Eversource Energy (d/b/a) · NYSE:ES
Eversource Energy (d/b/a) — Eversource Energy — EEI Financial Conference 2019
38 slides from Eversource Energy (d/b/a)'s conference presentation, Nov 8, 2019
Slide 1: EEI Financial Conference November 10-12, 2019
EEI FINANCIAL CONFERENCE November 10 - 12, 2019
Slide 2: Safe Harbor Statement
Safe Harbor Statement 1 All per - share amounts in this presentation are reported on a diluted basis. The only common equity securities that are publicly traded are common shares of Eversource Energy. The earnings and EPS of each business do not represent a direct legal interest in the assets and li
Slide 3: Eversource Focused on Industry Leadership Through Superior Operations and Sustainability
2 Eversource Focused on Industry Leadership Through Superior Operations and Sustainability
Slide 4: Eversource's Total Shareholder Return has Outperformed Significantly in Both the Short and Long Term
Eversource’s Total Shareholder Return has Outperformed Significantly in Both the Short and Long Term 3 Total Shareholder Return YTD 10/31/2019 2018 3 - Year 5 - Year 10 - Year Eversource 31.5% 6.4% 40.1% 80.4% 279.4% EEI 40 - Company Index 23.9% 3.7% 36.0% 68.5% 176.4% S&P 500 23.2% - 4.4% 30.4% 50.
Slide 5: Dividend Growth Continues to Outperform Peers
Dividend Growth Continues to Outperform Peers 4 $1.57 Annualized Dividend $1.67 5% - 7% $1.78 $1.90 $2.02 $0.00 $0.50 $1.00 $1.50 $2.00 $2.50 2014 2015 2016 2017 2018 2019 +$0.10 $0.10 Payout Ratios: 59% 59% 60% 61% 62% +$0.11 +$0.12 +$0.12 +$0.12 $2.14
Slide 6: Strong Long-Term Earnings Growth Expected to Continue
Strong Long - Term Earnings Growth Expected to Continue $2.81 $2.28 $2.53 $2.65 $2.81 $2.96 $3.11 2012A* 2013A* 2014A* 2015A* 2016A 2017A 2018A 2019E** 2020E 2021E 2022E 2023E 5 *Excludes merger and integration costs $3.25 $3.40 to $3.50 **Excludes Northern Pass impairment
Slide 7: Projected Capital Expenditures For Core Businesses
6 $856 $889 $994 $987 $746 $573 $548 $491 $903 $1,082 $1,145 $1,217 $1,131 $1,132 $1,143 $1,109 $271 $335 $404 $459 $473 $439 $483 $476 $14 $102 $109 $112 $126 $133 $143 $138 $152 $185 $199 $137 $131 $128 $127 $0 $500 $1,000 $1,500 $2,000 $2,500 $3,000 $3,500 2016A 2017A 2018A 2019E 2020E 2021E 2022
Slide 8: Rate Base by Core Business – Current and Future
7 42% 47% 50% 2017 Year - End Rate Base Projected 2023 Year - End Rate Base Transmission Electric Distribution & MA Solar Natural Gas Distribution Water $16.6 billion $24.5 billion Rate Base by Core Business – Current and Future 48% 10% 37% 15% 46% 5% 5% 34% Note: Excludes offshore wind investments
Slide 9: Framework for an Equitable Modern Grid in CT
• AMI • Electric Storage • Zero emission vehicles • Innovative technology • Interconnection standards • Energy affordability 8 ▪ PURA decision released on 10/2/19 focused on multiple objectives ▪ Removing barriers to the growth of CT’s green economy ▪ Enabling transition to decarbonize future focuse
Slide 10: MA Grid Mod Status – Implementing 2018-2020 Plan
MA Grid Mod Status – Implementing 2018 - 2020 Plan Preparing Filing for 2021 - 2023 Plan 9 MA Grid Mod Tracked Investments 2018 - 2020 ($233MM) Next Steps File new three - year plan in mid - 2020 for 2021 - 2023 implementation MA DPU order in grid modernization proceeding approved $133MM in tracked
Slide 11: NH Grid Modernization Has Multiple Objectives
NH Grid Modernization Has Multiple Objectives • Legislation established investigative docket in July 2015 • Working group report on “Grid Modernization in New Hampshire” issued in March 2017 • “Staff Recommendation on Grid Modernization” issued in January 2019 • Written comments and technical sessio
Slide 12: Progress on Major Transmission Reliability Projects
11 • New 13 - mile project between Portsmouth and Madbury , NH • NHSEC order approving project issued 1/31/19 • Construction began in May 2019 • Projected completion: Q2 2020 • Total projected investment: $125 million • Investment through September 30: $51.7 million Seacoast Reliability Project • 27
Slide 13: A Robust and Upgraded Transmission System is Key to Future Grid Transformation
A Robust and Upgraded Transmission System is Key to Future Grid Transformation • A significant amount of our transmission structures are 40+ years old, and we have accelerated replacement to ensure long - term reliability • We are adding equipment to better integrate intermittent renewable generatio
Slide 14: Projected Investment in Natural Gas Pipe Replacements 2016-2023
Projected Investment in Natural Gas Pipe Replacements 2016 - 2023 - All With Timely Cost Recovery $58 $48 $38 $69 $75 $85 $99 $108 $59 $67 $79 $93 $104 $114 $117 $120 2016A 2017A 2018A 2019E 2020E 2021E 2022E 2023E CT Accelerated Replacement Program MA Gas System Enhancement Program 13 Consistent wi
Slide 15: Eversource is Well Positioned to Meet Customers' Continued Natural Gas Demand Growth
14 Eversource is Well Positioned to Meet Customers’ Continued Natural Gas Demand Growth ▪ Secured 100,000 MMBtu/Day from Enbridge AIM project ▪ Secured 27,100 MMBtu/Day from Tennessee Gas CT expansion ▪ Addressed constraints on Algonquin lateral serving SE Connecticut ▪ Well positioned to support CT
Slide 16: Incremental Investments Expected to Grow Aquarion Rate Base Nearly 3 Times Faster
15 Incremental Investments Expected to Grow Aquarion Rate Base Nearly 3 Times Faster Than Before Eversource Acquisition $690 $710 $740 $760 $820 $890 $950 $1,030 $1,110 $1,200 2014A 2015A 2016A 2017A 2018A 2019E 2020E 2021E 2022E 2023E Year - End Rate Base $ in Millions *Does not reflect Town of Hin
Slide 17: Recent Distribution Rate Decisions
16 ▪ Effective Date: 5/1/18 ▪ Authorized ROE: 9.25% ▪ Term: 3 years ▪ Base rate increases of $64.3 million on 5/1/18, $31.1 million on 5/1/19 and $29.2 million on 5/1/20 ▪ Tracking mechanism for capex over $270 million ▪ Effective date: 11/15/18 ▪ Authorized ROE: 9.3% (previous 8.83%) ▪ Step rate in
Slide 18: Key Elements of New Hampshire Rate Filing
Key Elements of New Hampshire Rate Filing • PSNH filed a general rate case to raise annual base distribution rates by approximately $70 million on a permanent basis, effective 7/1/20, including an increase sought on a temporary basis – In June, the NHPUC authorized PSNH to raise annual distribution
Slide 19: FERC Transmission ROE Update
18 FERC Transmission ROE Update • Order issued: 10/16/18 • Current base: 10.57%; Cap: 11.74% • Illustrative base: 10.41%; Cap: 13.08% • New methodology that averages DCF, CAPM, risk premium, expected earnings • Provides path forward to resolve 2011, 2012, 2014 and 2016 complaints against New England
Slide 20: Sources of Funds to Execute Our Five-Year Cap Ex and Offshore Wind Investment Plan
19 Sources of Funds to Execute Our Five - Year Cap Ex and Offshore Wind Investment Plan » Operating cash flows » New debt financings » Approximately $2 billion of new equity » Using $100 million/year of Treasury shares to fund dividend reinvestment and employee stock plans; nearly 900,000 Treasury s
Slide 21: Factors Expected to Spur EPS Growth in Addition to Rate Base Growth
Factors Expected to Spur EPS Growth in Addition to Rate Base Growth » Improved capital structure resulting from 2018 rate reviews » Improved results at distribution companies that underearned their allowed returns in 2018, including NSTAR Electric, which is allowed to earn up to 12% » Higher carryin
Slide 22: Natural Gas Is Now New England's Single Biggest Source Of Electricity
Natural Gas Is Now New England’s Single Biggest Source Of Electricity Source: ISO - NE Pipelines that supply generators are increasingly constrained 21
Slide 23: Switch To Natural Gas And Renewables Has Driven Significant Reductions In Emissions
Switch To Natural Gas And Renewables Has Driven Significant Reductions In Emissions Power Production Up 230% Carbon Emissions NO X Emissions SO 2 Emissions Down 98% Down 73% Down 35% 22 Carbon Emissions NO X Emissions SO 2 Emissions Down 35% Down 73% Down 98% • Transmission Investment • Energy Effic
Slide 24: Achieving Longer Term Emissions Reductions Objectives Will Require Significant Steps
Achieving Longer Term Emissions Reductions Objectives Will Require Significant Steps Regional Greenhouse Gas Emissions Targets ( MMTCO 2 e ) Greenhouse Gas Emissions By Source 0 50 100 150 200 1990 (Actual) Today 2050 (Target) MA CT NH Gap: 100 MMTCO 2 e Electric Power 18% Transportation 48% Buildin
Slide 25: Offshore Wind Is Well-Suited To Be New England's Next Major Source Of Electricity
Offshore Wind Is Well - Suited To Be New England’s Next Major Source Of Electricity x ISO - NE Winter Reliability Report spotlighted region’s vulnerability to fuel supply disruptions x New pipeline capacity and long - term viability of LNG import facilities are challenged x Region’s energy policy is
Slide 26: Offshore Wind Can Greatly Enhance Winter Reliability in New England
Offshore Wind Can Greatly Enhance Winter Reliability in New England During two weeks in the winter 2017/2018: • Region was within days of rolling blackouts to manage fuel supplies • $700+ million in additional wholesale electricity costs • Emissions were equivalent to adding 6 million cars due to re
Slide 27: Eversource & Ørsted Partnership Is the Leading Offshore Wind Development Platform
Eversource & Ørsted Partnership Is the Leading Offshore Wind Development Platform Massachusetts: 1,600 MW authorized by legislation in 2016 » First 1,600 MW awarded to other developers » DOER recommends moving ahead with soliciting another 1,600 MW through 2024 (3,200 MW in total) Connecticut: 200 M
Slide 28: Expected Timeline For Eversource-Ørsted Projects
South Fork Wind Revolution Wind Sunrise Wind Size 130 MW 704 MW 880 MW Construction Operation Plan Filing with BOEM Already filed Early 2020 2020 Construction to Begin 2021 Late 2021/early 2022 2022 Commercial Operation End of 2022 Late 2023 2024 Price as of first day of commercial operation ~ $0.16
Slide 29: Our Competitiveness in New England and New York Auctions Benefits From Our Superior Lease Locations
28 Not to scale Revolution Wind South Fork Wind Block Island Wind Deepwater Northern Lease Bay State Wind Lease Mayflower Lease 20 - 25 Miles 35 - 40 Miles 60 - 65 Miles Distance to Mainland Our Competitiveness in New England and New York Auctions Benefits From Our Superior Lease Locations
Slide 30: Offshore Wind Complements Eversource's Portfolio Of Clean Energy Solutions
Offshore Wind Complements Eversource’s Portfolio Of Clean Energy Solutions Grid Modernization: • MA approved $133 million; New MA plan due by mid - 2020 • Evaluating plans for CT & NH EV Infrastructure: • Executing $45 million program for 3,500 new charging ports • Longer term opportunity of up to $
Slide 31: Eversource is the US Leader in Energy Efficiency
30 Eversource is the US Leader in Energy Efficiency, Investing Over $500M Annually to Reduce Customer Usage Source: American Council for an Energy - Efficient Economy 2019 Scorecard 15 3 20 1 6 3 Note: The lower the number…the more effective the Energy Efficiency Programs Retail Customer Count Up 3%
Slide 32: Carbon Reduction Goals and Vehicle Emissions Standards Will Help Electrify Transportation Sector
Current EV adoption trajectory insufficient to ensure compliance with 2025 target EVs on the road in MA/CT MA/CT CO2 emissions by sector (2016) • Ambitious goals set forth in the 2008 Global Warming Solutions Act • Reduce GHG emissions 80% below 1990 levels by 2050 • Committed to 450,000 EVs on the
Slide 33: Our Massachusetts Make-Ready EV Plan
Our Massachusetts Make - Ready EV Plan • First step to supporting electric vehicles in our service territory • Approved by regulators in November 2017 32 Key Highlights of MA Plan • $45M capital investment • Supports approximately 3,500 charging ports • Up to 450 customer sites • In - service by end
Slide 34: A Value Proposition That Delivers Results for Investors
A Value Proposition That Delivers Results for Investors Keys to Our Success: Results Delivered: 2. Control O&M spending Six - year average O&M reduction 3% - 4%/yr. through 2018 ( $ 275M ) 1. Exceed industry EPS and dividend growth Seven - year average EPS and dividend growth of 6.1% and 7.5%, respe
Slide 35: Appendix
APPENDIX EVERSSURCE ENERGY 34
Slide 36: Third Quarter and First Nine Months 2019 Results
35 3Q 2019 3Q 2018 3Q Change YTD 9 - 30 - 19 YTD 9 - 30 - 18 YTD Change $0.61 $0.55 $0.06 $1.32 $1.19 $0.13 0.33 0.34 (0.01) 1.07 1.04 0.03 (0.05) (0.04) (0.01) 0.18 0.16 0.02 0.06 0.06 0.00 0.08 0.08 0.00 0.03 0.00 0.03 0.04 0.05 (0.01) 0.98 0.91 0.07 2.69 2.52 0.17 --- --- --- (0.64) --- (0.64) $0
Slide 37: 2019 Financing Activity
36 2019 Financing Activity ▪ $1.3 billion of equity closed in June. Two - thirds of nearly 18 million shares subject to one - year forward sale arrangement • None of the forward has settled to date ▪ Approximately 900,000 treasury shares issued through 10/31/19 to fund dividend reinvestment, 401(k)
Slide 38: NSTAR Gas General Rate Review Filed
37 NSTAR Gas General Rate Review Filed ▪ On 11/8/19, NSTAR Gas filed a rate request seeking a $38 million base rate adjustment ▪ Request includes a proposed Performance Based Rate (PBR) mechanism (tied to a 5 - year stayout ) ▪ PBR adjustment includes inflation plus approximately 1.3% adder ▪ First