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Item 8. Financial Statements and Supplementary Data

2025-02-14 compared with 2024-02-14 · 633 added, 617 removed, 2646 unchanged (32% of the section changed)

66 unchanged sentences

We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matter

Critical Audit Matters

The critical audit matters communicated below are matters arising from the current-period audit of the financial statements that were communicated or required to be communicated to the audit committee and that (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments.

2 unchanged sentences

Critical Audit Matter Description

The Company’s utility companies are subject to rate regulation by the Federal Energy Regulatory Commission and by their respective state public utility authorities in Connecticut, Massachusetts, or New Hampshire (the “Commissions”).

The rate regulation by these Commissions is based on cost recovery.

The regulated companies’ financial statements reflect the effects of the rate-making process.

The rates charged to the customers of the Company’s regulated companies are designed to collect each company’s cost to provide service, plus a return on investment.

The application of accounting guidance for rate-regulated enterprises results in recording regulatory assets and liabilities.

Regulatory assets represent the deferral of incurred costs that are probable of future recovery in customer rates.

Regulatory assets are amortized as the incurred costs are recovered through customer rates.

The Company is subject to regulation by federal, Connecticut, Massachusetts, and New Hampshire utility regulatory agencies (the “Commissions”), which have jurisdiction with respect to the rates of the Company’s electric, natural gas, and water distribution companies.

Management has determined it meets the criteria for the application of regulated operations accounting in preparing its financial statements under accounting principles generally accepted in the United States of America.

Judgment can be required to determine if otherwise recognizable incurred costs qualify to be presented as a regulatory asset and deferred because such costs are probable of future recovery in customer rates.

As discussed in Note 2, regulatory proceedings in recent years have focused on the recoverability of costs, including storm costs, regulatory tracking mechanisms and benefit costs, amongst others.

In some cases, the Company records regulatory assets before approval for recovery has been received from the applicable regulatory commission.

The Company must use judgment to conclude that costs deferred as regulatory assets are probable of future recovery.

The Company bases its conclusion on certain factors, including, but not limited to, regulatory precedent.

Regulatory liabilities represent either revenues received from customers to fund expected costs that have not yet been incurred or probable future refunds to customers.

The Company uses judgment when recording regulatory assets and liabilities;

however, regulatory commissions can reach different conclusions about the recovery of costs, and those conclusions could have a material impact on the Company’s financial statements.

Management believes it is probable that each of the regulated companies will recover its respective investment in long-lived assets, including regulatory assets.

If management were to determine that it could no longer apply the accounting guidance applicable to rate-regulated enterprises to any of the regulated companies’ operations, or if management could not conclude it is probable that costs would be recovered from customers in future rates, the costs would be charged to net income in the period in which the determination is made.

Accounting for the economics of rate-regulation impacts multiple financial statement line items and disclosures, such as regulated property, plant, and equipment, regulatory assets and liabilities, operating revenues, depreciation expense and amortization of regulatory assets.

While management has indicated it expects to recover costs from customers through regulated rates, there is a risk that the Commissions will not approve full recovery of such costs or full recovery of all amounts invested in the utility business and a reasonable return on that investment.

We identified the impact of rate-regulation as a critical audit matter due to the significant judgments made by management to support its assertions about impact of future regulatory orders on the financial statements.

Management judgments include assessing the probability of recovery in future rates of incurred costs and of a refund to customers.

Given that management’s accounting judgments are based on assumptions about the outcome of future decisions by the Commissions, auditing these judgments requires specialized knowledge of accounting for rate regulation and the rate setting process due to its inherent complexities.

As a result, assessing the potential outcomes of future regulatory orders requires management judgment.

We identified the impact of rate regulation related to regulatory assets as a critical audit matter due to the judgments made by management, including assumptions regarding the outcome of future decisions by the Commissions to support its assertions on the likelihood of future recovery for deferred costs.

Given that management’s accounting judgments are based on assumptions about the outcome of future decisions by the Commissions, auditing these judgments required specialized knowledge of accounting for rate regulation and the ratemaking process due to its inherent complexities as it relates to regulatory assets.

How the Critical Audit Matter Was Addressed in the Audit

Our audit procedures related to the uncertainty of future decisions by the Commissions included the following, among others:

• We tested the effectiveness of management’s controls over the evaluation of the likelihood of (1) the recovery in future rates of costs incurred as property, plant, and equipment and deferred as regulatory assets, and (2) a refund or a future reduction in rates that should be reported as regulatory liabilities.

We tested the effectiveness of management’s controls over the initial recognition of amounts as property, plant, and equipment;

regulatory assets or liabilities;

and the monitoring and evaluation of regulatory developments that may affect the likelihood of recovering costs in future rates, a refund, or a future reduction in rates.

• We tested the effectiveness of management’s controls over the evaluation of the likelihood of the recovery in future rates of costs deferred as regulatory assets.

• We evaluated the Company’s disclosures related to the applicability and impacts of rate regulation, including the balances recorded and regulatory developments disclosed in the financial statements.

• We read relevant regulatory orders issued by the Commissions for the Company and other public utilities, regulatory statutes, interpretations, procedural memorandums, filings made by intervenors, and other publicly available information to assess the likelihood of recovery in future rates or of a future refund or reduction in rates based on precedents of the Commissions’ treatment of similar costs under similar circumstances.

We evaluated the external information and compared it to management’s recorded regulatory asset and liability balances for completeness.

• We read relevant regulatory orders issued by the Commissions for the Company and other public utilities, regulatory statutes, interpretations, procedural memorandums, filings made by intervenors, and other publicly available information to assess the likelihood of recovery in future rates based on precedents of the Commissions’ treatment of similar costs under similar circumstances.

We also evaluated the external information and compared it to management’s recorded regulatory asset and liability balances for completeness.

• For regulatory matters in process, we inspected the Company’s filings with the Commissions and the filings with the Commissions by intervenors that may impact the Company’s future rates, for any evidence that might contradict management’s assertions .

• We made inquiries of management, including legal counsel, and obtained the regulatory orders and analysis from management that support the probability of recovery, refund, or future reductions in rates for regulatory assets and liabilities to assess management’s assertion that amounts are probable of recovery, refund, or a future reduction in rates.

Investments in Unconsolidated Affiliates – Impact of Offshore Wind Impairment and Offshore Wind Divestiture - Refer to Note 6 to the Financial Statements

• We performed audit procedures on deferred storm restoration costs for completeness and accuracy.

• We made inquiries of management, including legal counsel, and obtained the regulatory orders and analysis from management that support the probability of recovery in rates for regulatory assets to assess management’s assertion that amounts are probable of recovery.

Investments in Unconsolidated Affiliates – Impact of Offshore Wind Investment Divestiture - Refer to Note 6 to the Financial Statements

Critical Audit Matter Description

Eversource’s offshore wind business includes 50 percent ownership interests in each of North East Offshore and South Fork Class B Member, LLC, which collectively hold three offshore wind projects.

North East Offshore holds the Revolution Wind project and the Sunrise Wind project.

South Fork Class B Member, LLC holds the South Fork Wind project.

Eversource’s offshore wind business also includes a noncontrolling tax equity investment in South Fork Wind through a 100 percent ownership in South Fork Wind Holdings, LLC Class A shares.

The offshore wind projects are being developed and constructed through joint and equal partnerships with Ørsted.

In the second quarter of 2023, the Company announced that it had completed the strategic review of its offshore wind investments and determined that it would continue to pursue the sale of its offshore wind investments.

The Company also entered into a purchase and sale agreement with Ørsted for its 50% interest in an uncommitted lease area and committed to provide tax equity for the South Fork Wind project through a new tax equity ownership interest.

In connection with the conclusion of the strategic review, Eversource evaluated its aggregate investment in the projects, uncommitted lease area, and other related capitalized costs and determined that the carrying value of the equity method offshore wind investment exceeded the fair value of the investment and that the decline was other-than-temporary.

The estimate of fair value was based on the expected sale price of the Company’s 50 percent interest in the three contracted projects based on the most recent bid value, the sale price of the uncommitted lease area included in the purchase and sale agreement, expected investment tax credits and potential investment tax credit adder amounts, the value of the tax equity ownership interest, and the expectation of a successful repricing of the Sunrise Wind Offshore Renewable Energy Credit (“OREC”) contract.

As a result, the Company recognized an other-than temporary impairment charge in the second quarter of 2023.

In the fourth quarter of 2023, The New York State Public Service Commission denied Sunrise Wind’s petition to amend its OREC contract to increase the contract price to cover increased costs and inflation.

Also during the fourth quarter, project construction forecasts were updated, and these new forecasts reflected additional expenditures for construction and scheduling related pressures, including the availability and increased cost of installation vessels and supply chain cost increases related to foundation fabrication.

In determining the current fair value of the investments, these updated projections exceeded the previously estimated projections for construction expenditures, which resulted in a revised sales price that is now significantly lower than the previous bid value.

Accordingly, the Company also recognized an other-than temporary impairment charge in the fourth quarter of 2023.

We identified the evaluation of other-than-temporary impairment charge for the offshore wind investment as a critical audit matter.

It involves a significant degree of judgment and estimation, including identifying circumstances that indicate an impairment may exist at the equity method investment level, selecting discount rates used to determine fair values, and developing an estimate of discounted future cash flows expected from

investment operations or the sale of the investment.

This required a high degree of auditor judgment and an increased extent of effort when performing audit procedures to evaluate the reasonableness of management’s estimates and assumptions related to the price and the discount rate used in the discounted future cash flow method.

In the third quarter of 2024, Eversource sold its interests in the Revolution Wind project, the South Fork Wind project, and the Sunrise Wind project.

Eversource’s offshore wind business continues to hold a noncontrolling tax equity investment in the South Fork Wind project through a 100 percent ownership in the Class A shares of South Fork Wind Holdings, LLC.

Upon sale, Eversource recorded a loss of approximately $524 million.

As part of the sale, Eversource agreed to make certain post-closing purchase price adjustment payments, which could further impact the final purchase price.

The Company recorded a liability of $365 million reflecting its estimate of the future obligations under the sale terms, which primarily include a cost overrun sharing obligation, an expected obligation to maintain the buyer’s internal rate of return and obligations for other future costs.

We identified the evaluation of the offshore wind investment divestiture as a critical audit matter because of the extensive effort required to audit the subjective and complex judgments associated with the determination of the loss on sale and related contingent liability.

How the Critical Audit Matter Was Addressed in the Audit

Our audit procedures related to the discount rate used to determine fair market values and the estimates of discounted future cash flows expected from the sale of the investment.

• We tested the effectiveness of management’s controls over impairment considerations including the aggregate investment in the projects, the sale price of the uncommitted lease area, and other related capitalized costs, as well as the discounted cash flow analysis for the offshore wind investments.

We tested the effectiveness of management’s controls over the initial recognition of the impairment charge.

• We evaluated the Company’s disclosures related to the impairment charges disclosed in the financial statements.

• We evaluated the assumptions utilized within the discounted cash flow model used in the Company’s impairment analysis.

• We made inquiries of management and evaluated the full impairment analysis from management that supported the other-than-temporary impairment charge in accordance with ASC 323-10-35-32A “Equity Method and Joint Ventures – Subsequent Measurement”.

Our audit procedures related to the offshore wind investment divestiture included the following, among others:

• We tested the effectiveness of management’s controls over loss considerations including the recording and disclosure of the loss on the offshore wind investments, including estimates and assumptions used to measure the loss.

We tested the effectiveness of management’s controls over the loss recognition on the investments.

• We evaluated the Company’s disclosures related to the offshore wind transactions in the financial statements.

• We evaluated management’s assumptions utilized in recording the loss on investments.

• We evaluated the sufficiency of the contingent liability based on facts and circumstances that existed as of the reporting date.

• We made inquiries of management and evaluated management’s analysis that supported t he project forecast, the timing of the loss, and the assumptions made in the recording of the loss on investments, including the contingent liability.

/s/ Deloitte & Touche LLP

8 unchanged sentences

Cash $ 26,656 $ 53,873

Cash Equivalents — 327,006

Receivables, Net (net of allowance for uncollectible accounts of $ 556,164 and $ 554,455 as of December 31, 2024 and

4 unchanged sentences

Regulatory Assets 2,189,660 1,674,196

Current Assets Held for Sale 56,327 —

Prepayments and Other Current Assets 315,368 355,762

7 unchanged sentences

Marketable Securities 320,272 337,814

Long-Term Assets Held for Sale 2,611,145 —

Other Long-Term Assets 642,869 592,080

7 unchanged sentences

Accounts Payable 1,736,880 1,869,187

Accrued Interest 341,558 260,577

Regulatory Liabilities 632,282 591,750

Current Liabilities Held for Sale 52,593 —

Other Current Liabilities 868,491 821,404

3 unchanged sentences

Regulatory Liabilities 4,032,564 4,022,923

Derivative Liabilities 67,999 143,929

Asset Retirement Obligations 590,890 505,844

Accrued Pension, SERP and PBOP 123,754 135,473

Accrued SERP and PBOP 95,400 123,754

Long-Term Liabilities Held for Sale 398,859 —

Other Long-Term Liabilities 1,123,999 1,029,238

14 unchanged sentences

EVERSOURCE ENERGY AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF (LOSS)/INCOME

CONSOLIDATED STATEMENTS OF INCOME/(LOSS)

For the Years Ended December 31,

8 unchanged sentences

Taxes Other Than Income Taxes 997,901 940,359 910,591

Loss on Pending Sale of Aquarion 297,000 — —

Total Operating Expenses 9,492,100 9,511,370 10,091,182

1 unchanged sentence

Interest Expense 1,111,336 855,441 678,274

Impairments of Offshore Wind Investments 2,167,000 — —

Losses on Offshore Wind Investments 464,019 2,167,000 —

Other Income, Net 410,482 348,069 346,088

(Loss)/Income Before Income Tax Expense ( 275,037 ) 1,865,968 1,572,269

Income/(Loss) Before Income Tax Expense 1,243,836 ( 275,037 ) 1,865,968

Income Tax Expense 424,664 159,684 453,574

Net (Loss)/Income ( 434,721 ) 1,412,394 1,228,046

Net Income/(Loss) 819,172 ( 434,721 ) 1,412,394

Net Income Attributable to Noncontrolling Interests 7,519 7,519 7,519

Net (Loss)/Income Attributable to Common Shareholders $ ( 442,240 ) $ 1,404,875 $ 1,220,527

Basic (Loss)/Earnings Per Common Share $ ( 1.27 ) $ 4.05 $ 3.55

Diluted (Loss)/Earnings Per Common Share $ ( 1.26 ) $ 4.05 $ 3.54

Net Income/(Loss) Attributable to Common Shareholders $ 811,653 $ ( 442,240 ) $ 1,404,875

Basic Earnings/(Loss) Per Common Share $ 2.27 $ ( 1.27 ) $ 4.05

Diluted Earnings/(Loss) Per Common Share $ 2.27 $ ( 1.26 ) $ 4.05

Weighted Average Common Shares Outstanding:

2 unchanged sentences

The accompanying notes are an integral part of these consolidated financial statements.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS)/INCOME

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME/(LOSS)

For the Years Ended December 31,

(Thousands of Dollars) 2024 2023 2022

Net (Loss)/Income $ ( 434,721 ) $ 1,412,394 $ 1,228,046

Net Income/(Loss) $ 819,172 $ ( 434,721 ) $ 1,412,394

Other Comprehensive Income, Net of Tax:

4 unchanged sentences

Comprehensive Income Attributable to Noncontrolling Interests ( 7,519 ) ( 7,519 ) ( 7,519 )

Comprehensive (Loss)/Income Attributable to Common Shareholders $ ( 436,556 ) $ 1,407,729 $ 1,254,663

Comprehensive Income/(Loss) Attributable to Common Shareholders $ 818,918 $ ( 436,556 ) $ 1,407,729

The accompanying notes are an integral part of these consolidated financial statements.

9 unchanged sentences

Dividends on Preferred Stock ( 7,519 ) ( 7,519 )

Issuance of Common Shares - $ 5 par value

2,165,671 10,828 189,077 199,905

Capital Stock Expense ( 2,847 ) ( 2,847 )

Long-Term Incentive Plan Activity 8,335 8,335

1 unchanged sentence

Issuance of Treasury Shares for Acquisition of

New England Service Company 462,517 29,401 8,650 38,051

The Torrington Water Company 925,264 54,830 17,303 72,133

Other Comprehensive Income 2,854 2,854

Balance as of December 31, 2022 348,443,855 1,799,920 8,401,731 5,527,153 ( 39,421 ) ( 216,225 ) 15,473,158

Net Income 1,412,394 1,412,394

Net Loss ( 434,721 ) ( 434,721 )

Dividends on Common Shares - $ 2.70 Per Share

1 unchanged sentence

Dividends on Preferred Stock ( 7,519 ) ( 7,519 )

Issuance of Common Shares - $ 5 par value

2,165,671 10,828 189,077 199,905

Long-Term Incentive Plan Activity 1,375 1,375

Issuance of Treasury Shares 1,096,411 57,770 20,543 78,313

Capital Stock Expense ( 2,847 ) ( 2,847 )

Issuance of Treasury Shares for Acquisition of

The Torrington Water Company 925,264 54,830 17,303 72,133

Other Comprehensive Income 5,684 5,684

Balance as of December 31, 2023 349,540,266 1,799,920 8,460,876 4,142,515 ( 33,737 ) ( 195,682 ) 14,173,892

Net Loss ( 434,721 ) ( 434,721 )

Net Income 819,172 819,172

Dividends on Common Shares - $ 2.86 Per Share

1 unchanged sentence

Dividends on Preferred Stock ( 7,519 ) ( 7,519 )

Issuance of Common Shares - $ 5 par value

15,740,294 78,702 921,387 1,000,089

Capital Stock Expense ( 10,642 ) ( 10,642 )

Long-Term Incentive Plan Activity ( 6,557 ) ( 6,557 )

8 unchanged sentences

Operating Activities:

Net (Loss)/Income $ ( 434,721 ) $ 1,412,394 $ 1,228,046

Adjustments to Reconcile Net (Loss)/Income to Net Cash Flows Provided by Operating Activities:

Net Income/(Loss) $ 819,172 $ ( 434,721 ) $ 1,412,394

Adjustments to Reconcile Net Income/(Loss) to Net Cash Flows Provided by Operating Activities:

Depreciation 1,433,503 1,305,840 1,194,246

4 unchanged sentences

Regulatory Under Recoveries, Net ( 919,359 ) ( 151,548 ) ( 205,294 )

(Customer Credits)/Reserve at CL&P related to PURA Settlement Agreement and

Storm Performance Penalty — ( 72,041 ) 81,274

Customer Credits at CL&P related to PURA Settlement Agreement and Storm

Performance Penalty — — ( 72,041 )

Amortization 342,864 ( 490,117 ) 448,892

1 unchanged sentence

Payment in 2022 of Withheld Property Taxes — — ( 78,446 )

Impairments of Offshore Wind Investments 2,167,000 — —

Losses on Offshore Wind Investments 464,019 2,167,000 —

Loss on Pending Sale of Aquarion 297,000 — —

Other ( 102,450 ) ( 53,026 ) ( 39,192 )

17 unchanged sentences

Cash Dividends on Preferred Stock ( 7,519 ) ( 7,519 ) ( 7,519 )

Increase/(Decrease) in Notes Payable 695,552 ( 78,170 ) 256,125

(Decrease)/Increase in Notes Payable ( 94,959 ) 695,552 ( 78,170 )

Repayment of Rate Reduction Bonds ( 43,210 ) ( 43,210 ) ( 43,210 )

41 unchanged sentences

Critical Audit Matter Description

The Company is subject to rate regulation by the Federal Energy Regulatory Commission and the state public utility authority in Connecticut (the “Commissions”).

The rate regulation by these Commissions is based on cost recovery.

The Company’s financial statements reflect the effects of the rate-making process.

The rates charged to the customers are designed to collect the Company’s cost to provide service, plus a return on investment.

The application of accounting guidance for rate-regulated enterprises results in recording regulatory assets and liabilities.

Regulatory assets represent the deferral of incurred costs that are probable of future recovery in customer rates.

Regulatory assets are amortized as the incurred costs are recovered through customer rates.

The Company is subject to regulation by federal and Connecticut utility regulatory agencies (the “Commissions”), which have jurisdiction with respect to the rates of the Company’s electric distribution business.

As discussed in Note 2, regulatory proceedings in recent years have focused on the recoverability of costs, including storm costs, regulatory tracking mechanisms and benefit costs, amongst others.

In some cases, the Company records regulatory assets before approval for recovery has been received from the applicable regulatory commission.

The Company must use judgment to conclude that costs deferred as regulatory assets are probable of future recovery.

The Company bases its conclusion on certain factors, including, but not limited to, regulatory precedent.

Regulatory liabilities represent either revenues received from customers to fund expected costs that have not yet been incurred or probable future refunds to customers.

The Company uses judgment when recording regulatory assets and liabilities;

however, regulatory commissions can reach different conclusions about the recovery of costs, and those conclusions could have a material impact on the Company’s financial statements.

Management believes it is probable that the Company will recover its investment in long-lived assets, including regulatory assets.

If management were to determine that it could no longer apply the accounting guidance applicable to rate-regulated enterprises to the Company’s operations, or if management could not conclude it is probable that costs would be recovered from customers in future rates, the costs would be charged to net income in the period in which the determination is made.

While management has indicated it expects to recover costs from customers through regulated rates, there is a risk that the Commissions will not approve full recovery of such costs or full recovery of all amounts invested in the Company and a reasonable return on that investment.

Management judgments include assessing the probability of recovery in future rates of incurred costs and of a refund to customers.

As a result, assessing the potential outcomes of future regulatory orders requires management judgment.

How the Critical Audit Matter Was Addressed in the Audit

Our audit procedures related to the uncertainty of future decisions by the Commissions included the following, among others:

We tested the effectiveness of management’s controls over the initial recognition of amounts as property, plant, and equipment;

regulatory assets or liabilities;

and the monitoring and evaluation of regulatory developments that may affect the likelihood of recovering costs in future rates, a refund, or a future reduction in rates.

• We tested the effectiveness of management’s controls over the evaluation of the likelihood of the recovery in future rates of costs deferred as regulatory assets.

We evaluated the external information and compared it to management’s recorded regulatory asset and liability balances for completeness.

• We read relevant regulatory orders issued by the Commissions for the Company and other public utilities, regulatory statutes, interpretations, procedural memorandums, filings made by intervenors, and other publicly available information to assess the likelihood of recovery in future rates based on precedents of the Commissions’ treatment of similar costs under similar circumstances.

We also evaluated the external information and compared it to management’s recorded regulatory asset and liability balances for completeness.

• We performed audit procedures on deferred storm restoration costs for completeness and accuracy.

/s/ Deloitte & Touche LLP

14 unchanged sentences

Materials, Supplies and REC Inventory 217,316 156,467

Taxes Receivable 41,253 65,785

Regulatory Assets 638,529 480,369

11 unchanged sentences

Notes Payable to Eversource Parent $ 280,000 $ 249,670

Long-Term Debt – Current Portion

Accounts Payable 548,100 622,055

8 unchanged sentences

Regulatory Liabilities 1,395,883 1,315,928

Derivative Liabilities 67,999 143,929

Other Long-Term Liabilities 204,801 258,185

20 unchanged sentences

Depreciation 406,540 376,904 355,511

Amortization of Regulatory (Liabilities)/Assets, Net ( 500,367 ) 335,636 99,009

Amortization of Regulatory Assets/(Liabilities), Net 104,446 ( 500,367 ) 335,636

Energy Efficiency Programs 171,690 133,453 134,222

12 unchanged sentences

Net Income $ 512,598 $ 518,733 $ 532,920

Other Comprehensive Income/(Loss), Net of Tax:

Other Comprehensive (Loss)/Income, Net of Tax:

Qualified Cash Flow Hedging Instruments ( 27 ) ( 26 ) ( 26 )

Changes in Unrealized Gains/(Loss) on Marketable Securities 42 ( 56 ) ( 25 )

Other Comprehensive Income/(Loss), Net of Tax 16 ( 82 ) ( 51 )

Changes in Unrealized Gains/(Losses) on Marketable Securities — 42 ( 56 )

Other Comprehensive (Loss)/Income, Net of Tax ( 27 ) 16 ( 82 )

Comprehensive Income $ 512,571 $ 518,749 $ 532,838

19 unchanged sentences

Capital Contributions from Eversource Parent 123,500 123,500

Other Comprehensive Loss ( 82 ) ( 82 )

Other Comprehensive Income 16 16

Balance as of December 31, 2023 6,035,205 60,352 3,384,265 2,645,868 185 6,090,670

3 unchanged sentences

Capital Contributions from Eversource Parent 300,000 300,000

Other Comprehensive Income 16 16

Other Comprehensive Loss ( 27 ) ( 27 )

Balance as of December 31, 2024 6,035,205 $ 60,352 $ 3,684,265 $ 2,819,107 $ 158 $ 6,563,882

10 unchanged sentences

Uncollectible Expense 17,190 11,675 15,578

Pension, SERP and PBOP (Income)/Expense, Net ( 18,316 ) ( 28,971 ) 5,295

Pension Contributions — — ( 98,913 )

Regulatory Over/(Under) Recoveries, Net 157,200 ( 144,793 ) ( 152,775 )

(Customer Credits)/Reserve related to PURA Settlement Agreement and

Storm Performance Penalty — ( 72,041 ) 81,274

Amortization of Regulatory (Liabilities)/Assets, Net ( 500,367 ) 335,636 99,009

Pension, SERP and PBOP Income, Net ( 12,019 ) ( 18,316 ) ( 28,971 )

Regulatory (Under)/Over Recoveries, Net ( 257,561 ) 157,200 ( 144,793 )

Customer Credits related to PURA Settlement Agreement and Storm Performance Penalty — — ( 72,041 )

Amortization of Regulatory Assets/(Liabilities), Net 104,446 ( 500,367 ) 335,636

Cost of Removal Expenditures ( 60,536 ) ( 80,479 ) ( 71,596 )

13 unchanged sentences

Cash Dividends on Preferred Stock ( 5,559 ) ( 5,559 ) ( 5,559 )

Increase in Notes Payable to Eversource Parent 457,000 — —

(Decrease)/Increase in Notes Payable to Eversource Parent ( 177,000 ) 457,000 —

Issuance of Long-Term Debt 650,000 800,000 —

41 unchanged sentences

Critical Audit Matter Description

The Company is subject to rate regulation by the Federal Energy Regulatory Commission and the state public utility authority in Massachusetts (the “Commissions”).

The rate regulation by these Commissions is based on cost recovery.

The Company’s financial statements reflect the effects of the rate-making process.

The rates charged to the customers are designed to collect the Company’s cost to provide service, plus a return on investment.

The application of accounting guidance for rate-regulated enterprises results in recording regulatory assets and liabilities.

Regulatory assets represent the deferral of incurred costs that are probable of future recovery in customer rates.

Regulatory assets are amortized as the incurred costs are recovered through customer rates.

The Company is subject to regulation by federal and Massachusetts utility regulatory agencies (the “Commissions”), which have jurisdiction with respect to the rates of the Company’s electric distribution business.

As discussed in Note 2, regulatory proceedings in recent years have focused on the recoverability of costs.