8-KFinancial Events

EVERSOURCE ENERGY 8-K Report, Material Impairment (Jul 25, 2019)

Filed July 25, 2019For Securities:ES

Summary

Eversource Energy (ES) has filed an 8-K report detailing a significant impairment charge related to its Northern Pass transmission line project. The company recorded a pre-tax impairment charge of approximately $240 million (estimated $200 million after-tax, or $0.64 per share) due to the New Hampshire Supreme Court's decision on July 19, 2019, affirming the denial of the project's siting application by the New Hampshire Site Evaluation Committee (NHSEC). This impairment charge primarily includes capitalized project costs, such as engineering, siting, permitting, and legal expenses, as well as the carrying value of land acquired for the project. While a substantial write-down, the company anticipates no significant future cash expenditures related to this impairment. The charge is recognized as a subsequent event impacting the financial statements for the period ended June 30, 2019. Investors should note that certain costs are subject to reimbursement agreements and tax benefits have been considered, partially mitigating the net impact.

Key Highlights

  • 1Eversource Energy recorded a significant impairment charge of approximately $240 million pre-tax ($200 million after-tax) related to the Northern Pass project.
  • 2The impairment is a direct result of the New Hampshire Supreme Court's decision on July 19, 2019, upholding the denial of the project's siting permit.
  • 3The charge includes previously capitalized project costs (engineering, siting, permitting, legal) and land acquired for the project.
  • 4The impairment charge is estimated to reduce earnings per share by $0.64.
  • 5Eversource does not expect significant future cash expenditures related to this impairment.
  • 6The company recognized a receivable for certain cost reimbursement agreements and considered tax benefits, totaling approximately $115 million, which offset some of the impairment impact.
  • 7The impairment is treated as a subsequent event impacting the financial statements for the period ending June 30, 2019.

Frequently Asked Questions

The Northern Pass was a planned 1,090 megawatt high voltage direct current transmission line intended to interconnect New Hampshire with Québec. It was a significant infrastructure project for Eversource Energy.

The impairment charge was triggered by the New Hampshire Supreme Court's decision on July 19, 2019, which denied Northern Pass's appeal and affirmed the NHSEC's prior decision to deny the project's siting application. This made the construction and operation of the project no longer probable.

Eversource recorded an estimated pre-tax impairment charge of $240 million, which translates to approximately $200 million after-tax. This is expected to reduce earnings per share by $0.64. The company has factored in reimbursements and tax benefits, totaling about $115 million, which partially offset the charge.

No, Eversource stated that it does not expect any significant estimated future cash expenditures associated with this impairment charge.