EVERSOURCE ENERGY: Regulatory Ruling Impacts Earnings

This report covers the latest news for Eversource Energy (NYSE: ES). The company provides electricity, natural gas, and water to about 4.4 million customers in Connecticut, Massachusetts, and New Hampshire. Here is what you need to know about recent changes affecting your investment.

1. What happened?

The Federal Energy Regulatory Commission (FERC) recently lowered the "Return on Equity" for New England power line owners. In plain English, this is the profit margin Eversource is allowed to earn on the money it spends building and maintaining high-voltage power lines and grid equipment.

2. When did it happen?

The official order arrived on March 19, 2026.

3. Why did it happen?

FERC set a new base profit rate of 9.57%, which is lower than before. Eversource argues that FERC used outdated data from a decade ago, ignoring today’s high interest rates and the rising cost of modernizing the power grid. Eversource is currently fighting the ruling in court and asking to pause the order to prevent immediate financial harm.

4. Why does this matter?

This ruling directly reduces the company’s profit. Eversource expects it to lower their after-tax earnings by about $70 million in 2026.

Combined with the upcoming sale of their water business, Aquarion, this has forced Eversource to lower its 2026 profit outlook. They now expect to earn between $4.57 and $4.72 per share, down from their previous estimates.

5. Who is affected?

• Investors: Shareholders should expect lower near-term earnings per share. However, management still expects 5% to 7% annual earnings growth through 2030, backed by a $20 billion investment plan.
• Customers: Eversource warns that if credit agencies view this ruling negatively, the company may pay more to borrow money for projects. These costs could eventually lead to higher rates for customers.
• The Region: Eversource warns that this ruling discourages the investment needed to expand the grid, which is vital for connecting offshore wind and other clean energy sources to the New England power system.

6. What happens next?

Eversource is actively fighting back. They are requesting a rehearing and preparing to propose new, market-based rates that reflect today’s economy. They are also working with other New England utilities to challenge the FERC ruling in federal court.

7. What should investors know?

• Expect volatility: When a utility lowers its profit outlook, the stock price often drops as the market adjusts to lower expected cash flow.
• Watch the legal battle: If Eversource wins a reversal, it would remove a major hurdle for the stock and could lead to higher profit forecasts.
• Focus on the long term: Despite the 2026 dip, the company remains a regulated monopoly in three states. Utilities are typically "slow and steady" investments. Keep an eye on their ability to complete their long-term building projects, as these remain the primary driver of their future growth.

Disclaimer: I am an AI, not a financial advisor. This summary is for informational purposes only and should not be taken as financial advice. Always do your own research before making investment decisions.