10-K: Eversource posts strong 2025, guides higher for 2026

Eversource Energy delivered higher 2025 earnings and cash flow, set 2026 EPS guidance, detailed a $26.5B 5‑year capex plan, and updated offshore wind and regulatory outcomes.

Summary

• Reported 2025 net income attributable to common shareholders of $1.692B, or $4.56 per share (2024: $0.812B, $2.27).
• 2025 non-GAAP earnings were $1.767B, or $4.76 per share (excludes offshore wind charges); 2024 non-GAAP was $1.634B, or $4.57 per share.
• 2026 EPS guidance set at $4.80–$4.95 and long-term EPS CAGR of 5–7% through 2030 (base 2025 non-GAAP EPS of $4.76).
• Operating cash flow rose to $4.11B (2024: $2.16B); 2025 capital investments were $4.16B (2024: $4.48B).
• Declared a quarterly dividend of $0.7875 per share (approved Jan 27, 2026); paid $3.01 per share in 2025 (2024: $2.86).
• Raised $465.4M via an at-the-market equity program in 2025; issued $2.94B of long-term debt and repaid $1.40B.
• Five-year (2026–2030) capital plan totals $26.51B: $11.24B electric distribution, $6.80B natural gas distribution, $7.24B electric transmission, $1.23B IT/facilities.
• Electric transmission rate base was ~$11.3B at 12/31/2025 (~$4.6B CL&P; $4.4B NSTAR Electric; $2.3B PSNH).
• Segment 2025 non-GAAP earnings: Electric Distribution $667M; Electric Transmission $777M; Natural Gas Distribution $361M; Water Distribution $44M.
• Recorded a net after-tax charge of $75M in 2025 related to offshore wind sale contingencies; offshore wind contingent liability was $448.2M (current) at 12/31/2025.
• PSNH New Hampshire rate case approved (July 25, 2025): $100.7M increase effective Aug 1, 2025; authorized ROE 9.5%, 50% equity; alternative regulatory framework with annual adjustments (2026–2028). Appeals filed Jan 30 and Feb 6, 2026.
• Yankee Gas Connecticut rate case approved (Nov 5, 2025): $82.2M increase effective Nov 1, 2025; authorized net ROE 9.32%, 53% equity; reconsideration pending (decision by Mar 15, 2026).
• Massachusetts settlements: EGMA/NSTAR Electric settlement (approved Dec 1, 2025) including $82.3M of EGMA acquisition/integration cost recovery; NSTAR Gas settlement (approved Jan 16, 2026) reinstating a $45M rate base reset from Jan 1, 2026.
• Aquarion (water) sale denied by PURA (Nov 19, 2025); appeal sustained and remanded (Jan 15, 2026); final PURA decision expected Mar 25, 2026.
• CL&P received $107.8M in Connecticut bond proceeds to reduce customer charges (Sept 19, 2025).

Sentiment

Score: 7

Explanation: StockSavvy.ai views this as a solid update with higher earnings, robust cash flow, constructive regulatory developments, and clear guidance, partially offset by offshore wind contingent liabilities, appeals, and ongoing FERC ROE uncertainty.

Positives

• Material EPS and net income growth: 2025 GAAP EPS $4.56 vs $2.27 in 2024; non-GAAP EPS $4.76 vs $4.57.
• Strong operating cash flow of $4.11B, up ~$1.95B year over year, supporting capex and dividends.
• Set 2026 EPS guidance of $4.80–$4.95 and 5–7% long-term EPS CAGR through 2030.
• Transmission earnings growth supported by ~$11.3B rate base at year-end 2025.
• Regulatory wins: PSNH $100.7M increase with an alternative regulatory framework; NSTAR Gas $45M rate base reset reinstated; EGMA/NSTAR Electric settlement enabling $82.3M recovery.
• Dividend increased to $0.7875 quarterly (declared Jan 27, 2026); paid $3.01 per share in 2025.
• Capital plan visibility: $26.51B planned capex (2026–2030) across regulated networks.
• Improved collections and state support: CL&P received $107.8M CT bond proceeds to reduce customer charges.

Negatives

• Offshore wind exposure persists: increased contingent liability by $284M pre-tax in 2025; liability stood at $448.2M current at year-end.
• Dilution from equity issuance: 7.13M shares issued in 2025 via ATM ($465.4M proceeds).
• High consolidated debt load: long-term debt $26.87B; commercial paper $1.28B outstanding at parent.
• Aquarion sale denied by PURA; outcome uncertain pending remand, prolonging portfolio simplification.
• Potential cash flow timing impacts: Massachusetts 2026 winter bill relief program defers recovery to later in 2026.

Risks

• FERC transmission ROE complaints remain unresolved; reserve of $39.1M (pre-tax, excl. interest) for the second complaint; outcomes could materially impact results.
• Offshore wind post-closing purchase price exposure (cost overrun sharing and IRR maintenance) for Revolution Wind; contingent liability $448.2M with potential for additional losses if costs or delays increase.
• Regulatory challenges and appeals: PSNH rate case appeals (filed Jan 30 and Feb 6, 2026); Yankee Gas reconsideration pending (decision due Mar 15, 2026).
• State policy shifts and affordability pressures (CT PURA, MA Future of Gas) may constrain cost recovery and rate timing.
• Environmental liabilities totaled $154.3M (66 sites) at 12/31/2025, predominantly MGP-related; costs could rise as remediation advances.
• Cybersecurity and AI-related operational and compliance risks; potential for significant system disruption and penalties.
• Capital markets access and interest rate risk may affect financing costs for the $26.5B capex plan.
• Water regulatory compliance risks (PFAS, lead) could require material investment; drought and minimum flow rules may limit supply.
• Potential tax law changes (e.g., OBBBA changes) may affect capital planning and incentive monetization.
• Acute and chronic climate risks (severe storms, flooding) may drive higher non-recoverable storm costs or penalties.

Future Outlook

Targets 2026 EPS of $4.80–$4.95 and 5–7% long-term EPS CAGR through 2030, supported by a $26.5B regulated capex plan and growing transmission and distribution rate base. Outlook assumes stable regulatory outcomes (PSNH alternative framework adjustments 2026–2028, MA PBR and settlements, CT mechanisms), continued cash flow strength, and disciplined financing. Management flags uncertainties around FERC transmission ROE cases, offshore wind contingent payments, and state affordability-driven policies.

Management Comments

• Projects earning within 2026 EPS guidance range of $4.80–$4.95 and long-term EPS growth of 5–7% through 2030 (base 2025 non-GAAP EPS $4.76).
• Raised capital investment plans to $26.5B for 2026–2030 to modernize and harden the grid, expand gas infrastructure prudently, and support technology and facilities.
• Continues to monitor offshore wind post-closing exposures and update contingent liability estimates as new cost information becomes available.

Industry Context

StockSavvy.ai notes that U.S. regulated utilities continue to lean on transmission expansion, grid hardening, and performance-based regulation to drive earnings, while navigating rate affordability and elevated financing costs. Offshore wind remains a sector headwind given cost inflation and schedule risk, aligning with broader industry challenges seen across East Coast projects. Eversource’s transmission growth and constructive regulatory outcomes track favorably versus peers, but exposure to unresolved FERC ROE cases and residual offshore wind liabilities warrants continued attention.

Comparison to Industry Standards

• Allowed distribution ROEs: Eversource’s recent authorizations (e.g., PSNH 9.5% ROE, 50% equity; Yankee Gas net ROE 9.32%, 53% equity) are broadly in line with regional precedents (e.g., Avangrid/United Illuminating and National Grid jurisdictions typically 9–10% with 50–55% equity).
• Transmission ROE framework: Eversource currently bills at a 10.57% base ROE with 11.74% cap pending FERC complaints; this is consistent with other New England Transmission Owners and compares to contested ROEs across MISO and PJM, indicating sector-wide regulatory uncertainty.
• Capex scale: The $26.5B five‑year plan is competitive with large-cap regulated peers focusing on grid modernization and resiliency; execution and financing discipline will be key in a higher-rate environment.

Legal Proceedings

• FERC ROE complaints (four separate proceedings) remain pending; Eversource reserved $39.1M pre‑tax for the second complaint period.
• PSNH storm cost prudency review docket (2018–2023 events) awaiting NHPUC order.
• CL&P storm cost prudency review proceeding for 2018–2023 events; securitization docket anticipated thereafter.
• Offshore wind contingent liability related to Revolution Wind and South Fork Wind sale to GIP; liability $448.2M current as of Dec 31, 2025 with potential for additional losses.
• Aquarion sale denial appealed; Connecticut Superior Court sustained appeal and remanded to PURA (Jan 15, 2026).

Related Party Transactions

• Eversource’s gas LDCs purchase natural gas transmission services from an Enbridge-owned pipeline in which Eversource holds an equity interest; affiliate transaction costs total approximately $77.7M annually.

Stakeholder Impact

• Rate increases in NH (PSNH) and CT (Yankee Gas) support infrastructure investment and reliability.
• Massachusetts 2026 winter bill relief program provides near‑term customer credits with deferred recovery to moderate bill impacts.
• Dividend growth benefits shareholders; equity and debt issuance support long-term capital program.
• Environmental remediation reserves of $154.3M reflect ongoing commitments; majority associated with legacy MGP sites.
• Service quality: NSTAR Electric met 2025 SQ metrics; NSTAR Gas to pay ~$1.6M in SQ charges for 2025 performance.

Next Steps

• Monitor PURA decision on Yankee Gas reconsideration (expected by March 15, 2026).
• Monitor PURA final decision on Aquarion sale remand (expected March 25, 2026).
• Track PSNH rate case appeals at the NH Supreme Court (DOE appeal Jan 30, 2026; OCA cross‑appeal Feb 6, 2026).
• Follow FERC transmission ROE complaint proceedings and potential impacts.
• Execute 2026–2030 capex program and Greater Cambridge Energy Program milestones.
• Implement Massachusetts 2026 winter bill relief credits and subsequent recovery timing.
• Advance CT AMI cost recovery and integrated distribution system planning under PBR dockets.

Key Dates

Recommendation

Earnings momentum, constructive regulatory outcomes, and clear capital deployment plans are balanced by residual offshore wind liabilities, FERC ROE and appeal uncertainties, leverage and dilution from the ATM. The stock merits a hold pending clarity on Aquarion, ROE cases, and final offshore wind cash obligations.

Keywords

Eversource, ES, electric transmission, electric distribution, natural gas distribution, water utilities, rate case, PURA, DPU, NHPUC, FERC ROE, offshore wind, Revolution Wind, South Fork Wind, Sunrise Wind, Aquarion, capex plan, EPS guidance, dividend, ATM equity offering