Eversource Energy (D/B/A)

Hello, everyone, and welcome to Eversource Energy's second quarter 2023 earnings call. My name is Emily, and I'll be coordinating your call today. After the presentation, there will be the opportunity for any questions, which you can ask by pressing start, followed by the number one on your telephone keypads. I'll now turn the call over to our host, Investor Relations Director Robert Becker. Please go ahead, Robert.

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

Thank you, Bob, and thank you, everyone, for joining us on this call this morning. I hope that you're all having a good summer and can take some time off after earnings season. Today, we'd like to update you on our commitment to deliver value to our customers to achieve important objectives on both ESG and diversity and our progress to close out the offshore wind seal process. Starting on slide three, here at Eversource, we are working tirelessly to deliver energy and clean water safely and reliably to our 4.4 million customers. Our steadfast focus on serving our customers well continues to deliver superior results in all aspects of our businesses in Connecticut, Massachusetts, and New Hampshire. As you can see from the bottom of this slide, investments we have made over the past decade are greatly benefiting customers. The average months between interruptions has increased significantly from 12 months in 2011 to nearly 20 months at the end of 2022, in over two years through the first half of 2023. As a result, this high performance level puts Eversource's reliability in the top decile. compared to industry peers. In addition, when an outage occurs, the average duration experienced by customers has improved dramatically. A relatively short average duration of outages also puts Eversource in the top decile compared to industry peers. This top decile level of reliability is the result of years of investment in the states in which we operate and the dedication and the hard work of our skilled employees. Turning to slide four on the energy supply slide of our Customs Bill, we're pleased that our customers have experienced some improvement in supply pricing in New England. Challenges due to natural gas supply constraints because of the war in Ukraine and the global market dynamics led to last winter's historically high energy prices here in New England. This summer, Natural gas prices have moderated nicely, and we're seeing much lower electricity prices as a result. In Connecticut and Massachusetts, new supply rates went into effect on July 1st and will remain in place through the end of the year. Supply rates for residential customers in Connecticut and Massachusetts decreased approximately 40% per kilowatt hour from January of this year to July 1st of this year. In New Hampshire, residential customers will see a decline of approximately 40% per kilowatt hour in the supply rate effective August 1st. As a reminder, we purchase power on behalf of our customers in accordance with guidelines set by our state regulators, and we do not earn any profit from this portion of our customer's bill. We are very pleased that our customers have seen some cost relief this summer. as it helps to offset customers' usage that is much higher in the summer than in the winter. And while 2023 prices have come down in recent months, we expect another seasonal increase in supply prices for this coming winter. Therefore, we remain focused on our industry-leading energy efficiency programs, and we're continuing to engage with policymakers to discuss long-term solutions. To that end, in June, senior leaders actively participated in the FERC-sponsored forum in Portland, Maine, on gas and electric reliability matters. The topics discussed include retaining existing natural gas infrastructure and new electric transmission infrastructure needed to connect onshore and offshore generation and other renewable energy resources. This was a very well-attended meeting that included all four FERC commissioners and the state energy policy leaders from across New England. We look forward to continuing the engagement with FERC and other key stakeholders to continue to advance this energy resource challenge for New England. Turning to slide five, in June, we posted on Eversource's website our 2022 sustainability report, along with our standalone diversity, equity, and inclusion report. These publications highlight our commitment to leading environmental, social, equity, and governance practices. We continue to make strong progress towards our 2030 carbon neutrality goal with a quarter of the emissions already cut from our baseline year of 2018. To continue progressing toward this target, we're focused on five key sources of emissions. Line loss, natural gas leaks, energy use across our facilities, fuel use by our fleet, and releases of sulfur hexafluoride that is used as an insulator in electrical equipment. The many initiatives we have implemented to drive emissions down are showing results. In fact, from 2021 to 2022, we've seen a 15% overall emissions reduction. These efforts have ranged from enabling more capacity for renewables on the grid to replacing aging leak-prone natural gas pipes, to investing in hybrid vehicles, and procuring renewable energy for our buildings. We're also pursuing innovative solutions such as a pilot project featuring a first-of-its-kind sulfur hexafluoride-free breaker used in our electric system. And we continue to explore solutions that will enable a decarbonized heating sector. These include our geothermal pilot, in evaluating the potential to replace natural gas with low or zero carbon molecules. As many of you know, we're also expanding our emission reduction efforts through the commitment to adopt an ambitious science-based target. Committing to a science-based target is a best practice that places us among a handful of industry leaders in the U.S., and we plan to have our targets submitted by 2024. Turning now to our clean energy effort. In 2022, we invested nearly $800 million in clean energy, including offshore wind, battery storage, electric vehicle charging, and first-of-a-kind utility-scale network geothermal energy pilot in Massachusetts. Although we announced our plans to divest of offshore wind assets, Eversource remains committed to supporting the development of important regional clean energy solutions. Slide six reflects the many clean energy initiatives underway in Massachusetts to enable the clean energy transition. As you can see on this slide, Massachusetts has a constructive regulatory framework that will facilitate over $2 billion of clean energy investments over the next five years. This includes approximately $200 million of FERC-approved transmission projects that would enable offshore wind generation to interconnect to our grid. We could potentially see an additional $350 million of transmission investment when Massachusetts issues its next RFP for additional offshore wind generation. And certainly we can expect this transmission interconnection need to grow as additional offshore generation is procured for the region. We continue to emphasize the need for system investments to support increased electrification and distributed generation to help ease the current reliance on natural gas generation in the region. Here at Eversource, while we're focused on enabling clean energy transition, we're also focused on enabling an equitable transition. This means protecting communities industries and people that are at risk of being disadvantaged in the clean energy transition. Now moving to offshore wind. As you see here in slide 7, we continue to make progress in the development of our offshore wind projects through our joint venture with Orsted. We recently achieved some major milestones with the South Fork Wind Project, construction of the project's U.S. built onshore substation and transmission cable is complete, and the installation of the offshore substation and the subsea transmission cable were recently completed. Additionally, wind turbine preassembly is underway in New London, Connecticut. An installation of offshore towers will begin soon. South Fork Wind is on track to become the nation's first completed utility scale offshore wind farm, and federal waters, and will soon deliver enough clean, renewable energy to power nearly 70,000 homes. Also, we continue to make good progress on our Revolution Wind Project. As on July 17th, we received the Environmental Impact Statement from BOEM, setting the process for our Record of Decision and Construction and Operations Plan approvals over the next few months. In May, we announced the sale of our uncommitted lease area to Orsted for $625 million in an all cash transaction. Last week, we received federal approval on the lease transaction, clearing the way toward a closing. We are now working on finalizing the transaction for the sale of our interest in the three development projects. We have substantially completed the due diligence phase in commercial terms on this transaction. We are now truly near the goal line of wrapping up this deal. We are now working through the various agreements needed to complete this transaction and expect to make an announcement soon. Moving to slide eight. As you can see here, the expected spending and in-service dates have not changed for the three offshore wind projects. But what has changed is that our procurement costs for the three projects are now at 93% as we are getting close to commencing construction activities on Revolution Wind. John will discuss the path forward toward our seal of these projects, as well as some visibility on the impairment charge on the offshore wind investments. In closing, as we continue our focus toward enabling a clean energy future, Our nearly 10,000 employees and I have one goal in mind, to serve our customers well. That means making sure we understand our customers' needs, continuing to provide reliable and safe service, and making the necessary investments to deliver energy and clean water today, tomorrow, and for the years to come. We've made a commitment to make the appropriate investments to enable the transition into clean energy future. I couldn't be prouder of the effort that the Eversource team performs every day. And I look forward to the future with great excitement. Thank you again for your time. And I will now turn the call over to John Marrera.