A pure-play utility stuck in rate fights
- Eversource completed the sale of its Aquarion water business for $1.7 billion.
- The company received approval to securitize roughly $870 million in storm costs.
- A FERC ruling cut the allowed transmission base ROE to 9.57%, hurting earnings.
- Eversource is asking FERC to reset the transmission base ROE to 11.39%.
- The CL&P rate case and a potential $700 million transmission project are key upcoming events.
Back to basics, but not simple
Eversource is now officially a pure-play electric and gas utility. The company sold its offshore wind investments in 2024 and closed the sale of its Aquarion water business for $1.7 billion in June 2026. This simplifies the business into electric distribution, electric transmission, and natural gas distribution across New England.
The bull case centers on a cleaner balance sheet and clear regulatory wins. Eversource recently secured approval to securitize roughly $870 million in Connecticut storm costs, and it was preliminarily selected for a $700 million transmission project. These wins support its multi-billion dollar capital plan and long-term earnings growth target.
The bear case revolves around the Federal Energy Regulatory Commission. FERC previously lowered the allowed base return on equity for New England transmission owners to 9.57%, which drags on earnings. Eversource is fighting the order and filed a new request for an 11.39% base ROE, but that outcome is uncertain.
Visibility should improve late in 2026. Key catalysts include the finalization of the new transmission project, a FERC ruling on the prospective ROE rate, and outcomes from the ongoing rate case in Connecticut. Until those clear, the regulatory overhang persists.
Paid through regulated bills
Eversource makes money by delivering electricity and natural gas to customers. Following the sale of its water business in mid-2026, its utilities focus purely on wires, poles, pipes, substations, and related systems. Regulators set the rates customers pay, including a chance for the company to earn a return on approved investments.
This model can be stable because people still need power and gas in weak economies. It also limits upside because Eversource cannot simply charge whatever it wants. Regulators decide how much cost can be recovered and what return is fair.
Growth mostly comes from building and upgrading infrastructure. The company spends capital, asks regulators to include that spending in rates, then earns a return over time. If regulators delay recovery, cut allowed returns, or reject costs as imprudent, the same capital plan can become a cash flow problem.
Wires and pipes
Electric distribution
This is the local delivery of electricity to homes and businesses. It is the largest revenue segment and benefits from distribution rate increases and grid investment.
Electric transmission
This is the high-voltage grid that moves power across New England. It was recently selected for a major new project, though FERC ROE rulings create near-term pressure.
Natural gas distribution
This business delivers gas through local pipes. Earnings benefit from rate increases and infrastructure investment, though demand is seasonal.
Water distribution
Eversource provided water service through its Aquarion subsidiary before completing a $1.7 billion sale on June 30, 2026, to focus purely on electric and gas delivery.
Electric delivery dominates
Segment shares are estimated based on electric and gas utility operations following the June 2026 sale of the Aquarion water business. Electric distribution remains the core driver.
What can break the plan
FERC ROE fight goes the wrong way
High impact · Medium oddsFERC lowered the New England transmission base ROE to 9.57% and Eversource recorded a material pre-tax liability in early 2026. The company says possible pre-tax losses could reach $932 million if the broader retroactive period goes against it. That would pressure earnings, cash flow, and investor confidence.
CL&P rate case disappoints
High impact · Medium oddsEversource is preparing its first major CL&P electric rate review in about a decade, asking for a $451 million revenue increase at a 10.25% ROE. The filing will test whether Connecticut's regulatory tone has really improved. A low allowed ROE or big disallowances would weaken the capital plan.
Offshore wind liability grows
Medium impact · Medium oddsEversource sold its offshore wind stakes, but it still has purchase price adjustment exposure tied mainly to Revolution Wind. The company recorded a $164 million after-tax charge in Q2 2026 due to work stoppages. More cost overruns or delays before the project finishes could require another charge.
Execution risk on capital plan
Medium impact · Low oddsThe company has a large $21.5 billion utility infrastructure plan over five years. This could increase by another $700 million if the preliminary ISO-NE transmission project selection becomes final. Executing this much capital work on time and on budget requires flawless operations.
In one breath
Is Eversource still in offshore wind?
No, Eversource sold its offshore wind investments in 2024. It still has a financial liability tied to the sale terms, mainly around Revolution Wind construction costs.
Why did Eversource cut 2026 guidance?
The FERC transmission ROE ruling lowered expected earnings. Management revised 2026 non-GAAP EPS guidance to $4.57 to $4.72 and now bases its 5% to 7% long-term EPS growth target on that lower starting point.
What is the biggest near-term catalyst for ES stock?
The FERC ROE process is the biggest earnings issue. The CL&P rate case is also important because it affects cash flow and the quality of future growth in Connecticut.
