Eversource Sells Water Unit, Trims Earnings Outlook
The utility booked a $115 million after-tax charge tied to the $2.4 billion divestiture.
Eversource Energy (ES) completed the sale of its Aquarion Water Company for $2.4 billion in cash, marking the utility’s exit from the water distribution business and a shift to a pure-play regulated electric and natural gas model. The transaction closed in the second quarter and generated adjusted net equity proceeds of approximately $1.7 billion, which the company said would be used to reduce debt.
The divestiture triggered an after-tax non-cash charge of $115 million, or $0.31 a share, in the quarter, a one-time item not present in prior periods. Eversource also lowered its 2026 non-GAAP earnings-per-share guidance to a range of $4.57 to $4.72, down from the prior $4.80 to $4.95, reflecting the absence of Aquarion’s earnings. The company maintained its long-term EPS growth target of 5% to 7% through 2030, with expectations to reach the upper half of that range by 2028.
First-quarter results underscored the underlying strength of the remaining regulated businesses. Revenue rose 9.4% year-over-year to $4.50 billion, while GAAP earnings per share climbed 7.3% to $1.61. Non-GAAP recurring EPS, which excluded a $0.12 FERC ROE refund charge, increased 15.3% to $1.73.
Segment performance drove the gains. Natural gas distribution earnings surged 35.2% to $295.3 million, benefiting from base rate increases across all gas businesses effective November 2025. Electric transmission earnings rose 12.5% to $224.3 million, supported by continued investment and higher non-refundable revenues, while electric distribution earnings grew 7.6% to $202.8 million, aided by rate increases in Massachusetts and New Hampshire. The now-divested water segment, reported pre-sale, posted a 77.8% jump in earnings to $6.4 million.
Higher costs tempered the gains. Operating expenses increased 7.4% to $3.43 billion, with purchased power, gas, and transmission costs up 13.3%, while interest expense climbed 21.4% to $365.3 million, reflecting elevated debt levels and financing costs. The parent and other companies segment widened its loss to $78.1 million, driven by a higher effective tax rate.
Eversource also raised its five-year capital investment plan to $26.5 billion for 2026–2030, up $2.3 billion from the prior $24.2 billion target, excluding Aquarion-related spending. The increase is earmarked for electric and natural gas distribution projects. The company plans to raise $800 million to $1.1 billion in equity over the period, with $465 million already raised through September 2025 via at-the-market issuances.
The utility’s financial flexibility improved, with its funds-from-operations-to-debt ratio rising to 14.6% as of June 30, 2025, up from 12.7% at year-end 2024. The metric now sits more than 100 basis points above downgrade thresholds at S&P and Moody’s.