Eversource Energy’s Strong Financial Performance in the First Quarter of 2025

Eversource Energy, a leading utility company in the Northeast, has reported impressive financial results for the first quarter of 2025. The company’s net income attributable to common shareholders reached $550.8 million, or $1.50 per share, compared to $521.8 million, or $1.49 per share, in the same period of 2024.

Earnings Overview and Future Outlook

Eversource’s regulated businesses, which include electric distribution, electric transmission, natural gas distribution, and water distribution, were the primary drivers of the company’s strong performance. The Regulated Companies segment earned $609.8 million, or $1.66 per share, in the first quarter of 2025, compared to $540.8 million, or $1.53 per share, in the same period of 2024.

The electric distribution segment’s earnings increased by $20.3 million, primarily due to higher revenues from base distribution rate increases at PSNH and NSTAR Electric, as well as increased electric system improvements at CL&P. The electric transmission segment’s earnings increased by $22.7 million, reflecting the company’s continued investment in its transmission infrastructure.

The natural gas distribution segment’s earnings increased by $27.8 million, driven by higher revenues from base distribution rate increases at EGMA and NSTAR Gas, as well as increased investments in natural gas infrastructure.

The water distribution segment’s earnings decreased by $1.8 million, mainly due to the absence of a benefit recorded in the first quarter of 2024 related to Aquarion Water Company of Connecticut’s rate case decision.

Eversource’s parent company and other businesses reported a $40.0 million increase in losses, primarily due to higher interest expense resulting from the absence of capitalized interest following the sale of the company’s offshore wind investments in the third quarter of 2024.

Looking ahead, Eversource has reaffirmed its 2025 earnings guidance range of $4.67 to $4.82 per share and its long-term earnings growth rate target of 5 to 7 percent through 2029, using 2024 non-GAAP earnings per share of $4.57 as the base year.

Liquidity and Capital Investments

Eversource’s liquidity position remains strong, with cash flows from operating activities totaling $1.04 billion in the first quarter of 2025, compared to $291.3 million in the same period of 2024. The company’s cash and cash equivalents stood at $111.4 million as of March 31, 2025, up from $26.7 million as of December 31, 2024.

Eversource’s capital investments in property, plant, and equipment totaled $1.01 billion in the first quarter of 2025, compared to $1.15 billion in the same period of 2024. These investments were primarily focused on enhancing the reliability and resilience of the company’s electric, natural gas, and water distribution systems, as well as upgrading its transmission infrastructure.

In the first quarter of 2025, Eversource issued $1.20 billion of new long-term debt and repaid $300 million of existing debt. The company also paid common share dividends of $276.2 million, including $270.2 million in cash dividends and $6.0 million in non-cash dividends in the form of treasury shares.

Pending Sale of Aquarion Water Business

On January 27, 2025, Eversource announced that it had entered into a definitive agreement to sell its Aquarion water distribution business for an aggregate enterprise value of approximately $2.4 billion in cash. The sale is subject to regulatory approvals and is expected to close in late 2025. Eversource plans to use the net proceeds from the sale to pay down parent company debt.

Regulatory Developments and Rate Matters

Eversource’s regulated subsidiaries continue to navigate various regulatory proceedings and rate matters in their respective service territories.

In Connecticut, the Public Utilities Regulatory Authority (PURA) is conducting a two-phase proceeding to evaluate and potentially implement a performance-based regulation (PBR) framework for electric distribution companies, including CL&P. The first phase of the proceeding has commenced, and PURA has issued straw proposals on revenue adjustment mechanisms, performance metrics, and integrated distribution system planning. The final decisions on these matters are expected in 2025, but Eversource cannot predict the ultimate outcome of this proceeding and its impact on CL&P at this time.

Regarding transmission rates, the Federal Energy Regulatory Commission (FERC) continues to address several complaints filed by various parties challenging the New England Transmission Owners’ (NETOs) base return on equity (ROE) and incentive cap. While FERC has provided illustrative calculations for the first complaint period, indicating a potential base ROE of 10.41 percent and an incentive cap of 13.08 percent, Eversource believes the applicability of these calculations to the NETOs’ four pending cases is uncertain due to the complex differences between the cases. As a result, Eversource has not made any changes to its reserves or recognized ROEs for any of the complaint periods or subsequent periods.

Segment Performance and Analysis

Electric Distribution The electric distribution segment’s earnings increased by $20.3 million in the first quarter of 2025, primarily due to:

• Higher revenues from base distribution rate increases at PSNH and NSTAR Electric
• Increased electric system improvements at CL&P

Tracked distribution revenues, which are fully recovered from customers through regulatory mechanisms, increased due to:

• Higher CL&P NBFMCC revenues driven by an increase in the retail Non-Bypassable Federally Mandated Congestion Charge rate
• Higher wholesale market sales revenue at CL&P due to increased average electricity market prices

Natural Gas Distribution The natural gas distribution segment’s earnings increased by $27.8 million in the first quarter of 2025, primarily due to:

• Higher revenues from base distribution rate increases at EGMA and NSTAR Gas
• Increased investments in natural gas infrastructure

Tracked distribution revenues increased due to higher natural gas supply procurement costs, which are fully recovered from customers.

Electric Transmission The electric transmission segment’s earnings increased by $22.7 million in the first quarter of 2025, primarily due to a higher transmission rate base as a result of Eversource’s continued investment in its transmission infrastructure.

Water Distribution The water distribution segment’s earnings decreased by $1.8 million in the first quarter of 2025, mainly due to the absence of a benefit recorded in the first quarter of 2024 related to Aquarion Water Company of Connecticut’s rate case decision.

Eversource Parent and Other Companies Eversource parent and other companies reported a $40.0 million increase in losses, primarily due to higher interest expense resulting from the absence of capitalized interest following the sale of the company’s offshore wind investments in the third quarter of 2024.

Strengths and Weaknesses

Strengths:

• Strong financial performance across the regulated business segments, driven by rate base growth and effective cost management
• Continued investment in electric, natural gas, and water infrastructure to enhance reliability and resilience
• Successful execution of the pending sale of the Aquarion water distribution business, which will strengthen the company’s balance sheet
• Reaffirmed earnings guidance and long-term growth targets, providing investors with confidence in the company’s future performance

Weaknesses:

• Increased losses at the Eversource parent and other companies segment due to higher interest expense
• Ongoing regulatory uncertainty surrounding the FERC’s treatment of the NETOs’ base ROE and incentive cap, which could impact future earnings
• Potential impact of the performance-based regulation (PBR) framework being developed in Connecticut on CL&P’s future earnings

Outlook and Future Opportunities

Eversource’s strong financial performance in the first quarter of 2025 and its reaffirmed earnings guidance and long-term growth targets suggest the company is well-positioned to continue delivering value to its shareholders. The pending sale of the Aquarion water distribution business will further strengthen the company’s balance sheet and provide additional financial flexibility to support its ongoing infrastructure investments.

However, the company faces some regulatory uncertainties, particularly regarding the FERC’s treatment of the NETOs’ base ROE and incentive cap, as well as the potential implementation of a PBR framework in Connecticut. Eversource will need to navigate these regulatory challenges effectively to maintain its strong financial position and continue delivering reliable service to its customers.

Overall, Eversource’s diversified utility operations, focus on infrastructure investments, and commitment to operational excellence position the company well for the future. As the company continues to adapt to evolving industry trends and regulatory environments, it is poised to capitalize on opportunities to drive sustainable growth and create long-term value for its shareholders.