Eversource vs. FERC: A Fight Over Profits and New England's Power Grid

HARTFORD, Conn. & BOSTON – May 06, 2026 – Eversource Energy showcased a robust start to the year, reporting strong first-quarter earnings that surpassed 2025 figures. However, the positive operational results were overshadowed by a significant regulatory blow from the federal government, igniting a high-stakes legal battle with profound implications for the company's finances, future infrastructure projects, and the cost of energy for millions across New England.

The region's largest energy provider announced GAAP earnings of $606.8 million, or $1.61 per share, for the first quarter of 2026, an increase from the $550.8 million, or $1.50 per share, reported in the same period last year. On a non-GAAP basis, recurring earnings reached $650.7 million, or $1.73 per share. But buried within these figures was a critical charge: a $43.9 million after-tax hit, equivalent to $0.12 per share, stemming directly from a contentious federal ruling.

A Regulatory Storm Gathers

The financial charge is the first tangible impact of a March 19, 2026, decision by the Federal Energy Regulatory Commission (FERC). In a ruling known as Opinion No. 594, the commission retroactively reduced the authorized Return on Equity (ROE) for New England transmission owners. The decision lowered the base ROE from 10.57% to 9.57%, a move that not only curtails future earnings but also mandates refunds to ratepayers for past charges dating back over a decade.

This ruling is the latest chapter in a dispute that began in 2011. After years of litigation, including a 2017 court remand that sent a previous FERC decision back to the drawing board, the commission applied a complex financial modeling formula to determine the new, lower rate. While celebrated by consumer advocates and some state officials as a victory for ratepayers—projected to return between $900 million and $1.5 billion across the region—the decision was met with fierce opposition from utilities.

Joe Nolan, Eversource's Chairman, President, and CEO, blasted the decision in a statement, calling it an "arbitrary and flawed ROE reduction." He stressed the poor timing of the ruling, noting it comes "at a time when New England needs significant transmission investments to bring incremental generation in the region that would lower costs for customers."

Eversource Mounts a Legal Counter-Offensive

In response to the FERC order, Eversource has launched a multi-pronged legal and regulatory campaign. The company has filed a formal request for a rehearing at FERC, sought an extension on the refund timeline, and submitted a motion to stay the order's implementation pending further appeals. The utility argues that forcing immediate refunds could create "rate whiplash" for customers if the decision is later overturned by the courts.

More proactively, Eversource has also submitted a Section 205 filing with FERC, a formal request to establish a new, prospective ROE. Citing current market conditions and using the same methodology FERC employed in its recent ruling, Eversource is proposing a replacement ROE of 11.39%. The company contends that this higher rate is necessary to attract the capital required to fund its ambitious infrastructure plans, especially given heightened geopolitical risks and persistent supply chain constraints.

This legal strategy underscores the deep-seated disagreement over the financial conditions needed to maintain and upgrade the region's aging energy grid. Utilities argue that a lower ROE makes it harder and more expensive to raise the billions of dollars required for critical projects, potentially impacting their credit metrics and increasing borrowing costs that are ultimately passed on to customers.

The Billion-Dollar Question for New England's Grid

The conflict between Eversource and its federal regulator goes far beyond corporate balance sheets. At stake is the pace of investment in New England's transmission system, the critical network of high-voltage lines that serves as the backbone of the region's power supply. Nolan warned that "punitive decisions" from regulators jeopardize the company's ability to complete this "critical work for customers."

Eversource has outlined a $24.2 billion capital plan through 2030, aimed at enhancing reliability, accommodating the growth of renewable energy sources like offshore wind, and hardening the grid against severe weather. A lower ROE, the company fears, could put pressure on its ability to fund this plan without seeking to raise additional, and potentially more expensive, equity.

Conversely, officials like the Massachusetts Attorney General, who have advocated for a lower ROE for more than a decade, argue that the previous, higher rates incentivized utilities to "overbuild" the transmission system, driving up costs for consumers. They see the FERC decision as a necessary correction that will deliver significant savings to households and businesses.

This tension highlights a central challenge in utility regulation: balancing the need to provide investors with a return sufficient to attract capital against the public interest in maintaining affordable and reliable energy. The outcome of Eversource's legal challenges will have a lasting impact on how this balance is struck across New England.

Wall Street Weighs the Risk

The regulatory uncertainty has not gone unnoticed by investors. In the wake of the FERC ruling, Eversource's stock has pulled back, falling over 11% in the past month. The direct financial impact prompted the company to revise its full-year 2026 earnings guidance downward, from a range of $4.80-$4.95 per share to a new range of $4.57-$4.72 per share. This revision also accounted for the potential impacts of the pending sale of its Aquarion water utility, a deal which recently received final approval from Connecticut regulators.

Financial analysts are now recalibrating their models, with many adopting a cautious "Hold" rating on the stock. While some express confidence in Eversource's regulated growth platform and its ability to manage the headwinds, the estimated $880 million refund obligation for Eversource alone presents a material challenge.

Despite the near-term turbulence, Eversource reaffirmed its long-term target of 5% to 7% compound annual earnings per share growth through 2030. The company projects it will reach the upper half of that range by 2028, signaling confidence that it can navigate the current regulatory storm. For now, however, the company, its investors, and its customers are left watching as a pivotal battle over the future of New England's energy landscape unfolds in courtrooms and regulatory chambers.