Eversource Energy (ES) — Q2 2025 Earnings Call Transcript

Good morning, and thank you for joining us today on the second quarter 2025 earnings call for Eversource. During this call, we'll be referencing slides that we posted this morning 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-Q and 10-K. Speaking today will be Joe Nolan, our Chairman and President and Chief Executive Officer; and John Moreira, our Executive Vice President, Chief Financial Officer 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, Rima, and good morning, everyone. Thank you for being with us today. Starting on Slide 4. We have made great progress halfway through the year, executing our key strategic priorities while maintaining our commitment to being a pure-play pipes and wires regulated utility. As anticipated, electric demand continues to rise, both in the near term and throughout our 10-year forecast horizon. We recognize this growth trajectory early on and worked closely with key stakeholders to position ourselves to effectively meet the challenge. In several regions, demand is expected to outpace existing infrastructure capacity, underscoring the critical need for strategic upgrades and new development. The accelerating electrification of transportation and heating sectors, driven by decarbonization efforts is further fueling this upward trend. Notably, low growth through the first half of 2025 has exceeded 2%, nearly double the rate observed during the same period last year, reinforcing our expectations in validating the investments we've made to capitalize on this momentum. A clear indication of this is the 10% increase in our 5-year infrastructure investment plan that we announced in February. Our balance sheet is strengthening and our FFO to debt ratio continues to improve as a result of constructive regulatory outcomes as well as our execution on cash flow enhancements that we laid out last year, such as exiting the offshore wind business and the planned divestiture of our water business. Turning to our quarterly accomplishments on Slide 5. Once again, this quarter, we saw solid earnings growth from our transmission and distribution businesses versus last year's results. Earnings for the second quarter were $0.96 a share, in line with our expectations. We are reaffirming our 2025 EPS guidance range of $4.67 per share to $4.82 per share as well as our long-term EPS growth projection of 5% to 7% through 2029. In addition to our solid financial results, we had other significant accomplishments across the company. During this hot summer, we continue to maintain our top decile reliability performance, even during record-breaking heat waves. I'd like to briefly acknowledge the severe weather event that impacted parts of Connecticut, Southeastern Massachusetts, and Cape Cod during the July 4th holiday weekend. This storm had damaging winds well above 70 miles per hour. These dangerous conditions posed significant operational challenges, but our team responded swiftly to ensure safety and service continuity. I would like to thank all our employees, including crews, operations, and customer services teams who worked around the clock to restore power to our customers. This is also a testament to our continued investment in grid modernization, which has significantly enhanced system resilience, enabling faster and more efficient storm restoration efforts that minimize customer outages and support long-term reliability. We issued our annual sustainability report, which is available on our website. The report highlights some of our most innovative sustainability and governance achievements, including our network geothermal pilot project, our Cape Cod Solutions transmission project, and our efforts to develop the future energy workforce. Shifting focus to the regulatory front. Let me begin with an update on Connecticut. The Connecticut legislative session ended in early June. The general assembly passed Senate Bill 4, SB4, on a bipartisan basis. SB4 is a comprehensive energy reform bill with the stated intention of making electric bills more affordable and the utility regulation process more transparent. The bill was signed into law by Governor Ned Lamont. SB4 allows for securitization of storm costs incurred by Eversource from 2018 to 2025, which is important for customer bill predictability as well as strengthening our balance sheet. The new law also clarifies the requirements of the public utility regulatory authority, including requiring that all five commissioners sit on all rate request proceedings moving forward. Additionally, the law allows the state to use bonds to cover the cost of some public benefit programs, which are also currently recovered through a separate charge on our customers' bills. This is expected to modestly reduce their overall bill impact. We appreciate that leaders on both sides of the aisle in the general assembly are committed to ensuring a transparent and constructive process for utilities in Connecticut to deliver safe and reliable service. Staying with Connecticut, the Aquarion divestiture process continues to progress well. We are well into the regulatory approval proceedings in all three states, and we expect to close the sale by the end of the year. We also received a decision from the Connecticut Supreme Court on Aquarion's appeal from its 2023 rate case results. We are encouraged by the court's findings on the applicability of the legal standards for rate making, including the application of prudency standards as well as utility companies being entitled to carrying charges on deferred costs. This court ruling was an important development for future investments and cost recovery. Our focus in this legal challenge has always been to get clarity from the court on the applicability of prudent standards in order to support and defend capital investments in the future. Having the rules of the road clarified by the court is critical in this regard and is of greater value than the evidentiary disputes on Aquarion's 2023 rate case. Moving north, we received a constructive decision on the rate case for a public service company of New Hampshire. We are pleased with the commission's collaborative approach on this rate case proceeding. This decision which was in line with our expectations, largely supports our investments in grid monetization, system reliability, and necessary energy infrastructure needed to continue delivering safe, affordable and sustainable electricity to our New Hampshire customers. John will cover the details of this recent decision. We are pleased to announce that during the second quarter, we finalized contracts that maintain positive constructive relationships with several of our key unions, representing electric and natural gas employees in Massachusetts. It's important to Eversource that we maintain these relationships with our union partners. Turning to Slide 6. As we invest in modernizing our infrastructure and supporting the energy transition of the future, we are equally focused on keeping costs manageable for the families and businesses we serve. Affordability is not just a goal, it's a cornerstone principle in every investment we make. Through innovative solutions and strategic grid enhancements, we're enabling the integration of renewable energy resources and preparing for the increase in electric demand expected in our region. Our advanced metering infrastructure rollout in Massachusetts is progressing very well, and we reached a major milestone in July. The AMI communication network, which started deployment earlier this year in Western Massachusetts is substantially complete. This was a critical foundational step prior to the meter installation. We have also started the construction of the communication network in Eastern Massachusetts. I am pleased to report that following a successful system launch last week, we have begun the installation of the first AMI meters in Western Massachusetts. The transition to AMI meters for all Eversource Massachusetts electric customers is expected to take approximately three years to complete. We are very excited to bring AMI to Massachusetts. This initiative aims to bring transparency, efficiency, and reliability to energy distribution while empowering customers to make informed decisions about their energy consumption. Even more exciting is our key project, the Cambridge Underground substation, the first of its kind in the United States. Construction is moving ahead well since breaking ground earlier this year. Boston Properties, our partner on this project, is now advancing toward the final depth of approximately 105 feet. We are pleased that we can meet the growing needs that enable clean energy resources for Cambridge, a global center of innovation. The Eversource team behind our innovative Outer Cape battery energy storage was recognized for their work on the project by the Energy Systems Integration Group. This group is an independent not-for-profit organization that galvanizes the expertise of the technical community to support grid transformation in energy systems integration. Our system was recognized for its state-of-the-art nature and the seamless implementation of the first of its kind systems to improve reliability for customers. Since full commissioning in December of 2022, this system has been dispatched on several occasions, avoiding sustained outages for thousands of customers during storms and other unexpected events. Turning to a brief update on Revolution Wind on Slide 7. You may recall that in early May, Orsted announced that the project was approximately 75% complete. We expect Orsted to update the overall project status soon. The onshore substation construction, which Eversource oversees is progressing well. We expect the onshore substation construction to be substantially complete this month. The testing and commissioning process is underway, which will allow the substation to provide back feed power to the offshore facilities in early 2026. This construction progress significantly reduces the critical path risk for Eversource. Before we conclude today's call, I want to thank all of you, our employees, partners, and investors for your continued trust and support. This quarter's results reflect our team's unwavering commitment to operational excellence, customer service and long-term value creation. This quarter wasn't just about performance; it was about our over 10,000 employees working together every day to keep the lights on and provide superior customer service. From our line workers restoring power in the dock to our engineers designing the grid of tomorrow to customers and shareholders who trust us every day, we're proud to serve over 4 million customers across three states. As we look ahead, we remain focused on delivering safe, reliable, and sustainable energy while navigating an evolving regulatory and economic landscape. I will now turn the call over to John Moreira to discuss our financial results.

Thank you, Joe, and good morning, everyone. This morning, I will review second quarter earnings results, provide a regulatory update, and discuss our balance sheet and credit metrics progress. I'll start with our second quarter results on Slide 9. GAAP and recurring earnings results for the second quarter were $0.96 per share compared with GAAP and recurring earnings of $0.95 per share last year. Higher utility earnings were largely offset by a decrease in parent and other earnings. Looking at the quarter results, starting with transmission, higher electric transmission earnings of $0.02 per share were due to increased revenues from continued investments in the transmission system and lower interest expense, partially offset by the impact of share dilution. Next, we have higher electric distribution earnings of $0.02 per share that benefited from distribution rate increases in New Hampshire and Massachusetts providing cost recovery of infrastructure investments in our distribution system. These higher revenues were partially offset by higher property taxes, interest, depreciation, and the impact from share dilution. The improved results of $0.02 per share at Eversource's Natural Gas segment were due primarily to base distribution rate increases at both Massachusetts utilities, to also provide timely recovery of investments in our natural gas segment. These revenue increases were partially offset by higher O&M, interest, depreciation, property tax expenses, and the impact from share dilution. Water distribution earnings improved $0.02 per share year-over-year as a result of higher revenues and lower interest expense. Eversource parent losses increased $0.07 per share for the quarter. Lower results were as expected, primarily due to higher interest expense resulting from the absence of capitalized interest after the sale of our offshore wind business. Overall, our second quarter earnings were in line with our expectations, and we are pleased with this solid performance. Moving to our key regulatory items beginning with New Hampshire on Slide 10. On July 25, we received the order on the PSNH rate proceeding. We have proposed an increase of $103 million, which was amended from the original proposal of $182 million, primarily to exclude deferred storm costs, which will be considered by the commission in another docket. The audit approved a permanent rate increase of $100 million based on an ROE of 9.5% and a 50-50% capital structure. This increase includes the previously approved temporary rate increase of $61 million. The PUC also approved a new performance-based rate mechanism with a 4-year term that includes annual inflation adjustments and a 142 basis point adder. This rate order is effective as of today. We will continue to evaluate all of the components of the rate order to determine next steps. While not all components of our rate proposal were adopted, we are encouraged by this constructive rate outcome that was in line with our expectations. Moving to Slide 11. In Massachusetts, on November 1, new rates are expected to go into effect for NSTAR Gas under the annual PBR adjustment and a potential rate base rolling which are elements of our approved 10-year PBR plan for NSTAR Gas. In addition, EGMA will have a rate increase of approximately $62 million, also effective on November 1, reflecting the second phase of the 2024 rate base rolling. Moving to Connecticut, we have completed the discovery phase of the hearings of our Yankee Gas rate proceeding and have provided strong support for our system infrastructure investments and cost structure. We expect a final decision in this rate proceeding in October for rates to be effective November 1. As a reminder, this filing seeks to recover an adjusted revenue efficiency of approximately $190 million, reflecting the recovery of critical investments and cost increases since the previous rate review back in 2018. We also received a draft decision in the Connecticut PBR docket in July. While we appreciate PURA's work on advancing this important regulatory construct, we continue to have concerns with certain core components of this framework and are working with PURA and other stakeholders to ensure that we have alignment with the PBR structure that we can support. Next, let me reaffirm our 5-year capital plan of $24.2 billion, as shown on Slide 12, which reflects our 5-year utility infrastructure investments by segment. This plan reflects a 10% increase over the last 5-year plan. And as we've discussed previously, it only includes projects for which we have a clear line of sight from a regulatory perspective. Through June of 2025, we have executed on $2.2 billion of our $4.7 billion infrastructure investment plan. We are very pleased with this progress, and we are on track to meet our planned target for the year. We continue to see additional capital investment opportunities in the range of $1.5 billion to $2 billion within this 5-year forecast period. Turning to Slide 13. We remain highly focused on improving our cash flow position and strengthening our balance sheet condition. Our plan to enhance our cash flows is balanced by our equity needs of $1.2 billion, the majority of which is expected to be issued towards the back half of our 5-year forecast period. As I have stated before, we expect our FFO to debt ratios for 2025 to be approximately 100 basis points above the rating agency thresholds. In fact, our Moody's FFO to debt ratio as of the first quarter of this year of 11.5% reflects an improvement of over 200 basis points from December 31, 2024. In early September, we met with all three rating agencies and received positive feedback on our execution of cash flow enhancements. Moody's recently reaffirmed its ratings for both Eversource Energy and NSTAR Electric, which we were very pleased to see. Unfortunately, Moody's also announced a downgrade for Connecticut Light & Power to Baa1 from A3. Moody's cited the Connecticut regulatory environment as their reason for the downgrade. As we shared with you last quarter and as shown on Slide 14, we have executed on substantially all the items necessary to improve our cash flows and strengthen our balance sheet condition. As a result, our operating cash flows have continued to improve, increasing over $1 billion year-over-year through the first half of this year. We also see further opportunity for customer bill stabilization and balance sheet enhancement through Senate Bill 4 in Connecticut by establishing a legal foundation for the securitization of storm costs. This would certainly benefit our cash flow position and our balance sheet improvement efforts. As a reminder, our forecast did not assume securitization as the cost recovery for the Connecticut deferred storm costs. Staying with Connecticut, we recently supplemented our storm cost recovery filing with an additional $171 million of storm costs for the period of February 2023 through December of 2023. This brings the total balance of deferred storm costs currently with PURA for prudency review to $980 million. We continue to believe that all of the storm restoration costs we filed were prudently incurred and should be recovered from customers. It's important to note that we now have approximately 85% of the $2 billion of deferred storm cost balance being recovered in rates or in the prudency review process across all three states. Moving to Slide 15, I would like to share a progress update on debt maturities at the parent level and also cover our at-the-market equity issuance program. Our plan to retire $600 million of maturing payment debt during 2025 is progressing as planned, and we are prepared to manage the final maturity this month with existing resources, as shown on the slide. We anticipate no new long-term debt issuances this year at the parent company. During the second quarter, we issued approximately $200 million of equity under the ATM program. We will closely manage further issuances in the second half of the year as we monitor the status of the Aquarion transaction and our short-term commercial paper balances. Next, I will turn to 2025 earnings guidance as shown on Slide 16. With the first half of the year in the record books, we are reaffirming our 2025 recurring earnings per share in the range of $4.67 to $4.82, and our longer-term EPS growth rate of 5% to 7% off the 2024 EPS base. We remain confident in our EPS growth outlook, underpinned by the disciplined execution of our strategic plan. Our customer-focused investments in electric transmission and distribution that are supported by constructive regulatory mechanisms, ensuring timely cost recovery for the majority of our businesses. At the same time, ongoing progress on storm cost recovery and O&M cost discipline are expected to provide a solid foundation, positioning Eversource to provide consistent long-term value to our shareholders. I'll now turn the call back to Rima to begin our Q&A session.

Michelle, we're ready to begin our Q&A session.

Maybe just to start on the balance sheet. I appreciate the updates there. So the 11.5% FFO to debt at the end of 1Q, just can you walk us through kind of the confidence levels in hitting that 14% level by the end of the year and some of those drivers in addition to the asset sales, which, if I recall, was expected to add about 100 basis points to that ratio?

Carly, it's John. I'm very confident. The main factor that will boost our FFO to debt is the recovery of deferrals in rates. However, I don't anticipate a significant improvement in the second half of the year since we've already recovered the $900 million that was included in rates as of July 1 last year. We're on track. It's not only about public benefits; we also have cost recovery from deferrals, including the storms I mentioned in my formal remarks, as well as other regulatory assets coming into rates across different jurisdictions. In my formal remarks, I indicated that we will keep an eye on our progress regarding the regulatory approval for Aquarion. That alone is expected to add about 100 basis points. I'm confident that we'll reach the 13% target with the Aquarion closing towards the end of the year, contributing approximately 100 basis points to provide us with a nice cushion.

Got it. Great. And then just on Connecticut. You mentioned, obviously, the securitization of the storm cost was not in your base plan. So could you talk a little bit about how that potentially could impact the longer-term FFO to debt levels? And then just from a logistics perspective, how should we think about the timing to filing for that securitization and when that could ultimately have an impact on the balance sheet?

Sure. Let me start with your first question. Currently, we are not changing our $1.2 billion requirement. If everything else remains constant, that will definitely affect our financing needs. In about six months, we plan to do a complete refresh, and in February, we will provide an update on our revised equity needs. When we disclose our equity needs, we will consider the securitization aspects of those costs. Regarding your second question, we recently filed an additional $171 million in storm costs with PURA, bringing the total storm costs under prudency review to nearly $1 billion. This is a significant amount for the authority to review. Following this latest filing, PURA has updated their procedural schedule, which extends through March of next year for hearings and briefs. At this moment, we do not have a specific approval date for that review. However, once we receive the review—which is the critical part—we are ready to move forward with the securitization process, which we anticipate will take about 12 to 18 months to complete. Initially, we hoped to have that cash by the end of 2026, but with this new schedule, it now looks more like 2027.

I just wanted to kind of follow up with some of the points that we discussed there. I think the slides highlight the ending first quarter FFO to debt. I was just wondering if you could share updated metrics for the second quarter for Moody's and S&P and how you stand against those thresholds at this point?

For Moody's, we have a clear perspective. I can assure you that we will continue to make progress every quarter. This quarter alone, we've improved by over 200 basis points on a 12-month rolling basis, which is quite significant for just one quarter. I anticipate that this momentum will persist, and in the upcoming quarters, we expect to reach that 13%.

Got it. And I was just wondering if we could turn to New Hampshire a little bit here. If there's any other, I guess, process takeaways that you have from the outcome there and views, I guess, on settlements versus full litigation and how you think things progressed there?

Yes, Jeremy, I think it was fantastic. We have been in the rate arena since 2018, and every case we had before that was settled. I have spoken to many people, and we do not recall ever having a litigated case. This case was very good because it brought many issues to light. The regulatory environment is quite favorable. In such situations, you don't get everything you desire, but the outcome was constructive, fair, and transparent. We requested 103 after accounting for storms, and we received 100 with a return on equity of 9.5%. What I appreciate is that it was constructive not only with the commission but also with all parties involved. Going forward, I believe it serves as an example for other jurisdictions on how to handle rate cases professionally. We are pleased. We are reviewing the order and there are some aspects we might want to adjust, but overall, it is a positive order for both the customers and the company.

I would like to emphasize that we successfully established the PBR structure, which was significant for us, and we hope it remains in place. We are also very pleased that the revenue level from the rate case is quite supportive, serving as a solid foundation for future rate increases as we transition into our PBR environment.

One more on the balance sheet. So the ATM issuances of about $220 million during the quarter after where it was off during the first quarter. I know the commentary still shows the majority of equity towards the back half of the forecast period. So how should we think about that? What made you turn it on during the last quarter? And I know last year, you had that similar run rate of $1 billion over the year, about $250 million per quarter on average. So what should we expect going forward? And at a minimum, were you active in July?

Well, you'll see that when the third quarter happens, Jeremy. So obviously, in my formal remarks, I said, look, our equity needs for this year will be dictated by how the Aquarion approval progresses and what our short-term debt balances are. So we saw a window of opportunity in June, and we did that raise all in the month of June as a way to provide liquidity for us, which is very important to us. So I've said that time and time again, what we need for this year is going to be based on the timing of the Aquarion and our short-term balances. So once again, I think the guidance that I just reiterated still holds. Once we close Aquarion, I don't see the need to raise any equity for some time.

Okay. That's helpful. Then longer-term question on Connecticut. Between the legislative updates and the Connecticut court ruling, do you think you're positioned to redeploy some of the capital back into the state? In the past, you diverted some money away from Connecticut into other states, given the uncertainty. Do you think you're ready to reallocate? Or would you want to see some more constructive data points from the commission itself first?

We would like to see some more constructive data points coming out of the commission before we reassess our capital redeployment.

Okay. Do you think there's opportunity between now and the year-end update when you formally refresh the capital forecast? Or do you think it will take a little more time than that?

That's difficult to predict, but one of the events that we're watching very closely is what the outcome of the Yankee Gas case proceeding.

And we also have a reconsideration on AMI; if we get some clarity around that and some rules of the road that are fair to us, then that's also an opportunity as well.

Joe, I don't want to start off on a bad foot, but the last earnings call, I made a call that Knicks would beat the Celtics.

Yes. I know, you're good, you're good. I thought you were going to tell me happy 40th anniversary; today is my 40th anniversary at the company. I start my 41st year, Anthony. I mean, I thought you'd have something nice like that.

I worked at a utility, and people were very fortunate. Like, there's a lot of, like, you do a lot of different jobs. Like, your career really moves to different things. How many different jobs do you think you had over the 40 years?

Oh, it was heartbreaking. I had a start in customer service; I thought I was terrible. I wanted to be in communications, and look what happened. It was probably the best job I ever had starting in customer service because I end up going back and running it, and I've done everything. There's not really a job that I haven't done. So it's been a great, great run.

Well, congratulations; 40 years is very impressive. I just had some housekeeping questions in New Hampshire. What's the percentage breakout in rate base in New Hampshire? I think you guys have a decent amount of FERC regulated rate base there, just a percentage between, I guess, what's regulated by the New Hampshire regulators and what's regulated by FERC. And then just a follow-up, the equity layer on FERC assets in New Hampshire. Are they based on an actual equity ratio or what's set in rates, like a hypothetical structure?

Anthony, on the FERC side, the FERC side is based on a tariff for all of New England, and it's based on the actual.

Great. And then in New Hampshire, how much of if I think of PSNH, how much of that rate base is state-regulated versus FERC- regulated?

State-regulated is about $2.1 billion on the distribution side. And on the FERC side, subject to check, I think it's 1.7, 1.8, if my memory serves me correct. But I can double-check that.

That's great. Just sorry, go ahead.

No, I was just going to say Rima can follow up with you and confirm that for you.

Joe, I mean John, how many years do you have with Eversource or even the predecessor companies?

25, going on my 26th year. And I've had numerous jobs, Anthony, not as exciting as Joe, so.

I have a question regarding the equity needs in relation to the storm cost recovery in Connecticut. We're waiting on the outcome of the Aquarion sale, but I want to highlight that we will have lower equity needs. You mentioned there will be additional capital expenditures. If at least part of the $1.5 billion to $2 billion comes in, it would lead to additional equity needs, correct? Therefore, even with the Aquarion sale and securitization, it's unlikely that the total equity amount will decrease—there just won't be a significant increase in equity alongside the higher capital expenditures. Is this the correct way to view the situation?

I believe you're on the right track. As I mentioned earlier, in February, we will be conducting a refresh. There are various factors to consider, and by then, we will have a clearer understanding of the Aquarion transaction, which we hope will be finalized. Our guidance still indicates we aim to complete that transaction by the end of the year, and that is already factored into our plans. Regarding securitization, we will have more clarity on the timing and the amount by that time. Additionally, we will update our 5-year capital plan to include another year. We anticipate the potential for $1.5 billion to $2 billion in additions, a significant portion of which, as Joe pointed out, relates to AMI in Connecticut. We will be able to provide more clarity by the end of this year.

Okay. And then on the Yankee Gas rate case vis-a-vis SB4. So I mean, we obviously saw the comments from the Attorney General and Connecticut. You've been out of for quite, what is it, 7 years, right? Since the last rate case.

2018.

Yes. So, will the SB4 apply here? Do all the commissioners need to participate in the rate case? Is this more like a test case for how future rate cases in the state might proceed?

Yes. I think it's very unlikely they will see two more decisions before this one is resolved. Keep in mind, the Attorney General is an elected official, and a lot of what they do is related to messaging for different audiences. We have a good working relationship with the Attorney General, and we will continue to work hard on this case to achieve a fair decision, both for us and for our customers.

Yes. And, Angie, as I said in my formal remarks, the team did a phenomenal job in presenting the justification for the investments that we've made to maintain that system very safe and reliable for our customers. So we did an excellent job taking into account some of the issues that PURA had raised in other rate proceedings. So we put a very, very strong case in front of them. We knew we had to, and we did. And I'm very, very pleased with how that process has progressed.

I understand the plan is to sell the assets, but if this approach doesn't succeed, will you restart the sale process? If the commission doesn't approve the current transaction, will you retain the asset and address funding needs with additional equity?

Yes. I mean, I think that case is going very, very well. The hearings finished last week, and I don't see any challenges around that. I think it's highly unlikely that we don't see that approved. I think the team did a phenomenal job. And, keep in mind, you've got to keep in mind that the legislature and the governor enacted a law to allow this entity to buy that asset. So for that to shift or something to happen there is the likelihood is highly unlikely. If it does, obviously, we'll cross that bridge when it comes to it. But I'm very optimistic that, that transaction will close this year, and we'll be in great shape.

Congratulations on 40 years. Just one clarifying question. In terms of the Connecticut Courts clarification around prudency standards, can you maybe unpack that a little bit more in detail around the implications for your business and how that could impact whether it's an AMI decision or other decisions that would be coming before in the future?

We were very pleased with the court's decision, which reaffirmed the prudency standard as it currently exists in law. We particularly appreciated the clarification that the commission cannot use hindsight in the rate recovery process. This means that prudency must be determined at the time management makes the investment decision. Additionally, during the prudency review, which may occur several years later, it is not permissible to introduce new facts or circumstances that arose after that initial period. This was very encouraging for us.

Great. And does that have any implications for any AMI decision or any of the other upcoming decisions that would impact you?

Well, I think it will have a lot of effect on that because at the end of the day, we're making decisions based on the facts that are on the table today. And so if we pull the trigger and we decided to make the investment, it's not going to be something that two or three years from now that somebody is going to say, well, I think the rules have changed now and circumstances are different. So I think it has changed. I think it's improved. It's certainly improved my feeling around making that investment, that we wouldn't have to be concerned that the rules could change down the road. So I think very much so. I think it helps.

Good morning, Paul.

Hey, good morning. No, it is Paul and happy anniversary.

Oh, thank you, Paul. You're so thoughtful.

Yeah, I have been here for 40 years. That is a significant milestone. I hope to reach that age. I have two quick follow-up questions to clarify what I heard. Is the plan to not require any additional equity in 2025 after your proposal in June?

No, that's not what I said. I mentioned that we completed the $200 million raise, and we will keep an eye on our CP balances as well as the progress on the Aquarion to ensure we maintain a suitable level of liquidity. However, I don't expect that amount to be significant this year. Additionally, with the proceeds from the Aquarion expected later this year, I'm not anticipating a large amount of equity, if any, to be issued in 2026.

Could you describe some of the key factors influencing the second half of the year, particularly in light of the corporate negative of $0.34 in the first half and the positive driver at corporate in the third quarter? Overall, I would appreciate any insights on the building blocks for this period.

Sure, Paul. As I've mentioned in the past few quarters, interest costs are going to be a challenge, and I expect them to be an even greater challenge in the first half of 2025. This is due to the recent sale transactions, with part closing in July and the GIP sale on September 30, which is why the impact on the parent is somewhat higher than it would typically be. For the second half of the year, I don't foresee the interest component being as significant as it was in the first half. Additionally, the tax true-ups that we usually conduct occur in the third quarter, which may affect the parent. Regarding the utility side, I believe it will remain stable. I've provided guidance on the rate adjustments for the gas companies starting November 1, so that's essentially confirmed.

Well, thank you very much. Thanks, everybody, for joining us today on the call. We're very excited about the future, and we want to thank you for taking the time this morning, and enjoy the rest of the summer.