Eversource Energy (ES) — Q1 2024 Earnings Call Transcript

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

Thank you, Matt, and thank you all for joining us on the call this morning. Let me begin with an update on the sale of our offshore wind business. I am pleased to report that we are on track to close the sale of the 3 projects over the coming months. We are progressing well on the approvals necessary to close these transactions, as shown on Slide 3. We have filed all regulatory approvals with the New York Public Service Commission and FERC for the sale of South Fork Wind and Revolution Wind to Global Infrastructure Partners. And we recently executed the purchase and sale agreement for Sunrise Wind with Orsted. For Sunrise Wind, we have also filed applications for regulatory approvals with the New York Public Service Commission and FERC. We anticipate these approvals will take about 90 days. On the construction front, I can't tell you how excited and proud I was of my Eversource colleagues as I stood alongside New York Governor Hochul to flip the switch to energize South Fork Wind in March. We will certainly capitalize on lessons learned from South Fork, a first-of-its-kind project here in the United States. The same construction processes will be used for the Revolution Wind project where onshore and offshore construction is underway. Now that our offshore wind risk is largely behind us, we are very excited about the future of Eversource delivering safe and reliable electric, natural gas and water service to our 4.4 million customers. Turning to Slide 4. Eversource is moving forward as a pure-play regulated pipes and wires utility business, doing what we do best, delivering clean energy safely and reliably to our customers every day. When we are doing what we do best, our customers are the direct beneficiaries. A good example of this came in early April when a late winter storm caused significant damage across the Northeast. Through our investments in technology, including smart switches and other reliability innovations, we were able to restore 85,000 customers in New Hampshire within 5 minutes, greatly reducing the impact of the storm to many customers in that area. This amazing response received numerous accolades from customers and personal acknowledgment from Governor Sununu. We take tremendous pride in our emergency response organization in our ability to stand up our emergency response teams for timely restoration. Eversource teams from all 3 states responded to the storm damage in New Hampshire, minimizing customer outage time. Our resiliency investments help to minimize customer outage impacts. Our preparation enables us to hit the ground running in front of potential severe weather events in our emergency response plan, supports scalable and efficient restoration for those customers who are impacted. And we work tirelessly to communicate that timely recovery of storm costs is critical to support these efforts. Turning to the Clean Energy Future. As you can see on Slide 5, the states we serve have very aggressive greenhouse gas reduction goals. Both the transportation sector and residential and commercial heating sectors are the largest contributors to greenhouse gas emissions. Although the region has acted by reducing carbon emissions from power generation, we have a long way to go on heating and transportation to achieve the state's targets by 2050. To meet these targets, we project that average household electric demand will double in the summer and more than triple in the winter. That's why it's critical that we all work collaboratively and get started today on making achievement of these targets a reality. Moving to Slide 6. Achievement of Massachusetts' decarbonization goals are being addressed in part through the Electric Sector Modernization Plans, or ESMP. This is the most comprehensive clean energy plan in the nation with planning processes and requirements that will provide the pathway for the state to achieve its clean energy objectives. The Eversource ESMP is a product of our system planning process, incorporating the state's assumptions for projected demand growth from electric vehicles and electric heating. To develop our ESMP, we have analyzed expected electric growth down to the circuit level to identify grid investments needed over the next 5 years and beyond. These infrastructure investments will convert our distribution grid into the platform for the clean energy transition. It will increase electrification capacity by 180% and will allow for the adoption of 2.5 million electric vehicles, 1 million heat pumps and 5.8 gigawatts of solar generation, thereby making Massachusetts a leader in delivering clean energy to its homes and businesses. In New Hampshire, we are focused on a number of regulatory initiatives and are evaluating ways to advance clean energy initiatives such as large-scale utility-owned solar development. For example, New Hampshire state legislators are working on a bill that would institute structural reforms to New Hampshire's Energy Facility Site Evaluation Committee or the SEC, reducing the size of the SEC from 9 members to 5 and eliminating unnecessary process to improve efficiency and to lead to more consistent outcomes. In turn, this will lead to an accelerated citing and permitting process for these clean energy initiatives. Turning to Connecticut. State policy leaders have a vision of solar expansion, electric vehicle adoption and future renewable purchase power agreements as part of its clean energy transition. We are a strong supporter of these efforts to enable the clean energy future for our customers, and we certainly are looking to partner with the state collaboratively and productively to achieve this important vision for our customers. While we continue to work diligently to support state policy leaders on thoughtful and reasonable policies aimed at increased adoption of clean energy technologies and the reduction of carbon emissions, we have serious concerns with the lack of alignment between state policy and regulatory decisions implementing that policy. As it stands, regulatory policies in Connecticut discourage investment and utility innovation as well as our participation in a wide range of clean energy initiatives that rely on our balance sheet, in our capital resources. Upfront program funding by the utilities does not work where cost recovery is continually deferred and delayed into the future on certain terms. Without recognition that our funding sources rely on a secure and predictable cost recovery path, we cannot move forward to put additional capital resources on the table. We are encouraged by PURA's decision last month to provide timely reimbursement of deferred public policy costs through the company's electric annual rate adjustment mechanism. Decisions that adhere to law and legislative policy are critical to assure a constructive regulatory environment in Connecticut and to make the vision of a clean energy future a reality for our customers. Looking forward to the future, we remain committed to our extensive outreach plan across Connecticut, furthering our efforts to engage collaboratively and productively with Connecticut's leadership. Lastly, I want to thank my Eversource colleagues for their unwavering commitment and dedication to our customers. I have the utmost confidence in our team to deliver safe and reliable energy service to our customers with daily progress toward a clean energy future. I will now turn the call over to John Moreira to walk through our financial results.

Thank you, Joe, and good morning, everyone. This morning, I will discuss our first quarter financial results, give you a regulatory update and cover drivers for our cash flow enhancement. I'll start with the first quarter results on Slide 7. Our GAAP and recurring earnings for the quarter were $1.49 per share compared with GAAP and recurring earnings of $1.41 per share last year. Breaking down the first quarter earnings results of the $1.49 per share into segments, our Electric Transmission earned $0.50 per share compared with earnings of $0.45 per share in 2023. Improved results were driven by our continued investments in our transmission system to address capacity growth for customers and connect clean energy resources to the region. Our Electric Distribution earnings were $0.48 per share compared with earnings of $0.47 per share in 2023. Higher revenues primarily due to a base distribution rate increase at NSTAR Electric were partially offset by higher operating expense, higher interest expense and increased property taxes and depreciation. Our Natural Gas Distribution business earned $0.54 per share compared with $0.49 per share in 2023. Natural Gas Distribution earnings increased due to higher revenues from capital cost recovery mechanisms, a base rate increase at NSTAR Gas and lower operating expenses. Our Water Distribution segment contributed $0.01 per share compared with flat earnings in 2023. Eversource Parent & Other Company earnings were a loss of $0.04 per share compared to breakeven results in 2023. The lower results were due primarily to higher interest expense and the absence of a net benefit in the first quarter of last year from the liquidation of a renewable energy fund. Overall, our first quarter earnings were in line with our expectations, and we are reiterating our 2024 EPS guidance of $4.50 to $4.67 per share as well as our longer-term 5% to 7% EPS growth rate. Turning to regulatory items on Slide 8. Starting with Massachusetts, we filed our Electric Sector Modernization Plan with the Massachusetts Department of Public Utility in January. And we expect to have a decision on our plan in the August timeframe. Our ESMP calls for an incremental $600 million capital investments for interconnection of solar resources through 2028. As a reminder, this $600 million is incremental to our $23.1 billion capital investment forecast we announced back in February. In New Hampshire, we are very busy on the regulatory front. In March, we submitted our documentation for a prudence review of $232 million of storm costs related to storm events from August 2022 through March of 2023. We anticipate that review will be completed later this year. In addition, we anticipate filing a rate review in New Hampshire this summer, with temporary rate relief going into effect 90 days after the filing. Closing out the regulatory update is Connecticut, where we received the final decision on our annual rate adjustment mechanism 2 weeks ago, for new rates to become effective July 1 of this year. The major drivers of the $873 million increase are recoveries of purchase power contracts and protected hardship uncollectible accounts, both of which are costs required by law. These under-collected costs in Connecticut, which were approximately $400 million in 2023, contributed significantly to a reduction in our 2023 FFO to debt ratio. This rate impact will be significantly offset by lower energy supply costs that will also go into effect July 1 of this year. We appreciate PURA's decision to provide timely reimbursement to the company of these state policy costs as required by law, reducing the pressure on our balance sheet to finance these costs for a longer time period. Timely recovery of these costs reduces the total amount that customers will pay through avoidance of carrying charges on these balances. In March, we resubmitted our request for a prudence review of approximately $635 million of Connecticut storm costs relating to weather events that occurred from 2018 through 2021. The vast majority of these costs represent payments to outside line and tree crews to assist in the restoration, resulting from 24 significant storm events during that period. We are currently in the discovery phase of the proceeding. As a reminder, recovery of these costs will coincide with new distribution rates following our next general distribution rate proceeding. In early April, following the Superior Court decision on our Aquarion rate case, we filed for a review of that decision by the Appellate Court along with a request to transfer the appeal directly to the Connecticut Supreme Court. We are requesting that the Connecticut Supreme Court hear this case due to the critical legal issues raised by the Aquarion rate decision. Without proper resolution of these issues, there will be a negative impact on utility investment and customers long term. As Joe mentioned, we are committed to our extensive and ongoing outreach efforts that have been pivotal to educating key leaders and communities on the necessity for stable regulatory policies. We are also demonstrating our commitment to support the state's policy leaders who seek to move the state forward with thoughtful and reasonable policies aimed at reducing carbon emissions and achieving increased adoption of clean energy resources. A successful path to a clean energy future will require a substantial ramp-up in planned proactive distribution infrastructure investment rather than a piecemeal approach as well as sound public policies and adherence to legal principles to enable that investment. However, the existing gap between the state's vision of a transition to a clean energy future and the regulatory framework discouraging investment is an obstacle for Connecticut's progress on climate change, the clean energy transition and even core service goals. As a result, we have taken a hard look at our capital deployment priorities and are implementing necessary cuts to our Connecticut investment levels in 2024 and over the next 5 years. In 2024, we are reducing our capital expenditures by nearly $100 million. And we have notified PURA of our unwillingness to put capital at risk in relation to advanced meter infrastructure and electric vehicle programs. In total, we are expecting to reduce capital investment in Connecticut by $500 million over the next 5 years. Until we see Connecticut's regulatory decisions come back into alignment with law and state policy, our decisions on the deployment of our valuable capital resources have to be based on our current experience with regulatory outcomes for utility investment. With that, I do want to emphasize that we are confirming our 5-year capital expenditure forecast of $23.1 billion across all business units. Substantial, consistently emerging infrastructure needs across our system provide ample opportunity for capital deployment in lieu of using those valuable resources in Connecticut. I will now cover a number of drivers that are expected to enhance our FFO-to-debt ratio from 2023 to 2025. As you can see on Slide 9, the under-collection of 2023 deferred state policy costs, which will now be recovered as a result of the 2024 annual rate adjustment decision in Connecticut as well as other under-recoveries of regulatory deferrals across all states of approximately $200 million, contributed to the lower FFO to debt that we experienced in 2023. We expect other enhancements in 2024 and 2025 that include the sale of South Fork and Revolution Wind assets to GIP. Upon closing of the sale to GIP, we anticipate receiving approximately $1.1 billion of cash proceeds from this transaction. In addition to the GIP sale proceeds, we anticipate utilizing our tax equity investment in South Fork Wind, which we expect will bring around $500 million of cash over the next 24 months. Lastly, collection of storm costs in Massachusetts and New Hampshire, planned rate increases at our utilities, the sale of our Sunrise Wind project to Orsted, equity issuances and cash flows from a potential sale of our water business will drive the enhancement of 2023 FFO to debt to 14% to 15% targeted by 2025. Moving on to our equity issuances. In the first quarter of 2024, we raised approximately $75 million through our existing ATM program. And we issued 550,000 treasury shares. We continue to anticipate our equity needs to be up to $1.3 billion over the next several years. Also, as we announced in February, we are undertaking a review of our Water Distribution business. Proceeds from a successful sale are assumed in our long-term financing plan, reducing the level of equity that would otherwise be needed. We continue to prepare materials needed to launch the first phase of this process. Closing out on Slide 10, as I mentioned earlier, our $23.1 billion 5-year capital forecast and our forecasted financing plan drive our 5% to 7% EPS growth rate through 2028 based off of our 2023 recurring EPS of $4.34 per share. I'll now turn the call back to Matt for Q&A.

Thank you, John. Elissa, we are now ready for questions.

Joe, can you first tell us what capital expenditure you are cutting in Connecticut? Where are you reallocating funds? And is that reallocation beneficial considering the difference in capital costs?

Thank you, Shahriar. Over the past decade, we've spent a significant amount of money on electric reliability for our Connecticut customers. Our best-in-class engineering has moved months between interruptions from 10 months to nearly 2 years. So clearly, our investments have paid huge dividends for our Connecticut customers. However, the regulatory decisions over the past few years are misaligned with the law and the state policy. And without a secure and predictable cost recovery path, we cannot continue to put additional capital resources on the table. So our investment objectives in Connecticut have been centered around safety and reliability. As you'd expect, we will not reduce our safety spending. Therefore, the reduction will likely come from reliability areas. As John has mentioned, we have ample opportunities for capital deployment on our system. So we feel very, very good about that. And yes, it would be accretive.

Got it. And Joe, can you cut more if need be?

Well, we are going to be very thoughtful and deliberate about it. Obviously, we've had a great track record down there. I will tell you that the reliability numbers in that state are best-in-class. I don't think you'll find it. You'll find it really anywhere else around the country. So I'm very proud of that. But if we continue to see this negative regulatory environment, we're going to have to look at everything.

I would also add, Shahriar, that as a reminder, we do have a resiliency program in place, which we get timely recovery of up to $300 million of distribution investments at CL&P, which has been very, very critical for us to achieve this performance level that Joe just mentioned.

Got it. And maybe a quick question for John. John, the up to $1.3 billion of equity is still part of the plan. That amount will be influenced by the outcome of the water sale. How are you approaching the means of issuance? Are you considering a more systematic approach or prefunding spending and balancing the sheet in advance, such as through ATMs or possibly a larger, one-time issuance?

Our view, and that will continue to be our position, is to be opportunistic in exploring and utilizing our ATM program to accomplish that. As I've said time and time again, an ATM program gives us tremendous flexibility. And we were very successful in executing at least through month $75 million. We've done quite a bit more over the past couple of weeks.

I wanted to start by discussing the FFO to debt walk and I appreciate the details provided. First, could you remind us about the timing of the 2023 under-recoveries affecting the cash flow statement this year? Additionally, how should we consider the impacts between the $1.8 billion and other identified drivers?

The under-recovery for 2023 across all utilities, particularly impacting CL&P and Connecticut, was about $600 million. If we normalize it, the FFO to debt ratio at the end of 2023 was approximately 9%, which increases by around 200 basis points. With the favorable order we received on the annual rate adjustment mechanism, we are optimistic that both cash and additional amounts related to 2024 costs will start coming in from July 1 through April 30 of the following year, leading to a 10-month recovery. Additionally, we've highlighted our offshore wind initiatives, which we believe will significantly boost us closer to the 14% to 15% range by the end of 2025.

Got it. Okay. Great. And then maybe just on the Massachusetts ESMP process. What are sort of the next milestones for us to look out for there? And then just more broadly, how do you think about opportunities for the other states that you serve to adopt sort of similar frameworks?

Sure. I'll start with Massachusetts. The hearings on that docket have just concluded, and we are now entering the briefs and reply briefs phase. I want to emphasize that, according to the Clean Energy legislation passed a couple of years ago, the DPU must make a decision by the August timeframe I mentioned earlier. Moving forward, the $600 million I highlighted will materialize within our forecast period if we receive favorable approval from the DPU, but we also anticipate needing further investments beyond this period, as noted in our filing. Massachusetts is proactively identifying opportunities to ensure that the state's established goals are met. In Connecticut, as Joe mentioned, we are eager to support their Clean Energy strategy, but it will require cooperation from both the utilities and the authority. Lastly, in New Hampshire, we are in discussions about utility-owned solar and will likely propose an investment opportunity in the coming months. As I mentioned earlier, we plan to file for a rate review this summer.

In all of that solar investment, it's important to note that this would be regulated investment, specifically utility-owned solar, which is quite similar to the model we have here in Massachusetts, Carly.

Can you elaborate on how cutting investment in Connecticut and the recent outcome regarding Aquarion might impact your plans to monetize the asset? Also, can you provide an update on this process and your confidence that there will not be additional equity involved in the plan you presented today?

Well, the appeal process, obviously, we would love to have a positive data point. But the appeal process will continue to make its way. You're probably looking at, at least a year in the making, but we are continuing to move forward with launching Phase 1 of the process relatively soon. And then, we'll make the decision at that point.

Okay. So still moving ahead, it seems. I appreciate that. I just wanted to follow up on Carly's question regarding the FFO to debt. The tax equity investment from South Fork will likely be a more one-time occurrence contributing to the cash flow improvement. I wanted to confirm that, excluding these one-time items, you still expect to reach 14% to 15%. What factors are contributing to that, considering the one-time issues?

Yes. No, we certainly do, Nick, the tax equity. We actually think, as I stated, 24 months. That's probably a bit conservative. I think that will probably lead into 2026. We do have other tax benefits that we want to utilize for us before we tap into those ITCs. So that can be elongated a bit, which is great. And then longer term, yes, that does fall off the cliff. But we have other items that will certainly kick in. We are sitting on a pretty large deferred storm balance. So I see those costs coming in, in potentially '26, certainly '27 and beyond to really maintain that high level of FFO to debt.

I have one more question about Sunrise. I understand you're not disclosing the price, but last quarter, there was a negative book value. I don't think the queue is available yet, but is that still the case, or can you provide any insights? Or will we need to wait for the sale agreement to be made public for any updates?

It does. We have to adhere to accounting rules, which state that if there is a contingent gain, we must wait to receive the cash. Therefore, the transaction must be completed. I would expect an adjustment of those balances to take place, likely in the third quarter of this year.

Continuing with Slide 10, I appreciate the insights shared. I just want to clarify the key drivers; everything on the right side of that slide is categorized as FFO, not as debt reduction, when discussing the transition from 14% to 15%.

Yes. No, it's a mixed bag. So obviously, what's more critical is that we have the cash coming in, right, which will displace debt and obviously enhance our operating cash flows.

Could you provide an update on Aquarion regarding your appeal to the Supreme Court? Is there a timeline for when you filed or plan to file, and how will you know if they will take the case?

We filed that early April, that request. So we feel good that the Supreme Court will take the case and that it will just expedite the whole process. Once the court accepts that, then you're probably looking at a 9- to 12-month process, is what we're estimating.

Okay. But you're not going to hold off the sale process to wait for that, you just move forward.

No, we're not. In the meantime, we expect to implement the original rate change, and we've taken that into account in the first quarter this year. Once that's in place, the company can proceed with the filing for their WICA program, which will provide about 30% to 35% of their annual capital program cost recovery.

In Connecticut, another question here, I agree the state policies and regulatory environment are not aligned. So I understand you're reluctant to put capital to work. My question is, what exactly is it that you're looking for? What would it take to get you more comfortable with the regulatory setup? Is it a qualitative good faith kind of conversation? Are you looking for something more explicit like preapprovals for spending on AMI and EVs?

Yes. Well, we're looking for preapproval, looking for our regulatory recovery, a roadmap for the recovery of odd dollars that we have spent. As you know, the filing that we just got approved there for $800-plus million, that was money we spent on behalf of the customers in Connecticut. These were state-mandated requests that we did. And so we expect to get paid for that. And if the state wants to have AMI, we expect to have an orderly recovery process for our investments, just like we have in Massachusetts, and that's all we're looking for that if we spend dollars, we want to know we're going to get the dollars back. We don't want to be chasing those dollars. We don't want to have uncertainty around it. And I know that everybody on this call doesn't want uncertainty. And so you could have my assurance that we will not spend dollars until such time as we have a constructive regulatory environment that allows us to get fair treatment in the recovery of our dollars that we've spent on behalf of the customers in Connecticut to bring better service.

Okay. Is that something you think could be done in the regulatory arena or would that require legislation?

No, I think we can achieve that within the regulatory framework. We are definitely aligned with the governor and various other agencies. This allows us to collaborate effectively when we submit a filing, ensuring everyone is on the same page. Our relationship with the Attorney General is also very strong. However, we need to ensure that all other state interests are aligned so we can create a constructive roadmap to proceed.

All right. Sounds good. On the topic of FFO to debt, I want to elaborate. I know this has been asked a few times, and I appreciate the details on Page 9. This might seem like a basic question, but if the $600 million from under-recoveries adds 2%, and if we triple that to $0.8 billion, why does the impact on FFO to debt only increase by double or less? Based on simple math, it seems like there should be a 3:1 ratio in both dollars and percentages. What are the factors affecting this?

Well, keep in mind that in that 300 to 400 basis point movement, it does include other cash flow items that we have not quantified in that $1.8 billion, Andrew, and then additionally, when the cash comes in, it's going to impact both the numerator and the denominator accordingly. So it's not a one for one.

On Slide 12, you mentioned that some parent debt has already been issued for the year. Are you asking if that relates to the maturities at the bottom of the slide or the maturities that may be refinanced, which would lead to additional debt? Let me know if that’s not clear.

No, you're thinking about it correctly. The maturity is listed on that slide. We have $900 million due on June 27, and another $450 million in the fall. In early January, we have $300 million coming due. It's more about the prefunding. With the proceeds from the transactions I mentioned, we should be out of the debt and capital markets for quite some time.

Great. And then just to stay on the mark with Connecticut questions. I know sometimes when utilities ramp up CapEx or they may be doing some new projects, they talk to policymakers, some regulators prior to it and get a feel of just the policymakers are on board with this increased capital that they're spending. I'm curious if something happened in Connecticut where you had similar discussions on actually to lowering of CapEx.

Yes, we have had discussions regarding our investments. We began discussing AMI three years ago, and everyone is in agreement that we want AMI. We've also talked about investing in electric vehicles and infrastructure. We are fully aligned with the key leaders involved. Our dialogue continues, and currently, we are expressing to them that we cannot proceed without certainty. Since we started talking about AMI, costs have increased. Had we progressed earlier, it would have saved our customers money, but this delay is not helpful. We are initiating the project in Massachusetts, where we will be installing AMI meters and infrastructure, which will benefit our customers.

John, for investors, could you clarify the implications if you decide not to proceed with the Aquarion water sale? Specifically, would the equity potentially exceed $1.3 billion if the sale doesn't go through? Or is that the maximum, and would proceeding with the sale result in a lower equity value?

There are still many variables in play, and we won't adjust the $1.3 billion equity needs until we have more clarity. As we move through the next year, our current focus is on preparing for the potential sale of Aquarion and completing Phase 1 to see how that develops.

Understood. And then just to be clear on the FFO to debt, I know a lot of questions have been asked, you get to that 14% to 15% by 2025 with or without the Aquarion sale? Am I thinking about it the right way?

If you look at the bottom of the left side of that slide, we have other drivers. These other drivers represent cash inflows that we have not quantified. However, we are assuming, as I have repeatedly stated, in our financing plan that the sale of Aquarion will take place.

Perfect. Okay. And then just one hopefully quick follow-up. Anything to kind of note in terms of the construction process or costs on revolution in Sunrise? Any updates versus your past disclosures there?

Yes. No, it's too early right now, but we continue to stay close to it, and we'll keep you updated. We did start though. The good news is we're in the ground, and construction is underway. So we're excited, and we're going to utilize the same practices that we successfully deployed in the construction of the South Fork project, which, as you all know, though, all 12 of the turbines are up, and they're running. And we're very, very proud that we are the first offshore wind provider in the United States.

Real quick one, staying on CL&P here. If you take out your depreciation or maintenance CapEx, how much of that additional CapEx is covered under an existing rider or tracker or something like that outside of a base rate? You mentioned energy efficiency. Is there other CapEx?

The largest capital expenditure is the $300 million investment in system hardening that has been implemented for quite some time. This initiative has supported timely cost recovery and significantly improved reliability in Connecticut. I would say that a substantial portion of the maintenance depreciation will be addressed by this.

Okay. Okay. And then kind of a real quick follow-on on some of the other questions. Do you expect the clean energy policy overall, not necessarily just the rate setting, but clean energy policy overall in Connecticut will be a political issue this year? Or is that something for years down the road?

Yes, the legislative session will end next week, so I don't expect any developments at that time. However, I believe the discussions will continue as we stay engaged throughout this year and beyond until we reach a mutual understanding of what is important for the state. We aim to identify areas for investment that will yield fair returns and ensure a level playing field. That's essentially what we're seeking.

Sorry, Elissa, I just want to thank everybody for their time, and please follow up with IR with any additional follow-up questions that we can help out with. And I'll turn it back over to Elissa.