8-KRegulation FDExhibits & Filings

EVERSOURCE ENERGY 8-K Report, Regulation FD Disclosure (Oct 4, 2021)

Filed October 4, 2021For Securities:ES

Summary

Eversource Energy, through its subsidiary The Connecticut Light and Power Company (CL&P), has entered into a comprehensive settlement agreement with various Connecticut state agencies, including the Department of Energy and Environmental Protection (DEEP), Office of Consumer Counsel (OCC), and Office of the Attorney General (AG). This agreement aims to resolve issues stemming from pending regulatory proceedings initiated by the Connecticut Public Utilities Regulatory Authority (PURA), particularly those related to Storm Isaias. The key financial implications for CL&P and Eversource Energy involve a total of $75 million in customer rate relief and assistance. This includes $65 million in customer bill credits over two months and $10 million for customer assistance initiatives. These amounts are expected to result in pre-tax charges to earnings in the third quarter of 2021. Importantly, this settlement prevents the implementation of previously proposed return on equity reductions by PURA, offering some relief to the company's profitability. Furthermore, CL&P has agreed to freeze its base distribution rates until at least January 1, 2024, with certain exceptions for other rate mechanisms and cost recovery outside of base rates. The agreement also involves CL&P withdrawing its appeals related to Storm Isaias, while retaining the opportunity to demonstrate the prudence of storm costs in future proceedings. The total expected after-tax charge to earnings for Eversource Energy related to this settlement and prior Storm Isaias penalties is $83.8 million, or $0.24 per share, for 2021.

Key Highlights

  • 1CL&P, a subsidiary of Eversource Energy, reached a settlement agreement with Connecticut state agencies and regulatory bodies.
  • 2The settlement includes $65 million in customer bill credits and $10 million for customer assistance initiatives, totaling $75 million in rate relief.
  • 3Eversource expects to recognize a combined pre-tax charge of $75 million in the third quarter of 2021 related to these customer benefits.
  • 4The settlement averts previously proposed reductions to CL&P's return on equity (90 and 45 basis points) by PURA.
  • 5CL&P's base distribution rates will be frozen until at least January 1, 2024, excluding certain other rate mechanisms and cost recovery processes.
  • 6CL&P will withdraw its pending appeals concerning PURA decisions related to Storm Isaias.
  • 7The total expected after-tax charge to earnings for Eversource Energy for 2021 due to this settlement and Storm Isaias penalties is $83.8 million, or $0.24 per share.

Frequently Asked Questions

Eversource Energy expects a total after-tax charge to earnings of $83.8 million, or $0.24 per share, for 2021. This includes charges for the settlement agreement and previously recorded Storm Isaias penalties.

CL&P has agreed to freeze its base distribution rates until at least January 1, 2024. This freeze applies to base rates but not to other rate mechanisms, reconciling mechanisms, formula rates, or cost recovery outside of base distribution rates.

By reaching this settlement, CL&P avoids a 90 basis point reduction to its return on equity from a prior PURA decision and a 45 basis point reduction from a draft decision. This prevents a negative impact on the company's profitability that would have resulted from these reductions.

The settlement resolves certain issues in pending regulatory proceedings and involves CL&P withdrawing its appeals related to Storm Isaias. However, CL&P will still have the opportunity to petition for and demonstrate the prudence of storm costs incurred in response to Storm Isaias in a future ratemaking proceeding.