.5) | |
The increase in energy supply procurement was driven by higher average prices, partially offset by lower average supply-related sales volumes.
The decrease in CL&P’s FMCC revenues was driven by a decrease in the retail Non-Bypassable Federally Mandated Congestion Charge (NBFMCC) rate, which reflects the impact of returning net benefits of higher wholesale market sales received in the ISO-NE market for long-term state approved energy contracts at CL&P, which are then credited back to customers through the retail NBFMCC rate. CL&P’s average NBFMCC rate in effect from January 1, 2022 through April 30, 2022 was $0.01423 per kWh and from May 1 through August 31, 2022 was $0.01251 per kWh. As a result of the CL&P RAM proceeding in Docket No. 22-01-03, CL&P reduced the average NBFMCC rate effective September 1, 2022 from $0.01251 per kWh to $0.00000 per kWh. As part of a November 2022 rate relief plan, CL&P further reduced the average NBFMCC rate effective January 1, 2023 to a credit of $0.01524 per kWh. These rate reductions returned to customers the net revenues generated by long-term state-approved energy contracts with the Millstone and Seabrook nuclear power plants. The average NBFMCC rate changed to $0.00000 per kWh effective July 1, 2023.
The decrease in wholesale market sales revenue for the three months ended June 30, 2023, as compared to the same period in 2022, was due primarily to lower average electricity market prices received for wholesale sales. ISO-NE average market prices received for CL&P’s wholesale sales decreased to an average price of $27.05 per MWh for the three months ended June 30, 2023, as compared to $65.90 per MWh for the same period in 2022, driven primarily by lower natural gas prices in New England. CL&P’s volumes sold into the market were primarily from the sale of output generated by the Millstone PPA and Seabrook PPA that CL&P entered into in 2019, as required by regulation. CL&P sells the energy purchased from Millstone and Seabrook into the wholesale market and uses the proceeds from the energy sales to offset the contract costs. The net sales or net cost amount is refunded to, or recovered from, customers in the non-bypassable component of the CL&P FMCC rate.
Transmission Revenues: Transmission revenues increased $4.6 million due primarily to a higher transmission rate base as a result of continued investment in our transmission infrastructure.
Eliminations: Eliminations are primarily related to transmission revenues derived from ISO-NE regional transmission charges to the distribution business that recover the costs of the wholesale transmission business in rates charged to customers. The impact of eliminations increased revenues by $2.8 million.
Purchased Power and Transmission expense includes costs associated with purchasing electricity on behalf of CL&P's customers, the cost of energy purchase contracts entered into as required by regulation, and transmission costs. These energy supply procurement, other energy-related costs, and transmission costs are recovered from customers in PURA-approved cost tracking mechanisms, which have no impact on earnings (tracked costs). Purchased Power and Transmission expense increased for the three months ended June 30, 2023, as compared to the same period in 2022, due primarily to the following:
| | | | | |
(Millions of Dollars) | |
Energy supply procurement costs | $ | 196.5 | |
Other distribution costs | 3.0 | |
Transmission costs | 4.7 | |
Eliminations | 1.2 | |
Total Purchased Power and Transmission | $ | 205.4 | |
The increase in energy supply procurement costs was driven by higher average prices, partially offset by lower average supply-related sales volumes.
Operations and Maintenance expense includes tracked costs and costs that are part of base distribution rates with changes impacting earnings (non-tracked costs). Operations and Maintenance expense decreased for the three months ended June 30, 2023, as compared to the same period in 2022, due primarily to the following:
| | | | | |
(Millions of Dollars) | |
Base Electric Distribution (Non-Tracked Costs): | |
Employee-related expenses, including labor and benefits | $ | (6.4) | |
Storm costs | (4.7) | |
Operations-related expenses (including vegetation management, vendor services and vehicles) | (4.4) | |
Shared corporate costs (including computer software depreciation at Eversource Service) | 2.7 | |
Other non-tracked operations and maintenance | 0.6 | |
Total Base Electric Distribution (Non-Tracked Costs) | (12.2) | |
Total Tracked Costs | 9.8 | |
Total Operations and Maintenance | $ | (2.4) | |
Depreciation expense increased for the three months ended June 30, 2023, as compared to the same period in 2022, due primarily to a higher net plant in service balance.
Amortization of Regulatory (Liabilities)/Assets, Net expense includes the deferral of energy-related costs and other costs that are included in certain regulatory-approved cost tracking mechanisms. This deferral adjusts expense to match the corresponding revenues compared to the actual costs incurred. These costs are recovered from customers in rates and have no impact on earnings. Amortization expense also includes the amortization of certain costs as those costs are collected in rates. Amortization of Regulatory (Liabilities)/Assets, Net decreased for the three months ended June 30, 2023, as compared to the same period in 2022, due primarily to the deferral adjustment of energy-related and other tracked costs that are included in the non-bypassable component of the FMCC mechanism, which can fluctuate from period to period based on the timing of costs incurred and related rate changes to recover these costs. The decrease in the FMCC mechanism was driven primarily by the CL&P November 2022 rate relief plan, which reduced the non-bypassable FMCC rate effective January 1, 2023. The reduction in the CL&P non-bypassable FMCC retail rate decreased the regulatory over-recovery balance, which resulted in a decrease to amortization expense of $220.3 million in the second quarter of 2023, as compared to the second quarter of 2022.
Energy Efficiency Programs expenseincludes costs of various state energy policy initiatives and expanded energy efficiency programs that are recovered from customers in rates, most of which have no impact on earnings. Energy Efficiency Programs expensedecreased for the three months ended June 30, 2023, as compared to the same period in 2022, due to the deferral adjustment, which reflects actual costs of energy efficiency programs compared to the estimated amounts billed to customers, and the timing of the recovery of energy efficiency costs.
Interest Expense increased for the three months ended June 30, 2023, as compared to the same period in 2022, due primarily to higher interest on long-term debt ($4.1 million) and higher interest on short-term notes payable ($4.1 million), partially offset by an increase in capitalized AFUDC related to debt funds ($0.9 million) and a decrease in interest expense on regulatory deferrals ($0.8 million).
Other Income, Net decreased for the three months ended June 30, 2023, as compared to the same period in 2022, due primarily to a decrease related to pension, SERP and PBOP non-service income components ($7.8 million) and higher investment losses driven by market volatility ($0.4 million), partially offset by an increase in capitalized AFUDC related to equity funds ($1.8 million).
Income Tax Expense increased for the three months ended June 30, 2023, as compared to the same period in 2022, due primarily to higher pre-tax earnings ($2.8 million), higher state taxes ($1.2 million), and an increase in valuation allowances ($2.8 million), partially offset by a decrease in items that impact our tax rate as a result of regulatory treatment (flow-through items) and permanent differences ($0.7 million).
EARNINGS SUMMARY
CL&P's earnings increased $7.5 millionfor the three months ended June 30, 2023, as compared to the same period in 2022, due primarily to lower operations and maintenance expense and higher earnings from its capital tracking mechanism due to increased electric system improvements. The earnings increase was partially offset by higher pension plan expense, higher interest expense, and higher depreciation expense.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Market Risk Information
Commodity Price Risk Management: Our regulated companies enter into energy contracts to serve our customers, and the economic impacts of those contracts are passed on to our customers. Accordingly, the regulated companies have no exposure to loss of future earnings or fair values due to these market risk-sensitive instruments. Eversource's Energy Supply Risk Committee, comprised of senior officers, reviews and approves all large-scale energy related transactions entered into by its regulated companies.
Other Risk Management Activities
Interest Rate Risk Management: We manageInterest rate risk is associated with changes in interest rates for our outstanding long-term debt. Our interest rate risk exposure in accordance withis significantly reduced as typically all or most of our written policies and procedures by maintainingdebt financings have fixed interest rates. As of March 31, 2024, all of our long-term debt was at a mix of fixed and variable rate long-term debt.interest rate.
Credit Risk Management: Credit risk relates to the risk of loss that we would incur as a result of non-performance by counterparties pursuant to the terms of our contractual obligations. We serve a wide variety of customers and transact with suppliers that include IPPs, industrial companies, natural gas and electric utilities, oil and natural gas producers, financial institutions, and other energy marketers. Margin accounts exist within this diverse group, and we realize interest receipts and payments related to balances outstanding in these margin accounts. This wide customer and supplier mix generates a need for a variety of contractual structures, products and terms that, in turn, require us to manage the portfolio of market risk inherent in those transactions in a manner consistent with the parameters established by our risk management process.
Our regulated companies are subject to credit risk from certain long-term or high-volume supply contracts with energy marketing companies. Our regulated companies manage the credit risk with these counterparties in accordance with established credit risk practices and monitor contracting risks, including credit risk. As of June 30, 2023,March 31, 2024, our regulated companies held collateral (letters of credit or cash) of $27.0$10.0 million from counterparties related to our standard service contracts. As of June 30, 2023,March 31, 2024, Eversource had $21.8$29.1 million of cash posted with ISO-NE related to energy transactions.
We have provided additional disclosures regarding interest rate risk management and credit risk management in Part II, Item 7A, "Quantitative and Qualitative Disclosures about Market Risk," in Eversource's 20222023 Form 10-K, which is incorporated herein by reference. There have been no additional risks identified and no material changes with regard to the items previously disclosed in the Eversource 20222023 Form 10-K.
ITEM 4. CONTROLS AND PROCEDURES
Management, on behalf of Eversource, CL&P, NSTAR Electric and PSNH, evaluated the design and operation of the disclosure controls and procedures as of June 30, 2023March 31, 2024 to determine whether they are effective in ensuring that the disclosure of required information is made timely and in accordance with the Securities Exchange Act of 1934 and the rules and regulations of the SEC. This evaluation was made under management's supervision and with management's participation, including the principal executive officer and principal financial officer as of the end of the period covered by this Quarterly Report on Form 10-Q. There are inherent limitations of disclosure controls and procedures, including the possibility of human error and the circumventing or overriding of the controls and procedures. Accordingly, even effective disclosure controls and procedures can only provide reasonable assurance of achieving their control objectives. The principal executive officer and principal financial officer have concluded, based on their review, that the disclosure controls and procedures of Eversource, CL&P, NSTAR Electric and PSNH are effective to ensure that information required to be disclosed by us in reports filed under the Securities Exchange Act of 1934 (i) is recorded, processed, summarized, and reported within the time periods specified in SEC rules and regulations and (ii) is accumulated and communicated to management, including the principal executive officer and principal financial officer, as appropriate to allow timely decisions regarding required disclosures.
There have been no changes in internal controls over financial reporting for Eversource, CL&P, NSTAR Electric and PSNH during the quarter ended June 30, 2023March 31, 2024 that have materially affected, or are reasonably likely to materially affect, internal controls over financial reporting.
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
We are parties to various legal proceedings. We have disclosed certain legal proceedings in Part I, Item 3, "Legal Proceedings," and elsewhere in our 20222023 Form 10-K. These disclosures are incorporated herein by reference. There have been no material legal proceedings identified and no material changes with regard to the legal proceedings previously disclosed in our 20222023 Form 10-K.
ITEM 1A. RISK FACTORS
We are subject to a variety of significant risks in addition to the matters set forth under our forward-looking statements section in Item 2, "Management's Discussion and Analysis of Financial Condition and Results of Operations," of this Quarterly Report on Form 10-Q. We have identified a number of these risk factors in Part I, Item 1A, "Risk Factors," in our 20222023 Form 10-K, which risk factors are incorporated herein by reference. These risk factors should be considered carefully in evaluating our risk profile. There have been no additional risk factors identified and no material changes with regard to the risk factors previously disclosed in our 20222023 Form 10-K.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
The following table discloses purchases of our common shares made by us or on our behalf for the periods shown below. The common shares purchased consist of open market purchases made by the Company or an independent agent. These share transactions related to matching contributions under the Eversource 401k Plan.
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Period | Total Number of Shares Purchased | Average Price Paid per Share | Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs | Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans and Programs (at month end) |
April 1 - April 30, 2023 | — | | $ | — | | — | | — | |
May 1 - May 31, 2023 | 210 | | 75.95 | | — | | — | |
June 1 - June 30, 2023 | 2,773 | | 70.30 | | — | | — | |
Total | 2,983 | | $ | 70.70 | | — | | — | |
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Period | Total Number of Shares Purchased | Average Price Paid per Share | Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs | Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans and Programs (at month end) |
January 1 - January 31, 2024 | — | | $ | — | | — | | — | |
February 1 - February 29, 2024 | — | | — | | — | | — | |
March 1 - March 31, 2024 | 1,039 | | 58.95 | | — | | — | |
Total | 1,039 | | $ | 58.95 | | — | | — | |
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
Not applicable.
ITEM 4. MINE SAFETY DISCLOSURES
Not applicable.
ITEM 5. OTHER INFORMATION
On MayDuring the quarter ended March 31, 2023, Jay S. Buth, Vice President, Controller and Chief Accounting Officer,2024, none of the Company’s directors or officers adopted, modified, or terminated a Rule“Rule 10b5-1 plan that he entered into on May 24, 2021.trading arrangement” or a “non-Rule 10b5-1 trading arrangement,” as such terms are defined under Item 408 of Regulation S-K.
ITEM 6. EXHIBITS
Each document described below is filed herewith, unless designated with an asterisk (*), which exhibits are incorporated by reference by the registrant under whose name the exhibit appears.
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| Exhibit No. | Description |
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| Listing of Exhibits (Eversource) |
* | 4.14 | EighteenthTwenty-Second Supplemental Indenture between Eversource Energy and The Bank of New York Trust Company N.A., as Trustee, dated as of MarchApril 1, 2023, establishing the terms of the additional $5502024, relating to $700 million aggregate principal amount of its 5.45% Senior Notes, Series Z,FF, Due 2028 (2031 and $700 million aggregate principal amount of Senior Notes, Series GG, Due 2034 (Exhibit 4.1, Eversource Energy Current Report on Form 8-K filed March 6, 2023,April 18, 2024, File No. 001-05324001-05324)) |
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*+ | 4.210 | Nineteenth Supplemental Indenture between Eversource EnergyForm of Executive Change in Control and The Bank of New York Trust Company N.A., as Trustee,Involuntary Termination Severance Program Agreement, dated as of May 1,December 4, 2023 relating to the issuance of an additional $550 million aggregate principal amount of its 5.45% Senior Notes, Series Z, Due 2028, $450 million aggregate principal amount of Senior Notes, Series AA, Due 2026 and $800 million aggregate principal amount of Senior Notes, Series BB, Due 2033 (Exhibit 4.3, Eversource Energy Current Report on Form 8-K filed May 11, 2023, File No. 001-05324) |
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| Listing of Exhibits (PSNH) |
* | 4 | |
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| Listing of Exhibits (Eversource, CL&P, NSTAR Electric, PSNH) |
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SIGNATURE
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
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| | EVERSOURCE ENERGY |
| | | |
August 4, 2023May 3, 2024 | | By: | /s/ Jay S. Buth |
| | | Jay S. Buth |
| | | Vice President, Controller and Chief Accounting Officer |
| | | |
SIGNATURE
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| | | | | | | | | | | |
| | THE CONNECTICUT LIGHT AND POWER COMPANY |
| | | |
August 4, 2023May 3, 2024 | | By: | /s/ Jay S. Buth |
| | | Jay S. Buth |
| | | Vice President, Controller and Chief Accounting Officer |
| | | |
SIGNATURE
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
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| | NSTAR ELECTRIC COMPANY |
| | | |
August 4, 2023May 3, 2024 | | By: | /s/ Jay S. Buth |
| | | Jay S. Buth |
| | | Vice President, Controller and Chief Accounting Officer |
| | | |
SIGNATURE
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
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| | PUBLIC SERVICE COMPANY OF NEW HAMPSHIRE |
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August 4, 2023May 3, 2024 | | By: | /s/ Jay S. Buth |
| | | Jay S. Buth |
| | | Vice President, Controller and Chief Accounting Officer |
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