ES · Q1 2026 Earnings

Bearish

Eversource Energy

Reported May 6, 2026

30-second summary

Eversource lowered FY26 non-GAAP EPS guidance to $4.57–$4.72 from $4.80–$4.95, a $0.23 midpoint cut (-4.7%) driven by the March 19 FERC decision slashing the base transmission ROE from 10.57% to 9.57% — a roughly $70M after-tax 2026 earnings hit. Management is challenging the ruling on two parallel tracks (court appeal plus a Section 205 filing seeking 11.39%) while reaffirming the 5–7% long-term growth rate off the revised, lower 2026 base — a quiet rebasing that pushes the burden onto FY27–FY28 execution. The Aquarion close is now contingent on a mid-June appeal window, and management's framing of 2026 as "transformational" within a "changing regulatory landscape" is the most defensive language this team has used in four quarters.

Guidance

Eversource lowered full-year 2026 non-GAAP EPS guidance by $0.23 per share (midpoint) to $4.57–$4.72, citing approximately $70M after-tax earnings impact from FERC ROE decision, offsetting reaffirmed 5–7% long-term growth rate.

Guidance is issued for the full year only, refreshed each quarter. Prior and new below are the same FY updated this quarter.

New guidance

Metric	Period	Guide	YoY
Impact of FERC ROE decision on 2026 earnings	FY 2026	approximately $70 million reduction in after-tax earnings	—

Changes to prior guidance

Metric	Period	Prior guide	New guide	Δ	Result
EPS (non-GAAP)	FY 2026	$4.80 to $4.95	$4.57 to $4.72	-$0.23 to -$0.23 (midpoint lowered from $4.875 to $4.645, -$0.23 per share)	Lowered

Management tone

Q2 anchor → Q3 anchor → Q4 anchor → Q1-26 anchor: Contingent posture → Strategic offense → Transformational year → Regulatory defense and litigation.

The arc from "strategic offense" two quarters ago to "litigating FERC" today is the sharpest tone reversal in this coverage window. In Q3 2025, management framed Connecticut as thawing, load growth as a tailwind, and Revolution Wind as nearing completion — the posture of a team going on offense. Q4 introduced "transformational year" as a hedge against the soft FY26 guide. This quarter the company is openly adversarial with its primary federal regulator: "We believe this decision by FERC departs from the statutory limitations imposed by the Federal Power Act and longstanding judicial precedent." That is the language of a company that has concluded accommodation will not work — a notable break from the collaborative tone Joe used about Connecticut just six months ago.

The 5–7% long-term growth reaffirmation is doing more work than at any point in the prior three quarters. In Q3 the 5–7% range was reaffirmed off a $4.57 2024 base with the FY25 raise lending credibility. In Q4 the base was rebased to $4.76 (2025), already a quiet roll-forward. This quarter, the same range is reaffirmed off a $4.645 implied 2026 midpoint — a base that is itself $0.23 below where it stood 90 days ago. The verbatim line — "we remain confident in our ability to deliver earnings growth towards the upper half of our long-term target of $5 to 7% by 2028" — preserves the destination on paper while quietly lowering both the starting line and the implied endpoint. The market arithmetic on the 2028 number has moved without the headline acknowledging it.

The Section 205 filing at 11.39% is being positioned as a settlement scaffolding, not a litigation bet. Management's framing — "Using FERC's own methodology from its recent decision and current market data, we arrived at a just and reasonable base ROE for transmission of 11.39%" — is engineered to give all six New England transmission owners, six state consumer advocates, and the AGs a defensible number to settle around. The quantified alternative using the regulator's own framework signals management still wants a negotiated outcome even while the court appeal proceeds. The dual-track strategy is more sophisticated than typical utility regulatory communications, and the 7-month timeline (60 days FERC + ~5 months implementation) gives a concrete checkpoint for the 4Q call in February.

Confidence on Aquarion has degraded from "intend to close" to "wouldn't be catastrophic if it didn't." The Q4 brief noted the Aquarion close had slipped from year-end 2025 with a contingency rate case filed. This quarter Carly Davenport's question drew out a striking framing: management said they no longer have "a gun to their head" and could live with the deal not closing. That is materially weaker conviction than the "expected to close by year-end" language from Q3, and it telegraphs that the $1.6B equity-portion offset assumed in the original Aquarion math is becoming an option, not an expectation.

Balance-sheet language continues to avoid FFO/debt — the metric introduced in Q3, withdrawn in Q4, and still absent this quarter. Three consecutive quarters now without the disclosure that anchored the Q3 confidence narrative. Combined with the storm-securitization timing dependency and the FERC-driven earnings cut, the silence on the leverage anchor is louder this quarter than last.

Recurring themes management leaned on this quarter:

FERC regulatory risk and legal challenge to transmission ROE decisionStorm cost securitization enabling cash collection in Connecticut and New HampshireBalance sheet de-risking and financing stability despite ROE headwindsOperational excellence demonstrated during February blizzard responseState policy support for energy infrastructure investment and reliabilityCapital deployment discipline across $26.5 billion five-year plan

Risks management surfaced:

FERC March 19th decision reducing transmission ROE from 10.57% to 9.57%, expected to lower 2026 earnings by ~$70 millionAquarion sale closure contingent on appeal period ending mid-June; fallback to rate case required if deal failsRevolution Wind construction delays and cost overruns reflected in contingent liability balanceRefund obligations under FERC decision creating cash flow timing uncertainty despite May 2027 extensionFederal policy uncertainty and shifting FERC commissioner priorities creating long-term regulatory instability

Q&A highlights

Carly Davenport · Goldman Sachs

What are management's latest thoughts on potential further appeals in the Aquarian transaction process and confidence in closing the deal?

Management expressed confidence in the period decision, stated they are vigilant but no longer have a 'gun to their head,' and indicated they intend to close but it wouldn't be catastrophic if it didn't. They are watching for appeals through June 14th.

Appeal window closes June 14thManagement intends to close the transactionNo longer under time pressure ('don't have a gun to our head anymore')

Andrew Weisel · Scotiabank

What ROE will management book prospectively for 2027 and beyond—the 11.39% or 9.57%—and will guidance resolution occur before 4Q earnings?

Management confirmed current guidance (March 31st update) assumes the 9.57% rate. They expect to implement the 11.39% rate on a subject-to-refund basis and will provide definitive guidance on the 4Q call in February once the 205 process is resolved.

Current guidance based on 9.57% ROEExpect to implement 11.39% rate subject to refundGuidance update expected 4Q call in FebruaryTimeline: 60 days from FERC filing + up to 5 months = ~7 months to implementation

Steve Fleischman · Wolf Research

Who are the parties involved in the FERC settlement negotiations, and what is the mandate/deadline for FERC to rule?

Management identified stakeholders as all six New England state transmission owners, consumer advocates from six states, and state AGs. FERC has 60 days to approve implementation, then up to 5 months for rate implementation, totaling approximately 7 months.

All six New England state transmission owners impactedSix state consumer advocates and AG offices at negotiation tableFERC 60-day timeline from filing dateAdditional 5-month implementation period

Sophie Karp · KBCM

How are management thinking about timing of equity capital issuance given FERC and Aquarian uncertainties—issue needed amount now or wait for clarity?

Management stated no urgency to go to market given: (1) $800M-$1.1B guidance range through 2030 is 'nominal'; (2) $1.5B JSN offering completed in February; (3) expect ~$2B from CT and NH storm securitization within 12-15 months. They will monitor transactions before acting.

$800M-$1.1B equity issuance guidance through 2030$1.5B JSN offering completed February 2025~$2B expected from storm securitizations within 12-15 monthsNo current market urgency

Marcella Perez · Wells Fargo

What is confidence level on the 15-month refund period interpretation and what milestones should investors watch, particularly regarding MISO proceedings?

Management stated the 15-month refund period is law and was accrued in Q1, but they dispute the retroactive date selection as inconsistent with FERC's authority. MISO decision will be a significant data point if case goes full process instead of settling.

15-month refund period accrued in Q1Management challenges retroactive date back to 2014 as unlawfulMISO decision will be significant precedent if no settlementNew Hampshire storm securitization: ~$470M including carry charges

Answers to last quarter's watch list

PURA decision on the Aquarion sale (March) — The deal cleared PURA but is now in an additional appeal window closing June 14. Management's confidence has softened materially: they "intend to close" but explicitly said it would not be catastrophic if it did not, with the filed $88M CT rate case as the fallback. The $1.6B equity-portion offset is increasingly optional rather than expected.

Continue monitoring

FFO/debt ratio re-disclosure — Not restored. Third consecutive quarter of silence on the leverage anchor introduced in Q3 2025. Management talked instead about securitization proceeds (~$2B within 12–15 months) and the $1.5B February JSN issuance as evidence of balance-sheet stability. The silence on FFO/debt while the FERC decision pressures cash flows is the more telling datapoint.

Resolved negatively

PURA storm-cost securitization decision in July — Management reaffirmed CT and NH together deliver ~$2B within 12–15 months; NH securitization (~$470M including carry charges) expected late 2027. Final PURA decision on the CT Storm Cost Prudency Review now expected in July, consistent with prior guidance.

Continue monitoring

Connecticut AMI update post-meeting — Not specifically addressed in the disclosed materials this quarter. The CLMP rate case letter of intent is being filed with PURA later this month, which could clarify AMI cost recovery, but management did not refresh the stale $1B placeholder.

Continue monitoring

FY26 EPS quarterly cadence vs the $4.80–$4.95 guide — The guide itself has been cut to $4.57–$4.72, rendering the original cadence question moot. The FERC ROE decision absorbed the $0.23 reduction; there is no read yet on whether the revised range is being tracked against in the first half.

Not resolved

Equity issuance pace within the $800M–$1.1B range — Management explicitly said no near-term market access is required. The $1.5B JSN offering was completed in February and ~$2B of securitization proceeds are expected within 12–15 months, deferring common equity. This is consistent with neither front-loading (would signal Aquarion doubt) nor back-loading (would signal March PURA confidence) — instead it signals reliance on the securitization wedge.

Continue monitoring

What to watch into next quarter

Aquarion appeal window closes June 14 — binary outcome on whether the deal closes or the $88M CT rate case becomes the actual financing path. A failed close reopens the equity question that management has tried to defer with securitization timing.

FERC Section 205 process — 60-day FERC review of the 11.39% proposal; watch for any indication of settlement convergence among the six-state stakeholder group versus a path to full litigation. Definitive guidance update expected on the 4Q call in February.

PURA July decision on the CT Storm Cost Prudency Review — gates the start of the 12–15 month securitization cash-collection clock. Slippage compounds the FFO/debt headwind that management is no longer disclosing.

CLMP rate case letter of intent (filing later this month) — first concrete data point on whether CT regulatory tone has held since the Q3 thaw, and the cleanest forward read on AMI cost recovery.

MISO ROE decision — flagged in Q&A as a significant precedent data point if the ES case proceeds through full litigation rather than settling. A favorable MISO outcome strengthens the 11.39% Section 205 case; an unfavorable one accelerates pressure to settle below 11.39%.

Whether the $880M disputed retroactive refund exposure becomes quantified — currently accrued at the 15-month level; the dispute centers on whether retroactivity to 2014 stands. Resolution either way is material to cash flow timing.

Sources

Eversource Energy Q1 FY2026 Form 8-K, filed May 6, 2026. https://www.sec.gov/Archives/edgar/data/72741/000110465926056267/tm2613673d1_8k.htm
Eversource Energy Q1 FY2026 earnings call commentary (management prepared remarks and Q&A as referenced in extraction).

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