Eversource Lowers 2026 EPS Guidance Due to FERC ROE Cut and Aquarion Sale Impact
Summary
Eversource Energy has revised its 2026 non-GAAP earnings guidance downward to $4.57-$4.72 per share, primarily due to a Federal Energy Regulatory Commission (FERC) decision to reduce the return on equity for New England transmission owners and the impact of the Aquarion Water Company sale.
Key Events
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FERC Reduces Transmission ROE
The Federal Energy Regulatory Commission (FERC) issued an order establishing a base return on equity (ROE) of 9.57% for New England transmission owners, a reduction that will significantly impact profitability.
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Material Earnings Impact Expected
This FERC decision is expected to lower Eversource's future after-tax earnings by approximately $70 million for 2026.
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Revised 2026 Earnings Guidance
The company adjusted its 2026 non-GAAP earnings guidance to a range of $4.57 to $4.72 per share, reflecting the FERC decision and other factors.
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Aquarion Sale Impact on Guidance
The revised guidance also incorporates a $15 million negative impact for 2026 from the recently approved Aquarion Water Company sale, which was previously denied according to the 10-K filed on 2026-02-17.
Analysis
The Federal Energy Regulatory Commission's (FERC) decision to reduce the return on equity (ROE) for New England transmission owners is a significant negative development for Eversource Energy, directly impacting its profitability. The expected $70 million reduction in 2026 after-tax earnings, combined with a $15 million negative impact from the recently approved Aquarion Water Company sale, has led to a material downward revision in the company's 2026 non-GAAP earnings guidance. While Eversource is pursuing legal action to challenge the FERC order and prevent retroactive refunds, the immediate financial outlook is pressured. Investors should monitor the outcome of the legal challenges and any further updates on the company's capital expenditure plans, as the decision could raise the cost of capital for vital infrastructure projects.
At the time of this filing, ES was trading at $69.28 on NYSE in the Energy & Transportation sector, with a market capitalization of approximately $26B. The 52-week trading range was $52.28 to $76.41. This filing was assessed with negative market sentiment and an importance score of 8 out of 10.