Eversource Energy(ES) 2022 Chairman, President, and CEO Joe Nolan's Shareholder Letter: Navigating Challenges and Embracing Opportunities

• Invested a record $3.8 billion in core businesses, enhancing system reliability and supporting clean energy.
• Earnings per share from recurring operations grew approximately 6 percent from 2021 to 2022.
• Dividend increased by 5.8 percent to an annualized level of $2.55 per share, with a further increase approved in 2023.
• Positive regulatory milestones achieved, including NSTAR Electric rate review resolution in Massachusetts.
• Continued growth in the water distribution business with strategic acquisitions.
• Advancements in clean energy initiatives, including battery storage, geothermal energy pilot, and support for electric vehicle charging infrastructure.
• Commitment to sustainability with a goal of carbon neutrality from operations by 2030.
• Recognition for ESG performance, including rankings on Newsweek's Most Responsible Companies and JUST Capital's Most JUST Companies lists.

The 9,600 employees of Eversource Energy excelled on many fronts in 2022, providing safe and reliable delivery of energy and water, strong customer service, best-in-the-nation energy efficiency programs, and highly effective storm response to our 4.4 million customers in Connecticut, Massachusetts, and New Hampshire. Our reliability remained in the top decile among our electric utility peers, while we continued to enhance our support for our region’s clean energy future. I’m honored to share an overview of our team’s great success.

We executed well on our operating and capital investment plans throughout the year. We invested a record $3.8 billion in our core businesses in 2022, compared with investments of approximately $3.5 billion in 2021 and $3 billion in 2020. Those increased investments made our systems more reliable, addressed challenges related to climate change, enabled additional homes and businesses to connect to us, and allowed customers to more easily interact with us when and how they chose.

Our earnings per share from recurring operations grew approximately 6 percent from $3.86 in 2021 to $4.09 in 2022. In 2022, we also raised our dividend by 5.8 percent to an annualized level of $2.55 per share, and in February 2023, our Board of Trustees approved a 5.9 percent increase to an annualized rate of $2.70 per share. Our credit ratings continue to be among the highest in the industry with an “A” level rating and positive outlook at Standard and Poor’s. 2022 was a difficult year for the markets, primarily due to sharply rising interest rates, but utility stocks generally fared better than the market as a whole. Eversource’s total return of negative 5 percent was 13 percentage points better than the S&P 500’s.

On the regulatory front, we achieved several important milestones. These included a positive resolution of our NSTAR Electric rate review in Massachusetts, as well as approvals by the Massachusetts Department of Public Utilities of our proposals to implement advanced metering infrastructure (AMI) and a new methodology to resolve a bottleneck that had dramatically slowed the development of third-party solar generation in the state. On the federal level, the Federal Energy Regulatory Commission approved NSTAR Electric’s Settlement Transmission Support Agreement with the Park City Wind project, which sets forth the terms by which NSTAR Electric will support Park City Wind’s interconnection with the regional grid through our Mid-Cape Reliability Project transmission upgrade, a joint effort that will result in customer savings.

Our Aquarion water company provided high-quality service to customers in 2022, despite extreme drought conditions. We have continued to grow our water distribution business through acquisitions, including the completion of the Torrington Water Company acquisition in Connecticut, and have filed with the Massachusetts Department of Public Utilities a request for approval to acquire Pinehills Water Company. We see continued opportunity in water in 2023 and beyond.

Energy supply costs emerged as a major challenge in 2022. Global issues including the war in Ukraine drove up natural gas prices, causing significant increases in the supply portion of customer bills. Additionally, inadequate natural gas pipeline capacity into New England during the winter heating months contributed to an unprecedented spike in electric supply costs this past winter. Eversource has broadened a variety of customer assistance programs, ranging from flexible payment plans to energy efficiency programs and services that help customers lower their energy use. We continue to work with our states on other bill support and relief options for customers.

We achieved several milestones in our work to be a catalyst for clean energy for New England and the Northeast. Our award-winning and innovative battery storage unit in Provincetown, Massachusetts, entered service and, operating as designed, maintained service to thousands of customers during an event that would normally have caused an outage. We began work on a networked geothermal energy pilot in Framingham, Massachusetts, with strong support from the community. We’ve proposed solar energy projects coupled with storage in Massachusetts, and received approval for additional planned investments to support the growth of electric vehicle charging stations in Massachusetts and New Hampshire.

Our states’ emphasis on electrification as a path to emissions reduction, as well as the continued growth of distributed renewable generation, creates significant opportunities for transmission development. We are working to increase transmission capacity while building all stakeholders’ awareness that the clean energy future will require major network investment as we move forward. In Massachusetts, we proposed six “cluster” projects representing $900 million in combined transmission and distribution investment that will allow 1,000 megawatts of renewable energy to interconnect with our grid. We received approval for the first proposal at the end of 2022.

We expect another source of clean energy — offshore wind — to provide a steadily growing source of energy for the Northeast United States. Our offshore wind joint venture with Ørsted worked effectively to advance our three projects. Construction is well under way on South Fork Wind where in-service is projected for late 2023, while Revolution Wind and Sunrise Wind are moving steadily through the permitting process. However, over the long term, our role in offshore wind may evolve into being of a builder and operator of the transmission network that will bring wind energy onto the New England grid, rather than as an owner of the wind turbines. In May 2022, we commenced a strategic asset review of our offshore wind assets, a review that could result in the divestiture of those investments.

We continue to be an industry leader in sustainability; environmental, social and governance (ESG) areas; and diversity and inclusion. We made progress on our commitment to achieve carbon neutrality from our operations by 2030, reducing emissions in areas such as facility improvements, fleet upgrades, and replacement of older natural gas pipelines. Further, we committed to establishing a science-based target — a best practice that extends our commitment to emissions reductions and places us among industry leaders. We maintained strong ratings from leading ESG evaluators and published a comprehensive Sustainability Report, as well as a new Diversity, Equity and Inclusion report. Together, these reports are generating praise for Eversource as one of the most transparent companies in corporate America. Finally, we deepened our commitment to equity by creating tools, guidelines, and policies to help us incorporate equity into all of our actions and decisions.

Eversource maintained its emphasis on effective storm restoration and timely, informative storm-related communications with our stakeholders. We successfully responded to four major and nine minor activations of our Emergency Response Plans in 2022 across our three states. In late December, our employees worked through the holidays to bring customers back to service.

We strongly supported our communities throughout the year, including through our signature events — the Eversource Walk & 5K for New Hampshire Easterseals, the Eversource Walk for Boston Children’s Hospital, the Massachusetts General Cancer Center/Eversource Everyday Amazing Race, and the Eversource Hartford Marathon. Our employees also returned to support in-person volunteer opportunities as COVID-related restrictions were lifted, donating more than 27,000 volunteer hours at more than 120 events.

We were proud to receive independent national recognition for excellence in a variety of areas, particularly our ESG performance. These honors included:

• Newsweek’s list of Most Responsible Companies, where we again ranked as the #1 utility.
• The JUST Capital and CNBC list of Most JUST Companies, a ranking of most responsible publicly traded companies.
• Investor’s Business Daily magazine’s list of 100 Best Environmental, Social and Governance (ESG) Companies.
• The Bloomberg Gender Equality Index, which recognizes companies that have shown their commitment to advancing women’s equality in the workplace and transparency in gender reporting.
• Multiple #1 and #2 rankings in several categories of Institutional Investor’s annual investor rankings of utilities, based on a poll of institutional investors and analysts.

I want to close my report by thanking Jim Judge, who retired as Executive Chairman on December 31, 2022, following a long and successful career that included service as Eversource’s Chairman, President, and CEO. I appreciate Jim’s many contributions to the success of our company, as well as his friendship and mentorship.

Joe Nolan
Chairman, President, and Chief Executive Officer

Read the original letter here.