Eversource Energy (D/B/A)

Welcome to the Eversource Energy Q1 2020 results conference call. My name is Richard, and I'll be your operator for today's call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session. During the question-and-answer session, if you have a question, please press star, then 1 on your touchstone phone. Please note that this conference is being recorded. I'll now turn the call over to Jeffrey Kotkin, Vice President for Investor Relations for Eversource Energy. Mr. Kotkin, you may begin.

Thank you, Richard. Good morning and thank you for joining us today. I'm Jeff Kotkin, Eversource's Vice President for IR. During this call, we'll be referencing slides that we posted last night on our website. And as you can see on slide one, some of the statements made during this investor call may be forward-looking as defined within the meaning of the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. These forward-looking 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. These factors are set forth in the news release issued yesterday. Additional information about the various factors that may cause actual results to differ can be found in our annual report on Form 10-K for the year ended December 31st 2019. Additionally, our explanation of how and why we use certain non-GAAP measures and how those measures reconcile to GAAP results is contained within our news release and the slides we posted last night and in our most recent 10-K. Speaking today will be Phil Lembo, our Executive Vice President and CFO. Also joining us today are Joe Nolan, our Executive Vice President for Strategy and Customer and Corporate Relations, John Marrera, our treasurer and senior VP for finance and regulatory, and Jay Booth, our VP and controller. We are generally speaking from different locales this morning across Massachusetts and Connecticut. Now I will turn to slide two and turn over the call to Phil.

Thank you, Jeff. And we all hope that everyone on the phone is healthy and remains healthy and that your families also are safe and doing well. This morning, I'll review the results of the first quarter. I'll talk about our efforts to build and operate in our critical electric and natural gas and water infrastructure during this COVID-19 pandemic. I'll talk a little bit about the recent regulatory developments and finally provide you an update on our offshore wind investment partnership with Orsted. I'll start with slide two and our significant and comprehensive efforts to deal with the impact of the coronavirus. You know, our country and our region, I guess it's an understatement to say we're in the midst of an incredibly challenging period. And Evisource, as a provider of critical services for nearly half New England, is taking its responsibility to its customers and its employees extremely seriously. And as you know, Massachusetts and Connecticut are two of the states most impacted by the virus. More than 100,000 cases have been confirmed across those two states, and an additional 2,600 in New Hampshire. Our priorities at Eversource start with the health and safety of our employees, our customers, and our communities. We're closely following the guidance provided by the CDC. and local health authorities in our daily work activities. Although we are actively accomplishing all of our essential work, we have suspended certain less time-sensitive work, such as upgrades to our own work centers and offices, as well as some work interior to customers' locations for energy audits and alike. We've undertaken extensive efforts to expand our facility sanitizing efforts and have enhanced the availability of personal protective equipment, including face coverings and masks, so our employees can continue to maintain our energy systems in a safe manner. We took early and aggressive actions in accordance with our well-defined pandemic action plan, and we have continuously refined and adjusted our playbook as we've moved through the situation. Nearly all of our employees who normally work in an office setting are working remotely. a practice that's been in place since early March. Approximately 4,500 employees continue to work in the field to support the reliability and safety of our energy and water delivery systems. But significant changes have been made in their work patterns as well. They've been able to receive their daily work assignments without having to enter our buildings. Their line trucks and other vehicles are disinfected before and after every shift. Employees traveling in Eversource vehicles are now driving one person per vehicle, where we previously had a two-person. It's one person per vehicle. And when at the work site, maintaining a six-foot social distancing and face coverings when conditions require them. And those are all enforced as standard work practices. We've been very clear in our communications that if any employee feels ill, they should stay home. while also implementing temperature checking and other health screening before anyone enters our electric and gas control rooms. We were quick to initiate a quarantine process early on to isolate those who potentially were exposed to COVID-19 either at work or at home. We believe this has been a very positive, has resulted in very positive impacts on our ability to minimize the spread of the virus to others. To date, more than 400 employees have returned to work following their quarantine period and medical clearance. To date, we've had 30 employees who have been confirmed positive for COVID-19, and actually 18 of those are now back to work. We've successfully maintained our high level of service and safety and also kept up with the necessary pace to achieve our capital investment work program for the year. I'll talk more about this in a minute. When we have experienced significant weather events, we were able to deal with them safely, promptly, and effectively. A mid-March heavy, wet snowstorm resulted in more than 56,000 New Hampshire customers losing power. But crews from all three states responded and restored power within 24 hours. Also, an intense nor'easter battered our service territory and many others on April 13th, but we were able to restore power to nearly all of the 240,000 impacted customers within the first 24 hours after the storm hit. There are many other areas where we changed our traditional practices to accomplish key work during the pandemic threat. We've moved all electronic permission gathering programs for our annual treat clearance program in Connecticut. We held our first virtual annual meeting yesterday. Above all, we continue to execute our business plans and strategies successfully. As shown on slide three, our total return through the first four months of the year compares very favorably to our peers and to the broader market. This follows our very strong performance in 2019 and the three-year, five-year, ten-year total returns that far outpace both the EEI index and the S&P 500. In this period of uncertainty, our business model resonates very well. Well over 90% of our business is revenue decoupled. We have pension recovery trackers for our FERC transmission and Massachusetts distribution businesses. Much of our capital improvement program is tracked, and we are operating under multi-year rate plans for our three largest distribution franchises. Additionally, under existing approved mechanisms, we recover all bad debt associated with power supply or medical or financial hardship accounts. We continue to receive strong support from our customers, regulators, and policymakers in the face of this unprecedented challenge. Last week, Connecticut regulators issued an interim decision that call for utilities to offer payment programs during the COVID-19 crisis that are available to any customer requesting financial assistance, requiring no initial down payment and have a duration of 24 months, and waive any fees or interest in calculation of the monthly payment amount, essentially what we've already been doing. Recognizing the possible increase in utilities' receivable balances and bad debt expense The Connecticut PURE directed utilities to maintain a detailed record of these costs incurred and revenues lost as a result of implementing its orders and said it will allow utilities to establish a regulatory asset to track incurred costs. These costs will include working capital costs, which will be calculated in accordance with the utility's most recent rate case. However, as you can see on slide four, there have been some impacts on our regulatory dockets. In New Hampshire, the electric rate schedule has been delayed. We were originally scheduled to receive a final order in May and implement permanent rates on July 1st, 2020. But the governor's executive order in late April now provides the New Hampshire PUC additional time or up until November to issue a final decision in our first general rate case in a decade in New Hampshire. As you may recall, that public service in New Hampshire implemented a temporary $28 million rate increase effective July 1st of 2019. That increase will remain in effect until permanent rates are set at the end of this case. And any difference between the temporary rates and the permanent rates will be reconciled back to that July timeframe. So the delay will not affect the earnings over the long term. In Massachusetts, we agreed to a one-month delay in our NSTAR gas rate case. So a decision is now expected at the end of October 2020 with rates effective on November 1st. Since the transaction for Columbia Gas was announced shortly after our year-end earnings call, we've not had the opportunity to review it with many of you on this call. The key elements of our deal are reflected on slide five. We are acquiring the assets of Columbia Gas of Massachusetts, not any of the liabilities associated with the tragic September 2018 incident in the Merrimack Valley. We'll pay $1.1 billion for the net assets and assume none of the company's debt. The $1.1 billion is one-times rate base. The transaction has received extensive support within Massachusetts, and we are highly confident it will close. We believe the transaction is an excellent one for customers, as Columbia Gas customers will now become part of a larger, well-respected local owner. We expect the transaction to be immediately creative and continue to be creative over the coming years as we complete our integration and transition to our, excuse me, transition to our operating systems at Eversource, as well as making needed investments in the infrastructure to provide safe and reliable service. We expect to file the application with the Massachusetts Department of Public Utilities shortly. We filed in March with the U.S. Justice Department for review under the Hart-Scott-Rodino Act, and the 30-day waiting period expired a couple of weeks ago. We expect to finance the $1.1 billion initially with a combination of debt and equity issued at Eversource parent. The percentage or the ratio of that financing will be roughly equivalent to the capitalization ratio on Eversource as a whole. The precise timing and size of the equity and debt will depend on market conditions as we go forward. Over time, we expect the new gas company to issue its own debt most likely in the private market, the same way that Instar Gas or Yankee Gas currently raise long-term debt capital. Turning from Columbia Gas to slide six, we raised approximately $1.2 billion of cash in the first quarter. We sold $350 million of 30-year notes at Eversource Parrot and $400 million of of green bonds at NSTAR Electric. Additionally, we closed out the forward element of last year's $1.3 billion block equity deal. We did that in late March, bringing in an additional $420 million in cash. And today, just today, we're closing on $190 million first mortgage bond offering at NSTAR Gas. The new issuance will help repay short-term debt that was incurred when 125 million, 4.46% NSTAR gas bond matured in January. And the new issuance was at very attractive rates versus that 4.46. Our cash position is further enhanced by the fact that we have only 25 million of maturities remaining over the balance of the year 2020. Eversource and NSTAR Electric continue to meet their daily liquidity needs very effectively in the commercial paper market. Although borrowing rates increased late in the first quarter, rates today are well below those average first quarter levels, which bodes well for our short-term debt interest expense going forward. Our capital program remains on track for the year. As you can see in a slide in the appendix, we continue to project capital investment of approximately $3 billion in 2020. In large part, because of the very mild winter weather, we had a very strong start for the year, with reliability enhancements and system improvements totaling $600 million in the first quarter of 2020, compared with about $550 million in the same period of 2019. Due to the critical nature of our infrastructure and regulated investments, we have continued to work safely and effectively throughout the stay-at-home requirements in place over our three states. You know, regulators recognize that some long-term initiatives will need to move forward to ensure that we have a grid capable of serving our customers' increasingly sophisticated needs. A new three-year grid modernization work plan for 2021 through 2023 will be filed in Massachusetts this summer. Just yesterday, in Connecticut, Connecticut regulators issued an order requesting proposals on program designs for a number of initiatives related to grid modernization. They include such topics as advanced metering infrastructure, energy storage, and zero-emission vehicles. Proposals are due by the end of July, July 31st. We have included Massachusetts grid modernization expenditures in our five-year forecast, but we have not included grid modernization work in Connecticut in that forecast. So now I'll turn to first quarter results. And that's on slide seven. We earned $1.02 per share in the first quarter of 2020, excluding a penny per share of expense related to our acquisition of the assets of Columbia Gas of Massachusetts. In all segments, the higher share counts partially diluted the benefits of higher net income. In total, the share dilution for the quarter was $0.04. In each segment, let's go through that. Earnings for our electric distribution segment were $0.39 per share compared with earnings of $0.38 per share in the first quarter of 2019. The increase is primarily related to higher distribution revenues partially offset by dilution and higher depreciation, interest, and property tax expense. The transmission segment earnings rose to 38 cents per share in the first quarter of 2020 from 37 cents in 2019. The higher earnings primarily reflect an increased level of investment in our transmission facilities. Earnings from our natural gas segment totaled 25 cents per share in the first quarter of 2020, compared with 24 cents per share in the first quarter of 2019. High distribution revenues were partially offset by higher O&M and higher depreciation expense. Earnings in our water business were $2.1 million in the first quarter of 2020, up from $0.9 million in the first quarter of 2019. Improved results were due to higher revenues from capital tracking mechanisms and lower depreciation expense in Connecticut. A smaller first quarter loss at Eversource parents of one cent per share in 2020, and that's exclusive of the acquisition charge, compares to a loss of two cents per share in the first quarter of 19. And this was due in part to lower interest expense. As you saw in our news release in slide eight, we continue to project earnings per share in 2020 of $3.60 to $3.70 and we continue to foresee earnings growth through 2024 around the middle of our 5% to 7% range based on our regulated core business. Earnings from offshore wind and Columbia Gas of Massachusetts would be incremental to our long-term guidance. Turning to offshore wind in slide 9, there have been a few developments since our year-end call in February. On March 13th, We filed our construction and operations plan, or COP, with the Bureau of Ocean Energy Management for the 704 megawatt Revolution Wind Project. So BOEM's review of that project has begun. We expect to have a full schedule for that review later this year. We have not yet received the new schedule from BOEM on its review of the 130 megawatt South Fork project. The COP on that was filed back in 2018, but the process was paused last year so that we could update the project for our new one nautical mile by one nautical mile configuration. We expect the new schedule to be posted by mid-year. Additionally, Due to travel and meeting restrictions stemming from the COVID-19 pandemic, the administrative law judge overseeing the New York Public Service Commission review of South Fork has extended the near-term schedule, adding another 10 weeks until the state hearings can begin. As a result, intervener testimony will be due in early August, and hearings are now to commence at the end of September. As a result of these items, And as Orsted said on its call last week, these delays will make it very unlikely that the South Fork project will enter commercial operation by the end of 2020. We continue to have a target filing date on our COP for sunrise wind with BOEM in the second half of this year. That timetable may be affected by New York's current restrictions on both onshore and offshore survey work. We expect to have more insight into the timing of that COP filing and the schedule for sunrise by late this summer. Despite these near-term scheduling headwinds, we remain strongly convinced that the opportunities in offshore wind off the northeast coast are excellent, with 15,000 megawatts likely to be built over the coming years to supply the significant clean energy needs of New England and New York. Our partnership with Orsted has won more than 1,700 megawatts of offshore wind contracts across the region. As any future RFPs are issued, we will continue to evaluate those opportunities and will exhibit the same financial discipline we've demonstrated time and time again for many, many years. We continue to view offshore wind initiatives as a unique and very positive opportunity to provide clean energy and significant economic development stimulus to the region, while providing investors with a very attractive long-term earnings and cash flow benefit. Let me emphasize that the earnings from offshore wind are incremental to the 5 to 7 percent EPS CAGR that we expect on our existing regulated business. Our regulated business model works because of the constructive regulatory environment we operate within and consistently high levels of execution we've achieved. This model is particularly attractive in uncertain times, such as where we are today. I want to emphasize that a critical factor in our success over the past decade has been providing excellent service to our 4 million customers. This is accomplished by having a tremendous team of 8,300 employees who have a singular focus on providing safe and reliable service to our customers and addressing the energy policy imperatives of our region. I'm very proud. I'm very proud of the early aggressive actions we took as a company over the past several months to protect employees, customers, and our communities. I'm very grateful for the dedication, innovation, and passion our employees have demonstrated as they have continued to work safely and effectively to execute our essential work on behalf of our 4 million customers. And as if the pandemic wasn't enough, they've also been called upon to respond very quickly to two significant storm events that blew throughout three states over the last few weeks. And although the pandemic situation remains uncertain, Eversource is very well positioned to be successful. We remain committed to the care and safety of our employees, our customers, and communities while we continue to execute the essential services that our customers expect. Most importantly, I wish all of our listeners today and their families a safe and healthy spring, and I look forward to coming out at the backside of this pandemic as soon as practical and seeing you all again. Thanks again for your time. I'll turn the call back over to Jeff for Q&A.

And I'm going to turn the call over to Richard just to remind you how to enter questions. Richard?

Thank you. We will now begin the question and answer session. If you have a question, please press star then 1 on your touchtone phone. If you wish to be removed from the queue, please press the pound sign or the hash key. If you're using a speaker phone, you may need to pick up the handset first before pressing the numbers. Once again, if you have a question, please press star then 1 on your touchtone phone. And we're standing by for questions.

Thank you, Richard. Our first question this morning is from Char Perez from Guggenheim. Good morning, Char.

Hey, it's actually Cody Clark on for Char. Good morning. Hey, Cody.

Good morning.

So first on the offshore wind solicitation in New York, is that still on track for the second half of this year? Has it seen any headwinds given the COVID situation?

I think that's the expectation that's out there, although no official schedule has come out. But I think that the direction is clear that that's where the state would like to go. But final dates haven't been established yet.

Got it. Thank you. And then could you give some color on how you're thinking about any water deals outside of New England? Are you seeing an increase in opportunities given the current macro backdrop?

I think the current macro backdrop really emphasizes the importance of, to me, the issue of size and scale and the ability of a company to have the financial capabilities for its liquidity, for it's able to access capital markets, its ability to respond to storms when you have a pandemic going on. So certainly there may be some smaller entities that are out there that may find that it's difficult to move forward in a world like that where there's uncertainty. So there could be opportunities there. Going forward, there's nothing that is in front of us at this moment. But I can assure you that the water business is a business that we like. The water business is one that we see as very synergistic to our electric and gas businesses. And it's one that we think that we can operate very effectively going forward. And whatever comes in front of us will be disciplined about whatever financial characteristics are associated with a deal like that, as well as making sure that there's benefits for customers. So nothing in front of us right now, but given the situation itself, you could see some smaller companies look for a way out.

Great. Thanks so much. Congrats on the quarter, and stay safe.

Thank you. You too. Thanks, Cody. Next question this morning is from Sophie Karp from KeyBank. Good morning, Sophie.

Good morning, guys. Congrats on the quarter. Thanks for taking the question. Thank you, Sophie.

I hope you will.

Yeah, I was just curious if you could comment on the volume trends, even though you decoupled, but just to get a sense of kind of what you've seen in the service sector as far as the economic hurt that's been experienced by the right players.

In terms of sales volume trend, is that your question, Sophie?

Yeah.

Yes. So I will say that sales in the first quarter were down, you know, both – You know, you'll see that on the electric side, you know, they were down close to 6%. And on the gas side, you know, nearly 14%. You know, and I'd say 95% of those numbers are due to the incredibly mild weather we had in the first quarter. Nothing to do with real COVID impacts. You know, we really were only a couple of weeks into COVID in the first quarter. I mean, in the weather in the first quarter in our service territory, you know, was the heating degree days were the lowest in 50 years. That's 5-0. They were about 18 or 19% below the previous year and below normal. You know, we have the warmest January in 90 years. You know, there's probably 100 different statistics that can, you know. So, one benefit, as I mentioned, was it enabled us to – to execute very well on our capital plan, but it didn't do much for us in terms of sales. So that's really what we've seen there. I will say, you know, kind of, you know, going forward, April was actually pretty cool here in our region. So in a strange way, you know, even though it's a shoulder month, I would expect, you know, maybe our gas business sales to be up in April despite COVID. I do think what you're going to see is, you know, a downward trend or downward pressure on the commercial sales. But where everybody's working at home, you know, probably some upside benefit on the residential sales in the electric business. But as you suggest, you know, folks should keep in mind that well, you know, above 90% of our revenues are not associated with sales that decouple. And so we have, you know, on the distribution side and certainly the transmission revenues are not associated with sales volume. So from a regulatory protection and program standpoint, we're in, you know, good shape, but the trends are as I described.

Great. Thank you. Helpful color. And then on NSTAR rate case, I'm just curious if it's been delayed by a month, right? Is that important for you as far as guidance and your projections that you have those rates in place before the winter season begins? Or is that not sort of material enough for guidance? How should we think about that in case there are future delays?

Yeah, it's not material enough. I mean, we expect that the new rates will be in place. As I mentioned, that there is just a one month delay, and we're optimistic that we'll be hitting that target so well ahead of the winter heating season. And really, the winter heating season is just getting started at the end of the year. We're expecting the order to come out as we've described with a one-month delay, but if it didn't, we don't see that as being a material to the guidance.

Got it. Terrific. Thank you. This is all for me.

Great. Thank you, Sophie. Next question is from Mike Weinstein from Credit Suisse. Good morning, Mike.

Hi. Good morning, guys. Hi. Good morning. I just wanted to confirm, you know, my understanding is that offshore wind, even if there are delays, right, that your guidance, your long-term guidance growth rate is not affected by that, right? You know, the offshore wind has always been additive and incremental, and the long-term guidance for EPS growth is really based on just the utilities in isolation.

That is correct, Mike. Yes, your understanding is absolutely correct. The 5% to 7% and being in the middle of that range is from our core regulated business offshore wind would be incremental to that.

Is there any impact on financing plans? I think you've already issued all the equity in the five-year plan, right? So is there any impact at all on financing plans from any potential delays in projects?

No, if I heard you correctly, I think you may have said we've issued all of the equity from our long-term projections. We talked about issuing $2 billion of equity last year. We issued 1.3, so we still had some equity left over to issue during the remainder of our long-term plan. So, you know, we'll be opportunistic about that and do that when the spending, you know, dictates. So if we're not spending the money, you know, that's going to make an impact of the timing of when we do any kind of financing.

What's left? Is it the ATM's left, the ATM portion of equity?

Yeah, we said that the 1.3 was the only block equity per se in our forecast. But I do want to be clear that, you know, subsequent to that guidance, we did announce the acquisition of Columbia Gas, and we will do equity and debt associated with that transaction.

Right. And that timing is this year, right?

Yeah, that timing, you know, depends on the market conditions. But, yes, this year we're expecting to close on that transaction later on in the third quarter of 2020.

Got it. You know, have you gotten any sense as to any potential changes to grid monetization priorities as a result of COVID? You know, that, you know, I understand the dockets are going on right now. You know, the one in Connecticut is ongoing. But is there any... Any sense of maybe that priorities might be different currently as a result of the crisis that we're all going through?

No, you know, my personal sense there would be that programs that emphasize social distancing and technology would be even more of value to a customer and to the grid. You know, so that, you know, what fits into there could be AMI, obviously, that, you know, there's nobody out there even driving around or, you know, you've got much more visibility of the system to its furthest reaches with an AMI-oriented system. You know, that certainly would be a way to, you know, improve, I guess, our social distancing. But I don't – there's nothing – There's no dramatic changes at this point in terms of the focus on grid mud. AMI has been part of the discussion anyway in Connecticut. And as I mentioned, you know, Connecticut is moving forward, and we should see some program designs and proposals by the end of, you know, the end of July timeframe.

All right. Okay. Thank you very much.

Thanks, Mike. Next question is from Caroline Bone from Evercore. Good morning, Caroline.

Good morning, guys, and thanks for taking my question. And I also just wanted to say thanks to all of your employees for all of their hard work right now. We're all really grateful.

Thank you, Caroline. That's very nice of you.

So my first question is really on Columbia Gas. I was wondering if you could comment on what sort of spending you're anticipating going forward on these assets. And apologies if I missed this earlier in the call. I just want to get a sense of how that impacts your long-term capital plan.

Well, as I said, Columbia is really not in our guidance at this point. So as we move through the approval process to closing, then we'll include that in our plans going forward. But I would say if you just look at what we spend in the gas business on the Yankee gas or in Massachusetts already on NSTAR gas, the capital spending programs are somewhat higher than they are currently at Columbia. So I would expect once we you know, get through our process and all the integration efforts and we put everything all down on paper, that you're likely to see some higher capital spending requirements on that system than has currently, you know, historically existed. You know, the other side of it is, you know, as we look at integration efforts, You know, we could, we'll be incorporating some of the, I'd say, corporate service activities into Eversource so that, you know, there could be some savings there. But, you know, I would expect on the capital side that the plans would be increasing from the previous plans that, you know, on a normal run basis of Columbia that they've had in the past.

Okay. Okay, that's very helpful. And then my other question is just, you know, do you guys expect these potential delays of the larger offshore wind projects to impact capital costs, or is it really too early to say at this point?

I'm sorry, Caroline, I didn't catch that.

Oh, on the offshore wind, the sunrise, you know, that might be delayed. Do you expect that to impact the capital costs for that project?

I didn't talk about sunrise. I will say that self work. And I may I may have said 2020.

I'm not sure, but oh yeah, no I. OK, sorry I thought like I said the on the slide it kind of implied that sunrise might you know could be delayed as well.

We have we're going to file the. The cop you know in the second half of this year and then a schedule will come out so you know that those schedules are not Dates are not changing. It's a self-work where the commercial operation date we had expected to be the end of 2022 that, you know, given the COVID situation, et cetera, it's unlikely that that will happen at the end of 2022, but no change in the other dates at this time.

Oh, got it. Okay. That's helpful. That's it for me. Thanks so much, guys.

Thanks, Caroline.

Appreciate it. Next question is from Julian from Bank of America. Good morning, Julian.

Hi, good morning. It's Alex Morgan calling in.

Hey, Alex. Thanks so much for taking my question.

Hey, congrats on the results.

Thank you.

My first question is about Connecticut AMI. I know you spent a little bit of time talking about it with the prepared remarks. I was wondering if you could potentially take it a little step further and talk about what the potential timeline on this could be and maybe your expectation on the size of the first six of the RFPs.

What we've said in terms of AMI has been that a full rollout of AMI in Connecticut and Massachusetts is about a billion dollars and And that's electric and gas. And we have about the same amount of customers in each state. So even if you assume that that's a 50-50 split on that. So it's a program that would be a significant improvement in terms of visibility for the grid. It would be a significant opportunity for us to better able to manage the distributed energy resources on the grid. and it would be, I think, a customer satisfier. And it is part of the, as you point out, of the ongoing discussions, probably ahead in Connecticut than where it is in Massachusetts right now, although Massachusetts will likely take up something to do with AMI in the near term. So in Connecticut, I can't give you any more specific than that other than You know it is on the agenda. You know plans are being formulated and being filed in those first areas of interest. You know, for the Connecticut regulator, which are really, you know, advanced metering infrastructure is one of the one of the items so that along with energy storage and electric vehicles. So I think you'll start to see more unfold on that as we get through the summer and into the year.

OK, and my second and last question is just a little more detail on the South Fork offshore wind project. I was wondering if you could talk through maybe some of the almost pros and cons of the project potentially being delayed because of COVID and BOEM. My expectation on the positive side would be you could share vessel CapEx with potentially Revolution Wind, But on the negative side, I was wondering how that might impact your contract details with LIPA and if there's any ability for that price to be renegotiated or revisited. And that's it for me. Thank you so much.

Thank you. Thank you for those questions. As you suggest, in terms of their sharing vessel plans and vessel capex could be a potential benefit. Also, larger turbine sizes as we move forward could be a potential benefit. That would require less poles to be erected in the ocean, so there could be some benefits there. The contract terms that we have on all of our offshore wind contracts allow us, you know, some time to, you know, because of delays that are caused outside of our control, like at BOEM or, you know, and in this case, you've got a pandemic adding to it. So, we feel very comfortable with the provisions that are in the contract that would enable us to, you know, move the dates in a way such that we can still deliver the power according to the terms of the contract, and we could see some benefits, as you point out.

All right. Thank you so much. Thanks, Alex. Next question this morning is from Neil Calton from Wells Fargo. Good morning, Neil.

Good morning. Thanks. Two quick questions on offshore. First, I have it in my notes that the plan to make about 3 to 400 million in investment this year in offshore. Is that correct? And then should we think about that as being substantially shifted out given the delays? And then second, any further thoughts about involvement in future offshore lease auctions going forward?

Thanks for those questions, Neil, and I hope you're doing well. You're right that in our disclosures and in the 10K, we talked about our capital program, and then we also included some guidance that talked about $300 million to $400 million on offshore wind. Certainly, if some of those costs, I would expect, would get shifted out of this year into subsequent years. Either you could see us be at the lower end of that range at a minimum and maybe potentially under the low end of that range. But those details would be worked out once we move a little more forward during the course of the year. In terms of future auctions, as you know, there were auctions a year or so ago. that other bidders paid a significant amount of money to acquire above a price that we in Orsted felt was appropriate. So certainly in New England, or if there are additional opportunities within those New England lease areas, we would certainly take a look at it. But again, I can't emphasize enough that we would use the same financial discipline that we've always demonstrated in terms of our bidding for those.

So just a quick follow-up. So you said New England. Would you look at New York or no?

Right now we're focused on the New England leases, Neil.

All right. Thank you.

All right. Thanks, Neil. Our next question is from Paul Patterson from Glenrock. Good morning, Paul.

Good morning. Good morning. Good to hear things are going well for you guys. A lot of questions have been answered. If you could give a little bit more flavor on the bill payment experience you guys have seen in the last month or so in terms of your customers and if there's any regional or any significant difference between the types of utilities and how people are paying their bills or not.

Sure, Paul. Again, I hope you're doing well. I'd say I feel very good about the regulatory constructs that we have in place in terms of delinquent accounts or delays or bad debts, as you might want to call it. We have already in place mechanisms for hardship cases of people who fit different medical or income oriented criteria already fall into kind of these hardship receivable categories. So across Massachusetts and Connecticut, we have abilities already in place sort of pre-COVID to collect on these. So we feel good about that. And as I mentioned, we've had recently in Connecticut an order coming out that would indicate, you know, We should collect all the costs and defer them for future recovery for, you know, incremental costs associated with COVID. And we have done some filings in Massachusetts and New Hampshire with sort of similar information in them. So I feel good about the regulatory mechanisms that we have in place. So I do think that each company across the country probably has, you know, differences, and I feel very good about what we have in place. In terms of our experience, you know, I'd say that it's still a little early to tell, but, you know, we have implemented these long-term rate repayment plans. As I mentioned, in Connecticut, now those plans can go for 24 months, but we've set up, you know, we're not charging late fees, we're not shutting customers off, and we're allowing them to be on flexible payment plans. We have not seen a significant reduction in customer payments. You know, our customers are, you know, doing a good job in terms of, you know, paying the bills that are sent out. So we haven't seen a significant deterioration, you know, at least over the last month or so.

Answered. So thanks again. Have a great one.

All right, Paul. Thank you. Next question is from Travis Miller from Morningstar. Good morning, Travis.

Hi.

How are you? Good. How are you?

We're good. Thank you. I was wondering on that Columbia acquisition, how do you think about financing that $1.1 billion up at the parent level? I know you'll keep the utility structure the same, but how do you think about that at the parent level?

Good morning, Travis. I hope you're doing well. Thank you for your question. How we think about it is to finance the $1.1 billion sort of in line with what the Eversource capital structure is, so a combination of debt and equity would be issued there. Going forward, as I mentioned, that the issuances going forward at that entity would likely be in the private market for debt, similar to how we finance the gas companies now under the Eversource family. So initially, the financing would be at the parent, but just like all of our other franchises, they do their own sort of debt financings, and they get their equity capital from the parent. So this will ultimately be no different.

Okay. Okay. And then just to be clear on that equity side, so that $2 billion plan obviously didn't include the Columbia potential equity financing, right?

That's correct.

So you'd have the Columbia acquisition equity financing plus that kind of $700 million and then plus anything that you'd want to do on the equity side for the offshore winds whenever material amounts of cash gets spent end of this year or next year. Is that the way I'm thinking about it correctly?

I think you've added one too many pluses in there. So let me clarify that the only thing in our plan is the remainder of the $700 million from the original $2 billion of equity that we announced last year. We executed $1.3 billion of that. We have $700 million And so that's the base plan. And then with the acquisition of Columbia, that would be kind of a 60-40-ish. That's sort of the capital structure now, 60% debt, 40% equity. Let's call it 45-55 is probably the better, more precise information, 55% debt, 45% equity. We're looking to finance the acquisition of Columbia along those lines. But that's it.

Okay. Okay. And then offshore winds, you'd be able to fund out of cash flow to the extent that you had any kind of cash on that later this year or early next year?

Yes. It would finance that in our current forecast period. That's correct.

Okay. Okay. Great. Just one quick technical question. On the revenue decoupling you have, is there a difference when you think about and go back to regulators in terms of weather versus COVID-19 impacts? Do those fit in two different buckets in terms of decoupling, or is it just full demand decoupling?

There's no difference in the buckets. It could be for any reason, economic, weather, or otherwise. So it's full Okay.

Great. Appreciate it.

Thank you.

Thank you, Travis.

Thanks, Travis. Next question is from Andrew Weisel from Scotia. Good morning, Andrew.

Hey, good morning, everyone. Good morning. Just want to clarify some of the stuff you just talked about there. If I remember correctly, the offshore financing plan was, you know, I'm going to paraphrase here, but the idea was since you kind of had one project coming online each year, the cash flows from revenues from the first would finance the second, and that would sort of trickle forward. My question is, if South Fork is delayed, you know, who knows by how long, is there any kind of a short-term bridge issue where you'll need cash to finance Revolution Winds Construction before South Fork is actually generating revenues?

No, that's not anticipated. If you recall, you know, South Fork is a fairly – small in size project, it's, you know, 130-ish megawatts versus Revolution Wind being 700 and Sunrise, you know, 880. So, you know, the South Fork project is really sort of the smaller of the cash requirements and smaller of the cash receipts also. So, no, we don't see any bridge issue there.

Okay, great. Then next on the you got the slide showing progress on major transmission projects. Slide 12. The Eastern Massachusetts completion date moved forward by a couple of years to 2023 and some some smaller delays for a couple of the other ones. Can you just talk about, you know, mostly the Eastern Massachusetts one, but also the other ones and what drove those pushing out of the completion dates?

Sure, I'd say, you know, with any of our transmission projects or any, you know, there's citing things, there's applications that get moved, there's hearings that switch around. I think that you shouldn't read too much into it other than in the Eastern Mass, we had a whole bundle of, you know, projects, you know, about 29 of them, right? So 22 of them or so are are done and we have some under construction. In one of those projects, there's been some delay in terms of getting started on the schedule that we want to be on. So it's the normal give and take that you go through in terms of the siting process in the towns and getting the permits and whatnot. So nothing major there. you know, sometimes projects get delayed and then we move other projects forward. So we don't anticipate any significant impact on our transmission plan as a result.

OK, thank you very much and I appreciate all the detail on the downside protection. It's a good time to have all those tools.

Yes, thank you Andrew and stay well.

Thanks Andrew. There are no more questions in the queue, so we want to thank you so much for joining us this morning. And if you have any follow-ups on this busy day, please send me an email. Take care and be safe. Thank you all.

And thank you, ladies and gentlemen. This concludes today's conference. Thank you for participating. You may now disconnect.