NSTAR Electric Company PFD 4.25%

What they do

NSTAR Electric operates as a regulated electric distribution utility, purchasing, delivering, and selling electricity to retail customers in parts of Massachusetts. It also owns solar power facilities and, through its wholly-owned subsidiary Harbor Electric Energy Company, distributes electric energy to a sole customer. The company is part of Eversource's electric distribution and transmission segments.

Revenue drivers

• Electric distribution — Delivers electricity to residential, commercial, and industrial customers in Massachusetts; revenues from base distribution rates increased in 2026.
• Electric transmission — Operates transmission assets serving New England customers; earnings impacted by FERC ROE reduction from 10.57% to 9.57%.
• Solar power facilities — Owns solar generation facilities that contribute to the distribution segment's results.

Recent performance

NSTAR Electric does not separately report financial results; it reports within Eversource's electric distribution and transmission segments. In the first half of 2026, Eversource's electric distribution segment earned $373.1 million, up from $350.0 million in the prior year, driven by base rate increases in Massachusetts. The transmission segment earned $408.0 million (excluding FERC charge), slightly above $407.5 million a year ago. Eversource's consolidated GAAP earnings for Q2 2026 were $53.7 million ($0.14 per share), versus $352.7 million ($0.96 per share) in Q2 2025, with non-GAAP recurring earnings of $329.1 million ($0.87 per share).

Strategy

Eversource completed the sale of Aquarion Water on June 30, 2026, focusing on being a pure-play regulated electric and natural gas delivery company. Management highlights continued investment in electric transmission and distribution systems, with base rate increases supporting revenue growth. The company was preliminarily selected by ISO-NE to develop transmission infrastructure bringing power from northern Maine to southern New England.

Risks

• Regulatory rate risk — FERC reduced the ROE for New England transmission owners, lowering allowed returns and impacting earnings.
• Offshore wind contingent liability — Eversource increased its contingent liability for payments to Global Infrastructure Partners related to the sale of South Fork Wind and Revolution Wind projects.
• Storm and weather exposure — Extreme weather, including severe storms, can damage distribution systems and cause significant restoration costs.
• Cybersecurity threats — Cyber events or breaches could disrupt systems, compromise customer data, and harm operations.

Outlook

Eversource reaffirmed 2026 non-GAAP recurring earnings guidance of $4.57 to $4.72 per share, reflecting the FERC ROE reduction and the absence of Aquarion earnings. The company expects cumulative long-term EPS growth of 5 to 7 percent through 2030, with growth towards the upper half by 2028.