Eversource Energy (ES) Q3 2026 earnings review
Eversource's credit cushion widens, but regulatory cuts reduce its profit
Eversource strengthened its balance sheet with cash from its water utility sale, while regulatory penalties and interest bills cut quarterly profit. Profit per share excluding one-offs dropped 23% from a year ago to $0.92, or 19% by our math after stripping out the divested Aquarion water business. Chief executive Joe Nolan nudged the full-year outlook midpoint up by a penny, which by our math points to profit rising 2% in the fourth quarter.
| Profit per share, excluding one-offs | $0.92 -22.7% from a year ago (-19.3% without water unit) |
|---|---|
| Operating revenues | $2,979M -7.5% from a year ago |
| Moody's cash flow to debt ratio | 16.1% up from 14.5% in December (13% trigger) |
| 2026 profit per share outlook | Raised 1 cent middle of the range: $4.66 (-2.1% from 2025) |
⚖️ Verdict: ⚪ Neutral
The story is unchanged because the water sale cash repaired the credit metrics as planned, while the regulatory rulings that govern 2027 and 2028 earnings remain undecided. Using the $1.7 billion water proceeds to pay down debt lifted cash flow ratios more than 3 percentage points above credit downgrade triggers and halted offshore wind losses for the quarter. The bad news: disallowed storm costs in Connecticut, a lower federal transmission return and costly parent bonds dragged down every remaining unit.
The question now is whether regulators will grant the higher customer rates Eversource needs to resume 5% to 7% profit growth after a down year. Either federal and Connecticut regulators approve higher returns on the utility's grid spending, or rate cuts keep earnings growth below the target range. The federal transmission return ruling effective November 30 will provide the first test.
🐂 Bull Case
Water Sale Cash Lifted the Credit Cushion
Eversource has spent two years repairing its balance sheet to avoid credit downgrades and limit new stock sales. The New England utility closed the sale of its Aquarion water business on June 30, 2026, and used the $1.7 billion in net cash proceeds to pay down parent company debt. That paydown showed up in the third-quarter credit metrics, which finance chief John Moreira highlighted as "Maintaining levels well above downgrade thresholds".
- Moody's cash flow to debt ratio: 16.1% in September, up from 14.5% in December and 3.1 percentage points above the 13% downgrade trigger
- S&P cash flow to debt ratio: 15.4% in September, up from 14.2% in December and 3.4 percentage points above the 12% trigger
- New stock issued via the market program: 0.3 million shares for $20 million through September, down from 7.1 million shares in 2025
The wider cushion matters because all three credit rating agencies now carry a stable outlook on Eversource and its subsidiaries. Because cash flow sits more than 3 percentage points above the downgrade lines, management did not have to sell common stock in the third quarter to fund its grid spending.
What to watch: the five-year common stock issuance target in the fourth-quarter update. A reduction below the current $800 million to $1.1 billion range would show that the repaired balance sheet permanently lowers shareholder dilution.
Grid Award Adds $700 Million in Future Spending
As a regulated utility, Eversource grows profit by building power lines and pipes, which increases the asset base that state and federal regulators allow it to earn a return on. Rate increases in Massachusetts and New Hampshire helped lift nine-month electric distribution profit to $574.1 million. In the third quarter, the regional grid operator selected Eversource's TIDE high-voltage power line project for New England.
The utility now lists $700 million of approved extra spending for TIDE, with about $400 million falling between 2027 and 2030 and construction running from 2029 to 2032. However, Moreira left the official $26.5 billion five-year capital spending plan unchanged this quarter rather than rolling the project in immediately, alongside $1 billion of potential smart-meter spending in Connecticut.
What to watch: the annual capital spending roll-forward on the fourth-quarter call in February. Rolling the $400 million TIDE share into the formal budget would raise the utility's projected asset growth through 2030.
No New Offshore Wind Losses Hit the Quarter
When Eversource sold its South Fork Wind and Revolution Wind projects in September 2024, it agreed to reimburse the buyer for certain construction cost overruns. Those overruns produced after-tax charges of $75.0 million in the third quarter of 2025 and $164.0 million in the second quarter of 2026. In the third quarter of 2026, the company recorded zero new offshore wind charges.
The presentation noted that "Project completion derisks business profile" as Revolution Wind nears commercial operation. One clean quarter eases the cash drain, but it does not end the obligation because Eversource remains on the hook for cost changes until the wind farm officially enters service.
What to watch: formal confirmation of Revolution Wind's commercial operation date by year-end. Reaching commercial operation caps Eversource's construction cost liability to the buyer.
🐻 Bear Case
Storm Penalty Cut Electric Profit Despite Upbeat Spin
"We were pleased to receive a constructive decision from PURA on previously deferred storm costs, which provides a clear path to securitization that ultimately will benefit our Connecticut customers," chief executive Joe Nolan said. PURA is Connecticut's utility regulator, and securitization lets Eversource issue bonds to recover past storm repair bills in mid-2027.
The numbers in the Electric Distribution segment tell a harder story. Segment profit fell 9.3% from a year ago to $200.9 million ($0.53 per share versus $0.60), hurt by "disallowed storm costs from PURA's July 29, 2026, final decision on CL&P's storm prudency proceeding" as well as higher depreciation, interest and property taxes. Connecticut regulators barred the utility from recovering part of its storm spending, so the ruling cut third-quarter earnings before any bond cash arrives.
This friction matters because Eversource is asking the same Connecticut regulator for a $451 million rate increase at its Connecticut Light and Power (CL&P) unit, plus $1 billion for smart meters. If PURA trims rate requests the way it trimmed storm costs, earnings growth in 2028 will fall short of management's target.
What to watch: PURA's ruling on the CL&P rate case, where new rates take effect in July 2027. A major disallowance on the $451 million request would force Eversource to cut its long-term profit growth plan.
Federal Return Cut Pressures Transmission Profit
Electric Transmission is Eversource's most profitable business per dollar of revenue, earning money under a federal formula rate. In March 2026, the Federal Energy Regulatory Commission (FERC) cut the base allowed return on equity for New England transmission owners from 10.57% to 9.57% and ordered refunds covering 2011 through 2026. Excluding the $43.9 million refund charge booked in the first quarter, third-quarter transmission profit slipped 1.9% from a year ago to $182.0 million ($0.48 per share versus $0.50).
Continuous grid investment could not overcome the 1 percentage point cut in the allowed return and higher interest bills. Eversource appealed the refund order to the D.C. Circuit Court and asked FERC to set a new 11.39% return effective November 30, 2026. The court expedited the appeal schedule, but it denied Eversource's motion to pause the refunds, which are due in May 2027.
What to watch: FERC's decision on the new transmission return, where the rate takes effect November 30, 2026. A decision that leaves the return near 9.57% would keep a permanent cap on transmission earnings in 2027.
High-Rate Hybrid Bonds Wiped Out Parent Profit
Even after paying down debt with the Aquarion water sale proceeds, Eversource carries a heavy interest bill at its holding company. In 2026, the parent company issued $1.5 billion of junior subordinated notes due in 2056 at coupon rates of 6.10% and 6.35%, while retiring $1.0 billion of older parent debt that carried rates between 1.40% and 4.75%.
- Parent and Other profit excluding one-offs: $6.5 million ($0.02 per share), down 80% from $33.3 million ($0.09 per share) a year ago
- Nine-month Parent and Other loss excluding one-offs: $137.8 million, widened from $92.2 million a year ago
- Total company interest expense: $348.7 million in Q3, up 9.6% from a year ago and up 1.8 percentage points as a share of revenue by our math
The company also faces $1.6 billion of parent debt maturities in 2027 at rates of 2.90% to 5.00%, while storm bond cash in Connecticut and New Hampshire will not arrive until mid-2027 or early 2028.
What to watch: fourth-quarter interest expense and 2027 refinancing terms. Refinancing the $650 million March 2027 maturity (currently 2.90%) at current market rates will add another drag to parent company results.
👓 Other Themes
Gas Rate Shift Doubled the Third-Quarter Loss
Natural Gas Distribution usually loses money in the warm summer months, and this quarter the loss more than doubled to $43.4 million ($0.11 per share) from $16.8 million ($0.05 per share) a year ago. Eversource attributed the drop to a "change in the seasonal rate design that shifted the recovery of quarterly revenues" in Massachusetts and higher depreciation, while nine-month gas profit still rose 18.9% to $281.6 million on winter rate increases.
💲 Other KPIs
Operating revenues fell 7.5% from a year ago after growing 2.3% in the second quarter and 9.4% in the first quarter. Removing the Aquarion water unit (sold on June 30) and the seasonal shift in Massachusetts natural gas billing drove the drop, though nine-month revenue still rose 2.1% to $10.39 billion.
Day-to-day operating and repair costs fell 2.6% from $518.3 million a year ago, reversing a 2.8% increase in the second quarter. For the first nine months of 2026, the utility held operating and maintenance growth to 1.3% ($1.49 billion versus $1.47 billion), helping support its affordability pitch in Connecticut.
Diluted shares rose 1.4% from 372.3 million a year ago, slowing from a 2.2% year-over-year increase in the second quarter. The utility issued 7.1 million shares under its market program in 2025, but issued only 0.3 million market shares and 1.2 million dividend-reinvestment and employee shares through September 2026.
🔮 Guidance
Raised. Eversource lifted the bottom of the range by 5 cents and trimmed the top by 2 cents, moving the middle of the range up 1 cent to $4.66 (a 2.1% drop from 2025). By our math, that leaves $1.10 to $1.18 ($1.14 in the middle, up 1.8% from a year ago) for the fourth quarter, when winter gas rates return.
Unchanged. The utility kept its 5% to 7% annual growth target through 2030 and now uses the $4.66 midpoint as the starting base year, expecting to reach the upper half of that range by 2028. Because 2026 sits below 2025's $4.76, compounding 6% from $4.66 points to $5.88 in 2030 by our math, down from $6.37 when 2025 was the base.
Unchanged. Management kept its five-year infrastructure budget at $26.5 billion, including $5.07 billion for 2026 and $5.18 billion for 2027. The company now categorizes the $700 million TIDE transmission award ($400 million in 2027–2030) as approved extra spending, but left it outside the formal five-year bar chart until the year-end update.
❓ Key Questions
How much did disallowed storm costs hurt third-quarter profit?
Eversource cited disallowed storm costs from Connecticut's July 29 ruling as a reason Electric Distribution profit fell $20.7 million, but did not give the exact dollar penalty in the release. Investors need to know how much of the drop was one-time versus ongoing.
Why wasn't the approved $700 million TIDE project added to the capital plan?
Slide 12 labels the $700 million TIDE transmission project (~$400 million in 2027–2030) as "Approved incremental investments", yet the five-year capital budget stayed at $26.5 billion. Did other grid projects slip out of the window, or is management waiting for February?
What happens to the 2027 plan if the federal return stays at 9.57%?
The new federal transmission return takes effect November 30, 2026, and Eversource has asked for 11.39%. Since FERC previously cut the rate to 9.57%, how much of the 5% to 7% long-term growth target depends on getting a higher number this month?
How much revenue did the Massachusetts gas rate shift move into winter?
The third-quarter gas loss more than doubled to $43.4 million because a seasonal rate design change shifted revenue recovery out of the summer. Management has not quantified the exact dollar boost that will reverse into the fourth and first quarters.