EVERSOURCE ENERGY

Eversource Energy is a public utility holding company engaged primarily in the energy delivery business through its wholly-owned regulated utility subsidiaries, which include electric utilities (CL&P, NSTAR Electric, and PSNH), natural gas utilities (Yankee Gas, NSTAR Gas, and EGMA), and water utilities (Aquarion). The company operates within a regulated framework subject to oversight by the Federal Energy Regulatory Commission (FERC) and state regulatory bodies including the Connecticut Public Utilities Regulatory Authority (PURA), the Massachusetts Department of Public Utilities (DPU), and the New Hampshire Public Utilities Commission (NHPUC). The industry is characterized by rate regulation based on cost recovery, with rates designed to collect each company's costs to provide service including a return on investment. Key structural forces shaping competition include state-level climate goals, such as Connecticut's target of zero-carbon electricity by 2040 and economy-wide net-zero greenhouse gas emissions by 2050, and Massachusetts' requirements for electric sector modernization plans and natural gas local distribution companies to submit climate compliance plans. The company faces increasing regulatory focus on performance-based regulation, as evidenced by PURA's open proceeding to evaluate and implement performance-based regulation for electric distribution companies in Connecticut.

Eversource's competitive positioning is defined by its exclusive franchise service territories in Connecticut, Massachusetts, and New Hampshire, where no other entity may provide electric distribution service within CL&P's, NSTAR Electric's, or PSNH's service territories without written consent. The company's electric transmission segment operates as part of the New England transmission system under ISO-NE, with transmission rates calculated under a FERC-approved formula ratemaking framework. The company's regulated utilities have exclusive obligations to serve all retail customers within their service territories, providing a structural moat against direct competition for distribution services. Primary competitors are not explicitly named in the filing for distribution services, though the company faces competition for transmission projects through FERC's competitive solicitation processes, including ISO-NE's Longer-Term Transmission Planning competitive solicitation process. The company's natural gas utilities in Massachusetts face potential business model changes from the DPU's 'Future of Gas' docket, which may require significant changes to local distribution company planning processes.

Eversource generates revenue primarily through regulated electric distribution, electric transmission, natural gas distribution, and water distribution operations. The company's revenue model is predominantly recurring, derived from rate-regulated charges for delivering electricity, natural gas, and water to residential, commercial, and industrial customers. Revenue is generated through base distribution rates established in regulatory proceedings, which include fixed customer charges and demand or energy charges, as well as tracked distribution revenues that recover costs through commission-approved cost tracking mechanisms on a fully reconciling basis. For customers who do not choose competitive energy suppliers, the company purchases power on behalf of customers and passes the related cost without mark-up through to those customers, recording offsetting amounts in revenues and purchased power. The company's electric transmission revenues are calculated under a FERC-approved formula ratemaking framework that provides for annual reconciliation of actual costs including an allowed return on equity. Customer segments include residential, commercial, and industrial customers across all utility operations, with water distribution also serving municipal and fire protection customers.

Eversource's electric distribution segment consists of the distribution businesses of CL&P, NSTAR Electric, and PSNH, which are engaged in the distribution of electricity to retail customers in Connecticut, Massachusetts, and New Hampshire respectively, and the solar power facilities of NSTAR Electric. As of December 31, 2025, CL&P furnished retail franchise electric service to approximately 1.32 million customers in 157 cities and towns in Connecticut. NSTAR Electric furnished retail franchise electric service to approximately 1.62 million customers in 159 cities and towns in eastern and western Massachusetts, and owns, operates and maintains a total of 70 MW of solar power facilities on twenty-two sites in Massachusetts. PSNH furnished retail franchise electric service to approximately 549,000 retail customers in 206 cities and towns in New Hampshire. The electric transmission segment includes transmission facilities owned by CL&P, NSTAR Electric, and PSNH that are part of an interstate power transmission grid over which electricity is transmitted throughout New England. At the end of 2025, estimated transmission rate base was approximately $11.3 billion, including approximately $4.6 billion at CL&P, $4.4 billion at NSTAR Electric, and $2.3 billion at PSNH.

The natural gas distribution segment includes NSTAR Gas, which distributes natural gas to approximately 306,000 customers in 59 communities in central and eastern Massachusetts; EGMA, which distributes natural gas to approximately 335,000 customers in 66 communities throughout Massachusetts; and Yankee Gas, which distributes natural gas to approximately 256,000 customers in 85 cities and towns in Connecticut. Total throughput in 2025 was approximately 69.9 Bcf for NSTAR Gas, 56.6 Bcf for EGMA, and 61.6 Bcf for Yankee Gas. The water distribution segment operates through Aquarion Company, which owns five separate regulated water utilities providing water services to approximately 249,000 residential, commercial, industrial, municipal and fire protection customers in 73 towns and cities in Connecticut, Massachusetts, and New Hampshire. As of December 31, 2025, approximately 91 percent of Aquarion's customers were based in Connecticut. The water utilities obtain water supplies from owned surface water sources and groundwater supplies with a total supply yield of approximately 135 million gallons per day, with approximately 98 percent of annual production being self-supplied.

In 2025, Eversource completed several significant capital events and operational developments. On May 30, 2025, Eversource entered into an equity distribution agreement to offer and sell up to $1.2 billion of its common shares through an at-the-market equity offering program, and issued 7,130,134 common shares resulting in proceeds of $465.4 million net of issuance costs. The company issued $2.94 billion of new long-term debt and repaid $1.40 billion of long-term debt in 2025. On July 25, 2025, the NHPUC approved a permanent rate increase of $100.7 million for PSNH effective August 1, 2025. On November 5, 2025, PURA issued a final decision in the Yankee Gas distribution rate case that included a distribution rate increase of $95.7 million effective November 1, 2025. On November 19, 2025, PURA denied the application to approve the sale of Aquarion, which was subsequently appealed and remanded back to PURA by the Connecticut Superior Court on January 15, 2026. On December 30, 2025, NSTAR Gas and the Massachusetts Office of the Attorney General reached a joint settlement agreement that allowed for reinstatement of a rate base reset of $45.0 million increase to base distribution rates effective January 1, 2026. The company also recorded a pre-tax charge of $284.0 million in the third quarter of 2025 to increase the contingent liability for purchase price adjustments associated with the offshore wind projects.

Eversource's total operating revenues for 2025 were $13,547.2 million, compared to $11,900.8 million in 2024, an increase of $1,646.4 million. Net income attributable to common shareholders was $1,692.4 million, or $4.56 per diluted share, in 2025, compared to $811.7 million, or $2.27 per diluted share, in 2024. Excluding charges related to offshore wind investments and the loss on the pending sale of Aquarion, non-GAAP earnings were $1,767.4 million, or $4.76 per share, in 2025, compared to $1,634.0 million, or $4.57 per share, in 2024. Operating income increased to $2,988.6 million in 2025 from $2,408.7 million in 2024. Cash flows provided by operating activities totaled $4.11 billion in 2025, compared with $2.16 billion in 2024. Investments in property, plant and equipment totaled $4.16 billion in 2025, compared with $4.48 billion in 2024.

Eversource projects that it will earn within a 2026 earnings guidance range of between $4.80 per share and $4.95 per share. The company also projects that its long-term EPS growth rate through 2030 will be in a 5 to 7 percent range, using 2025 non-GAAP EPS of $4.76 per share as the base year.

Eversource is pursuing significant investment in electric transmission infrastructure, with projected capital expenditures of $7.24 billion from 2026 through 2030 for the electric transmission segment. Key transmission projects include the Greater Cambridge Energy Program, which will construct Eversource's first underground transmission substation in Cambridge, Massachusetts, with a total estimated project cost of approximately $1.84 billion, including $1.38 billion allocated for transmission and $460 million for distribution. The initial in-service date for the project is June 2029, with remaining circuits placed in-service throughout 2030 and into 2031. As of December 31, 2025, $200.9 million has been spent on the project. The company is also pursuing investment opportunities in electric transmission facilities, distributed generation, and other clean-energy infrastructure, including interconnection facilities, though these involve significant risks including permitting and regulatory approval processes.

Eversource is investing in grid modernization and clean energy infrastructure to support state climate goals. In Massachusetts, NSTAR Electric's Electric Sector Modernization Plan was approved by the DPU in 2024, with an initial five-year plan proposing incremental distribution capital investments of $608 million and incremental distribution expense of $211 million. The DPU approved an interim cost recovery mechanism with a total spending cap of $139 million for the first term of July 1, 2025 through June 30, 2030, which included company-proposed incremental capital investment of $95 million and incremental expense of $44 million. The company is also evaluating opportunities for its natural gas system and exploring alternative, less carbon-intensive technologies like networked geothermal for heating and cooling. In Connecticut, legislation includes a target to achieve zero-carbon electricity by 2040 and economy-wide net-zero greenhouse gas emissions by 2050, which may create investment opportunities in grid infrastructure that enables more clean energy interconnection.

Eversource's natural gas distribution segment is pursuing continued investment in aging infrastructure replacement, with projected capital expenditures of $6.80 billion from 2026 through 2030. The company's natural gas utilities are subject to regulatory frameworks that allow for cost recovery through mechanisms such as the Gas System Enhancement Program in Massachusetts and the Distribution Integrity Management Program in Connecticut. However, the Massachusetts 'Future of Gas' docket may require significant changes to the local distribution company planning process and business models, including the submission of climate compliance plans every five years beginning April 1, 2025. The company does not believe there is any indication of an inability to recover costs or risk of impairment of NSTAR Gas' and EGMA's natural gas assets at this time. The company is also evaluating emerging technologies such as energy storage and automation programs that improve reliability.

Eversource projects to make total capital expenditures of $26.51 billion from 2026 through 2030, including $11.24 billion in electric distribution, $6.80 billion in natural gas distribution, $7.24 billion in electric transmission, and $1.23 billion in information technology and facilities upgrades and enhancements. Additionally, investments for the water distribution business are expected to total approximately $1.3 billion from 2026 through 2030. The company's capital allocation strategy includes funding these investments through cash flows from operations, short-term borrowings, long-term debt issuances, and equity issuances. On May 30, 2025, Eversource entered into an equity distribution agreement to offer and sell up to $1.2 billion of its common shares through an at-the-market equity offering program. The company paid dividends totaling $3.01 per common share in 2025, and on January 27, 2026, the Board of Trustees approved a common share dividend payment of $0.7875 per share payable on March 31, 2026.

Eversource faces several structural headwinds and constraints that management has explicitly flagged. The company is exposed to significant uncertainty regarding the applicability of FERC's MISO ROE order to the NETOs' four pending ROE complaint cases, which could materially impact financial condition, results of operations, and cash flows. A change of 10 basis points to the base ROE used to establish reserves would impact Eversource's after-tax earnings by an average of approximately $3 million for each of the four 15-month complaint periods, and prospectively, a change of 10 basis points to the base ROE would impact future annual after-tax earnings by approximately $7 million per year. The company also faces variability in costs and final investment returns related to the Revolution Wind and South Fork Wind offshore wind projects, with a contingent liability of $448.2 million recorded as of December 31, 2025 for expected future payments under the sale agreement with Global Infrastructure Partners. Factors that could increase the obligation include construction cost overruns, delays, and the eligibility for federal investment tax credits at a value lower than assumed.

Eversource faces regulatory and legislative headwinds in its operating jurisdictions. In Connecticut, PURA's performance-based regulation proceeding could result in changes to revenue adjustment mechanisms, performance metrics, and integrated distribution system planning that may impact CL&P's future rate structure. The company also faces uncertainty regarding the recovery of deferred storm costs, with $2.06 billion of deferred storm costs that either have yet to be filed with the applicable regulatory commission, are pending regulatory approval, or are subject to prudency review as of December 31, 2025. In Massachusetts, the DPU's 'Future of Gas' docket may require significant changes to natural gas local distribution company planning processes and business models. Customer affordability concerns, driven by volatility in energy supply costs, evolving public policy mandates, and inflationary pressures, may limit the company's ability to recover costs or fund infrastructure upgrades. The company also faces risks related to climate change, including increased severity of extreme weather events that could cause significant damage to facilities and require extensive expenditures.

Eversource faces financial and market constraints including limits on access to capital and increases in the cost of capital. The company's credit ratings and outlooks as of the filing date include Eversource Parent at BBB+ (Stable) from S&P, Baa2 (Negative) from Moody's, and BBB (Negative) from Fitch. Downgrades of credit ratings or disruptions in global capital markets could increase borrowing costs or restrict access to capital markets. The company also faces risks related to pension obligations, with future costs and liabilities dependent on factors including investment performance and discount rate assumptions. As of December 31, 2025, $1.39 billion of Eversource's long-term debt matures within the next 12 months, including $1.00 billion at Eversource parent and $300.0 million at NSTAR Electric. The company's ability to meet debt service obligations and pay dividends is largely dependent on the ability of its subsidiaries to pay dividends to Eversource parent.

Eversource faces material risks from the four pending FERC ROE complaints against the New England Transmission Owners, which challenge the base ROE of 11.14 percent that had been utilized since 2005 and seek reductions. The company has recorded a reserve of $39.1 million pre-tax for the second complaint period, and a change of 10 basis points to the base ROE would impact future annual after-tax earnings by approximately $7 million per year. The company also faces significant financial exposure from the offshore wind contingent liability, which totaled $448.2 million as of December 31, 2025, related to expected future payments under the sale agreement for the South Fork Wind and Revolution Wind projects. Factors that could increase this obligation include construction cost overruns, delays, and the eligibility for federal investment tax credits at a value lower than the 40 percent level assumed in the purchase price. The company has $2.06 billion of deferred storm costs subject to prudency review as of December 31, 2025, with the potential for disallowance if regulators find actions were imprudent. The company also faces risks related to the recovery of costs in rate proceedings, as evidenced by the Yankee Gas rate case decision which resulted in a net pre-tax loss to earnings of $8.5 million in the fourth quarter of 2025 due to disallowances of certain capitalized costs, and the NSTAR Gas settlement which resulted in a pre-tax charge of $12.2 million. Additionally, the company has $4.23 billion of goodwill on its consolidated balance sheet as of December 31, 2025, which could be impaired if reporting unit fair values decline.

Management's message emphasizes the company's focus on regulated utility operations and the execution of its capital investment program across electric transmission, electric distribution, and natural gas distribution segments. The company projects 2026 earnings guidance of between $4.80 per share and $4.95 per share, and a long-term EPS growth rate through 2030 of 5 to 7 percent using 2025 non-GAAP EPS of $4.76 per share as the base year. Management highlights the successful resolution of several regulatory proceedings, including the PSNH distribution rate case which approved a permanent rate increase of $100.7 million effective August 1, 2025, and the Yankee Gas distribution rate case which included a distribution rate increase of $95.7 million effective November 1, 2025. The company also emphasizes the joint settlement agreements reached in Massachusetts, including the NSTAR Electric and EGMA settlement that resulted in a net pre-tax benefit to earnings of $64.8 million in the fourth quarter of 2025, and the NSTAR Gas settlement that allowed for reinstatement of a rate base reset of $45.0 million. Management's strategic priorities include continuing to invest in transmission and distribution infrastructure to improve reliability and resiliency, pursuing regulatory outcomes that support cost recovery and adequate returns, and managing the remaining financial exposure from the sale of offshore wind investments. The company also emphasizes its commitment to reducing greenhouse gas emissions, having replaced its carbon neutrality goal with expanded targets aiming for a 45 percent reduction in both Scope 1 and 2 emissions by 2035 and net zero emissions by 2050 for both Scope 1 and 2 as well as Scope 3 emissions associated with customer energy use.