Eversource Energy (D/B/A)

Good morning and welcome to the Eversource Energy fourth quarter and year end 2020 results conference. My name is Brandon and I'll be our operator for today. At this time, all participants are in a listen-only mode. Later, we will conduct a question and answer session during which you may dial star 1 if you have a question. Please note this conference is being recorded and I will now turn it over to Jeffrey Kotkin. You may begin, sir.

Thank you, Brandon. Good morning, and thank you for joining us. I'm Jeff Kotkin, Eversource Energy's Vice President for Investor Relations. 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 31, 2019, and our Form 10-Q for the three months ended September 30, 2020. 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 Jim Judge, our Chairman, President, and CEO, and Phil Lembo, our Executive Vice President and CFO. Also joining us today are Werner Schweiger, our EVP and Chief Operating Officer, Joe Nolan, our EVP 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. Now I will turn the slide to and turn over the call to Jim.

Thank you, Jeff, and thank you, everyone, for joining us today for our review of 2020 results and our updated long-term outlook. First, let me say I hope that all is well with you and your families after what's been a challenging year for everyone. I'll start my comments by thanking more than 9,000 Eversource Energy colleagues for their exceedingly hard work and extraordinarily difficult circumstances in 2020. Not only did they have to deal with the first pandemic to strike the country in more than a century, but they also had to address the highest level of storm activity ever for our company, as well as the hottest summer on record in large parts of our service territory. Through it all, they worked safely and professionally, keeping their fellow workers and our customers first in mind. As you can see in slide four, despite 107 major and minor storms that struck our service territory in 2020, We successfully executed our $3 billion capital program. These expenditures are critical to enhance the resilience of our energy and water delivery systems, as well as to connect new customers and to support state clean energy initiatives. 2020 was also a year during which we advanced a number of our strategic initiatives. At the end of February, we executed an agreement with NYSOS to buy its Columbia Gas of Massachusetts assets. And we closed on that acquisition in early October, just seven months later. The acquisition added about 5% to our regulated business, and it's been extremely well received by state policymakers and by the more than 330,000 customers that Eversource Gas Company of Massachusetts now serves. We continue to expect the transaction to be accretive in 2021. It's progressively more accretive in the years ahead. as we steadily increase our level of investment in the Eversource gas system. Phil will profile some of these investments shortly. Over the past 12 months, we've also moved ahead on the permitting of our three offshore wind projects, and we are developing strategies to meet our industry-leading target of achieving carbon neutrality by 2030. On the financial side, we achieved balanced outcomes in rate cases affecting our two operating companies that have struggled in recent years to earn their allowed returns. And we also maintained our track record, dating back to the 2012 merger that created Eversource, of posting attractive earnings and dividend growth. Turning to slide five, you can see some of the very solid operating metrics that we achieved in 2020. Despite the unprecedented challenges of COVID and incessant storm activity, I am extremely proud of the operating record our employees achieved on behalf of our customers. Slide six illustrates what we're able to achieve on behalf of our shareholders. 2020 was far from the best year for utilities, as you know, but we were able to achieve a 4.5% total return for our shareholders, keeping us in the top tier of our EEI peers in the short, medium, and long-term. Medium and longer-term returns also compare favorably to the S&P 500. A key element in achieving that long-term return record is our steady and attractive dividend growth. As you can see on slide seven, last week, the Eversource Board increased the quarterly dividend by approximately 6.2 percent. You can also see that our payout ratio remains at about 62 percent a relatively conservative level that allows about $500 million of our earnings to be invested in our delivery systems each year. We continue to target dividend growth to be in line with earnings growth, which continued in 2020 at a roughly 6 percent pace. As you can see on slide eight, we expect that growth rate to be enhanced in the coming years by our Eversource gas acquisition and our offshore wind investments. The math associated with the acquisition is quite straightforward. Adding Eversource gas increased our total regulated rate base by about 5%. And to finance it, we only added about 1.8% to our outstanding share count. Since we already operate natural gas and electric utilities adjacent to the Eversource gas service territory, there are considerable opportunities to bring our high level of service and strong safety culture to our newest customers. Phil will discuss the impact on our capital program in a moment. I'll now turn to our long-term strategy of being the principal catalyst for greenhouse gas reductions in New England. Slide 9 shows how far we as a company have come over the past 30 years as we have divested all of our fossil generation, continued to reduce methane leaks from our distribution system, and taken other steps to improve the efficiency of our delivery systems, our facilities, and our vehicles. This has enabled us to be in sync with all the states of New England, which are targeting greenhouse gas reductions within their borders of at least 80% of the year 2050. Our long-term strategy is built around being a principal enabler of that reduction. While our company operations are not a significant contributor to our state's greenhouse gas emissions today, We have set a goal of driving our direct emissions to net zero. The left side of slide 10 highlights our five primary areas of focus in that effort. More significant to the region are the items on the right side. Over their lifetime, the more than $500 million that we invested in customers' energy efficiency initiatives in 2019 alone will reduce greenhouse gas emissions by 3.2 million metric tons. Efforts to significantly expand our zero-emissions vehicle charging infrastructure and reduce the number of homes heated with oil offer very significant additional opportunities to reduce the region's emissions. But the most significant initiative we have underway is our partnership with OSTED that we expect to result in at least 4,000 megawatts of offshore wind facilities being built off the coast of Massachusetts. That will reduce greenhouse gas emissions by approximately 6 million tons annually. The current status of our offshore wind efforts are noted on slide 11. As you can see, our South Fork project received its draft environmental impact statement. The comments on that draft are due next week. The U.S. Bureau of Ocean Energy Management continues to target January 2022 for issuing a decision on South Fork's construction and operations plan And assuming a positive decision, we continue to target an in-service date by the end of 2023. I should note that all the steps in the South Fork review process have been met either on or ahead of schedule since BOEM established its revised schedule last summer. On the state side, New York hearings on South Fork were completed in December, and we expect a state siting decision in the first half of 2021. And on the local side, our host community agreement with the municipality of East Hampton has been approved. On Revolution Lend, we filed our state signing application with Rhode Island at the end of December, and it was formally documented last month. We filed our federal application with BOEM in March of last year and expect BOEM to establish a review schedule for Revolution later this year. On Sunrise, we filed our application with BOEM in September, and our state siting application with the New York Public Service Commission in the fourth quarter. Later this year, we expect BOEM to establish a review schedule for Sunrise Wind. Our partnership with Orested has never been stronger, and we continue to work closely on both the siting and procurement for the projects we have won and our bids for additional contracts. While we're disappointed that we did not win additional capacity in the latest New York RFP, we will remain very disciplined in our bidding and know that there are likely to be several additional RFPs over the next 12 months, including Rhode Island, Massachusetts, and possibly New York. You can see on slide 12 why we can be so disciplined with our bidding strategy. The 550 square miles of ocean that we have under long-term lease from the federal government are the closest to shore and should be the least expensive to develop and maintain. Moreover, one lease costs us a million dollars. Areas that are smaller and much further from shore were leased a few years ago for $135 million apiece. This slide shows the current status of Megawatts One and megawatts still to be bid among the four states where we compete. And the number of megawatts being sought will continue to rise, pending legislation in Massachusetts, likely adding another 2,400 megawatts to the state's already approved 1,600 megawatts of upcoming RFPs. President Biden continues to express strong support for renewable energy in general, and offshore wind specifically. On January 28th, the President issued an executive order requiring the Department of Interior to conduct a full assessment of offshore wind siting processes so they align with the administration's goals to advance renewable energy production. The president has also established a White House Office of Domestic Climate Policy and created a federal government-wide task force to coordinate actions between agencies. Additionally, actions taken by Congress and the IRS late last year provide additional financial incentives for offshore wind development. As you can see on slide 13, those incentives include 30% investment tax credits for projects that commence construction before January 2026, and a 10-year safe harbor on projects eligible for tax credits. Taken together, these changes add more certainty to the tax benefits available for offshore wind and underscore the federal government's support for these projects. Lastly, before I turn it over to Phil, I want to emphasize the strong strategic position of Eversource for the coming years. Our corporate strategy is fully aligned with the energy policy of the states we serve. Our execution continues to be extremely strong. Our employees and Board of Trustees are fully engaged. Last week, our Board's Corporate Governance Committee became the Governance, Environmental, and Social Responsibility Committee, with additional direct charter oversight responsibilities for our expanding ESG initiatives. Five years ago, we said we wanted to be viewed as the country's premier energy company, And some of the citations noted on slide four illustrate the recognition that we received from a number of well-regarded third parties. I'm very confident that our future remains exceedingly bright. Now I'll turn the call over to Phil.