Logo of jester cap with thought bubble.

Image source: The Motley Fool.

Eversource Energy (NYSE:ES)
Q2 2021 Earnings Call
Jul 30, 2021, 9:00 a.m. ET

Contents:

  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:

Operator

Good morning and welcome to the Eversource Energy Second Quarter 2021 Results Conference. My name is Brandon and I'll be your operator for today. [Operator Instructions] Please note this conference is being recorded.

I will now turn the call over to Jeffrey Kotkin, you may begin sir.

Jeffrey R. Kotkin -- Vice President, Investor Relations

Thank you, Brandon. Good morning and thank you for joining us. I'm Jeff Kotkin, Eversource Energy's Vice President for Investor Relations. During this call, we'll be referencing slides that we posted last night on our website. And as you can see on Slide 1, some of the statements made during this investor call may be forward-looking as defined within the meaning of the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. These forward-looking statements are based on management's current expectations and are subject to risk and uncertainty, which may cause the actual results to differ materially from forecasts and projections. These factors are set forth in the news release issued yesterday.

Additional information about the various factors that may cause actual results to differ can be found in our annual report on Form 10-K for the year ended December 31, 2020 and on our Form 10-Q for the 3 months ended March 31, 2021. Additionally, our explanation of how and why we use certain non-GAAP measures and how those measures reconcile to GAAP results is contained within our news release and the slides we posted yesterday and in our most recent 10-K and 10-Q.

Speaking today will be Joe Nolan, our President and Chief Executive Officer; and Phil Lembo, our Executive Vice President and CFO. Also joining us today are John Moreira, our Treasurer and Senior VP for Finance and Regulatory; and Jay Buth, our VP and Controller.

Now I will turn to Slide 2 and turn over the call to Joe.

Joseph R. Nolan -- President and Chief Executive Officer

Thank you, Jeff. We hope that all on the phone are safe and well, and we look forward to seeing you in person later this year. I will cover a few topics this morning and then turn over the call to Phil to discuss our mid-year financial results with some new and important grid modernization in AMI developments in Massachusetts.

I know the most recent months have resulted in weather challenges across the country. In the West, our peers have [Phonetic] to deal with heat and wildfires. in New England with an increased level of thunderstorm activity dropped off by a glancing blow from Tropical Storm Elsa. Employees have worked around the clock many days restoring power to our customers from tree-caused damage to our overhead [Phonetic] system, while our implementation of new technology in vegetation management has limited the scope of many of the resulting power outages. Our dedicated crews continue to be on the front line completing a large amount of emergency restoration work, in fact, in humid conditions over the past month and a half and doing so in a safe and effective manner.

The work has been excellent and we continue to receive notes of appreciation from both our customers and municipal leaders. I was out all day in Connecticut. The day also passed through and I cannot say enough about our team in preparing for and responding to storm damage in coastal regions of Connecticut in Massachusetts. We greatly appreciate the recognition of those efforts that we received from Connecticut PURA Commissioners at the July 14 meeting.

As I mentioned during our first quarter earnings call, improving our relationship with Connecticut policymakers and customers is my top priority as CEO. Earlier this week, a number of Connecticut legislators joined several state community education and labor leaders at our Berlin Connecticut campus to celebrate the 1st class of students who are completing our new Lineworker certification program in partnership with the Hartford based Capital Community College. We continue to see steady monthly improvements in our customer favorability ratings and we appreciate the positive feedback we are receiving from municipal leaders. But we have to prove ourselves during the next major storm. I strongly believe that the changes we are implementing to our communication systems and processes will put us in a much better place the next time a multi-day storm cleanup effort occurs.

Next I want to provide an update on the offshore wind partnership with Orsted. Over the past few months, we have continued to make significant progress on the three projects that I noted on Slide 3. Perhaps the most significant development was the agreement we reached with Dominion Energy to charter the Jones Act-compliant wind turbine installation vessel, currently under construction in Brownsville, Texas. Once construction of the vessel was complete in late 2023, it will seal to New London, Connecticut where it will be used to install wind turbines for Revolution Wind and Sunrise Wind. The vessel will be one of the largest, most advanced of its kind in the world and will provide a more efficient approach to construction and use the feeder barges.

Work has recently begun at New London at the state-owned ocean facing Deepwater peer to convert into a major state area for offshore wind. As you know, the primary variable in our construction timetable to siting approvals. We continue to be on a good path to secure Federal Bureau of Ocean Management or BOEM approval of 132MW South Fork project in January of 2022, which will enable construction to begin early next year and will be completed before the end of 2023. During hearings spring [Phonetic] resulted in Rhode Island Coastal Resource Management Council approval of the project, we indicated that we would install 12 11-megawatt turbines in connection with this project.

We are making progress on the 2 larger projects as well. State permitting applications in Rhode Island for Revolution Wind and in New York for Sunrise Wind we're filed last December. In April, the Rhode Island Energy Facility Siting Board issued a preliminary decision in order and Revolution Wind schedule with advisory opinions for local and state agencies to be submitted by August 26, 2021. Evidentiary hearings are due to begin by mid October.

The Sunrise Wind application was deemed complete by New York officials on July 1, initiating the formal review process for the project. As we noted in May, BOEM was targeting the completion of the review of Revolution Wind for the third quarter of 2023. Based on that review schedule, we now expect to be able to achieve commercial operation in 2025. We have not yet received the schedule for BOEM's review of the Sunrise project, but we are in a good position with our New London stacking area, our turbine installation ship and our suppliers. So depending on the BOEM review schedule that we expect to receive within the next few months, we expect Sunrise will reach commercial operation in 2025 as well.

These dates are consistent with the vision of the Biden administration, which continues to accelerate to review of offshore wind projects proposed for the Atlantic Coast. It is also consistent with the administration's target of having 30,000MW of offshore wind operating in the United States by 2030. Offshore wind is one of several initiatives underway to help our states achieve the greenhouse gas reduction targets.

On July 14, PURA took major -- took a major step forward in furthering the state's clean energy goals when it approved a comprehensive program to support the state's push for having at least 125,000 zero emission vehicles on the road by the end of 2025. The order is described on slide 4. We appreciate a number of the changes that PURA made to the draft decision to enhance the programs expected success. We will submit the implementation plan based on the PURA order by October 15.

Also on that slide is a description of a proposal that Massachusetts Utilities submitted on July 14 to further develop the infrastructure that is needed to support rapid conversion of the states vehicles to zero emissions. As you can see on the slide, by the end of this year, we will have invested $55 million in our Massachusetts Electric Vehicle program helping to connect about 4,000 charge ports. However since transportation is responsible for more than 40% of the states' greenhouse gas emissions, significantly more support is needed to help the state beat its targets of reducing greenhouse gas emissions by 50% by 2030 and 70% by 2040.

Massachusetts had only 36,000 electric vehicles registered as of January 1, 2021 and in 2020, only 3% of the light duty vehicle sold in the state where EVs. While that percentages above average for the country as a whole, it needs to be enhanced significantly going forward since at the current pace, we will have fewer than 500,000 EVs in Massachusetts, as of 2030. We need more than 1 million EVs by then for the state to reach its targets.

We have proposed spending more than $190 million on EV support from 2022 to 2025, including $68 million of capital investment. These investments are described on the slide and include the expanded Charter infrastructure investment, some rate incentives in new opportunities to add EV infrastructure in environmental justice communities. Our support for our stage greenhouse gas reduction efforts is discussed at length in our 2020 Sustainability Report, which was posted on our website earlier this month. A link to the new report is included on Slide 5.

The revamp report has incorporated a number of enhancements to provide you with more visibility into our environmental, social and governance efforts. We're also pleased to share updates on our 20:30 carbon neutrality goal, including our first third party verification of our 20-20 greenhouse gas footprint.

We have a number of teams within Eversource cast with making our 2030 goal a reality. They include a team focusing on reducing emissions in 5 principal areas. Another team working on developing the strategy to offset emissions that cannot be eliminated by 2030 and another team that's encouraging all 9,300 Eversource employees to contribute to their best ideas on how we could achieve our 2030 goal. They've have already developed some truly innovative proposals that we are evaluating. Their enthusiasm is just more evident on why I am so confident about Eversource's future.

Now I will turn the call over to Phil Lembo.

Philip J. Lembo -- Executive Vice President and Chief Financial Officer

Thank you, Joe. This morning I'm going to cover three areas, second quarter results, the status on several of the regulatory dockets pending and some exciting opportunities ahead for us in terms of grid modernization and AMI that Joe alluded to.

I'll start with our results for the quarter in slide 6. We are in $0.77 per share for the quarter, including $0.02 per share of costs primarily relating to the transitioning of Eversource Gas Company of Massachusetts into the Eversource systems. Excluding these costs, we earned $0.79 per share in the second quarter and $1.87 per share in the first half of 2021. So let's take a look at each of the segments performance in the quarter.

Our Electric Transmission business earned $0.40 per share in the second quarter of 2021 compared with earnings of $0.39 per share in the second quarter of 2020, a higher level of necessary investment in our transmission facilities was partially offset by higher share count there. Our Electric Distribution business earned $0.35 per share in the second quarter of '21 compared with earnings of $0.34 per share in the second quarter of 2020. Higher distribution revenues were partially offset by higher O&M, depreciation and property taxes. The higher O&M was largely driven by increased storm activity in the second quarter of 2021 and higher employee medical expenses. The higher medical expenses is mostly due to the fact that in the second quarter of 2020, in the midst of the worst COVID in New England -- the worst of COVID in New England, many routine medical appointments were being canceled, but this is largely returned to normal now in our area.

Our Natural Gas Distribution business earned $0.01 per share in the second quarter of both 2021 and 2020. As you know, natural gas utilities in New England tend to have relatively neutral results in the second quarter. Our Water Distribution business Aquarion earned $0.03 per share in the second quarters of both 2021 and 2020. Beginning next year, we expect Aquarion revenues to be bolstered by previously announced acquisition of New England Service Company or any SC owns the number of small water utilities that serve approximately 10,000 customers in Connecticut, Massachusetts and New Hampshire. We continue to expect to close the transaction before the end of this year. State regulators are currently reviewing the acquisition and its benefits to customers. Our parents in other company segment had modest second quarter losses in both years.

Turning to Slide 7, you can see that we have reiterated our amended earnings guidance that we issued in May. We continue to expect ongoing earnings toward the lower end of our $3.81 to $3.93 per share guidance. This incorporates $28.6 million pre-tax charge relating to our performance in Connecticut, following the devastating impact of tropical storm Isaias last summer. We recorded the charge in the first quarter of this year. We also continue to project long-term EPS growth in the upper half of the range of the 5% to 7% through 2025 excluding the impact of our new offshore wind projects.

From our financial results, I will turn to the status of various regulatory initiatives and I'll start in Connecticut. We have updated summary of various proceedings in the appendix of our slides. I mentioned earlier that the Public Utilities Regulatory Authority or PURA has finalized the $28.6 million civil penalty associated with our storm performance last summer that follow the April 28 release of a final storm performance decision that we discussed on our first quarter call. As you know we have appealed that April 28 decision in Connecticut Superior Court. Do not have a full schedule for those court proceedings, but expect the case to take many months before the court renders a decision. A scheduling conference will be held later next month.

The April 28 storm order also required a 90 basis point reduction in Connecticut Light and Powers distribution ROE on top of the $28.6 million penalty. That pancaking of penalty forms, one of the principal basis of our appeal since we believe it violates the state law that was in effect at the time of the storm. Additionally hearings in the temporary rate reduction docket commenced in May will continue next month. A supplemental hearing is scheduled for August 9, at which time additional testimonial evidence may be presented on certain issues including the applicability in term of the 90 basis point penalty. Pure justice Week notified parties that written testimony on the applicability in term of that penalty may be filed in advance of the August 9 hearing, no later than August 4.

CL&P's distribution ROE for the 12 months ended March 31, 2021 was 8.86% and its authorized distribution return was 9.25%. The scheduled for this proceeding currently indicates a decision date of October 13. We will continue to update you as this docket proceeds.

Regardless of the status of this rate review, we and our regulators share a common goal of providing nearly 1.3 million Connecticut electric customers with safe, reliable service and to help the state meet its aggressive carbon reduction and clean energy goals.

Turning to Massachusetts, Joe mentioned our electric vehicle initiative earlier. On July 1, we submitted two other proposals to the Department of Public Utilities. As you can see on slide 8, the first was an extension of the grid modernization plan that we began implementing with the DPU approval back in 2018. The investments we've made on this first phase have allowed us to reduce the scope of outages, monitor power conditions much more closely and assist in the installation of distributed energy resources throughout the Massachusetts service territory. The program is submitted to the Massachusetts DPU earlier this month, call for the investment of another $200 million from 2022 through 2025 to further improve substation automation, wireless communications and expand other programs that would have a number of other benefits including reducing peak demand in line losses.

Reducing line losses, an important element in achieving our 2030 carbon neutrality goal. In the same docket, we're asking the DPU to take the first steps to allow us to embark on a 6-year effort to implement advanced metering infrastructure for our nearly 1.5 million Massachusetts Electric customers along with a new communications network, Meter Data Management System and Customer Information system.

We project capital investment associated with the full program to be in the $500 million to $600 million range over the period of 2023 through 2028. These technologies are critical enabling investment that support the state's 2050 clean energy goals. And as I've mentioned previously, Connecticut is looking at how AMI should be introduced for CL&P customers although PURA has acknowledge the potential for substantial benefits that AMI can deliver. Currently, there is no full schedule for the docket at this time.

Finally, I just want to cover recent financings and rating agency actions. In recent months, both Moody's and Standard and Poor's have changed CL&P's outlook to negative. Moody's changed Eversource parent outlook to negative as well. While we're not happy with these developments, we understand these changes are primarily related to the ongoing regulatory proceedings in Connecticut, such as the temporary rate reduction docket and the ROE penalty stemming from the ESI's report. We are pleased that Moody's recently affirmed PSNH, Public Service New Hampshire's rating and outlook recognizing the constructive outcome of last year's distribution rate proceeding in New Hampshire.

Also, we recently filed an application to issue up to $725 million of long-term debt at Eversource Gas Company of Massachusetts. Since we purchased the former Columbia Gas asset last year, Eversource Gas of Massachusetts has been borrowing long term exclusively through the Eversource parent. We believe that borrowing at the subsidiary level ultimately will be less costly for customers and we expect DPU decision on this application later this year. Like NSTAR Gas and Yankee Gas, we would expect Eversource Gas of Massachusetts to borrow in the private markets.

Thank you very much for joining us this morning. And I'll turn the call over to Jeff for Q&A.

Jeffrey R. Kotkin -- Vice President, Investor Relations

Thank you, Phil. And I'm going to turn the call back to Brandon just to remind you, how to enter your questions.

Questions and Answers:

Operator

Thanks, Jeff. And we will now begin the question the question and answer session. [Operator Instructions]

Jeffrey R. Kotkin -- Vice President, Investor Relations

Thank you. Brandon. Our first question this morning is from Shahriar Pourreza from Guggenheim. Good morning, Shar.

Shahriar Pourreza -- Guggenheim Partners -- Analyst

Good morning, Jeff, good morning, team.

Joseph R. Nolan -- President and Chief Executive Officer

Good morning.

Philip J. Lembo -- Executive Vice President and Chief Financial Officer

Good morning, Shahriar.

Shahriar Pourreza -- Guggenheim Partners -- Analyst

Just starting with the PURA and sort of the 90 basis points ROE reduction. It sounds like, one of the more recent notices opened the door for parties to petition for a defined penalty period versus something more perpetual. How do we -- how should we sort of think about kind of this opening, if you will, to a fixed link reduction versus indefinite. And then just remind us again what we should be watching for here going forward.

Philip J. Lembo -- Executive Vice President and Chief Financial Officer

Sure. Shahriar, this is Phil. As I mentioned the the docket is open and recently PURA did notify the parties that they could submit testimony on the applicability of the term -- of the penalty. To me that indicates there is a consideration of what a term would be as you know, the initial language was using the word indefinite. So I think that's positive development in terms of setting a specific term for the penalty. So in the docket, the information that came out last week sort of indicated that could file information there.

So what we should be looking for the year is there is a process that will continue on that docket. There is an expectation that order would be issued in October with any changes out of there effective November 1, is the current timeline.

Shahriar Pourreza -- Guggenheim Partners -- Analyst

Got it. Thank you for that. And then just lastly, and maybe just shifting to offshore wind and starting with the logistics side, redevelopment of the Connecticut State Pier and New London has had some cost increases, right, from $93 million to roughly $235 million obviously paid by state. But it sounds like everything else is kind of proceeding. Is there kind of any supply chain issues, you're kind of keeping an eye on or logistics that remain kind of unknown -- unknowns.

Joseph R. Nolan -- President and Chief Executive Officer

Yeah, thanks. Shahriar, this is Joe. I'll take that. So water work is underway at the New London port, we were just out there for some inspections. We do have all our onshore permits. It is going very, very well. Last week, the State finalized the funding. Any of those increases, the state is absorbing. So we feel very, very good about that. And then with regard to supply chain, there are no issues that are impacting any of our three projects, all of the projects have everything locked down. So we feel good about that.

Shahriar Pourreza -- Guggenheim Partners -- Analyst

Okay, perfect. That's all I had. Pretty clear-cut quarter. Thanks guys.

Joseph R. Nolan -- President and Chief Executive Officer

Thank you.

Philip J. Lembo -- Executive Vice President and Chief Financial Officer

Thank you.

Jeffrey R. Kotkin -- Vice President, Investor Relations

Thanks, Shahriar. Our next question is from Jeremy Tonet from JP Morgan. Good morning, Jeremy.

Ryan Brinkman -- JP Morgan -- Analyst

Hi, good morning guys. It's actually, Ryan on for Jeremy.

Joseph R. Nolan -- President and Chief Executive Officer

Hi, Ryan.

Philip J. Lembo -- Executive Vice President and Chief Financial Officer

Hi, Ryan.

Shahriar Pourreza -- Guggenheim Partners -- Analyst

I just wanted to start on the offshore and maybe on some of the kind of the siting process, you guys are going to talking about during the script and yeah, I think about the progress you guys have been making, we think some of the fishermen. I know this is kind of an issue with South Fork and Long Islands specifically, we're kind of want to get a latest side, kind of progress you're making in terms of other stakeholders kind of agreements and kind of the process you're making those relationships.

Joseph R. Nolan -- President and Chief Executive Officer

So thank you for the question, Ryan. We've had a lot of dialog down there and I think we've got some, a good path forward, and we've got obviously a positive decision we received in July from the CRMC down there and positive decisions in New York as well as in Massachusetts. So when we think a lot of the concerns or at least the path is pretty clear. And we feel good about it.

Ryan Brinkman -- JP Morgan -- Analyst

And then maybe just one on Connecticut. We saw you, I kind of get their settlement over the finish line there, just kind of wondering prospects, you're kind of seeing in with some stakeholders in terms of maybe potentially settling some of these issues and what kind of timeline we might be thinking about in terms of so becoming on that front.

Joseph R. Nolan -- President and Chief Executive Officer

Yes, sure. So generally speaking, a broad multi-party settlement is something that's obviously attractive to us. We have a long history of settlements, whether it's the NU and NSTAR merger in 2012 with the CL&P rate case or the Yankee rate case. So we feel good about that. I have been spending most of my time in Connecticut. We've been out with multiple parties and and I think that the temperature certainly has reduced and folks are in a good place. I think we need to prove ourselves. I mean, we know that. I think tropical storm, the recent one with Elsa which pass-through was really a good exercise for us to show that a lot of things have changed for our business. So biologic settlement is something that's attractive to us. We were pleased to see that [Indecipherable]

Settlement was approved. So we see some possibilities there.

Ryan Brinkman -- JP Morgan -- Analyst

Got it. Makes sense. I'll stop there. Thank you for answering my question.

Joseph R. Nolan -- President and Chief Executive Officer

Thank you. Ryan.

Jeffrey R. Kotkin -- Vice President, Investor Relations

Thank you, Ryan. Next question is from their Durgesh Chopra from Evercore. Good morning, Durgesh. Hey, good morning, Jeff. Thank you. Just going back to the Connecticut. outfit, the temporary rate reduction [Indecipherable], but you know some testimony around the Escuiler [Phonetic]. I'm just wondering where that stands and would you guys expect this final [Indecipherable] for the rate reduction effective the number that's addressed as well or that's finalized as well.

Joseph R. Nolan -- President and Chief Executive Officer

Durgesh, as you broke up a little bit on the questions. Are you talking about the the testimony from the intervener that went in.

Durgesh Chopra -- Evercore ISI -- Analyst

That's correct. The equity [Indecipherable]. That's exactly right.

Joseph R. Nolan -- President and Chief Executive Officer

Okay.

Philip J. Lembo -- Executive Vice President and Chief Financial Officer

Yes, this is Phil. During the course of that proceeding, there was testimony, and certainly we provided our own input to that testimony, and as well as question, the witness. So by the nature of the being part of the questioning, I would expect that somehow it could be considered in that proceeding going forward. So there is no specific area that is to be decided there. I think it was just a testimony that was filed by the EOE -- it's EOE witnessed -- that's a section of the Connecticut PURA, so.

Durgesh Chopra -- Evercore ISI -- Analyst

Got it. Thank you. That's helpful. And then maybe just a quick clarification, Phil. The AMI filing in Massachusetts. What portion of that $500 million to $600 million that you mentioned would be incremental to the current capex plan?

Philip J. Lembo -- Executive Vice President and Chief Financial Officer

We have currently no CapEx in our 5-year forecast for AMI in Connecticut or in Massachusetts. So any spending in either state would be incremental.

Durgesh Chopra -- Evercore ISI -- Analyst

Got it. And do you -- do we see a final decision in mid 2022 or is that just sort of like what the response means like, is this a hormonal sort of yes or no or just feedback from the Massachusetts DPU?

Philip J. Lembo -- Executive Vice President and Chief Financial Officer

So we expect a decision in 2022 mid-year is as good as estimated as any at this stage. So this has been a long-standing sort of desire, I think of the commission. We certainly have a need to make a decision on our metering infrastructure. So the timing is good. So we fully expect a decision in mid-year 2022.

Durgesh Chopra -- Evercore ISI -- Analyst

Okay, perfect. Thanks guys, much appreciate the time.

Jeffrey R. Kotkin -- Vice President, Investor Relations

Thanks, Durgesh. Next question is from Julien from Bank of America. Good morning, Julian.

Julien Dumoulin-Smith -- Bank of America -- Analyst

Hey, good morning, team. Thanks for the opportunity to connect. Maybe to pick up a little bit off the last question and flip it a little bit. When you think about the various scenarios, so you have a history of executing well, you talked about upper half from 5 to 7, there's is a variety of different pieces that are moving your puts and takes. How do you think about your confidence level under various scenarios in the upper half year and I'll let you answer that accordingly, because there is a lot of probably too many centers to talk about point out here, but would be curious do you think about the sort of the decision tree here or pathway potentially?

Philip J. Lembo -- Executive Vice President and Chief Financial Officer

Thanks, Julien. As we see our 5-year or long term forecast, I'm very confident in our ability to achieve our growth expectations. As you mentioned, there are always puts and takes. That's what we do as a management team, and that's what any company would do is manage that process and address issues that don't go your way and look for other opportunities. So there are various puts and takes that can occur over the course of any forecast period, but I am confident in our ability to achieve our target.

Julien Dumoulin-Smith -- Bank of America -- Analyst

Got it. Excellent. I'll leave that subject there. Maybe coming back as offshore wind subject as opposed the highest level observation or question back to you after Shahriar's question would be, given the more coincident construction of these projects here, any considerations around logistics that we should be focused on here, just given that they are now increasingly lining up against each other in parallel. Yeah. Thank you. Good morning, Julien. Joe Nolan here. Yeah, we feel great about the timing. Our projects are a really scheduled in a perfect formation. So we do think there's a lot of opportunity thereon. Mobilization, demobilization to allow these projects to be able to be constructed in a very orderly fashion and that's what really excites us. So, yeah, definitely opportunity is there, the timing is perfect for actually all three of them. Right. Excellent. And then lastly, just coming back to this question on settlement and I know -- I appreciate your comments earlier, curious to the extent to which you can resolve perhaps in a comprehensive manner all variety including net base rate case and filing next year in the context of some sort of settlement here, I just want to push on that subject. Just a tad more if you don't mind.

Joseph R. Nolan -- President and Chief Executive Officer

Yeah, Julien, I think you've had an opportunity to see our success in the past. We can do settlements that are quite comprehensive, we feel confident that if, if we get to the table. We've got obviously of the parties that we have great relationships with that a comprehensive settlement is definitely possible here and it's something that obviously will be attractive to acknowledge all basically due to a number of the parties. It is obviously very, very busy time down in Connecticut right now, and so I'm optimistic.

All right, excellent. Well, thank you very much and best of luck on those efforts. Thank you.

Philip J. Lembo -- Executive Vice President and Chief Financial Officer

Thank you, Julien.

Jeffrey R. Kotkin -- Vice President, Investor Relations

Thanks, Julien. Next question is from Paul Patterson from Glenrock. Good morning, Paul.

Paul Patterson -- Glenrock Associates -- Analyst

Thank you, good morning guys. How you doing.

Joseph R. Nolan -- President and Chief Executive Officer

Good, Paul, how are you.

Paul Patterson -- Glenrock Associates -- Analyst

All right. So just to sort of pick up on Julien's question there on the -- and Joe, you said you are optimistic about Connecticut and the potential for salmon [Phonetic], could you give us a feeling for what the, the key sticking points are because as you know, having do this some months ago, and I'm just wondering how should we think about what the -- what parties or the might be the key issue or what specific issues are the ones that probably are the ones for us to focus on being resolved.

Joseph R. Nolan -- President and Chief Executive Officer

Yeah, sure. I mean, it's the same parties that we've dealt with the -- you've got the Attorney General's office, you got the OCC, you have deep. I mean, each of the parties obviously that we've dealt with in the past and that would be the same folks that we would see if we get renewals some settlements.

Paul Patterson -- Glenrock Associates -- Analyst

Okay. And is there any key points or key issues that are the sticking points that are the key things that people are focused on that. That's causing more of an issue than others.

Joseph R. Nolan -- President and Chief Executive Officer

No. No, I wouldn't say there's any sticking points. There is no specific issues.

Paul Patterson -- Glenrock Associates -- Analyst

Okay. And in terms of timing, you guys gave a very detailed sort of rate case regulatory proceeding outlook and stuff, but how should we think about which [Indecipherable] before the hearing or how should we think about that.

Joseph R. Nolan -- President and Chief Executive Officer

Yeah. Settlements can occur at any point, as you know, in the process. So it's hard for me to say, we need to let certain things run their kind of regulatory course.

Paul Patterson -- Glenrock Associates -- Analyst

Okay. And then on the -- Phil, you called out the ratings downgrade potential. If you guys are downgraded other than, obviously, I mean obviously impacts the cost of borrowing. But other than that, is there anything else we should be thinking about, is there any other sort of potential trigger on covenant or anything we should be thinking about or anything else?

Philip J. Lembo -- Executive Vice President and Chief Financial Officer

No, Paul. There is no -- there are no other triggers that come into play here. And just for clarification, I think we all know that being on negative outlook doesn't necessarily mean that you're going to be downgraded. I think the agencies like to see certain progress in particular areas. So in the area that they sort of highlighted in terms of lowering the outlook was sort of a Connecticut regulatory area. So there are a lot of dockets going on there and if those move in a direction that the rating agencies view as credit positive, then that doesn't mean you're going to get the downgrade rates, they could put you back on to a stable outlook. So -- but nonetheless if something were to happen, there are no other triggers that would be in effect.

Paul Patterson -- Glenrock Associates -- Analyst

Okay, great. That's are my questions. Thanks so much guys. Have a good weekend.

Joseph R. Nolan -- President and Chief Executive Officer

Thanks, Paul. You too.

Philip J. Lembo -- Executive Vice President and Chief Financial Officer

Thanks, Paul.

Jeffrey R. Kotkin -- Vice President, Investor Relations

Next question is from Andrew Weisel from Scotia. Good morning, Andrew.

Andrew Weisel -- Scotia Howard Weil -- Analyst

Hey, good morning everyone. I mean I'll start by following up on that last question about the ratings agencies. I don't expect specific numbers, but I know there, the agency's concern is a regulatory risk, not exactly the balance sheet, but if they were to downgrade, how would that affect your plans for the mix of debt versus equity in the coming years?

Joseph R. Nolan -- President and Chief Executive Officer

Well, so a lot of hypotheticals there, I mean it's, if that happen. I'd have to see what -- was there something in a regulatory decision, what the impact of that would be. So I'd say we don't have any plans at this stage to make any really adjustments in our approach to our capital structure and what we're looking to do in terms of our debt financings. As you know, we identified that we had $700 million of additional equity. Financing that, we had identified a couple of years ago. That is still out there that we plan to do over some longer-term period on a periodic ATM [Phonetic] or something basis and then we are issuing about $500 million -- about $100 million a year is a better way of saying it out of our dividend reinvestment plan. So we are continuing to do some dribbling out of equity. And then we're doing long-term financings, but don't have any specific changes that I would highlight at this stage of the capital structure.

Andrew Weisel -- Scotia Howard Weil -- Analyst

Okay. The next question, Joe you opened your prepared remarks talking about the positive feedback to your preparation for response to the storms. Can you give some specific examples of ways that you changed your protocols and strategies since ECIS [Phonetic]. And if there are any additional new initiatives that you're planning to rollout to help minimize from driven outages.

Joseph R. Nolan -- President and Chief Executive Officer

Yeah, sure. Thank you, Andrew. What are the -- I think the multi impactful kind of system of rolled out as a community-based portal that allows communities to put their priorities in terms of public safety, block roads, those types of items are in there. We also have crews in each of the communities that allow communities to have their priorities addressed. So those are just some of the -- I would say the other piece that really was back to what we had done prior to ECIS because of the pandemic is we have folks that are located in each of these cities and towns. That's something we were not able to do with ECIS. As you know, at that point in time, everybody was in lockdown, it was a very complex recovery effort because we needed double of everything. We had to have single workers and vehicles. We had to have single workers in hotel rooms. And it was a very, very challenging. So when we had this last event there also, things are a little more back to normal and we had a lot of kind of technology portals that we have deployed, which we're very, very well received. I mean I was out on the system. I had an opportunity to talk to several of the cities and towns and all the feedback I received was very, very positive.

Andrew Weisel -- Scotia Howard Weil -- Analyst

Okay, great, that's helpful. Best of luck, going to the next one. Hopefully you won't be tested anytime soon, but hopefully it won't be too bad. Thank you.

Joseph R. Nolan -- President and Chief Executive Officer

Thank you, Andrew.

Jeffrey R. Kotkin -- Vice President, Investor Relations

Our next question is from Sophie Karp from KeyBanc. Good morning, Sophie.

Sophie Karp -- KeyBanc Capital Markets -- Analyst

Hey, good morning guys. Thank you for taking my question. I wanted to take a stab at Connecticut again, but maybe from a slightly different angle, not to sound like a boomer [Phonetic], but with the storms becoming more frequent and some may even say new normal. Is there a room for a dialog there that goes beyond just kind of sorting through the penalties and the past performance and establish a regulatory framework for dealing with consecutive storms as a new normal line of what they seeing in say in the hurricane belts where this for a while. These are [Indecipherable] this feature for the commission level where you have securitizations or drivers for that type of stuff. So any relook mechanisms that are predictable where you don't have to sore through each storm individually as we go forward. That's all I have it.

Joseph R. Nolan -- President and Chief Executive Officer

Thanks, Sophie. Some of those items have been discussed, securitization certainly was a topic that's come up from time to time in Connecticut in terms of storm costs. But usually in a rate proceeding where you're looking at all your cost and what's in your cost of service, etc. In our last settled rate proceeding with CL&P, we spent a lot of time on storms and what the right level of storm activity was to collect in rates and what appropriate deferral mechanisms might be there. So there has long been a recognition that these costs can move around and what's the best way of making sure that customer rates remain as stable as possible, but there still an opportunity for collecting these costs going forward.

So, those kinds of discussions will continue. And then the dialog will continue. There is nothing specifically on the table, per se in terms of storm cost recovery at this stage, but we've had discussions on various topics. We spend -- so before you get to storm recovery, one of the areas we do is try to not have to recover, right. So that means we try to do an effective job on our vegetation management and the capital spending that we do on technologies to restore customers quickly and remotely. So in the -- and we spent $200 million a year on vegetation management just to across our system to remove trees and open up rights of way, etc. So the best outage to have it is not to have it. I guess that's the best possibility. So we do things and the Commission has been receptive to our request for additional funding, but there's still a lot of tree work that can be done in Connecticut, as in other states, but that's an area that we continue, we'd like to continue to have a dialog on.

Sophie Karp -- KeyBanc Capital Markets -- Analyst

Thank you.

Jeffrey R. Kotkin -- Vice President, Investor Relations

All right. Next -- thank you, Sophie. Next question is from David Arcaro from Morgan Stanley. David?

David Arcaro -- Morgan Stanley -- Analyst

Hey, good morning. Thanks so much for taking my questions. A quick follow-up just on that last line of thinking. Is there a capex opportunity to look for more reliability kind of system hardening investments in Connecticut, you mentioned vegetation management and tree trimming, which seems more on the O&M side of things. I was wondering if there is more capital to deploy to lower the impact of storms going forward in Connecticut?

Joseph R. Nolan -- President and Chief Executive Officer

Well, we do have an approved capital tracking sort of safety reliability program that we have in Connecticut right now that we operate under. So as we do in the other states too. So there is -- that would not be new. We do spend money on technologies to again enhance our ability to prevent outages or in the event that you do have an outage to recover quickly. So there is an opportunity and we currently have a mechanism in place to do that.

David Arcaro -- Morgan Stanley -- Analyst

Okay, got it, thanks. Shifting to offshore wind. I was just wanted to clarify what gave you the comfort this quarter to put a specific year, specific data there for Revolution in Sunrise. Was it the progress that you saw it on the schedule that let you kind of crystallize those years.

Joseph R. Nolan -- President and Chief Executive Officer

Yeah, I'd say that's the primary driver. We've said when we first moved off the date, we said as soon as we get more clarification, we would go back and work with our partners with Orsted and develop a schedule. So in the case of Revolution Wind, we certainly we have that in place for Sunrise. It's soon to get in place. So we're, I guess cautiously optimistic on that date and we'll have to wait till we see more information out of own to be more certain, but that is it. We've seen movement and we have much more clarity now on dates than we did a year ago.

David Arcaro -- Morgan Stanley -- Analyst

Got it. That makes sense. And then just kind of last quick one, just wondering if there's any thoughts you might have on the Massachusetts RFP in your competitive positioning there for the next offshore wind project. Are there advantages you might be able to bring to the table as especially some of the infrastructure comes online for your other projects that you could potentially lean on?

Joseph R. Nolan -- President and Chief Executive Officer

Sure. Like all state RFPs for when we're evaluating, right now look at how it fits into our plan there. We expect other the states as well to have it, so it's under consideration.

David Arcaro -- Morgan Stanley -- Analyst

Great, thanks so much.

Joseph R. Nolan -- President and Chief Executive Officer

Thank you.

Jeffrey R. Kotkin -- Vice President, Investor Relations

Thanks, David. Next question is from Steve Fleishman from Wolfe. Good morning, Steve.

Steve Fleishman -- Wolfe Research -- Analyst

Hey, good morning. Thanks. Apologize if this was asked and just it is a lot of different issues in Connecticut, that you might be able to settle on I guess if you get to that point on the settlement. Just curious if there is a way to deal with kind of the need to file a rate case every four years. Could that be part of this or is that something that has to happen, no matter what

Joseph R. Nolan -- President and Chief Executive Officer

Yeah, Steve. Good morning, Steve. This is Joe. Absolutely. That could be part of any type of a comprehensive settlement, if that was something that was important to the parties. That's something we would definitely put on the table.

Philip J. Lembo -- Executive Vice President and Chief Financial Officer

Yeah. And I'll add to that. That's really more of a legislative mandate, Steve and it requires -- it appears to review the rates. So if the settlement. If there is information there that would be deemed as a review that could take care of that requirement. But that four-year sort of review is more of, in the legislative space.

Steve Fleishman -- Wolfe Research -- Analyst

Got it. No, that's helpful color, Phil. Thank you. That was it.

Philip J. Lembo -- Executive Vice President and Chief Financial Officer

All right.

Jeffrey R. Kotkin -- Vice President, Investor Relations

Thank you, Steve. Looks like we're all set. We don't have any more folks in the queue. So we want to thank everybody for joining us today. If you've got any follow-up, please give us a call or send us an email and have a wonderful weekend.

Operator

[Operator Closing Remarks]

Duration: 50 minutes

Call participants:

Jeffrey R. Kotkin -- Vice President, Investor Relations

Joseph R. Nolan -- President and Chief Executive Officer

Philip J. Lembo -- Executive Vice President and Chief Financial Officer

Shahriar Pourreza -- Guggenheim Partners -- Analyst

Ryan Brinkman -- JP Morgan -- Analyst

Durgesh Chopra -- Evercore ISI -- Analyst

Julien Dumoulin-Smith -- Bank of America -- Analyst

Paul Patterson -- Glenrock Associates -- Analyst

Andrew Weisel -- Scotia Howard Weil -- Analyst

Sophie Karp -- KeyBanc Capital Markets -- Analyst

David Arcaro -- Morgan Stanley -- Analyst

Steve Fleishman -- Wolfe Research -- Analyst

More ES analysis

All earnings call transcripts

AlphaStreet Logo

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.