Eversource Energy (ES) — Q2 2024 Earnings Call Transcript

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

Thank you, Matt. Good morning, everyone, and thank you for joining us on the call. Let me begin with an update on offshore wind. I am very pleased to report that we have closed the sale of Sunrise Wind Project to Ørsted and that we anticipate closing the sale of our South Fork and Revolution Wind Projects to Global Infrastructure Partners in the third quarter. Closing these sales delivers on our commitment to exit the offshore wind business and focus our resources on being a pure play regulated utility with tremendous low-risk regulated growth opportunities to enable the clean energy transition for customers. Turning to Slide 3. We continue to be a leader in delivering energy solutions for our customers with our focus on resiliency investments to address aging infrastructure and minimize customer outages on blue-sky days and during storm events. We are also very busy preparing for the future of electrification to achieve our region's greenhouse gas reduction goals. Moving to Slide 4. Shown here are our state's near-term and long-term greenhouse gas reduction goals. To achieve these goals, we are planning investments in our grid to meet the demand growth from the electrification of transportation in residential and commercial heating sectors. This effort requires us to upgrade and expand the electric system to handle the new demands that we will face, including more EV charging, more customers turning to heat pumps to warm and cool their homes, and expanded capacity needs to accommodate additional renewable energy resources. In addition, we must make our system smarter and stronger to withstand Mother Nature and the forces of climate change, which are resulting in more frequent and intense storms. We are continuing to invest in our electric system with smart technologies to help the grid automatically adjust to disturbances on the system and empower customers with more information to control their energy use. These increasing demands on the electric system make it critical for us to work together with our regulators to obtain timely cost recovery and maintain a solid financial position for the company. A strong financial position enables Eversource to plan for and meet these increasing demands while continuing to provide high levels of safe, reliable service to our customers. Turning to Slide 5. Our nearly $6 billion in transmission investments over the next five years is the largest program in our company's history and is key to achieving our collective greenhouse gas reduction goals. Based on system needs, our transmission investment program is moving from overhead line rebuilds in smaller reliability projects to much-needed new substations to meet electrification demands and work toward a carbon-free future. In our five-year plan, these new substations and substation upgrades will equal approximately $1 billion of investment, and over $600 million of transmission projects are planned to enable clean energy resources. Our five-year transmission investment program also includes over $3 billion for investments to replace aging infrastructure. We are also evaluating additional infrastructure requirements that could materialize during this forecast, and we expect incremental projects will be needed as we move forward. As we plan ahead, there are many areas of focus, such as advancing the electric sector modernization plan in Massachusetts, increasing import capacity into Boston, and enabling offshore wind and other renewables to advance regional decarbonization efforts that will drive transmission infrastructure investment for years to come. To give you an example of the magnitude of the incremental transmission investments we are seeing over the next ten years, we are planning for over a dozen new substations in Eastern Massachusetts alone to meet demand, compared to just four new substations constructed in that service area in the past decade. Moving to electric distribution on Slide 6, we are preparing for substantial growth in distribution investment. In Massachusetts, our current electric distribution investment plan is nearly double the previous five-year plan. As we move forward to prepare for significant electric demand growth in Massachusetts to meet the state's clean energy goals, we are constantly evaluating solutions that will provide the right balance in outcomes for our customers. In order to determine our distribution system investment needs in Massachusetts, we have carefully evaluated the factors that drive the needs in each specific area, allowing us to plan efficiently and cost-effectively for future system needs. Turning to Slide 7. We are very pleased with the progress of our Massachusetts AMI program, which we and other stakeholders know is critical for enabling a clean energy future. As part of the Massachusetts AMI program, we recently completed the successful implementation of a new customer billing and information system, replacing a nearly 40-year-old system. This new customer system will provide a critical foundation for our AMI deployment. We are currently working on system design, building and testing our meter management and communication applications, which we expect to conclude this summer. Network construction is anticipated to start early next year, with smart meter installation beginning in the third quarter next year. Our Massachusetts AMI program will deliver numerous day one benefits to customers, including improved grid management to enhance reliability and customer access to monitor electric consumption and control energy use. Further customer benefits include greater visibility on outages to enhance storm restoration response and dynamic rate design to enable customers to adjust electric use and lower their bills. Although we're very excited about the future transition to electrification, we are deeply committed to keeping the customer journey front and center. Affordability and fair and balanced rate design, along with a focus on environmental justice communities, is top of mind for Eversource. A good example of Eversource's exploration of creative solutions to enable an equitable transition to clean energy is our first-of-its-kind network geothermal pilot in Framingham, Massachusetts, which came online in June. We look forward to continuing our productive partnership with the state of Massachusetts as we deploy innovative technologies and pursue our carbon emission reduction goals. Turning to Connecticut, I want to thank the Lamont administration for its collaboration with utilities to provide regulatory clarity to continue the electric vehicle charging program. The solution that PURA is now preparing to put in place benefits our Connecticut customers while ensuring timely and adequate recovery of program costs. As I said before, it is critical to ensure that our customers receive safe, reliable, and affordable service in a balanced regulatory environment is the best way to get there. Also, you may have heard that Governor Lamont has nominated David Arconti as the new PURA commissioner to take the place of Vice Chairman Betkoski, who is retiring this coming January. We are encouraged that David is a nominee with keen interest in energy policy and valuable experience as a former member of the Connecticut General Assembly. We are hopeful that this is a step forward in bringing Connecticut closer to its state policy goals with recognition that investment is needed to support these goals. Touching on New Hampshire, we continue to see positive momentum on the collaborative approach to plan for long-term energy needs with the signing of House Bill 1431 by Governor Sununu in July. This still requires utilities to file integrated distribution plans with the Public Utilities Commission every five years, a 10-year forecast of electric demand, and an assessment of the distribution infrastructure needed to meet projected energy demands. Moving to Eversource's focus on our company's specific emission goals and employee development, I want to highlight the release of our 2023 Sustainability Report in our diversity, equity, and inclusion report, as shown on Slide 8. Eversource has been a leader in these areas for many years, and it's a part of our DNA. In this year's sustainability report, we've submitted our specific greenhouse gas reduction targets to the science-based target initiative. We also highlight the progress made towards reaching our goals of carbon neutrality from our operations by 2030 with over a 30% reduction in emissions from the 2018 baseline year. We are excited about the future. Eversource is uniquely positioned to leverage its skills, expertise, and scale to build utility infrastructure that will enhance system resiliency and transition to a clean energy future for our customers. We have a long runway of low-risk regulated investment opportunities and earnings growth potential, focused on delivering long-term value to our customers and our investors. Thank you for your interest in Eversource. I will now turn the call over to John Moreira to walk you through our financial results and progress made towards strengthening our balance sheet.

Thank you, Joe, and good morning, everyone. This morning, I will discuss our second quarter earnings results, provide a regulatory update, and review our financing activity. As shown on Slide 9, our GAAP and recurring earnings for the second quarter were $0.95 per share as compared with GAAP earnings of $0.04 per share in the second quarter of 2023 and recurring earnings of $1 per share in the second quarter of last year. You will recall in the second quarter of 2023, we recorded the first of two impairment charges associated with our offshore wind investment of $331 million, or $0.95 per share. We also had other nonrecurring charges of $6.2 million, or $0.01 per share, in the second quarter of 2023. Both items are included in our GAAP earnings results for 2023. Breaking down the second quarter earnings results by segment, starting with electric transmission, which earned $0.54 per share compared with earnings of $0.46 per share in 2023. Electric transmission earnings increased due to rate base growth. Our electric distribution earnings were $0.42 per share for the quarter compared with earnings of $0.47 per share in 2023. The earnings decrease was due primarily to higher O&M expense, driven by higher storm restoration costs and the absence of a favorable prior year regulatory adjustment in New Hampshire, partially offset by higher revenues driven by NSTAR Electric's base distribution rate increase effective January 1 of this year. Electric distribution earnings are expected to be higher in the second half of the year, driven by capital cost recovery and New Hampshire's $61 million interim rate increase effective August 1. Our natural gas distribution business earned $0.08 per share for the quarter compared with $0.03 per share last year. The earnings increase was due primarily to higher revenues from NSTAR Gas' November 1, 2023 rate increase and lower O&M, partially offset by higher depreciation, interest, and property tax expenses. The Water Distribution segment contributed $0.02 per share for the quarter compared with $0.03 per share last year. The decrease in earnings was primarily due to higher O&M and interest costs. Eversource parent and other companies lost $0.11 per share in the quarter compared with recurring earnings of $0.01 per share last year. The main driver of this decrease was higher interest expense. Overall, our second quarter earnings results were in line with our expectations, and we are reaffirming our 2024 EPS guidance range of $4.50 to $4.67 as well as our longer-term 5% to 7% EPS growth rate. Turning to our regulatory update on Slide 10, starting with Massachusetts, as you may recall, we filed our electric sector modernization plan with the DPU in January, which is a roadmap to address growth from electrification needs. We expect a decision on our plan later this month. As a reminder, our electric sector modernization plan calls for $600 million of distribution capital investments for the interconnection of clean energy resources and resiliency initiatives through 2028. This $600 million is incremental to our $23.1 billion five-year capital forecast we announced back in February. Next, I'm pleased to report that in early June, the DPU approved four additional capital investment projects to enable the interconnection of large-scale distributed generation resources on our system. Combined with the first project approved in December of 2022, these projects represent approximately $1 billion of total capital investment with $600 million of distribution investment and approximately $400 million of transmission investment. This $1 billion of investment is included in our five-year capital plan. In May, as per our settlement agreement related to the acquisition of EGMA, we filed our first rate base reset for rates to be effective November 1st of 2024. This filing reconciles our rate base, which has increased from $770 million to approximately $1.7 billion as of the end of 2023. This rate base reset is subject to a cap on the revenue change. With the application of this revenue cap, the proposed revenue increases are $78.7 million this year and $67.5 million effective November 1st of 2025. Closing out the Massachusetts regulatory items, we were pleased to receive final approval from the Massachusetts Energy Facility Siting Board for the Cambridge substation project. This is a $1.6 billion investment, of which $1 billion of investment is included in our five-year capital plan and the remaining balance in 2029 and 2030. This project consists of a new underground substation that will address the growing electricity needs of the city of Cambridge and the surrounding area. Turning to New Hampshire. PSNH filed a rate case in early June to recover more than $765 million of investment since our last rate case in 2019. The filing requests a rate range of $182 million in base distribution rates. That will take effect in two steps. The first rate adjustment will go into rates today, reflecting an increase of $61 million, with the remainder to go into effect on August 1st of next year. Interim rates will provide enhanced cash flows to the company until we receive a final rate decision next year. The filing proposes to recover investments made to improve reliability and includes recovery of increased costs associated with storm response and vegetation management due to the more frequent and more intense storm events. On blue sky days, the company's reliability investments in New Hampshire have certainly paid off for our customers. For example, thanks in large part to investments in distribution automation technology, the percentage of New Hampshire customers restored in non-storm events in less than five minutes has improved from 30% in 2018 to over 50% in 2023. In addition, the company has rigorously controlled O&M costs since our last rate case. We have also proposed to implement a four-year performance-based ratemaking plan, including our capital support mechanism that would adjust rates annually to be approved by the commission. This mechanism enhances cash flow supports for resiliency investments, replacement of aging infrastructure, and investments for the integration of customer distributed generation while maintaining the additional transparency that comes with PBR. We anticipate a final decision in this case in 2025. In Connecticut, discovery is underway under storm cost prudency review for $634 million. We are also preparing to file for storm prudency review later this year for storm restoration costs related to events in 2022 and early 2023. As Joe mentioned, we received a decision from PURA allowing us to continue supporting the electric vehicle charging program for customers under a constructive cost recovery framework that will enhance our cash flow position. I'll now provide an update on some of the items shown on Slide 11 that will enhance our FFO to debt ratio from 2023 to 2025. First, the 2024 annual rate adjustment in Connecticut became effective July 1 of this year, recovering approximately $900 million of several costs, including public benefits-related costs. The July 1st rate adjustment is recovering under-collections from 2023 and has reset rates to a level matching recurred costs that we expect in 2024. Public benefit costs include the cost of energy supply contracts with the Millstone and Seabrook nuclear power plants and uncollectible hardship costs. Second, with the closing of our sale of Sunrise Wind to Ørsted, we received net proceeds of $152 million that will be used to pay down debt. Third, with the closing of our sale of Revolution and South Fork Wind to Global Infrastructure Partners, we anticipate receiving gross proceeds of approximately $1.1 billion, subject to adjustments for capital expenditures. These proceeds will also be used to pay down debt. As a reminder, there is no impact to our financing plan from these capital expenditure adjustments. In addition, the filings for distribution rate increases at PSNH and at EGMA will provide additional cash flow enhancement. And lastly, regarding our equity issuances, we have raised approximately $250 million of equity through our ATM program and issued approximately 819,000 treasury shares in the first half of this year. We continue to anticipate equity means of up to $1.3 billion over the next several years, as shown on Slide 12. We are making progress on our effort to sell Aquarion Water Company. I'm happy to report that we have recently launched the initial phase of this process. All of the above actions give us a clear roadmap for improvement of our FFO to debt ratio in 2024 and give us confidence in achieving our 14% to 15% FFO to debt target at S&P in 2025. In summary, as you can see on Slide 13, we have a proven track record of earnings and dividend growth, and we are confident that our robust $23.1 billion five-year capital forecast and our forecasted financing plan will enable us to drive our 5% to 7% EPS growth rate through 2028 based off of our 2023 recurring EPS of $4.34. I'll now turn the call back to Matt for Q&A.

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

Hi, guys. Good morning.

Good morning, Shah. Good morning.

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

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

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

Yes, the governor is currently at 4, but it will drop to 3 in January. He is committed to finding a balance in Connecticut, as he has indicated in our discussions. While he may consider going to 5, I believe he will keep working on it. It's a continuous effort to ensure stability and regulatory certainty in Connecticut. For now, we're adopting a wait-and-see approach.

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

Yes. I must say that regarding the legislative process, there has been significant discussion. This specific legislation was created to enable a bidder who otherwise wouldn't have been able to participate in our sale process. It does not provide them any advantage over others. We have a strong group, so it's positive that this interested bidder is a recognized entity in Connecticut. The process will continue from here. John, would you like to discuss the timing?

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

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

Thank you.

Hi, good morning.

Good morning, Jeremy.

Hi, Jeremy.

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

If you look at the table, Jeremy, it was designed to show how it will affect the FFO to debt calculation. The $600 million will impact the enhanced numerator in the calculation, and the $2.6 billion will offset debt. That was the purpose of including that table. I apologize for any confusion. That was the intention behind it.

Got it. And…

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

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

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

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

Thank you.

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

Good morning. Yes.

Yes, thanks.

Hi. I just wanted to follow up on Jeremy's question about the offshore wind. Can you provide an update on the construction status of Revolution, the current costs, and capital expenditures? Additionally, how much offshore wind capital expenditure does Eversource expect to incur this year before selling the assets to GIP? Thank you.

The construction activity is progressing very well. As of a week ago, when we spoke with Ørsted, the monopiles or foundations are about 50% installed, which is impressive given the seasonal restrictions we faced. In terms of capital deployment, that information is sensitive, and we haven't disclosed it.

Okay, no problem.

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

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

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

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

Yes, of course. Let me begin with the $200 million, Nick. This amount does not include any recovery from the Connecticut storms. It is entirely associated with Massachusetts and New Hampshire. It’s important to remember that this reflects only a two-year recovery in both states, while the recovery period spans five years. Regarding the $634 million request that we submitted to PURA for a prudency review, the current schedule, which we hope to expedite, projects completion around September 2025. This timeline aligns with the potential for us to file a rate case at that time. Traditionally, the process involves conducting the prudence review in Connecticut, followed by filing a rate case, and once the rate case is finalized and the new rate is implemented, we would then incorporate the storm costs.

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

Thanks, Nick.

Good morning, Steve.

Good morning, Steve.

Good morning.

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

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

Okay. Regarding the equity plan, earlier this year before you received approval on Sunrise, you secured $230 million and avoided possible breakage costs. If I remember correctly, that was when the current plan was developed.

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

Given that is now completed, I would like to get more information on how that relates to the up to $1.3 billion, especially since there are still other factors in play. If you could provide a bit more insight now that we have that specific update, I would appreciate it.

Sure. I think you accurately identified the core of the question. We have many variables at play. Our financing forecast, which we developed and shared as part of our February guidance, involved numerous assumptions, and we are still working through those. At this point, it's a bit premature to provide further guidance on our equity requirements. For now, the figure of $1.3 billion is appropriate until certain matters are resolved.

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

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

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

Thank you, Steve.

Thank you, Steve.

Good morning, David.

Good morning, David.

Good morning.

Good morning. Thank you for taking my questions. I wanted to follow up on the FFO to debt enhancement slide. I was curious if there have been any changes in the underlying enhancements or if this is primarily a matter of highlighting some known items more specifically. Has anything changed positively or negatively?

Yes, these are the major headlines. However, things always change. One of the items that has materially developed, which is not included in the slide, is the tax benefits we've been able to harvest, generating some cash refunds. For 2024 alone, we had an inflow of about $120 million in tax refunds.

So and that's not…

One important aspect that hasn't been quantified but was included in my earlier remarks is the rate increases. We have EGMA implementing a significant increase to begin recouping the substantial investments we've made in that utility. Additionally, the usual PBR rate mechanisms are taking effect. Just yesterday, we received approval for a $61 million interim rate increase at PSNH. We anticipate having a final decision on another rate change effective August 1st, 2025, within the next 12 months. This quantification would provide further upside to the figures presented.

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

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

Okay. Awesome. Thanks so much. Appreciate it.

Thanks, David.

Julien, welcome back.

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

Thank you all very much. I appreciate it. I want to follow up on a couple of points that have been mentioned regarding returns. What are your thoughts on the developments in Connecticut? I’d like to discuss that idea briefly. I believe the Yankee Gas filing is expected later this year, possibly in December. How do you see that influencing the fourth quarter 2025 CL&P case? Are there any specific elements you’ll be paying attention to? I understand there’s a distinction between electric and gas, but I’m curious about your perspective on this. Additionally, what factors will you be monitoring on the PBR front, especially since it has been postponed for about a year? How do you see this relating to the anticipated positive developments? Thank you all once again. It’s nice to chat.

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

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

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

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

Correct. As I mentioned earlier, we are also getting ready to submit our second prudency request for additional storm costs we have incurred. This request is separate from the 634, and we aim to finalize it later this year.

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

That is correct.

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

Yeah, hope so. Thank you.

Good morning, Paul.

Good morning. How are you?

Great.

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

Yes, I think the delay is beneficial as it allows us to engage with key stakeholders in Connecticut and collaborate effectively to establish a productive PBR structure. We are well-versed in the PBR framework from Massachusetts, and as I mentioned in my formal remarks, we are also looking to implement a similar structure in New Hampshire.

Okay. Regarding transmission and related matters, there is considerable discussion at FERC and in the White House about implementing agreed-upon enhancing technologies. Many lawmakers from New England have also been advocating for this. I'm curious about your perspective on these technologies and the potential opportunities or challenges they may present, especially considering your plans for expansion.

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

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

Thank you. Thanks, Paul.

Good morning, Anthony.

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

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

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

Thank you.

Thanks, Anthony.

Hi, Travis.

Hi, Travis.

Hi, I'm just looking for a quick clarification regarding Slide 11 and the $200 million for the storm cost recovery. Is that primarily for New Hampshire, or does it pertain to something else?

New Hampshire. No, it's both Mass.

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

No, in Massachusetts, we have a prudency review taking place with multiple factors involved. The costs in question have already been approved in the rates for Massachusetts. In New Hampshire, we filed for a significant amount of $240 million, which is currently going through its own prudency review. This review will coincide with the implementation of permanent rates in 2025. Both Massachusetts and New Hampshire are set for a five-year recovery period.

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

Only, right.

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

Yes, we were very pleased. That legislation aligns perfectly with our operations. The integrated planning and the clarity we need as we move forward with our investments represent a very positive development for us, and it embodies our core values. We are focused on collaboration, which is evident in both New Hampshire and Massachusetts, where we recognize the priorities of those administrations and deliver accordingly.

Okay, great. I appreciate the thoughts.

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

Sure, sure. Okay, thank you.

Thank you.

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

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

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

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

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

Okay.

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

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

Okay.

Thank you.

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