PSNH Funding LLC 3 Annual Report - How They Did This Year

I’m putting together a plain-English guide to help you understand how PSNH Funding LLC 3 performed this year. My goal is to break down the technical details so you can decide if this fits your investment strategy.

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1. What does this company do?

PSNH Funding LLC 3 is a special entity created by the Public Service Company of New Hampshire (PSNH), a subsidiary of Eversource Energy. It was set up in 2018 to issue $280 million in "Rate Reduction Bonds" to pay off costs from when PSNH sold its power plants.

The entity doesn't have employees or run a traditional business. Its only job is to collect specific fees from PSNH customers and pass that money to bondholders. This will continue until the debt is paid off by February 1, 2033.

2. Financial performance

The entity’s only income comes from mandatory fees collected from PSNH customers. In 2025, these collections easily covered all debt payments. The company paid all required principal and interest to bondholders on February 1 and August 1. By the end of 2025, the remaining debt had dropped exactly as planned.

3. Operational reliability

The big win for investors is the reliable collection process. The company confirmed that all bond servicing followed the agreed-upon rules. There were no defaults or missed steps. Auditors checked the internal controls managed by PSNH and found them effective, ensuring that customer payments reached bondholders without delay.

4. Financial structure and safety

The entity is "bankruptcy-remote," meaning its assets are legally separate from its parent company, PSNH. Even if PSNH faced financial trouble, the right to collect these fees remains protected for bondholders. The Bank of New York Mellon acts as the Trustee, confirming that the company kept all required cash reserves and followed the bond rules.

5. Key risks

Your investment depends on the stability of the customer fees. These fees are set by the New Hampshire Public Utilities Commission (NHPUC). While the fees are mandatory, a major drop in electricity use could affect the timing of payments. However, the NHPUC has a system in place to adjust rates if collections fall short, keeping the payments on track.

6. Competitive positioning

This isn't a traditional business, so it doesn't compete for customers. It is a financial tool backed by state law. Its income comes from a mandatory charge on all PSNH customers, regardless of who supplies their electricity.

7. Leadership

Managers appointed by the parent company handle operations. In late 2025, Matthew Fallon became a Manager and Assistant Treasurer. This keeps the leadership team consistent, as he is an experienced professional from Eversource familiar with these specific bond requirements.

8. Future outlook

The plan is straightforward: keep collecting fees and paying bondholders twice a year. No new debt is planned. The entity will operate until the bonds mature in 2033, then it will close.

9. Regulatory environment

The New Hampshire Public Utilities Commission oversees everything. State law protects these bonds, limiting the state's ability to change the fee structure. As of 2025, there have been no legal or regulatory attempts to change the rules supporting these bonds.

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Investor Takeaway: This entity functions as a predictable, pass-through vehicle. Because its income is tied to mandatory state-regulated fees rather than market competition, it is designed for stability rather than growth. If you are looking for a predictable income stream backed by regulatory oversight, this structure is built to minimize surprises through 2033.