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Fitch Affirms Eversource and Subs; Outlook Stable

· 03/17/2021 15:48
Fitch Affirms Eversource and Subs; Outlook Stable

(The following statement was released by the rating agency)

Fitch Ratings-New York-17 March 2021:

Fitch Ratings has affirmed the 'BBB+' Long-Term Issuer Default Rating (IDR) of Eversource Energy and the Long-Term IDRs of the following utility subsidiaries: The Connecticut Light and Power Company (CL&P) at A-; NSTAR Electric Company at A; Public Service Company of New Hampshire (PSNH) at A-; and NSTAR Gas Company at A-. The Rating Outlook of each entity is Stable. All security ratings were also affirmed.

The Long-Term IDR of Eversource primarily reflects the consolidated strength of Eversource's regulated electric transmission and distribution (T&D), natural gas distribution and water distribution utility subsidiaries. These businesses consist predominantly of low-risk, regulated operations in Massachusetts, Connecticut and New Hampshire that generate relatively stable and predictable earnings and cash flow.

The ratings also consider Eversource's ownership interest in the development of offshore wind projects in the Northeast, which include risk associated with permitting and construction, but would provide long-term contracted cash flow once in operation.


Key Rating Drivers

Eversource

Regulatory Diversification: Eversource's three-state service territory provides regulatory diversification that is further enhanced by significant investments in electric transmission projects regulated by the Federal Energy Regulatory Commission (FERC). Fitch considers FERC to be among the most constructive regulatory bodies due to timely cost recovery and formulaic rates of return. FERC-regulated electric transmission operations account for more than one-third of Eversource's consolidated rate base.

Offshore Wind Projects: Eversource and Danish wind energy developer Orsted A/S (BBB+/Stable) have a 50/50 joint venture for offshore wind assets in the Northeast. The companies are partnering in the development of the 130MW South Fork Wind offshore wind project serving New York, the 704MW Revolution Wind offshore wind project serving Rhode Island and Connecticut, and the 880MW Sunrise Wind project serving New York. There is also the potential for development of other offshore wind projects.

Fitch expects the development of these large, multibillion dollar offshore wind projects will slightly weaken Eversource's leverage metrics through 2023, when South Fork Wind is expected to enter service. Near-term credit concerns are partially mitigated by Eversource's commitment to issue $700 million of common equity through 2025 to help partially fund offshore wind construction costs and the large utility capex plan. Eversource also committed to $500 million of common equity for dividend reinvestment and employee incentive programs funded with treasury shares.

Large Utility Capex Plan: Eversource expects to spend $17.0 billion in capex for core businesses, predominantly regulated utilities, over 2021-2025. This utility capex is a relatively low-risk growth plan, including more than $6.4 billion in electric distribution and solar energy, more than $4.4 billion in natural gas distribution, $4.3 billion in FERC-regulated electric transmission and $780 million in water distribution.

Most of Eversource's planned utility capex will be recovered with limited lag, reflecting FERC construction work in progress, electric distribution trackers and natural gas distribution infrastructure expansion cost-recovery mechanisms.

Weakened Financial Profile: Leverage weakened in 2017 due to the Aquarion Water Company acquisition and remained weak in 2018 due to tax reform, in 2019 due to the Northern Pass Transmission write-off, and in 2020 due to the Eversource Gas Company of Massachusetts acquisition and regulatory under-recoveries associated with coronavirus and storm costs. FFO leverage in each of those years exceeded Fitch's longer-term negative sensitivity level of 5.2x. The higher leverage was expected to be temporary in each of those years.

Eversource's financial profile is supported by stable and predictable cash flow from its regulated utility subsidiaries, which have strong standalone financial profiles. Fitch expects Eversource's FFO leverage to improve and average around 5.0x-5.4x through 2024.

Eversource's elevated leverage over the forecast period is due to the company's offshore wind growth projects, which require multiple years of investment, permitting and construction. Fitch does not expect cash inflows from these projects until 2023 at the earliest, resulting in high leverage before then.

Once these projects are on line, they are expected to provide robust and stable cash flow supported by long-term contracts and near-term tax benefits. The strength and stability of future cash flow provide reassurance that Eversource's high FFO leverage metric will likely return to within the longer-term threshold of Fitch's negative sensitivity. Significant delays and cost overruns or other project concerns could result in Fitch taking a negative rating action.

Coronavirus: Fitch does not expect the coronavirus to have a material long-term impact on the credit quality of Eversource or its utility subsidiaries. Liquidity is adequate to cover near-term needs and there are no significant operational concerns at this time. Eversource's utilities benefit from revenue decoupling in Massachusetts and Connecticut, which should insulate them from lower usage by commercial and industrial customers, and there are mechanisms in place to help with customer bad debt expense.

Parent/Subsidiary Linkage: Fitch uses a bottom-up approach in determining the ratings of Eversource and its utility subsidiaries. The linkage follows a weak parent/strong subsidiary approach. Fitch considers CL&P, NSTAR Electric, PSNH and NSTAR Gas to be stronger than Eversource due to the utilities' low-risk, regulated operations and the relatively balanced regulatory jurisdictions in which they operate.

There is moderate linkage between Eversource's Long-Term IDR and that of each utility subsidiary. This is supported by the utilities' access to debt capital markets and the cash flow diversification provided by seven utility businesses. However, the utilities lack strong ring-fencing provisions. Fitch could allow up to a two-notch difference in the Long-Term IDRs of Eversource and any of its utility subsidiaries.

CL&P

Low-Risk Business Profile: CL&P's regulated electric T&D operations have a low-risk business profile. The utility has no commodity exposure, and full revenue decoupling eliminates the impact of weather and usage patterns, providing better predictability to earnings and cash flow. Oversight by FERC provides CL&P's growing electric transmission business beneficial exposure to one of the more constructive regulatory jurisdictions, helping to counterbalance the state of Connecticut's more challenging regulatory environment.

Somewhat Restrictive Regulatory Environment: Fitch considers the regulatory environment for electric utilities in Connecticut to be somewhat restrictive, although it has improved in recent years. Authorized returns on equity (ROEs) tend to be below the industry average and periodically include performance penalties.

2017 Rate Case: CL&P's last rate case resulted in a settlement agreement and was authorized by the Connecticut Public Utilities Regulatory Authority in April 2018. The rate agreement incorporated a partially offsetting rate reduction to reflect the lower federal tax rates and included a $124.7 million three-step increase premised on a 9.25% authorized ROE and a 53% equity ratio. An earnings-sharing mechanism would enable CL&P to earn in excess of its authorized ROE.

Large Capex Plan: Capex is expected to remain elevated through the forecast plan, due in large part to significant investments in FERC-regulated regional transmission projects. Management forecasts transmission capex to total nearly $1.3 billion over 2021-2025. Improvements to CL&P's distribution system will also contribute to the large capex plan in the near term. Fitch expects capex to be funded in a manner consistent with the existing capital structure.

Solid Financial Profile: Financial metrics have weakened slightly due to tax reform but remain supportive of the ratings, aided by cost-saving efficiencies and reductions to O&M expense. Growth from FERC-regulated transmission investments that receive timely cost recovery and above-average returns contribute to the strong and stable cash flows. Fitch expects CL&P's FFO leverage to average around 3.6x-4.0x through 2024.

NSTAR Electric

Low-Risk Business Profile: NSTAR Electric's ratings largely reflect the low business risk and stable cash flows of its regulated electric T&D operations. The company has no commodity exposure and a decoupling mechanism that eliminates the effect of weather and usage patterns on revenue. A significant and growing share of the rate base is derived from electric transmission investments regulated by FERC.

Balanced Regulatory Environment: Fitch considers the regulatory environment overseen by the Massachusetts Department of Public Utilities (DPU) to be relatively balanced, supporting NSTAR Electric's strong financial profile. NSTAR Electric operates under a five-year performance-based ratemaking plan that runs through Dec. 31, 2022. NSTAR Electric benefits from full revenue decoupling and several cost-recovery mechanisms, which enhance the stability and predictability of cash flows. The DPU permits recovery outside of general rate cases for pension and post-retirement benefits, energy efficiency program costs and the associated lost revenue, and storm costs.

2017 Rate Case: Fitch considers the outcome of NSTAR Electric's 2017 rate case and implementation of performance-based ratemaking to have been constructive. The DPU authorized NSTAR Electric a $4.8 million electric rate increase in December 2018. This rate increase was composed of a performance-based ratemaking adjustment increase of $31.9 million, offset by a distribution rate decrease of $27.1 million to account for the return of excess accumulated deferred income taxes to ratepayers as a result of federal tax reform.

NSTAR Electric's third annual performance-based rate adjustment resulted in a $29.9 million increase to base distribution rates effective Jan. 1, 2021.

Large Capex Plan: Capex is expected to remain elevated through the forecast plan, due in large part to significant investments in FERC-regulated regional transmission projects. Management forecasts transmission capex to total nearly $2.1 billion over 2021-2025. Improvements to NSTAR Electric's distribution system will also contribute to the large capex plan in the near term. Fitch expects capex to be funded in a manner consistent with the existing capital structure.

Solid Financial Metrics: NSTAR Electric's financial profile is adequately positioned within its rating level, benefiting from a conservative capital structure and robust cash flows. Ongoing investments in FERC-regulated transmission projects receive timely cost recovery and above-average returns, which should enable the utility to maintain its financial strength. Fitch expects NSTAR Electric's FFO leverage to average around 3.7x-4.0x through 2024.

PSNH

Low-Risk Business Profile: PSNH's ratings largely reflect the low business risk and stable cash flows of its regulated electric T&D operations. PSNH has no commodity exposure and fully passes through all power supply costs to its customers. A significant share of PSNH's rate base is derived from electric transmission investments regulated by FERC.

Balanced Regulatory Environment: Fitch considers the regulatory environment overseen by the New Hampshire Public Utilities Commission (NHPUC) to be somewhat balanced. Authorized ROEs are lower than the industry average, but a transmission cost adjustment mechanism and a lost revenue adjustment mechanism help provide some cash flow stability. The NHPUC allowed PSNH to issue rate reduction bonds in 2018 to recover the stranded costs associated with the state-mandated sale of PSNH's thermal and hydroelectric generation facilities. PSNH's FERC-regulated electric transmission business provides beneficial regulatory diversification.

2019 Rate Case: Fitch considers the outcome of PSNH's 2019 rate case to be balanced and supportive of credit quality. The NHPUC approved a settlement agreement on June 27, 2019 to implement a temporary annual base distribution rate increase of $28.3 million. The new rates were implemented on August 1, 2019 and effective July 1, 2019. The settlement agreement also permitted PSNH to recover approximately $68.5 million in unrecovered storm costs over a five-year period beginning August 1, 2019, with debt carrying charges, which is included in the temporary rate increase.

On December 15, 2020, the NHPUC approved an October 9, 2020 settlement agreement that included a permanent rate increase of $45.0 million effective January 1, 2021 at PSNH. PSNH was also permitted three step increases, effective January 1, 2021, August 1, 2021, and August 1, 2022, to reflect plant additions in calendar years 2019, 2020 and 2021, respectively. The settlement agreement allowed for the effect of the permanent rate increase to be extended back to the temporary rate period. In lieu of a customer rate increase for this recoupment of revenue, the NHPUC directed a portion of PSNH's regulatory liability from the 2017 Tax Cuts and Jobs Act to offset bill impacts to customers.

On Dec. 23, 2020, the NHPUC approved the first step adjustment for 2019 plant in service to recover a revenue requirement of $10.6 million, subject to reconciliation after completion of an audit, effective Jan. 1, 2021. The settlement agreement also established a 9.3% authorized ROE with a 54.4% common equity ratio and provided for a new tracker to recover regulatory assessments, vegetation management costs, property tax costs and lost distribution revenue attributable to net metering.

Transmission Capex: PSNH's capex became more focused on transmission assets following the 2018 sale of the utility's generation facilities. Management expects to spend more than $940 million on transmission capex in 2021-2025. FERC-regulated transmission projects receive timely recovery of their costs, formulaic rates and attractive ROEs, which should enable PSNH to maintain its sold financial profile.

Strong Financial Metrics: PSNH's ratings are also supported by strong financial metrics. Growth in FERC-regulated transmission projects is expected to further strengthen cash flows, with reductions in O&M expense and other cost-cutting initiatives improving EBITDA margins. Fitch expects PSNH's FFO leverage to average around 3.4x-3.8x through 2024.

NSTAR Gas

Low-Risk Business Profile: NSTAR Gas' regulated natural gas distribution operations have a low-risk business profile. NSTAR Gas has no commodity exposure and benefits from a decoupling mechanism that eliminates the impact of weather and usage patterns on revenue. Fuel supply costs are recovered through a seasonal cost of gas adjustment clause that is reset semiannually.

Balanced Regulatory Environment: Fitch considers the regulatory environment overseen by the DPU to be relatively balanced, supporting NSTAR Gas' credit quality. NSTAR Gas operates under a 10-year performance-based ratemaking plan that runs through Oct. 31, 2030. NSTAR Gas benefits from full revenue decoupling and the Gas System Enhancement Program (GSEP) cost-recovery mechanism, which enhance the stability and predictability of cash flows.

2019 Rate Case: Fitch considers the outcome of NSTAR Gas' 2019 rate case and implementation of performance-based ratemaking to have been constructive. The DPU authorized NSTAR Gas a $23.0 million base distribution rate increase on Oct. 30, 2020. The DPU also approved NSTAR Gas' proposal to continue its ongoing GSEP cost-recovery mechanism, the inclusion of GSEP investments since 2015 into base rates and the implementation of a 10-year performance-based ratemaking plan, which includes an inflation-based adjustment mechanism to annual base distribution rates. NSTAR Gas is allowed a 9.9% authorized ROE with a 54.77% common equity ratio. The decision also approves a geothermal pilot program.

GSEP: NSTAR Gas' GSEP accelerates the replacement of certain natural gas distribution facilities to within 25 years. A DPU-approved tariff allows for annual adjustments to recover program costs. Fitch expects the tariff adjustment to mitigate the financial pressure associated with funding GSEP capex over the forecast period.

Weak Financial Metrics: Financial metrics weakened due to NSTAR Gas' large capex plan associated with GSEP, and FFO leverage was above Fitch's negative rating sensitivity of 5.0x through 2020. Fitch expects NSTAR Gas' FFO leverage to return to within Fitch's negative rating sensitivity threshold by 2021 and average around 4.9x-5.0x through 2024, adequate for NSTAR Gas' existing rating. DPU preapproval and cost-recovery mechanisms mitigate the risk associated with NSTAR Gas' accelerated pipe replacement program and high leverage.


Derivation Summary

Eversource is comfortably positioned in the 'BBB+' rating category. Eversource has a strong business risk profile, primarily attributed to its ownership predominantly of regulated utilities. The utility subsidiaries of Eversource and peer AVANGRID, Inc. (BBB+/Stable) operate in some of the same states in the Northeast in relatively balanced regulatory environments. Eversource and AVANGRID both benefit from a meaningful amount of regulatory diversification and significant exposure to FERC-regulated electric transmission assets, favorable factors that peer Consolidated Edison, Inc. (ConEd; BBB+/Negative) lacks. AVANGRID's unregulated renewable energy business accounts for nearly 25% of consolidated EBITDA, weakening AVANGRID's business risk profile.

Eversource and AVANGRID are also engaged in the development of large offshore wind projects in the Northeast, which include increased risk during the multiyear permitting and construction phases, but would provide long-term contracted cash flow once in operation. Fitch expects FFO leverage to average around 5.0x-5.4x through 2024 for Eversource and 5.0x for AVANGRID.

CL&P compares adequately with peers at its 'A-' Long-Term IDR. CL&P, The United Illuminating Company (UI; A-/Stable), Public Service Company of New Hampshire (PSNH; A-/Stable) and Central Maine Power Company (CMP; BBB+/Stable) are low-risk T&D utilities that operate in New England. Fitch considers the regulatory environment in Connecticut and Maine to be somewhat more restrictive, with lower authorized ROEs; the regulatory environment in New Hampshire is relatively balanced. CL&P, UI and PSNH are comparable with their mix of state-regulated utility operations and FERC-regulated electric transmission assets, which are relatively low risk and provide stable and predictable cash flows.

CMP has a much larger FERC-regulated transmission business (greater than 60% of rate base and growing) than its peers. CL&P, UI and CMP all benefit from revenue decoupling. In terms of EBITDA, CL&P is roughly 4.0x larger than UI and PSNH, and approximately 2.5x larger than CMP, providing CL&P with some benefit due to scale. Fitch expects FFO leverage to average around 3.6x-4.0x through 2024 for CL&P, 3.5x-3.8x for UI, 3.4x-3.6x for PSNH and 3.8x-4.1x for CMP.

NSTAR Electric compares adequately with peers at its 'A' Long-Term IDR. NSTAR Electric operates in a balanced regulatory environment in Massachusetts and benefits from a significant amount of FERC-regulated electric transmission assets, which are relatively low-risk and provide stable and predictable cash flows. NSTAR Electric and peer companies CL&P and Consolidated Edison Company of New York, Inc. (CECONY; BBB+/Negative) all have revenue decoupling, and CL&P has a significant amount of FERC-regulated electric transmission assets. However, CL&P and CECONY operate in regulatory environments in Connecticut and New York that Fitch considers to be less constructive than in Massachusetts. NSTAR Electric further benefits from a strong financial profile. Fitch expects NSTAR Electric's FFO leverage to average around 3.7x-4.0x through 2024.

PSNH compares adequately with peers at its 'A-' Long-Term IDR. PSNH has a similar business risk profile as CMP and UI. PSNH operates in what Fitch considers to be a relatively balanced regulatory environment in New Hampshire, while CMP and UI operate in somewhat more restrictive regulatory environments in Maine and Connecticut. All three entities benefit from significant exposure to FERC-regulated transmission assets, which are relatively low-risk and provide stable and predictable cash flows. Fitch expects FFO leverage to average around 3.4x-3.8x through 2024 for PSNH, 3.8x-4.1x for CMP and 3.5x-3.8x for UI.

NSTAR Gas compares adequately with peers at its 'A-' Long-Term IDR. NSTAR Gas benefits from a stronger business risk profile than peer natural gas distribution utilities The Berkshire Gas Company (BGC; A-/Stable), Connecticut Natural Gas Corporation (CNG; A-/Stable) and The Southern Connecticut Gas Company (SCG; A-/Stable). NSTAR Gas is much larger than fellow Massachusetts utility BGC, providing some benefit due to scale. Fitch also considers the regulatory environment for natural gas distribution utilities in Massachusetts to be more constructive than that in Connecticut. These favorable aspects for NSTAR Gas are offset by its weaker financial metrics than its peers. Fitch expects NSTAR Gas' FFO leverage to average around 4.9x-5.0x through 2024.


Key Assumptions

Fitch's Key Assumptions Within Its Rating Case for Eversource

--Consolidated rate base growing to $31.3 billion by year-end 2025, from $19.8 billion at year-end 2019.

--Consolidated core business capex of $17.0 billion over 2021-2025.

--CL&P's transmission capex totaling nearly $1.3 billion over 2021-2025.

--NSTAR Electric's transmission capex totaling nearly $2.1 billion over 2021-2025.

--PSNH's transmission capex totaling more than $940 million over 2021-2025.

--O&M expense relatively flat.

--South Fork Wind expected to be in service by the end of 2023.

--Normal weather.


RATING SENSITIVITIES

Factors that could, individually or collectively, lead to a positive rating action/upgrade:

Eversource

--FFO leverage expected to remain less than 4.5x on a sustained basis.

CL&P

--FFO leverage expected to remain less than 3.5x on a sustained basis.

NSTAR Electric

--FFO leverage expected to remain less than 3.0x.

--An upgrade to parent Eversource's Long-Term IDR. NSTAR Electric's ratings upside is restricted by a maximum two-notch differential between the Long-Term IDRs of NSTAR Electric and Eversource.

PSNH

--FFO leverage expected to remain less than 3.5x on a sustained basis.

NSTAR Gas

--A positive rating action is not likely due to the utility's small scale of operations and large capex plan.

--FFO leverage expected to remain less than 4.0x on a sustained basis.

Factors that could, individually or collectively, lead to a negative rating action/downgrade:

Eversource

--FFO leverage expected to exceed 5.6x on a sustained basis during the offshore wind project permitting and construction phases, followed by 5.2x after beginning service.

--Significant delays or cost overruns or other concerns related to the development of the company's offshore wind projects that would meaningfully negatively affect the company's cash flow profile.

--Adverse regulatory actions or other events that result in downgrades to Eversource's utility subsidiaries.

CL&P

--FFO leverage expected to exceed 4.5x on a sustained basis.

--An adverse regulatory decision that meaningfully reduces the stability and predictability of earnings and cash flow.

NSTAR Electric

--FFO leverage expected to exceed 4.0x on a sustained basis.

--An adverse regulatory decision that meaningfully reduces the stability and predictability of earnings and cash flow.

--A downgrade to parent Eversource's Long-Term IDR, given Fitch's maximum allowed two-notch differential between the Long-Term IDRs of the two entities.

PSNH

--FFO leverage expected to exceed 4.5x on a sustained basis.

--An adverse regulatory decision that meaningfully reduces the stability and predictability of earnings and cash flow.

NSTAR Gas

--FFO leverage expected to exceed 5.0x on a sustained basis.

--An adverse regulatory decision that meaningfully reduces the stability and predictability of earnings and cash flow.


Best/Worst Case Rating Scenario

International scale credit ratings of Non-Financial Corporate issuers have a best-case rating upgrade scenario (defined as the 99th percentile of rating transitions, measured in a positive direction) of three notches over a three-year rating horizon; and a worst-case rating downgrade scenario (defined as the 99th percentile of rating transitions, measured in a negative direction) of four notches over three years. The complete span of best- and worst-case scenario credit ratings for all rating categories ranges from 'AAA' to 'D'. Best- and worst-case scenario credit ratings are based on historical performance. For more information about the methodology used to determine sector-specific best- and worst-case scenario credit ratings, visit https://www.fitchratings.com/site/re/10111579.


Liquidity and Debt Structure

Adequate Liquidity: Fitch considers the liquidity for Eversource and each of its regulated utility subsidiaries to be adequate.

Eversource has a $2.0 billion CP program the company uses to provide its subsidiaries with intercompany loans. Eversource had $1,054.3 million of CP borrowings outstanding as of Dec. 31, 2020, leaving $945.7 million of available borrowing capacity.

Eversource, CL&P, PSNH, NSTAR Gas, Yankee Gas Services Company (not rated) and Aquarion Water Company of Connecticut (not rated) participate in a joint $1.45 billion revolving credit facility (RCF) that terminates on Dec. 6, 2024. Under the RCF, there is a $600 million borrowing sublimit for CL&P, a $300 million sublimit for each of PSNH, NSTAR Gas and Yankee Gas, and a $100 million sublimit for Aquarion. Eversource and Eversource Gas Company of Massachusetts (EGMA; not rated) have a $550 million RCF that terminates on Oct. 20, 2021. The $1.45 billion RCF and $550 million RCF serve to backstop Eversource's CP program.

NSTAR Electric maintains its own $650 million CP program backstopped by an equal-sized RCF. NSTAR Electric's $650 million RCF is separate from the shared RCF of parent Eversource and the other utilities but also terminates on Dec. 6, 2024. NSTAR Electric had $195 million of CP borrowings outstanding as of Dec. 31, 2020, leaving $455 million of available borrowing capacity.

Eversource and its utility subsidiaries require modest cash on hand and had $106.6 million of unrestricted cash as of Dec. 31, 2020.

Manageable Debt Maturities: Long-term debt maturities over the next five years are manageable.

At the parent level, Eversource has $750 million of 2.75% senior unsecured notes due March 15, 2022; $450 million of 2.8% senior unsecured notes due May 1, 2023; $400 million of 3.8% senior unsecured notes due Dec. 1, 2023; $450 million of 2.9% senior unsecured notes due Oct. 1, 2024; $300 million of 3.15% senior unsecured notes due Jan. 15, 2025 and $300 million of 0.8% senior unsecured notes due Aug. 15, 2025.

CL&P has $400 million of 2.5% first mortgage bonds (FMBs) due Jan. 15, 2023; $140 million of 7.875% FMBs due Oct. 1, 2024; and $400 million of 0.75% FMBs due Dec. 1, 2025

NSTAR Electric has $250 million of 3.5% senior unsecured notes due Sept. 15, 2021; $400 million of 2.375% debentures due Oct. 15, 2022; $80 million of 3.88% senior unsecured notes due Nov. 15, 2023; and $250 million of 3.25% debentures due Nov. 15, 2025.

PSNH has $160 million of 3.2% FMBs due Sept. 1, 2021 and $325 million of 3.5% FMBs due Nov. 1, 2023.

NSTAR Gas has $75 million of 2.33% FMBs due May 1, 2025.


Summary of Financial Adjustments

Financial statement adjustments that depart materially from those contained in the published financial statements are disclosed below:

--CL&P and NSTAR Electric receive 50% equity credit for their preferred stock.

--PSNH's securitization debt is removed from all financial metric calculations for PSNH and Eversource.


REFERENCES FOR SUBSTANTIALLY MATERIAL SOURCE CITED AS KEY DRIVER OF RATING The principal sources of information used in the analysis are described in the Applicable Criteria.
ESG Considerations

Unless otherwise disclosed in this section, the highest level of ESG credit relevance is a score of '3'. This means ESG issues are credit-neutral or have only a minimal credit impact on the entity, either due to their nature or the way in which they are being managed by the entity. For more information on Fitch's ESG Relevance Scores, visit www.fitchratings.com/esg.



NSTAR Electric Company; Long Term Issuer Default Rating; Affirmed; A; Rating Outlook Stable
; Short Term Issuer Default Rating; Affirmed; F1
----senior unsecured; Long Term Rating; Affirmed; A+
----preferred; Long Term Rating; Affirmed; A-
----senior unsecured; Short Term Rating; Affirmed; F1
Eversource Energy; Long Term Issuer Default Rating; Affirmed; BBB+; Rating Outlook Stable
; Short Term Issuer Default Rating; Affirmed; F2
----senior unsecured; Long Term Rating; Affirmed; BBB+
----senior unsecured; Short Term Rating; Affirmed; F2
Public Service Company of New Hampshire; Long Term Issuer Default Rating; Affirmed; A-; Rating Outlook Stable
----senior secured; Long Term Rating; Affirmed; A+
NSTAR Gas Company; Long Term Issuer Default Rating; Affirmed; A-; Rating Outlook Stable
----senior secured; Long Term Rating; Affirmed; A+
The Connecticut Light and Power Company; Long Term Issuer Default Rating; Affirmed; A-; Rating Outlook Stable
----preferred; Long Term Rating; Affirmed; BBB+
----senior secured; Long Term Rating; Affirmed; A+

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Fitch Ratings, Inc.
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Managing Director
+1 212 908 0351

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Senior Director
+1 212 908 0531

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Additional information is available on www.fitchratings.com
Applicable Model
Numbers in parentheses accompanying applicable model(s) contain hyperlinks to criteria providing description of model(s).
Corporate Monitoring & Forecasting Model (COMFORT Model), v7.9.0 (1)

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