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.

Thank you, Joe. And good morning, everyone. Today, I will review our results for the second quarter of 2023, including our offshore wind impairment charge. And I'll also discuss our recent offshore lease sale transaction, give you a status update. And review our 2023 financing activity. So let me start with slide nine. Our GAAP earnings were 4 cents per share in the second quarter of 2023, compared with GAAP earnings of 84 cents in the second quarter of 2022. As we announced in May, based on our completion of the offshore wind strategic review and the status of the pendant project sale process, the results for the second quarter include an after-tax impairment charge of $0.95 per share related to Eversource Energy's total offshore wind investment. I will review details of this impairment in a few minutes. Results for both years include transaction and transition costs related to the acquisition of Eversource Gas Company of Massachusetts and other charges that totaled $6.2 million in the second quarter of 2023, compared with $5.5 million in the second quarter of 2022. Absent these charges and the offshore wind impairment, our recurring earnings were $1 per share in the second quarter of this year compared with 86 cents in the second quarter of last year. Looking at some additional details on the second quarter recurring earnings by segment, starting with our electric transmission segment, which earned 46 cents per share in the second quarter of 2023, compared with earnings of 44 cents per share in the second quarter of 2022. Improved results were driven by our continued investment in Eversource's electric transmission system to maintain high reliability performance for customers. Our second quarter 2023 electric distribution earnings were $0.47 per share compared with $0.37 in the second quarter of last year. The improved results were primarily due to higher revenues, mainly from base distribution rate increases at NSTAR Electric, an expected favorable regulatory decision in New Hampshire that provided the recovery of previously expensed costs, and lower O&M as a result of lower storm restoration costs. These benefits were partially offset by higher interest expense depreciation and property taxes. Our natural gas distribution segment earned three cents per share in the second quarter of 2023, compared with earnings of two cents in the second quarter of last year. The improved second quarter results were due primarily to higher revenues from capital tracking mechanisms supporting our continued investments in Massachusetts natural gas infrastructure. as well as lower non-tracked O&M expense. These benefits were partially offset by higher depreciation, interest, and property tax expense. Moving on to our water distribution segment that earned $0.03 per share in the second quarter of this year, really at the same level that we earned in the second quarter of last year. EverSource parent and other companies' earnings were one cent per share in the second quarter of 2023, compared with flat earnings in the second quarter of 2022, excluding the offshore wind impairment charge and the transaction and transition charges, as I previously discussed. Improved second quarter results primarily reflect a lower effective tax rate, the residual benefit of a disposition of EverSource's interest in a clean energy fund, partially offset by higher interest expense. Now turn into slide 10 to further expand on what Joe covered on the sale of our 50% interest in approximately 175 acres of undeveloped, uncommitted lease area to Austed for 625 in an all cash deal. We have executed a letter of intent with Austed to use a portion of the proceeds from the lease area to provide tax equity to the South Fork project through a new tax equity ownership interest that we are finalizing the terms of this new agreement as we speak. On July 27th, we received approval from the Committee on Foreign Investment in the U.S. or CFIUS that allows us to close on both the lease area as well as the tax equity investment in South Fork later this month or early September. As part of completing our offshore wind strategic review, Eversource evaluated its aggregate investment in the contracted projects, the uncommitted lease area, and other related capitalized costs and determined that the carrying value of the offshore wind investment exceeded its carrying value. The current estimate of fair value has been based on the sale price of the uncommitted lease area, the expected sale price of Eversource's 50% interest in the three contracted projects based on the most recent deal pricing, investment tax credit qualifications for potential adders, and the expectation of a successful repricing of the Sunrise Wind OREC contract. As a result, Eversource recognized an after-tax impairment charge of $331 million, or $0.95 per share, in the second quarter of this year. This charge will not have any impact on our cash flows from operations. We have made good progress on advancing the sale of our existing 50% interest in the three contracted offshore wind projects. As Joe mentioned, the due diligence phase is now substantially complete and behind us, and we are advancing the transaction documentation. This process is complex with multiple agreements that must be completed at the same time, such as a replacement joint venture agreement. We recognize this process has taken a bit longer than expected, but we are not going to rush through this documentation phase. It's important for us to have all agreements in a good place. With that said, we continue to remain focused on completing the final phase of this process. And once again, as Joe mentioned, we expect to announce the transaction soon. As a reminder, our total offshore wind investment after accounting for the impairment charge is approximately $2.1 billion as of June 30th of this year. Now turning to slide 11, we are maintaining our full year guidance of $4.25 to $4.43 per share with a somewhat different quarterly earnings profile from 2022 due to a rate change as I previously discussed in our first quarter call. As a reminder, the rate design change at NSTAR Electric became effective at the beginning of this year, which eliminated higher summertime demand charges. This change shifts $0.08 per share of after-tax revenues out of the third quarter and into the first and fourth quarter in roughly equal 4 cents per share split. There is no impact on the rate design change on the second quarter or the full year results. In addition to reaffirming our long-term EPS growth rate solidly in the upper half of the 5% to 7% range, we also reaffirm our $21.5 billion five-year regulated capital program that we shared during our February earnings call. Capital expenditures has totaled about $1.98 billion in the first half of 2023. Moving to slide 12, here we highlight several factors that we expect will contribute to an improvement in cash flows in 2023 as compared to 2022. We expect an improvement over last year's in the ratio of funds from operation relative to total debt levels. Items we are highlighting on this slide include absence of 2022 one-time cash outflow items, net proceeds from the sale of our offshore wind investment, both the projects and the lease area that will be used to lower debt balances monetization of south fork wind investment tax credits higher storm cost recoveries and this distribution rate increases and the remaining equity issuance that we have discussed as you are all aware Over the past several years, we have experienced several significant storm events having an adverse impact on our cash flows, with a sizable deferred storm balance in Connecticut alone at approximately $900 million at the end of June. Our dedicated employees and the external contractor resources we depend upon to restore service to our customers safely and efficiently which comprise the vast majority of the level of deferred costs, do an incredible job working around the clock in these severe weather events. But that does come at a cost. In terms of the year-to-date financing activity, please turn to slide 13. As you can see here, in early May, we issued $1.8 billion of parent debt in three tranches at coupon rates ranging from 4.75% to 5.45%. And we retired $450 million of parent company debt. Our expectation is that debt issuances will be much, much lower in the second half of 2023. We have issued no additional equity under our ATM program. through July of this year. We remain committed to completing the remaining $1 billion in our ATM program. In addition, we anticipate raising additional equity through our dividend reinvestment and employee incentive programs using Treasury shares. And through July, we have issued 647,000 shares. Thank you very much for joining us this morning, and I look forward to seeing many of you soon. I will now turn the call over to Bob for Q&A.

Thanks, Sean. I'll now turn the call back to Emily to begin Q&A.

Thank you. If you would like to ask a question today, please do so now by pressing Start, followed by the number 1 on your telephone keypads. If you change your mind and would like to be removed from the queue, please press Start and then 2. When preparing to ask your question, please ensure that your device is unmuted locally. Our first question comes from the line of Shah Perez with Guggenheim Partners. Shah, please go ahead. Your line is now open.

Good morning, guys. Good morning, Shah. Can you hear me?

Yes, we can hear you. Good morning.

Just a couple of questions here. Perfect. Joe, just given the uncertainty that we're seeing nationally around just the offshore wind with, you know, a lot of project cancellations and renegotiations, How, I guess, how confident are you that you can get this transaction across the finish line at a reasonable price? And what does this sort of mean for the growth rate and the remaining portion of the ATM as it stands? So do you see kind of any situation post this deal where we could see incremental financing or an impact on how you measure out the 5% to 7% of this growth rate?

Yeah, well, thank you, Char. And I want to thank everybody for their patience around this complex situation. offshore wind seal. And, you know, it's been very, very complex. It involves multiple agreements that all have to be aligned. And we want to be sure that we get the most money for our shareholders out of that exit. And we remain focused on completing this transaction to the point that we're not going to let John Marrera take any summer vacation until he has it all taken care of. But back on point here, you know, this region is so dependent on natural gas for electric generation. And, you know, that shift has to come. It has to come in some form of an alternative generation. And that's where wind, given the energy factors in this region, you know, we can, you've got a wind availability factor out there of 40, you know, 49 to 50%. In the winter months, it's even greater when we peak. So we feel very strongly that wind is going to play a major role as we transition into to this clean energy environment. It performs especially well for us and for our customers, so I don't see anyone taking their foot off the gas. The policymakers are very, very excited about wind, so I don't see that waning. And I really feel the appetite for wind assets, although there's been a few that have decided not to go forward, As you know, we're out there very actively building. I was excited to get a lot of reports out of the foundations being installed for the new substation. We will be the first offshore wind company in service in the fall, which is very, very exciting to me. There are many parties that remain committed to offshore wind. Our offshore wind leases are very, very prized assets. They sit in an area that has all the fundamentals necessary to deliver great wind speeds for any future buyers. So that's why we feel good that it will continue to do well here. So all in all, it's going to take place. It didn't take place, obviously, at the pace that all of us would have liked it to take place, but I just want to promise you that we are here at the one yard line and that we are getting it over the goal. I think some of the announcements that we made today should give you greater clarity as to how much we really know about this transaction and that this really is the final stage. We're really focused on redeploying the proceeds for a debt pay down and we're reaffirming our 1B equity issuance that we provided to you on the year-end 2022 earnings call. So, you know, for that reason, I'm very confident that we'll complete the deal soon. And thank you again for your patience, Joe.

No, of course, Joe, are you comfortable with the current financing that's out there and the growth rate post this transaction? I mean, obviously, you're still dotting your I's and crossing your T's.

Yes, we are. We are fully confident in that.

Okay.

Yeah, we are fully confident in that and there's no change. Okay, perfect.

And just lastly, obviously, you know, you've highlighted this deal is taking a lot longer to get over the finish line and there's, you know, obviously a lot of investor angst over the contingencies and downside exposure. I guess, can you just maybe elaborate what remains on the negotiation side? How much of this kind of falls behind fund Orsted, which is kind of out of your control. And do you see the contingencies as being reasonable at this point in the discussion as we're thinking about upside and downside? Thanks, guys. John?

Yeah, sure. This is John. So, yes, I mean, there are, as Joe mentioned, and I mentioned in my formal remarks, there are a multitude of agreements that needs to be executed in conjunction with our purchase and sale agreement. some of which we will not be a party to. But we will help facilitate those working with the buyer to make sure that they get to a good place with Orsted. As far as the contingencies, what's on the table right now, and we're not here to disclose those components because we do not have an executed agreement, but I think we feel comfortable that we can manage those well. um with our stead and there's both you know they you know there's both pluses and minuses downside and upside and we feel comfortable um what would you know what will ultimately ultimately be agreed to perfect i'll jump back in the queue thanks guys appreciate it thank you our next question comes from steve fleischman with wolf research steve please go ahead your line is open

Hi, good morning. Thanks for the update. Good morning, Steve. So I think you mentioned that the impairment that you took on the offshore wind assumes you get the New York restructuring as well as the ITC adders. Is there any way to get a sense of what the investment level would be if you don't get those?

Yes, so that is correct. We have included both of those components in our impairment analysis. And obviously, in order for us to be in a position to do that, there needs to be a certain level of conviction and probability. And on both of those, we feel very, very good about. I would say, on average, folks can certainly calculate it. but it's probably 400 apiece, 400 million.

Okay. Understood. That's helpful, caller, also on the probability part. And then my other question, John, just on the FFO to debt slide, that's very helpful in terms of the drivers. Is there any way to get a better sense of start and end points there, or kind of the scale of any of those driver buckets there?

Yeah, and I think some of those items we have already shared, and they might even be disclosed in our 10-Q. But I would size kind of the first category, these one-timers that we experienced in 2022 that we will not materialize in 2023. I would say at least a quarter of a billion dollars. So 250 million goes away. You know, the three categories of those were, you know, we were as part of the 2021 Connecticut Steel and Peace Settlement Agreement. We still had half a year of refunds in 20 in 2022. That's been that cease. So that's behind us. So that was about 70 some odd million, 78 million. We made early on in 2022 some capital contributions, which we don't expect to make, at least for the foreseeable future. And then we had another property tax settlement in Massachusetts to the tune of about another $70 million that will not materialize this year. So that's that first category. And I think all the other ones, when you look at rate adjustments, cost recovery of previously deferred costs, those are starting to kick in. So in Massachusetts, as part of the rate case, we have close to $400 million rolling into rates. We had a piece of it that took effect earlier this year, and we have another chunk that'll take effect January 1st of 2024. So I think if you factor those items in, and clearly the biggest and media improvement in our cash flows is going to be the closing of these two transactions, the offshore wind transaction. So those are all the items, and obviously, as we've said, we still have a billion left under our ATM program to be executed. So all of those items gives me comfort that we will certainly move in the right direction from an FFO to debt.

Understood. I'll let others take from here. Thank you.

Thank you.

Our next question comes from Dagesh Chopra with Evercore ISI. Dagesh, please go ahead. Your line is open.

Hey, good morning, team. Thanks for giving me time. Hey, John, just really quickly, you mentioned Hey, good morning, guys. You mentioned as part of the impairment charge, you assume repricing on the sunrise wind. Can you just walk us through what the steps are or the next sort of milestones are as you kind of file for that repricing? And then what does that mean? Is that $400 million related to that repricing, if that's what you quantified it as?

Yes, so first let me say that the process is underway. There is a schedule out there that NYSERDA has posted which could render a decision as soon as October and November. So we expect something to be known certainly by the end of this year. So depending on what the approval is, we think it could be in the $450 million range. So I think discovery is taking place. There's been some requests. So we're going through that phase. RSTED is going through that phase right now. And so are the other bidders. We're all in the same procedural schedule.

Got it. Thanks. And then just switching gears, you mentioned roughly like $900 million in the deferred storm cost balance. And I know there is a filing coming up in Connecticut. Maybe can you just talk to that and what is the path to recovery and timeline of those costs?

Well, the normal process in Connecticut is you will commence recovery of storm costs as part of a general rate proceeding. And what we've done in the past is we filed for a prudency. It's uncertain. Right now we're still compiling all of the necessary data that's needed for that process to take place. But suffice it to say that the recovery of those costs will happen when there's a general rate proceeding. And as we've said, the earliest that that will happen will be end of 2025.

Got it. So it's part of your cash flow walk. There's nothing there from like 22 to 23. And then, you know, in terms of just improvement from recovery of those costs, that's more longer-term data.

That balance is more longer-term data. We do have some cost recovery in base rates, embedded in base rates with CLMP, but it's not significant to recover that anytime soon.

Thanks so much.

Thank you, Dagesh.

The next question comes from David Acaro with Morgan Stanley. David, please go ahead. Your line is open.

Hey, good morning. Thanks so much for taking my questions. Good morning. Good morning, David. I was wondering, are you still expecting... Are you still expecting 2.1 to 2.4 billion in capex in that 2024 to 2026 period that I think you would disclose previously and our returns still at that same level in the 11 to 13% ROE range?

David, is this offshore wind?

Yes, yes, sorry. Offshore wind 2024 to 2026 capex plans. Any changes to the longer term capex

No, no, no. It's reflected on that slide that we presented, so there's been no change in the overall capital forecast needs, both for this year, because we did revise that on the last quarter call, but longer term, no. There's been no capital changes to that.

Okay, got it. Thanks. And then the impairment on the offshore wind assets was slightly larger than the last estimate. I was just wondering if you could elaborate on what might have changed since the last estimate when you announced the recent transaction.

Sure, David. So in May, we were, you know, if the buyer hadn't completed its due diligence process, we hadn't even filed for the request for sunrise in New York. So a lot of things have have come together since we made that announcement. And all of those, you know, puts and takes have been factored into the impairment charge that we just recognized. So I would say a lot more is known and measurable today certainly than it was back in May. And that does reflect, as we've said in my, as I said in my phone remarks, the completion of due diligence and, you know, kind of the, you know, the current deal pricing.

Okay, got it. So a couple of moving pieces there, and it sounds like so in the original estimate of the write off that didn't include a repricing of sunrise or the or the potential value of the tax credit adders.

It didn't include the New York repricing, but we've always felt comfortable on the tax on the tax component. So we did include the percent adder.

Got it. Understood. Thanks very much.

Thank you, David.

The next question comes from Andrew Weisel with Scotiabank. Andrew, please go ahead. Your line is open.

Hey, good morning, everybody. Good morning, Andrew. I just want to clarify. Hi. I want to clarify, there's some confusion about the CLMP rate case layout. Does SB 7 allow regulators or intervenors to call you in before October 25, or is it the settlement supersedes the new state law?

Our position is that our 2021 settlement agreement provides the ability, qualifies for that four-year rate review, and that four-year rate review will expire in the fall of 2025.

Okay, great. Thank you. Next, I want to clarify the timing. So, excuse me. Okay, sorry. I want to clarify the timing. I think you said you set, can you hear me? Yes, we can hear you. Hello? Okay. Yeah. Terrific. Sorry about that. Anyway, you expect clarity on Sunrise for the end of the year, October, November, and yet both Joe and John, you guys both use the word soon from a sale price announcement. To be as clear as we can be, does soon mean before the repricing process is complete, or will you and the potential buyer wait until the future of Sunrise is known, either by waiting to make an announcement or adding a contingency to the contract?

No, we will not wait for the determination from the state of New York on that. We will announce once these documents, as we've mentioned, are ready to go.

Very good. Thank you, and sorry for the technical issue.

No worries. Thank you.

Our next question comes from Greg Orrell with UBS. Greg, please go ahead. Your line is open.

Yeah, thank you. Regarding the... Hey, regarding the billion dollars related to the ATM equity, what's the intent there for how long that would last you to fund the plan? And then is there any update on the Aquarian Rate Case appeal? Thanks.

Let me take the latter one. So the Aquarian Rate Case appeal continues to move forward. There's, I think, briefs to do later this month, 17th of August, I believe, and then reply briefs. And we hope that there is a hearing date scheduled for December 14th, where the record will be closed, and I believe it's scheduled for oral arguments at that point in time. So shortly thereafter, the judge could render a decision. So that's where we stand on that. the $1 billion remaining equity under the ATM program. Certainly, we've said it over several years, we haven't issued any equity this year just based on valuation. The ATM provides us with the ability to take advantage and be opportunistic. We'll continue to monitor things accordingly. and issue the equity as we feel comfortable.

Thanks.

Our next question comes from Jeremy Tenet with JP Morgan. Jeremy, please go ahead.

Hi, good morning. This is actually Rich Sunderland on for Jeremy. Can you hear me? Yes, we can, Rich. All right, great. Thank you. Just a couple housekeeping items up front. The $400 to $450 million you're referencing for New York, is that a pre-tax or after-tax figure? Pre-tax. Got it. Thank you. And then on the quarter itself, could you quantify the New Hampshire retroactive piece and the parent tax item as well?

The parent tax item, I would tell you that it's probably close to about 100 basis points different, quarter over quarter, in the effective tax rate. So last year's effective tax rate was like 24 and change, and we're running around 22 and change.

Got it.

And that New Hampshire retroactive piece, just how much was that, and is that baked into guidance?

It was baked into the guidance. We were banking on that. We were tracking the proceeding very, very closely last year, and we felt very good and comfortable about baking that in. I would say it's in, if I remember correctly, in the $15 million to $20 million range.

Got it. Very helpful. And then just one higher level question. There's been a lot of attention on DUI's draft decision came out recently. Any thoughts on how this impacts your approach on the CLMP front for 25 or any thoughts on reviews there to your Aquarian appeal or just other thoughts on Connecticut overall in light of that draft decision?

Yeah, well, no, that was a draft, as you know, on July 21st, it's not the final decision. Obviously, uh, You know, it appears to track the Aquarian decision discouraging investment in the state of Connecticut. You know, we're obviously concerned about that decision, and we're hoping that between now and the final decision that there are some changes in that. As you know, we will have our day in court, and if this remains as is, I assume that, you know, UI will be in court as well. You know, to, to talk about that, you know, 2025 is a long way away in terms of, uh, uh, you know, what we expect will happen in 2025. So, you know, I don't want to speculate on that. Uh, we'll, you know, we will, uh, continue to monitor that, continue to engage with, uh, you know, key policy, uh, makers in the state. We have very good relations with the governor, with the attorney general, with other parties, their agenda, our agenda is very much aligned around clean energy and clean energy investments. You know, there are a number, I mean, one of the things that's interesting with the state of Connecticut is the number of clean energy technology companies in that state. I mean, there are fuel cell companies, battery companies, all of them are looking to deploy their technologies. So, you know, any type of a chill on investment in that state is not good for all of these startup companies, and it's obviously disappointing. But listen, we're not going to... We're not going to get this hot. We're not going to lose faith. We're going to continue to work those relationships down there and try to get to a place that's fair for our customers and for our shareholders that gets us to a much better, cleaner environment with investments in that state. Again, it's a very fluid situation. We'll have to see what the final decision looks like, but I just want everybody to know that I am personally involved working this along with you know, the 9,500 other employees of this company, and we are going to work through these issues, and I'm confident that we can get to a much better place.

Understood. Very helpful, Collar. Thanks for the time today.

Thank you.

Our next question comes from Anthony Crowder with Mizuho. Anthony, please go ahead. Your line is open.

Morning, Anthony. Hey, good morning, Joe. Good morning, John. Thanks for taking my questions. I've been spending too much time up in Marlborough, Massachusetts, so I feel like a native now. Just, I guess on slide 12, if I could jump on Steve's question, where did you end the quarter on an FFO to debt basis? And if you could just give us a range as you're very close to finishing the sale of offshore wind on what the improvement could possibly be. Is it 200 basis points or two to 250 or one to 150, if you're willing to quantify what the type of pickup would be an FFO to that. I think with Steve, you gave more of the FFO, but not so much the metric.

Yeah, no, I hear you. And I'm not, I, I, I, we have not disclosed that. And truth be told that I want to have those discussions with the agencies before I share any of that detail with the broader audience. So we are now given where we are with the contracted project transaction. Now we're at a point where I can share some of that information, some of the details with the rating agency. And I have a meeting scheduled over the next several weeks to be able to do that.

Great. Just curious on the sale, and I apologize if I'm using just a different word. You may have answered this with Char's question. Once the sale is announced and once the sale closes, is there the potential for further liabilities that you have to be concerned with, or the expectation is once there's a sale and the sale closes, there's no more impact to Eversource?

Those are the – what we plan to disseminate once we execute the agreement. But as I've said, there will be some potential movements up or down.

I'm sorry, potential movements after the close that could be up or down. Is that fair? Correct. Great. Thanks so much for taking my questions. I really appreciate it.

Thank you.

Our final question today comes from the line of Julian DeMoon Smith with Bank of America. Julian, please go ahead. Your line is now open.

Hey, good afternoon, team, or good morning, rather, I should say. Thank you guys very much for the time. Just following up on a few house cleaning items here from the prior questions, just clearly, what in your forecast do you assume Connecticut electric and natural gas rate cases? Obviously, you're holding to the upper end. Just wanted to clarify when you think you'll pursue those?

On the electric, as we continue to state, our settlement agreement allows us to meet the four-year review period, and that review period will expire in the fall of 2025. So we do not expect to file a CLMP case prior to that date. And if you look at the... the length of time it takes in a general rate proceeding, you're looking at a year. So with that timeframe, you're probably looking at the earliest date that rates would be changed would be early 2027. And then for Yankee Gas, Julian, we have no plans right now to file a rate proceeding. So we'll continue to monitor that as we always do. but we don't have any current plans to file.

Got it. And no changes to your CapEx forecast for now, right, in Connecticut?

That is correct.

Got it. Excellent.

And then just clarifying earlier the FO to debt, I know lots of questions, pluses and minuses, but can you quantify the big building blocks as you think about through the forecast period? especially through 25 here. I mean, I think I heard ITC earlier. Can you just clarify? I know that you got some legacy items that we talked about earlier. And thank you again, John. But on 22, can you talk about the big puts and takes here that improve the metrics prospectively through the forecast period?

Through the forecast period? Through 2027? What's...

Yeah, I'm thinking about not just like 23 to 24, but really kind of getting that sustainable structural level, right, as you think about the big cooling blocks.

Yes, yes. I would say offshore wind will be the kickstop to that enhancement once we get those and offload some debt. I think if you look at the longer-term rate mechanisms that we have in place, certainly in Massachusetts, That will drive enhanced operating cash flows and the recovery of storm costs. Although for CLMP, it'll be towards the latter part of the forecast period. But I think all of those items, when you look at the cash flows in Massachusetts, as I mentioned, we are putting into rates about $400 million of deferred storm costs. And as part of the rate case, the amount included in base rates was significantly increased. So those are all of the items that will continue to have enhanced cash flows. And then completing our $1 billion equity program over the coming years will certainly enhance that credit metric.

Just to clarify, your 24 metrics here, do they benefit in FFO?

Go for it.

Yes, no, absolutely. I mean, with everything else being equal, yeah, we see 2023, as I mentioned in my formal remarks, moving in the right direction from where we landed in 2022, and I see that trend continuing over certainly into 2024 and beyond.

Right. And 24 includes the tax equity in your FFO? Yes. Got it. Okay. Excellent. Thank you. Really appreciate all the details here. Appreciate the cleanup. Best of luck, guys. Cheers. Thank you.

Those are all the questions we have time for today, so I'll hand the call back to Robert Becker for any closing remarks.

Thanks, Emily. That concludes our call. Thank you for joining us today. If you have any follow-up questions, please reach out to Investor Relations.

Thank you, everyone, for joining us today. This concludes our call, and you may now disconnect your lines.