Eversource Energy (d/b/a) · NYSE:ES
Eversource Energy (d/b/a) — Eversource Energy — FY2019 Earnings Presentation
38 slides from Eversource Energy (d/b/a)'s earnings presentation, Feb 19, 2020
Slide 1: 2019 Year-End Investor Call
2019 Year - End Investor Call February 20, 2020
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: Agenda
Agenda Jim Judge Chairman, President & CEO Phil Lembo Executive Vice President and CFO ▪ 2019 Successes ▪ Clean Energy Leadership ▪ Offshore Wind Update ▪ Shareholder Value ▪ 2019 Performance ▪ 2020 Outlook ▪ 2020 - 2024 Capex and Growth Rate ▪ Regulatory Update ▪ Financing Plans 2
Slide 4: Jim Judge, Chairman, President & Chief Executive Officer
Jim Judge Chairman, President & Chief Executive Officer 3
Slide 5: 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 4 Total Shareholder Return January 2020 2019 3 - Year 5 - Year 10 - Year Eversource 8.7% 34.4% 68.7% 85.8% 356.7% EEI 40 - Company Index 6.8% 25.8% 45.7% 64.4% 214.0% S&P 500 0.0% 31.5% 53.2% 73.9% 2
Slide 6: Operating Performance Continues to Improve
Operating Performance Continues to Improve SAFETY Injury rate per 100 employees (DART) 0.7 Average months between interruptions (MBI) System average interruption duration (SAIDI) On - time emergency response GAS RESPONSE ELECTRIC RELIABILITY 0.7 2019 2018 21.6 17.2 59.2 7 7.5 99.7% 99.5% Top Decile
Slide 7: Eversource Recognized as the Leading Energy Company
Eversource Recognized as the Leading Energy Company 6 #1 Energy and Utilities Company on Newsweek magazine’s Most Responsible Companies list Eversource became a Most Honored Company in 2020 Top level ESG and ESG risk rating #1 for utilities on list of America’s Most Just Companies
Slide 8: Eversource Only US Energy Utility Targeting Carbon Neutrality By 2030
7 Eversource Gas Emissions in Metric Tonnes CO2e Eversource Only US Energy Utility Targeting Carbon Neutrality By 2030 HOW WE’LL GET THERE • Reduce our own energy use by improving the efficiency of our facilities and reducing fleet emissions. • Reduce line losses in the electric transmission and dis
Slide 9: 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 2020 2020 Commercial Operation End of 2022 End of 2023 End of 2024 Price as of first day of commercial operation ~ $160/MWH for 90 MW ~ $86/MWH for 40 MW (avg. annual esc
Slide 10: Our Competitiveness in New England and New York Auctions
9 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 11: Earnings Growth Could Accelerate in 2024
10 Earnings Growth Could Accelerate in 2024 Should Revolution Wind Provide Meaningful Net Income That Year $2.28 $2.53 $2.65 $2.81 $2.96 $3.11 $3.25 $3.45 2012A* 2013A* 2014A* 2015A* 2016A 2017A 2018A 2019A* 2020E 2021E 2022E 2023E 2024E *Excludes merger and integration costs in 2012 - 2015 and NPT
Slide 12: Dividend Growth Continues to Outperform Peers
Dividend Growth Continues to Outperform Peers 11 Annualized Dividend 5% - 7% $1.78 $2.02 $0.00 $0.50 $1.00 $1.50 $2.00 $2.50 2016 2017 2018 2019 2020 Payout Ratios: 60% 61% 62% 62%* +$0.11 +$0.12 +$0.12 +$0.12 $2.27 $1.90 $2.14 *Excludes charges related to NPT in 2019 +$0.13
Slide 13: Phil Lembo, Executive Vice President & Chief Financial Officer
Phil Lembo Executive Vice President & Chief Financial Officer 12
Slide 14: 2019 vs. 2018 Financial Results
Q4 2019 Q4 2018 Change Full Year 2019 Full Year 2018 Change $0.28 $0.24 $0.04 $1.59 $1.44 $0.15 0.36 0.31 0.05 1.43 1.34 0.09 0.12 0.14 (0.02) 0.30 0.29 0.01 0.02 0.01 0.01 0.11 0.10 0.01 (0.02) 0.03 (0.05) 0.02 0.08 (0.06) $0.76 $0.73 $0.03 $3.45 $3.25 $0.20 --- --- --- (0.64) --- (0.64) $0.76 $0.7
Slide 15: 2020 Guidance Key Drivers Compared to 2019 Results
2020 Guidance Key Drivers Compared to 2019 Results EPS Range $3.60 - $3.70 • Distribution rate increases • Transmission rate base growth • Growth in distribution capital tracking programs • Higher depreciation and property taxes • Higher interest expense • Higher share count 14
Slide 16: Projected Capital Expenditures For Core Businesses
15 $889 $994 $1,030 $910 $832 $855 $711 $668 $1,082 $1,145 $1,221 $1,347 $1,208 $1,162 $1,170 $1,234 $335 $404 $453 $470 $498 $501 $507 $537 $14 $102 $110 $124 $127 $134 $147 $153 $152 $185 $239 $220 $169 $165 $171 $171 $0 $500 $1,000 $1,500 $2,000 $2,500 $3,000 $3,500 2017A 2018A 2019A 2020E 2021E
Slide 17: $1.65 Billion Increase in 2020-2023 Core Business Capex Since February 2019 Plan
16 $1.65 Billion Increase in 2020 - 2023 Core Business Capex Since February 2019 Plan Transmission Represents 60% of Increase $2,358 $4,515 $1,871 $514 $523 $3,308 $4,887 $1,976 $532 $725 $0 $1,000 $2,000 $3,000 $4,000 $5,000 $6,000 Electric Transmission Electric Distribution Natural Gas Distributio
Slide 18: Incremental Investments Expected to Grow Aquarion Rate Base Nearly 3 Times Faster
17 Incremental Investments Expected to Grow Aquarion Rate Base Nearly 3 Times Faster Than Before Eversource Acquisition $690 $710 $740 $760 $820 $887 $927 $996 $1,077 $1,167 $1,257 2014A 2015A 2016A 2017A 2018A 2019A 2020E* 2021E* 2022E* 2023E* 2024E* Year - End Rate Base $ in Millions *Reflects rat
Slide 19: What Would be Additive to the Core Business Investment Forecast?
18 What Would be Additive to the Core Business Investment Forecast? ▪ Grid modernization at CL&P, PSNH ▪ AMI ▪ Additional capital requirements resulting from MA statewide natural gas distribution assessment
Slide 20: Rate Base by Core Business – Current and Future
47% 11% 19 2018 Year - End Rate Base Projected 2024 Year - End Rate Base Transmission Electric Distribution & MA Solar Natural Gas Distribution Water $18.1 billion* $27.0 billion* Rate Base by Core Business – Current and Future 37% 14% 45% 5% 5% 36% Note: Excludes offshore wind investments *Rate bas
Slide 21: Factors Expected to Contribute to EPS Growth in Addition to Rate Base Growth
Factors Expected to Contribute to EPS Growth in Addition to Rate Base Growth » Improved results at distribution companies that underearned their allowed returns in 2018 » Incentives from growing energy efficiency programs » Conservatism of O&M guidance; flat through forecast period 20
Slide 22: Current Rate Cases
21 Current Rate Cases • 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, following settlement with Staff, the NHPUC authorized PSNH to raise annual
Slide 23: FERC Transmission New England ROE Update
22 FERC Transmission New England ROE Update • Oct. 2018 FERC Order in New England ROE cases proposed new methodology to address issues raised by Court in vacating Opinion 531A (New England ROE Complaint I) • This new methodology provided a path forward to resolve 2011, 2012, 2014 and 2016 complaints
Slide 24: Status of ES Equity Issuances
23 Status of ES Equity Issuances $1.3 billion block equity • 5.98 million shares issued on 6/4/19 • 6 million shares from forward sale closed on 12/30/19 • Remaining 5.96 million shares will close by 5/29/20 $500 million from DRP, employee plans • Nearly 1.1 million Treasury Shares issued from 1/1/1
Slide 25: 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 Seven - year average O&M reduction 2+%/yr. through 2019 ( $220M) 1. Exceed industry EPS and dividend growth Seven - year average recurring EPS and dividend growth of 6.1% and 7.2%,
Slide 26: Appendix
PD RR a everseunce ENERGY APPENDIX
Slide 27: Projected Transmission Capital Expenditures
26 $432 $466 $460 $384 $209 $184 $182 $141 $302 $334 $380 $366 $478 $436 $296 $284 $155 $194 $190 $160 $145 $235 $233 $243 $0 $200 $400 $600 $800 $1,000 $1,200 2017A 2018A 2019A 2020E 2021E 2022E 2023E 2024E CL&P NSTAR Electric PSNH $ in Millions Projected Transmission Capital Expenditures Other con
Slide 28: Transmission Rate Base Growth Projections
$2,766 $3,114 $3,274 $3,528 $3,699 $3,682 $3,670 $3,652 $2,517 $2,696 $2,928 $3,122 $3,580 $3,917 $4,108 $4,149 $777 $941 $1,062 $1,232 $1,323 $1,436 $1,617 $1,792 $0 $2,000 $4,000 $6,000 $8,000 $10,000 $12,000 2017A* 2018A* 2019A* 2020E* 2021E* 2022E* 2023E* 2024E* CL&P NSTAR Electric PSNH Transmis
Slide 29: Progress on Major Transmission Reliability Projects
28 • New 13 - mile project between Portsmouth and Madbury , NH • Construction began in May 2019 • Projected completion: Q2 2020 • Total projected investment: $125 million • Investment through December 31: $89.0 million Seacoast Reliability Project • 24 of 27 projects now in service • Three projects
Slide 30: Projected Investment in Pipe Replacements 2019-2024
Projected Investment in Pipe Replacements 2019 - 2024 All With Timely Cost Recovery $68 $72 $79 $87 $95 $103 $113 $112 $126 $130 $137 $144 $181 $184 $205 $217 $232 $247 $0 $50 $100 $150 $200 $250 2019A 2020E 2021E 2022E 2023E 2024E CT Accelerated Replacement Program MA Gas System Enhancement Program
Slide 31: Key Factors Helping to Keep Customer Bills In Check
Key Factors Helping to Keep Customer Bills In Check » Decline in Eversource O&M - Down approximately $220 million from 2012 » Lower corporate tax rates flowing through to customers - Estimated savings of approximately $300 million annually, including EDIT refunds » Increased efficiency of buildings
Slide 32: Estimated Generation Capacity Costs Paid By New England Electric Customers
Estimated Generation Capacity Costs Paid By New England Electric Customers $3,100 $4,000 $3,000 $2,400 $2,100 $1,600 $980 $0 $500 $1,000 $1,500 $2,000 $2,500 $3,000 $3,500 $4,000 $4,500 FCA 8 FCA 9 FCA 10 FCA 11 FCA 12 FCA 13 FCA 14 June 2017 - May 2018 June 2021 - May 2022 June 2022 - May 2023 June
Slide 33: Recent Distribution Rate Decisions
32 ▪ Effective Date: 5/1/18 ▪ Authorized ROE: 9.25% ▪ Term: 3 years ▪ Base rate increases: 5/1/18 = $64.3M 5/1/19 = $31.1M 5/1/20 = $29.2M ▪ Tracking mechanism for capex over $270 million ▪ Effective date: 11/15/18 ▪ Authorized ROE: 9.3% ▪ Base rate increases: 11/15/18 = $1.4M 1/1/20 = $15.8M 1/1/21
Slide 34: Framework for an Equitable Modern Grid in CT
• AMI • Electric Storage • Zero emission vehicles • Innovative technology • Interconnection standards • Energy affordability 33 ▪ 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 focus
Slide 35: NSTAR Electric Clean Energy and Grid Modernization Initiatives
34 NSTAR Electric Clean Energy and Grid Modernization Initiatives Grid Modernization: • Approved $133 million in grid facing investments in visibility and automation • New 2021 - 2023 plan due to DPU by mid - 2020 Solar: • All sites now in service • 70 MW in operation Storage: • Planning and permitt
Slide 36: MA Grid Mod Status – Implementing 2018-2020 Plan
MA Grid Mod Status – Implementing 2018 - 2020 Plan Preparing Filing for 2021 - 2023 Plan 35 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 37: Aquarion Water's $200 Million Plan to Improve SW CT Reliability
36 Aquarion Water’s $200 Million Plan to Improve SW CT Reliability • Phase 1 – Water mains complete $10 million • Phase 2 – Stamford mains complete $12 million • Phase 3 – Partial parallel SWRP projected $58 million • Routing Analysis – 2018 - 2019 • Design – 2020 • Execution – 2021 thru 2024 • Phas
Slide 38: Customers, Shareholders Benefiting From Lower Interest Rates
37 Customers, Shareholders Benefiting From Lower Interest Rates Recent Maturities Size (in $millions) Coupon Length in Years ES Parent $350 4.50% 10 CL&P $250 5.50% 10 NSTAR Electric $95 5.10% 10 PSNH $150 4.50% 10 Yankee Gas $50 $50 5.26% 4.87% 15 10 NSTAR Gas $125 $25 4.46% 9.95% 10 30 Recent Issu