Welcome to the Eversource Energy 2021 Year End Results Conference Call. My name is John, I'll be your operator for today's call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session. Please note, the conference is being recorded. And I will now turn the call over to Jeff Kotkin.

Thank you, John. Good morning and thank you for joining us. I'm Jeff Kotkin, Eversource Energy's Vice President for Investor Relations. During this call, we'll be referencing slides that we posted last night on our website. And as you can see on Slide 1, some of the statements made during this investor call may be forward-looking as defined within the meaning of the Safe Harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. These forward-looking statements are based on management's current expectations and are subject to risk and uncertainty, which may cause the actual results to differ materially from forecasts and projections. These factors are set forth in the news release issued yesterday afternoon. Additional information about the various factors that may cause actual results to differ can be found in our annual report on Form 10-K for the year ended December 31, 2021. Additionally, our explanation of how and why we use certain non-GAAP measures and how those measures reconcile to GAAP results is contained within our news release and the slides we posted last night and in our most recent 10-K and 10-Q. Speaking today will be Joe Nolan, our President and Chief Executive Officer; and Phil Lembo, our Executive Vice President and CFO. Also joining us today are John Moreira, our Treasurer and Senior VP for Finance and Regulatory; and Jay Buth, our VP and Controller. Now I will turn to Slide 3 and turn over the call to Joe.

Good morning. Thank you, Jeff. I will start with an overview of our team's 2021 operating accomplishments, update you on offshore wind projects, and discuss recent progress executing our clean energy strategy. I will then turn it over to Phil for a review of our financial performance and a new five-year forecast. We accomplished a great deal in 2021. As you can see on Slide 4, we had a terrific year operationally. We were able to put closure around a challenging set of regulatory proceedings in Connecticut. We made very significant progress on offshore wind projects and we have enthusiastically engaged the entire company around our target of having operations be carbon neutral by 2030. Turning to Slide 5 and operations. You can see that our electric service reliability and restoration performance were top decile and top quartile respectively. And our safety metrics as well, we're well above average. We continue to invest to enhance our customers' electric service reliability and the results are apparent. Even during a year when we had 20 major storm events and dozens of less severe events around our three states. We also continue to refine our emergency response efforts, which were on display again just 2.5 weeks ago, when a weekend blizzard hit South Massachusetts with hurricane-force winds and snow depths up to 2.5 feet. Thousands of our employees and contractors worked through biting cold to restore about 300,000 outages. Winds were still howling after the snowfall ended. But our crews were able to get our customers back online within two days. Most of our storm damage was preventative. We continue to work closely with our regulators in the communities we serve to ensure that we are installing more resilient equipment on our system and addressing the heavy vegetation along our roadways. We are committed to making the important investments needed to maintain high levels of electric service reliability and providing the grid resiliency needed to support our region's aggressive clean energy goals. In addition, we continue to accelerate the replacement of our most leak-prone natural gas and water infrastructure. Turning to Slide 6, you can see that despite strong results, we, like many of the high-performing utilities, underperformed both our peers and the broader markets in 2021 from a total return standpoint. This comes after some very strong years of relative outperformance by Eversource that continues to place our medium and long-term total return significantly above the EEI Index. There are solid reasons for our strong long-term record. First, since the 2012 merger that created Eversource, we have consistently achieved short-term and long-term earnings per share growth of about 6%. Going forward, we continue to expect our regulated businesses to support EPS growth in the upper half of the range of 5% to 7%. That earnings growth has enabled us to achieve attractive long-term dividend growth as well. As you can see on Slide 7, earlier this month, our Board approved a $0.14 per share increase in our annualized dividend, an increase that is consistent with our long-term growth projection. Not only is that level of dividend growth attractive to our investors, the low-60s payout ratio that it represents allows us to reinvest more than $500 million of earnings annually back into our business, reducing our incremental debt needs and supporting our strong credit rating.

Thank you, Joe. And this morning, I'm going to cover several areas: 2021 results, our 2022 earnings guidance and updated five-year regulated investment plan and long-term outlook, an update on some of the current regulatory proceedings, and finally, additional details around our offshore wind investment plan. So let me get started. Start with the 2021 results on Slide 15. Our GAAP earnings for 2021 were $3.54 per share compared to $3.55 in 2020. In the fourth quarter of 2021, GAAP earnings were $0.89 per share compared with GAAP earnings of $0.79 in the fourth quarter of 2020. All those periods include acquisition costs primarily related to our purchase in 2020 of the assets of Columbia Gas in Massachusetts, which we now call Eversource Gas of Massachusetts or EGMA. As I noted on our third-quarter call, 2021 full-year results also include charges related to the settlement agreement in Connecticut. Excluding those non-recurring charges, we earned $3.86 per share in 2021, that's up 6% from $3.64 in 2020. For the fourth quarter, excluding these charges, we earned $0.91 per share in 2021 compared with earnings of $0.85 in the fourth quarter of 2020. To break down the earnings into segments, Electric Transmission earned $1.58 per share for the full year 2021 compared with earnings of $1.48 in 2020. Higher earnings resulted from continued investment in our transmission system; we invested just over $1.1 billion in our transmission facilities in 2021, compared to just about $964 million in 2020. Our Electric Distribution segment earned $1.61 per share in 2020. Excluding the settlement charge, this compared to $1.60 in 2020. The higher revenues were largely offset by higher O&M, depreciation, property tax, and interest expense. These higher expenses stem from our ongoing investments to improve service and reliability for our customers. We invested about $1.25 billion in our electric distribution system in 2021, and this is up from just under $1.2 billion in 2020.

Our Natural Gas Distribution segment earned $0.59 per share in 2021 compared with earnings of $0.40 in 2020. This growth was driven primarily by having a full year of EGMA earnings included in our financials in 2021, compared to less than three months of EGMA earnings in 2020. This also includes the ongoing investment in safety and reliability of our natural gas systems, where we invested about $800 million in 2021. Our Water Distribution segment earned $0.11 per share in 2021, and this is down a $0.01 from $0.12 in 2020. The small decline primarily reflects the sale of the water delivery system around Hingham, Massachusetts that occurred in 2020. We continue to invest in clean and reliable water delivery with investments in our water segment totaling $144 million in 2021. This is up 13% from the prior year and about double from where it was when we first acquired Aquarion in 2017.

Excluding acquisition-related charges, the Eversource Parent segment lost $0.03 per share in 2021 compared to earnings of $0.04 in 2020. This change is largely due to a higher effective tax rate. Overall, as Joe covered in his remarks, we're very pleased with the strong year we had as we successfully overcame many challenges and delivered very positive results for our customers and for all of our stakeholders. From 2021 results, I'll turn to our 2022 guidance in Slide 16. We're projecting recurring earnings of between $4 and $4.17 per share this year compared with $3.86 we earned in 2021. The midpoint of that range reflects a 6% increase over 2021. This range excludes the remaining cost we expect to incur as we complete the integration of EGMA operations from NiSource to Eversource systems in 2022. The primary growth drivers are our ongoing investment in our Electric Transmission segment, where we expect to invest approximately $1.1 billion in 2022. The higher revenues from our Distribution segments, much of it relates to ongoing reliability and resiliency investments with existing recovery mechanisms and a performance-based revenue adjustment at NSTAR Electric. Those higher revenues will be partially offset by the anticipated increase in depreciation, property tax, and interest expense related to our customer-focused investments. On Slide 17, you see that we are reiterating our long-term earnings per share guidance in the upper half of the 5% to 7% growth rate from our core regulated businesses, with 2021 recurring EPS of $3.86 as the base level. To be clear, this guidance excludes earnings from offshore wind projects. On Slide 18, you can see that the primary driver of this growth is our regulated capital program, which continues to make our energy and water delivery system safer, more reliable, and more resilient for our customers. We expect to invest approximately $18.1 billion in those systems over the five-year period of 2022 through 2026. That compares with the $17 billion investment plan we discussed with you a year ago, which was for the period of 2021 through 2025. On the distribution side, we assume that we will invest nearly $400 million over the next five years on grid modernization and electric vehicle charging infrastructure in Massachusetts, which is somewhat above our recent spending levels there. We receive timely recovery of these investments with the return. In Connecticut and New Hampshire, we have not assumed any grid modernization investments at this time. As you can see on Slide 19, these investments in our core business are projected to produce a rate base CAGR of approximately 7.1% over the forecast period. Slide 20 lists the investments that are included in the five-year estimate and what remains outside of it, but we continue to exclude AMI from our core capital program. As Joe indicated in his remarks, dockets to implement AMI are very active in both Massachusetts and Connecticut and may be concluded later this year. However, they are not yet at the point where we should be including them in our capital forecast. Altogether, implementing AMI in the two states would require about $1 billion of investment in order to deliver long-term customer savings, enhance grid resiliency, and enable clean energy benefits. Additionally, it is becoming clear that significant additional transmission investment beyond the $500 million will be needed to reliably tie in the 9,000 megawatts of offshore wind that Massachusetts, Connecticut, and Rhode Island are targeting. These investments will extend beyond our forecast period and are therefore excluded from the forecast. Finishing up my discussion on the regulated business, I'll first turn to a review of our current regulatory items. As you can see on Slide 21, we continue to await FERC's ruling on several items. The first of the four complaints that were filed beginning back in 2011 challenging the return on equity authorized for all the New England electric transmission owners. The others are generic dockets. One is looking at a 50 basis point RTO adder and another looking at transmission incentives. On the distribution side, we are currently operating under multi-year rate plans in most of our distribution jurisdictions. CL&P's base rate freeze was approved as part of the comprehensive settlement Joe mentioned earlier. PSNH is currently in the second year of a multi-year rate plan. Our two Massachusetts natural gas delivery utilities are operating in the early years of eight and ten-year rate plans. Yankee Gas is nearing the four-year mark since its most recent rate review and we are currently evaluating when its next review will take place. Therefore, our primary rate review this year will be at NSTAR Electric in Massachusetts. Slide 22 covers the key elements of the review. We filed it a month ago and expect a decision around December 1, with new rates to take effect at the beginning of 2023. With new rates to take effect at the beginning of 2023. There were several components to the filing and a couple of the key ones I noted on the slide. So let me pause here to summarize. We expect to deliver another very positive year performance for our customers, shareholders, and all stakeholders in 2022. Our long-term earnings growth continues to be in the upper half of the 5% to 7% range through 2026 from our core regulated business. Our long-term growth rate is supported by a projected rate base growth of 7.1%. We have upside opportunities in the areas of grid modernization, AMI, and incremental transmission development that are not part of our current forecast. The investments I've discussed thus far have been in our regulated business.

Now I'll turn to our offshore wind partnership with Orsted. Joe mentioned earlier, our joint venture with Orsted has signed contracts for about 1,760 megawatts of offshore wind and we've locked in approximately 80% of the costs we need to bring our three projects into service. To date, we've invested about $1.2 billion in the joint venture, which includes some development and acquisition costs that are not directly related to the three projects. In 2022, we expect to invest an additional $900 million to $1 billion in the three projects. Over the remaining years of our forecast, we expect to invest an additional $3 billion to $3.6 billion to complete and bring into service all three projects. These estimates fully reflect certain cost increases that we've encountered over the past few months that were covered earlier and Joe's remarks, as well as our estimates of our costs going forward.

Last year, we told investors that we would provide more visibility into our financial expectations for our offshore wind investments. So providing you with a range of the expected investment levels over the next several years as part of that. And as we said before, the benefit on earnings from the large projects into service in 2025 is not projected to be significant. However, assuming Revolution Wind and Sunrise Wind enter service in 2025, we expect offshore wind earnings to add between 6% to 8% to the net income we expect from our core regulated business in 2026. The benefit on Eversource's cash flow beginning in 2026 is likely to be much more significant. Since Eversource is currently a cash taxpayer and we expect to remain one, we expect to use investment tax credits and accelerated depreciation for tax purposes in a highly efficient and effective manner, based on today's tax code. Changes are currently being considered in Congress to spur more clean energy investment that could significantly enhance our projected cash flows and returns. Potential changes include utilization of a direct pay option, allowing an increase of tax credits to 40% for meeting certain domestic content requirements and raising production tax credits to the ITC equivalent of 30%. Any of these potential changes could have significant positive implications for this business and cash flows, and none of these changes is reflected in the offshore wind guidance that I noted earlier. Historically, we have guided that our offshore wind projects were expected to generate mid-teens returns based on a standard Eversource 60-40 debt equity structure. Those returns are achievable with enhanced clean energy benefits contemplated by the Build Back Better Plan. But even with no changes to the current tax code, we now expect our offshore wind equity returns to be in the 11% to 13% range, still accretive for the Eversource investor and highly supportive of our state's aggressive clean energy goals.

So to summarize offshore wind, our projects are making excellent progress, and we continue to project in-service dates as previously forecast. We, like other developers, have very recently experienced higher costs associated with the global supply chain and vendor capacity issues, but like most other U.S. developers, we have a very clear line of sight on 80% of our costs and we continue to work closely with Orsted to identify savings opportunities. Despite some higher costs, we continue to project offshore wind earnings that are higher than in our regulated businesses. To close out today's call, I want to discuss our financing plans. As we've always done, we expect to finance our capital needs in a balanced way through a combination of internally generated funds, new debt issuances, and common equity. We intend to maintain the existing strong credit ratings that we currently have at the rating agencies.

Given the level of investments contemplated in this five-year outlook, we are planning to add an incremental $500 million to our equity needs over the next several years. When we first discussed issuing equity three years ago, we outlined a multi-pronged plan to raise equity capital. The first $2 billion plan was comprised of $1.3 billion in block equity and $700 million through an at-the-market or ATM program. Separately, we announced that we would use about $100 million a year in treasury shares rather than open market purchases to fund our dividend reinvestment and employee stock programs. To help fund the updated investment plan and allow us to maintain our strong financial profile and credit ratings, we are now increasing the size of our expected ATM program by $500 million to a total of $1.2 billion. In addition, we expect to continue to fund our dividend reinvestment and employee stock programs using treasury shares, and this is expected to be about $600 million over the next five years. Finally, as you can see on Slide 23, we continue to remind investors of our long track record of positive performance. This slide shows that over the decade since Eversource was created, we have consistently achieved the earnings and dividend growth we targeted back in 2012 while achieving very strong operating performance. We also have significantly enhanced our ESG profile, which certainly ranks among the best, if not the best, in the industry.

Thank you, Phil. And I'm going to return it to John, just to remind you how to enter questions. John?

Thank you.

Great. Thank you, John. Our first question this morning is from Steve Fleishman from Wolfe. Good morning, Steve.

Yeah. Hey. Good morning. Thanks, everybody. Just maybe one question, just there's a lot of offshore wind disclosures that you gave during the call. Is there a reason that none of this is in the slide deck? Just some color on that? It's helpful to have it, but just, yeah.

Yeah. It's all included in our 10-K, Steve, that is being released today too. So the nature of all those disclosures is included there.

Great. Okay.

The combination of the comments and the 10-K, I think provide all the information.

Great. To summarize, when I look ahead to 2026 and consider the shift from 6% to 7% regulated growth or the upper range of 5% to 7%, we anticipate an additional 6% to 8% net income from offshore winds in 2026. This means we will be adding 6% to 8% net income to the base growth rate of the regulated figures. Additionally, I expect my share count will increase by approximately $500 million more in equity than what we previously projected.

Is that your question, how do you get to the calculation? Yes, that.

Yeah. I'm just trying to kind of get to kind of the thesis from kind of EPS.

Yes, it's slightly more than five, as we increased the dividend reinvestment by about $100 million. Previously, it was around $100 million a year for five years, totaling $500 million; now it's approximately $120 million for five years. This reflects the incremental ATM program along with an additional $100 million on the DRIP side.

I'm sorry, could you clarify how much you're now planning to spend annually on the DRIP side? My understanding was that you were doing $100 million a year for treasury and DRIP.

It's just $120 million.

$120 million. Okay.

Yes.

So basically over five years, that's another $100 million of incremental equity, but I mean $600 million overall incremental equity.

Yes.

Okay. That's helpful. And then just in terms of just how are you feeling about the timelines on Revolution? I think there is a comment in the 10-K about that you're still analyzing those. Could you just give a little more color on that, please?

Sure. Good morning, Steve. We feel very, very good. We had a good opportunity to spend some time with the Interior Secretary last Friday. We've got tremendous support down there. All indications are that we continue to make great progress. We expect the Draft Environmental Impact Statement in July of this year; our approvals are expected by 2023, with construction beginning shortly after that. So we don't anticipate, although, never say never, but things have been very, very smooth in the side. I had mentioned in my prepared remarks, we've accomplished more this past year than we have in the three previous years. So I'm very optimistic about the schedules.

Last question, just I assume you probably updated the rating agencies on the offshore wind capital plan and your updated financing plan. And I just want to kind of check that you expect that this should keep stable ratings.

Yes. We are in frequent contact with the agencies regarding our capital spending plan and the regulatory developments in various states. We have kept them updated and will continue to do so throughout this year.

Great. I will let other people ask questions. Thanks so much for your time.

Thank you, Steve.

Thanks, Steve. Next question is from Insoo Kim from Goldman. Good morning, Insoo.

Hey. Good morning. First question also on offshore wind, could you just clarify, first of all, that the total costs, I guess, of your 50%. I think I heard a $1 billion in 2022 about another $3 billion to $3.5 billion over for many few years. Is that correct? So if I think about, what $4.5 billion for your state, that's about $9 billion total for the entirety of the three different projects. So taking 1.7 gigawatts, 1.8 gigawatts for those reflect about $5,000 per KW all in. Is that the right ballpark from there?

Doing the math that you just did, where you would get to. Yes.

Okay. And then related to that just thinking about the new offshore wind returns of 11 to 13 versus somewhere in that mid-teens you were talking prior. Given 80% of your project costs are largely locked in. So we're talking mostly in that other 20% of cost; are those from a timing perspective where you have to lock in pretty soon at these inflated levels that get your estimates to a lower level or do you have more time to see potentially there is some of the subsiding of costs?

Yeah. Good morning. Thank you. Great question. So the remaining 20%, we think we have opportunities there to look. We're not going to rush to sign a contract just to sign a contract. We are going to be thoughtful and deliberative. One of the things that has taken place in this offshore wind business, I was up in Albany for the foundation construction, onshoring it here in America. So there's a lot of on the supply chain that’s really moving very fast. So we think the remaining 20% is a great opportunity here for us to have some competitive opportunities and not rush just to sign a contract for the sake of signing a contract. So the long answer to your short question is we think we have some time for the remaining 20%, and we will remain disciplined in terms of executing any contracts.

Got it. And just one quickly if I could. On that upper half of the 5% to 7% through ‘26 that embeds that investment of the offshore wind and the financing costs that are associated with that as well.

Yes, correct. Yes. During construction, we basically capitalize the interest cost to the projects, but that does embed that in there too.

Right. That makes sense. Thank you so much.

Thank you.

Thanks, Insoo. Next question is from Durgesh Chopra from Evercore. Good morning, Durgesh.

Good morning, Jeff. I just need a quick clarification since my other questions have been addressed. Regarding the equity, the $1.2 billion ATM and the $600 million through DRIP and others, that's for the regulated side, correct? That doesn't include your roughly $4.5 billion investment on the offshore side.

What we've incorporated in terms of financing incorporates what we believe is an appropriate level for our long-range outlook that we've outlined here. So it's not a plan that you set it and forget it. This is something we will continuously monitor. We'll look at our plan, including our financing needs and if there are adjustments that are needed as we move through the next few years, we'll do that. But right now, what I've indicated to you is to support the full investment activities that I've outlined.

Got it. Thanks. That's all I had guys. Thank you.

All right. Thank you, Durgesh. Next question is from Nick Campanella from Credit Suisse. Welcome to our call, Nick.

Hey, thanks everyone for your time. I appreciate the insights on the offshore wind projects. Regarding the base business in operations and maintenance, you've managed to keep costs stable amidst inflation. Can you share what your forecast looks like for operations and maintenance in this five-year plan?

In the long-range forecast, we expect to maintain a similar approach with costs remaining flat or potentially increasing slightly as we progress, but definitely staying well below inflation levels. We have been effective at identifying efficiencies and opportunities in our processes, particularly during distribution rate cases. Our goal is to demonstrate that our current costs are lower than they were several years ago when we entered the last rate case. Therefore, we aim to be disciplined in managing our operating and maintenance costs, keeping them steady. While there may be a slight increase, we anticipate it will remain flat or below 1%.

Got it. That's really helpful. And then, I guess, just like looking at the guide $4, $4.17 with that $0.17 range. I think it's just a bit wider than what you've historically provided in ‘21 and ‘20. Is that just law of large numbers playing out or are you kind of seeing higher volatility in the base businesses?

I believe it's a combination of factors. Some of it is simply that the numbers are larger now. If you look back four or five years, it was around $0.10 and then increased to $0.15. As the figures have grown, the variation around them has also expanded. There's nothing more to infer from this aside from the fact that the midpoint is roughly in the 6% range.

Thanks a lot.

All right. Thank you, Nick. Next question is from Angie Storozynski from Seaport. Good morning, Angie.

Good morning. I just had a one follow-up on offshore wind. So you guys mentioned the 11% to 13%, are we talking about levered IRRs? And then, secondly, is there any difference in your sufficiency for profitability of the initial project versus those that are coming online in ’25?

I didn't catch the last part of your question, but the first part is the number is a return on equity. So that's, I think, what may talk about IRRs. But we've always for our investors, they like us to talk in terms of ROE. So it's the return on equity numbers.

So my second question is, I assume that it's an average return across the four projects. Is there, for example, higher profitability or higher returns on the initial projects coming online, and as time goes by and inflation pressures increase, could those projects that come online later have lower returns?

No. The number we've always tried to talk about is an average portfolio. So our portfolio of the three projects. Just keep in mind, though, when you look at the size, South Fork is much smaller than the other two. So by definition, just due to size, it's going to have less contribution when it comes online. But the numbers we're talking about are kind of the portfolio number.

Very good. Thank you.

Thank you, Angie. Next question is from Sophie Karp from KeyBanc. Good morning, Sophie.

Hi. Good morning, guys. Thank you for taking my questions. I have a couple of questions here. First on the offshore wind and just broadly speaking, maybe on your CapEx program. So you have a sizable portion of the locked-in, but could you discuss where you still have some sensitivities to price inflation from the pricing maybe how much is that? Is the escalators in some of the parts that are already locked in otherwise or is that all concentrated in the kind of 20% that's not locked in? Any color on that would be helpful.

I would say that the 20% that is not locked in still has ongoing discussions regarding certain contracts for specific projects we are addressing with our joint venture partner. However, the more significant items are primarily those that have not yet been completed, rather than any notable price escalations in the existing 80%.

Thank you. My second question concerns the unexpected energy bills that people are experiencing. Some of your competitors in the Northeast have recently been covered in the news regarding customers facing surprise bills related to energy costs, which could lead to political repercussions for them. What is the situation in your region? Considering you are located further north, this has historically been a concern. What are your observations this winter, and how do you address this issue when it occurs?

We took proactive steps last fall by engaging with our regulators, the administration, and the Governor's office to inform our customers about the market volatility. This effort was well received by our regulators and key stakeholders. We have effectively managed our hedging and secured a substantial amount, which helps mitigate the shocks that some customers are experiencing. While no one likes to see an increase, our customers understood and were able to prepare for it. We conducted extensive outreach to encourage our customers to consider budget billing, allowing them to distribute costs and reduce peaks. This initiative, along with our focus on energy efficiency, has been beneficial. Although bill increases are never welcome, informing customers in advance has helped them adjust and plan accordingly.

Very good. Thank you.

Thank you, Sophie. Next question is from Julien from Bank of America. Good morning, Julien.

Hey. Good morning, team. Thanks for the opportunity to connect. Just wanted to follow-up in brief here, I'm just reconciling the percentages that you talked about a moment ago, on the 6% to 8% additive, say by ‘26 year. It seems like that implies something in the order of magnitude of like a $140 million-ish of net income. I just want to reconcile that against the total quantum of CapEx that you all are contemplating investing here, right? If you think about a ballpark number like $5.5 billion of CapEx, what kind of equity ratio and ROE are you trying to back into it? Because if I look at 12% ROE and say a 40% equity ratio, it looks like it might be the mid-200's of net income. So I just want to reconcile what approach we should be taking? Are you employing more leverage in the offshore effort here? And that's how you get the ROE will higher here? Or just how does that math tie between the two approaches? I'm sorry to go back on the call here.

That's a great question. Your estimate for 2026 offshore wind should take into account our expected growth in the core business, as it will influence our net income for that year. This will affect your calculation of 6% to 8%. There may be potential for that figure to be higher than what you've proposed. Additionally, we expect slightly improved leverage from the offshore wind capital structure compared to the regulated business capital structure. As we receive approval for the regulated structure, there are also favorable tax benefits on the offshore wind side that allow for accelerated depreciation, which we can strategically utilize based on our tax situation. These are some of the factors to consider.

Got it. And just to clarify that super quick, the 5% to 7% in the upper half that applies through ‘26, right? Just to make sure I heard you right on that. And then, if I can just clarify that the tax piece of it, because you brought it up there a second ago, how are you thinking about electing, right? I mean, given the higher like that might be beneficial for an ITC versus the PTC election here. Can you talk about the ITC election decision? And then what's the amortization period for that potentially to calculate that ROE? I think that might be one of the other discrepancies in the number.

Yeah. Typically, it's over the life of the asset.

Okay, sorry. Thank you very much for the patience.

All right. Thank you, Julien. Our next question is from Andrew Weisel from Scotia. Good morning, Andrew.

Hi. Good morning, everybody. First a question on the dividends. How are you thinking about the pace of growth relative to consolidated earnings versus regulated earnings? In other words, should we expect 6% growth in the dividend through 2026, maybe something higher since you're expecting the upper half of the range, maybe higher because of offshore? Or could it be something lighter given the capital need to finance all the CapEx?

Our guidance is that we expect our dividend growth to be in line with our overall Eversource earnings growth. So that $0.005 or $0.01 on the dividend could make it a point something makes a difference. But we've consistently been in that range we've grown the dividend in line and maybe just slightly higher even than the earnings growth of Eversource. So that's the outlook that we would take going forward.

Okay. But it was 5.7 most recently, right? That's a little below the midpoint. Was there any behind that?

What I meant to convey is that adding another $0.01 to the $0.14 raises it to 6.2%. Historically, we've maintained our dividend at some rates for a few years—$0.12 for some years and $0.13 for others. We've decided to keep it at $0.14 for two years, which is 5.8%. An additional $0.01 would push it over. To reach exactly 6%, you would raise it by $0.005. However, when you consider a span of two to three years, the trend aligns quite consistently with our earnings growth.

Okay, that makes sense. I'll try not to dwell on that. One more question, this might just be a mathematical issue, but I noticed that the rate base CAGR was 8.0% and is now at 7.1%. That stood out to me, especially with the significant increase to the CapEx plan, which I believe was a 6.5% increase. How do we explain that? Is it simply due to a higher starting base?

Yes, it is. Last year was unusually high because we added the Eversource Gas of Massachusetts, the assets we acquired from NiSource. In the previous five years, the rate base growth was essentially zero during that time. Now, with EGMA included in the base, the growth reflects that adjustment.

That makes sense. Thank you very much.

You're welcome.

Thanks, Andrew. Our next question is from David Arcaro from Morgan Stanley. Good morning, David.

Hey. Good morning. Thanks for taking my question. Yeah, I was wondering, I appreciate all the disclosure around offshore wind and the net income contribution in 2026. I was wondering if you could just characterize how much of a run rate level that might be. In other words, is that going to be or maybe talk about some elements of how it could be lumpy beyond 2026 or is that going to be a fairly steady level to look for over the course of the contract? Thanks.

Our guidance extends through 2026. It shouldn't be inconsistent, although there may be tax items in certain years that could affect the numbers. We're still determining the appropriate tax election, which could introduce some variability in specific years. One of our contracts has an escalator, which may enhance the run rate moving forward. Once the projects are operational, the primary costs we'll incur will be O&M costs, and we believe we have opportunities to optimize those; we have a vessel strategy in place for that O&M activity, which we think could lead to improvements in the following years.

Got it. That's helpful color. Then maybe on the regular CapEx side of things, I was wondering, did you mention that there could be more incremental utility-scale solar in Massachusetts, and would that be further upside to the plan? Wondering if there's any potential size or scale or quantification you might be able to provide around that. And then also, similar thing just would be transmission in New England beyond short transmission piece of bringing offshore wind into the system, the $500 million that you mentioned. Is there any preference for Eversource to build that given it's in your service territory or is that going to be kind of spread around New England transmission owners, potentially? Thanks.

I'll start by addressing the last point first. We consider ourselves the leading transmission builder in the region, backed by a strong track record and our proven ability to plan projects in collaboration with ISO, ensuring they are operational on time and under budget. The competitive process conducted by the ISO for a power plant retirement in Everett, Massachusetts demonstrates our capability to deliver innovative and cost-effective solutions efficiently. We firmly believe that we are a top contender for such transmission projects. Additionally, regarding transmission, there are two components that are not currently reflected in the forecast. The first is the $500 million allocated for existing contracts within the forecast period. While we've secured contracts on the development side, there is regulated transmission required within our service area and Cape Cod, as much of this work will take place there. We are actively engaged in those efforts, but this has not yet been incorporated into the forecast, which suggests potential for additional value, and I anticipate we could see upside in that $500 million range. Furthermore, the states are looking for capacity beyond the current increase of offshore wind to 9,000 megawatts, indicating a need for further incremental capacity. Initially, costs may be higher as existing capacity is utilized, but achieving an additional 9,000 megawatts will necessitate significant expansion at interconnection points. If this materializes, it would likely occur towards the end of our forecast period and could extend for many years after. This represents a longer-term opportunity for the company. Regarding rate-based solar, we currently believe there are no opportunities to enhance our five-year forecast. However, there may be chances beyond that timeframe. We anticipate that developing the 280 megawatts we've outlined in our plan will take place throughout the forecast period. We can reassess the possibility of additional builds after that period, but at present, that is all that is incorporated into the forecast.

Okay, great. That makes sense. Thanks.

All right. Thank you, David. Next question is from Paul Patterson from Glenrock. Good morning, Paul.

Hey. Good morning, guys.

Hey, Paul.

Just to go back to offshore wind, I want to ensure I have the numbers correct. Including what you have invested today, the total range is $4.3 billion to $5.8 billion. Is that correct? And is the 11% to 13% return on equity based on approximately 40% of that?

Yeah. Some of the numbers would include development costs that are not associated with the projects. So there are some work done on unused lease areas that we would allocate to future projects.

Okay. So I guess, what I am trying to understand is whether the 11% to 13% is related to the range of 3.9 to 4.6 or if it is a different number. I apologize for any confusion, but I am trying to clarify what the 11% to 13% is based on. What is the total CapEx that supports that? And is that approximately 40% of what you have mentioned?

It would be the first time you mentioned 4.5 or 5 as the total number. We have already invested around $1.2 billion through the end of 2021. However, some of the costs included in that $1.2 billion pertain to work on our unused leased area or are reserved for future development. Therefore, the actual project costs are somewhat lower than that figure. We plan to invest between $900 million and $1 billion in 2022 and an estimated $3 billion to $3.6 billion over the forecasting period. When you summarize these figures, the total project cost falls within the range of 4.7 to 5.4. So those inclusive of all that. There are still portions that are being allocated for the future? Regarding the Massachusetts legislation, specifically the Baker bill you mentioned, could you clarify what you think the potential impact of that legislation might be?

I apologize for the confusion. Massachusetts had a provision in its legislation that restricted future bids to be no higher than previous bids. This limitation hindered the bidding process, which is why the last Request for Proposal only had two bidders; it simply wasn't effective. In contrast, states like Connecticut and New York have adopted a broader view that considers economic development and other factors beyond just price. Governor Baker understands that this restriction negatively affects the number of potential bidders, so he is lifting the cap and promoting economic development. He recognizes the advantages that states like Connecticut, New York, and Rhode Island have gained from significant investments in supply chains and offshore wind. This legislation will effectively eliminate the cap, leading to a more dynamic and competitive bidding process.

Okay. My rest of the questions I think have been answered. Thanks so much. Have a good one.

Thank you.

Thanks, Paul. Our next question is from Jeremy Tonet from J.P. Morgan.

Hi. Good morning. It's actually Ryan on for Jeremy. Thanks for my question. Just one maybe mechanical one on the schedule. Can you just remind us on the Dominion vessel and the availability there, and what are the logistics on utilizing that?

Sure. We are the first customer for that vessel. The team was down to Texas. They saw the construction underway; they're making significant progress. Dominion's very confident that the ship will be delivered to us on time; it was scheduled to be completed in 2023. As you know, our schedule really begins construction in 2024. So we feel very, very good about that. If the vessel is delayed, we have a day per-day carry on that. So it will just move forward and allow us to utilize it for the period of time that we need for those two projects.

Got it. That makes sense. I appreciate the positive updates from Connecticut. So regarding the performance base rates that are still in early stages, do you have any expectations on how they might evolve over time, especially with the changing regulatory landscape?

I mean, I think if you look at Eversource in the states where we do a performance base rates here in Massachusetts, we performed very, very well. We were probably one of the early adopters of that in this state. So we feel very confident about it. We're going to play an active role, obviously, in any proceeding around performance-based rates. But I think if you look at our record, you look at our performance, as I had mentioned, what we did in 2021 and what the team did was extraordinary. I think all of our metrics I think we hit the ball out of the park. And so we feel very, very good about it.

Got it. Very helpful. Thank you for taking my questions.

Thank you.

Thanks, Ryan. Next question is from Steve Fleishman from Wolfe.

Thank you. I have a clarification question. I believe your 5% to 7% growth rate includes the previous $1.2 billion of equity that was part of your plan, and I wanted to confirm whether the updated 5% to 7% growth rate encompasses the full $1.8 billion of equity in that.

Yes, it does. Steve. It does include.

Okay. So essentially, the offshore wind net income benefit would all be net income without any more share count beyond what's the shares that are already embedded in your core growth rate funding?

Yes, correct. Yes. During construction, we basically capitalize the interest cost to the projects, but that does embed that in there too.

That's good. And just any sense on kind of the pace of the equity issuance. I guess it would just be the ATM part of it?

It's hard to say that the nature of an ATM is to be opportunistic in the marketplace. But I would think that we're looking to do that over the next few years type of issuance.

Yeah. Great. Thank you.

Thanks, Steve.

All right, folks, thank you very much. We don't have any more questions in the queue. If you have any follow-ups, please give us a call or send us an email. And have a great rest of your day.

Thank you, ladies and gentlemen. That concludes today's conference. Thank you for participating and you may now disconnect.