10-QPeriod: Q3 FY2021

EVERSOURCE ENERGY Quarterly Report for Q3 Ended Sep 30, 2021

Filed November 5, 2021For Securities:ES

Summary

This 10-Q filing for Eversource Energy (ES) focuses on market risk disclosures and controls and procedures, with limited new information beyond its 2020 10-K. The company's regulated entities effectively pass through commodity price risks to customers, mitigating direct earnings exposure from energy contracts. Interest rate and credit risks are managed according to established policies, with collateral held for certain energy supply contracts. Management has affirmed the effectiveness of the company's disclosure controls and procedures, with no material changes to internal controls over financial reporting during the quarter. Key risks highlighted, which are largely consistent with prior disclosures, revolve around regulatory and legislative actions. Adverse outcomes from state and federal regulatory commissions regarding rate filings, allowed returns on equity (ROE), or cost recovery, particularly for storm restoration and transmission projects, could negatively impact financial performance. Specific mention is made of complaints filed against electric companies under ISO-NE jurisdiction concerning alleged unjust and unreasonable ROEs, which could have material financial repercussions.

Financial Highlights

46 data points
Beta

Revenue

$2.44B

Net Income

$285.05M

11.7% Net Margin

EPS (Diluted)

$0.82

Total Assets

$48.01B

Cash & Equivalents

$88.20M

Free Cash Flow

-$75.08M

Financial Statements
Beta
Revenue$2.44B
Operating Expenses$1.95B
Operating Income$483.33M
Interest Expense$147.96M
Net Income$285.05M
EPS (Basic)$0.82
EPS (Diluted)$0.82
Shares Outstanding (Basic)344.02M
Shares Outstanding (Diluted)344.67M

Key Highlights

  • 1Regulated entities pass commodity price risk to customers, limiting direct earnings exposure from energy contracts.
  • 2Interest rate and credit risk management are in place, with $108.5 million in collateral held from counterparties as of September 30, 2021.
  • 3Management has concluded that disclosure controls and procedures are effective.
  • 4No material changes have occurred in internal controls over financial reporting during the quarter.
  • 5Regulatory and legislative actions remain a significant risk factor, potentially impacting earnings and liquidity.
  • 6Concerns exist regarding potential adverse decisions from regulatory bodies on rate filings, cost recovery, and allowed rates of return.
  • 7Specific mention of FERC complaints regarding alleged unjust and unreasonable ROEs for electric companies under ISO-NE jurisdiction.

Frequently Asked Questions

Eversource's regulated companies enter into energy contracts to serve customers, and the economic impacts of these contracts are passed on to customers. Consequently, the regulated companies do not have direct exposure to losses in future earnings or fair values due to these market risk-sensitive instruments.

No, the filing indicates that there have been no material legal proceedings identified and no material changes with regard to legal proceedings previously disclosed in the 2020 Form 10-K. Similarly, for risk factors, other than those already discussed, there have been no additional material risk factors identified or material changes to previously disclosed risks.

Management has evaluated the design and operation of the company's disclosure controls and procedures as of September 30, 2021, and concluded that they are effective. They ensure that required information is recorded, processed, summarized, and reported in a timely manner according to SEC rules and regulations. There have been no changes in internal controls over financial reporting during the quarter that materially affected them.

The primary regulatory risks stem from the actions of state and federal regulatory commissions and legislators. These include potential adverse outcomes in rate filings, challenges to cost recovery (including storm restoration costs), downward adjustments in allowed rates of return (ROE), and penalties or fines. Additionally, there are specific complaints filed with FERC regarding alleged unjust and unreasonable ROEs for electric companies under ISO-NE jurisdiction that could have a material impact.