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INVESTMENTS IN UNCONSOLIDATED AFFILIATES | 12 Months Ended
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Dec. 31, 2024
Equity Method Investments and Joint Ventures [Abstract] |
INVESTMENTS IN UNCONSOLIDATED AFFILIATES | INVESTMENTS IN UNCONSOLIDATED AFFILIATES Investments in entities that are not consolidated are included in long-term assets on the balance sheets. Investments in affiliates where Eversource has the ability to exercise significant influence, but not control, over an investee are initially recognized as an equity method investment at cost. Earnings impacts from these equity investments are included in Other Income, Net on the statements of income. Eversource's investments accounted for under the equity method include the following:
|  |  |  |  | Investment Balance as of December 31,
(Millions of Dollars) | Ownership Interest |  | 2024 |  | 2023
Offshore Wind Business | 50% | - | 100% |  | $ | 22.2 |  |  | $ | 515.5 |
Natural Gas Pipeline - Algonquin Gas Transmission, LLC | 15% |  | 112.6 |  |  | 116.0 |
Other | various |  | 33.9 |  |  | 29.0 |
Total Investments in Unconsolidated Affiliates |  |  |  |  | $ | 168.7 |  |  | $ | 660.5 |
For the years ended December 31, 2024, 2023 and 2022, Eversource had equity in earnings of unconsolidated affiliates of $51.9 million, $15.5 million, and $22.9 million, respectively. Eversource received dividends from its equity method investees (excluding proceeds received from sale or liquidation of investments) of $20.5 million, $20.1 million, and $26.2 million, respectively, for the years ended December 31, 2024, 2023 and 2022. Offshore Wind Business: Eversource’s previous offshore wind business included 50 percent ownership interests in each of North East Offshore and South Fork Class B Member, LLC. During 2024, Eversource sold its interest in these entities, and in doing so, sold its interests in the Revolution Wind project, the South Fork Wind project, and the Sunrise Wind project. Eversource’s current offshore wind business is now comprised only of a noncontrolling tax equity investment in South Fork Wind through a 100 percent ownership in South Fork Wind Holdings, LLC Class A interests. On May 25, 2023, Eversource announced that it had completed a strategic review of its offshore wind investments and determined that it would pursue the sale of its offshore wind investments. On September 7, 2023, Eversource completed the sale of its 50 percent interest in an uncommitted lease area consisting of approximately 175,000 developable acres located 25 miles off the south coast of Massachusetts to Ørsted for $625 million in an all-cash transaction. In September of 2023, Eversource made a $528 million investment in a tax equity interest for South Fork Wind. South Fork Wind was restructured as a tax equity investment, with Eversource purchasing 100 percent ownership of a new Class A tax equity membership interest. This investment will result in Eversource receiving cash flow benefits from investment tax credits (ITC) and other future cash flow benefits as well. As of December 31, 2024, $459 million of expected investment tax credits and other expected tax benefits were reclassified from the South Fork Wind tax equity investment balance reported in Investments in Unconsolidated Affiliates as a decrease in Accumulated Deferred Income Taxes on the Eversource balance sheet, which represented a non-cash reclassification. As a result of these investment tax credits, Eversource expects lower federal income tax payments from 2025 to 2027. As of December 31, 2024, the tax equity interest in South Fork Wind totaled $22.2 million. On January 24, 2024, Eversource entered into an agreement with Ørsted to sell Eversource’s 50 percent share of Sunrise Wind, subject to certain conditions and regulatory approvals. On April 18, 2024, Eversource and Ørsted executed an equity and asset purchase agreement and on July 9, 2024, Eversource completed the sale of its 50 percent ownership share of Sunrise Wind to Ørsted. In accordance with the equity and asset purchase agreement and after adjustment for a reduction in capital spending compared to forecasted amounts, adjusted proceeds totaled $152 million. Ørsted paid Eversource $118 million at the closing of the sale transaction, which was used to repay parent company debt. Remaining proceeds of $34 million will be paid after onshore construction is completed and certain other construction milestones are achieved. The remaining expected proceeds have been recorded in Other Long-Term Assets on Eversource’s balance sheet as of December 31, 2024. Eversource recorded a pre-tax gain on the sale of Sunrise Wind of $377 million in 2024. With completion of the sale, Eversource does not have any ongoing financial obligations associated with Sunrise Wind. On February 13, 2024, Eversource executed an agreement to sell its 50 percent interests in the South Fork Wind and Revolution Wind projects to Global Infrastructure Partners (GIP) for an initial gross purchase price of approximately $1.1 billion. The initial purchase price was subject to adjustment based on, among other things, the progress, timing and the construction cost of Revolution Wind, including changes in actual versus forecasted capital spending between signing the agreement and closing of the transaction. On September 30, 2024, Eversource completed the sale of its 50 percent ownership share in the South Fork Wind and Revolution Wind projects to GIP for adjusted gross proceeds of $745 million, which were received at closing. Adjusted gross proceeds from the sale were approximately $375 million lower than the previously estimated purchase price. This reduction reflects approximately $150 million resulting from lower capital spending between signing the agreement and closing, and approximately $225 million related to the final terms of the sale transaction, primarily due to the delay of the commercial operations date of Revolution Wind. Proceeds from the transaction were used to repay parent company debt. As part of the Revolution Wind and South Fork Wind sale, Eversource and GIP agreed to make certain post-closing purchase price adjustment payments, which could further impact the final purchase price. The post-closing purchase price adjustment payments include cost sharing obligations that require Eversource to share equally with GIP in GIP’s funding obligations up to an effective cap of approximately $240 million of incremental capital expenditure overruns incurred during the construction phase for Revolution Wind, after which Eversource will have responsibility for GIP’s obligations for any additional capital expenditure overruns in excess of this amount. The purchase price is also subject to post-closing adjustments as a result of final project economics, which includes Eversource’s obligation to maintain GIP’s internal rate of return through the construction period for each project as specified in the agreement. Post-closing purchase price adjustment payments will be made following the commercial operation date of Revolution Wind. South Fork Wind has achieved commercial operation, and Eversource is in the process of finalizing the construction cost post-close purchase price adjustment payment related to this project, which is not expected to be material. Upon the completion of both sale transactions in 2024, the total proceeds were compared to the carrying value of the investments, including an estimate of liability for post-closing adjustment payments to GIP, and Eversource recognized an aggregate, net after-tax loss on the sales of its offshore wind investments of $524 million. The aggregate, net after-tax loss is comprised of (1) the lower proceeds related to final terms of the sale transaction to GIP of approximately $225 million related to non-construction costs for the Revolution Wind and South Fork Wind projects, primarily due to a purchase price reduction of $150 million resulting from the delay of the commercial operations date of Revolution Wind, (2) recently identified forecasted construction costs as a result of a delay in the anticipated commercial operation date related to Revolution Wind of approximately $350 million, which includes an estimate for the anticipated post-closing adjustment to GIP related to Eversource’s expected cost overrun sharing obligation, and (3) approximately $326 million, which includes an estimate for the anticipated post-closing adjustment related to Eversource’s expected obligations to GIP as a result of final economics of the Revolution Wind and South Fork Wind projects and other future costs, as well as a net $60 million increase in income tax expense including an increase in the valuation allowance for unused capital losses. These losses were partially offset by the $377 million gain on the sale of Sunrise Wind. Upon sale, Eversource recorded a contingent liability of $365 million, reflecting its estimate of the future obligations under the GIP sale terms, which include the expected cost overrun sharing obligation, expected obligation to maintain GIP’s internal rate of return, and obligation for other future costs. The majority of this liability is expected to be settled upon the completion of the Revolution Wind project. The long-term portion of the liability of $350 million is recorded in Other Long-Term Liabilities, and $15 million is recorded in Other Current Liabilities on Eversource’s balance sheet as of December 31, 2024. Contingencies are evaluated using the best information available at the time the financial statements are prepared, and this assessment involves judgments and assumptions about future events. Factors that could increase the post-closing adjustment payments owed to GIP include the ultimate cost of construction and extent of cost overruns for Revolution Wind, delays in construction, which would impact the economics associated with the purchase price adjustment, and Revolution Wind’s eligibility for federal investment tax credits at a lower value than assumed and included in the purchase price. The purchase price included the sales value related to a 40 percent level of federal investment tax credits, 10 percent of which is the energy community investment tax credit (ITC) adder included in the Inflation Reduction Act of approximately $170 million related to Revolution Wind. Although management believes the ITC adder value is realizable, there is some uncertainty at this time as to whether those ITC adders can be achieved, and management continues to evaluate the project’s qualifications and to monitor guidance issued by the United States Treasury Department. A change in the expected value or qualification of ITC adders could result in a significant loss in a future period. New information or future developments that arise as construction progresses and as cost estimates are reviewed and revised will require a reassessment of the estimated liability for the post-closing adjustment payments. The Company is currently aware that construction of the offshore foundations, offshore substation and turbine tower installations could result in increased cost overruns in the future. Only preliminary construction cost projections are available for these cost overruns, and there is insufficient updated information at this point in order for Eversource to change its estimate with reasonably estimable information. Eversource will continue to assess the potential exposure and adjust the liability as needed. It is expected that updated costs estimates will become available in the first half of 2025, and adverse changes in facts and circumstances could result in additional losses that could be material. The Company believes it is reasonably possible that there is an additional loss in excess of the liability recorded, but management cannot reasonably estimate a range of loss beyond the $365 million recorded at this time. Total net proceeds could also be adjusted for a benefit due to Eversource if there are lower operation costs or higher availability of the projects through the period that is four years following the commercial operation of Revolution Wind. Under the agreement with GIP, Eversource’s existing and certain additional credit support obligations for Revolution Wind are expected to roll off as the project completes construction. Under the agreement with Ørsted, Eversource’s existing credit support obligations for Sunrise Wind were either terminated or indemnified by Ørsted as a result of the sale. Eversource has entered into separate construction management agreements to manage Sunrise Wind’s and Revolution Wind’s onshore electric substation construction through completion. In this role, Eversource will be solely a service provider to Sunrise Wind and Revolution Wind. 2023 Impairments: Equity method investments are assessed for impairment when conditions exist as of the balance sheet date that indicate that the fair value of the investment may be less than book value. Eversource continually monitors and evaluates its equity method investments to determine if there are indicators of an other-than-temporary impairment. If the decline in value is considered to be other-than-temporary, the investment is written down to its estimated fair value, which establishes a new cost basis in the investment. Impairment evaluations are based on best information available at the impairment assessment date. Subsequent declines or recoveries after the reporting date are not considered in the impairment recognized. Investments that are other-than-temporarily impaired and written down to their estimated fair value cannot subsequently be written back up for increases in estimated fair value. Impairment evaluations involve 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. During 2023, in connection with the process to divest its offshore wind business, Eversource identified indicators for impairment in both the second and fourth quarters of 2023. In each impairment assessment, Eversource evaluated its investments and determined that the carrying value of the equity method offshore wind investments exceeded the fair value of the investments and that the decline in fair value was other-than-temporary. The completion of the strategic review in the second quarter of 2023 resulted in Eversource recording a pre-tax other-than-temporary impairment charge of $401 million ($331 million after-tax) to reflect the investment at estimated fair value based on the expected sales price at that time. This established a new cost basis in the investments. Negative developments in the fourth quarter of 2023, including a lower expected sales price, additional projected construction cost increases, and the October 2023 OREC pricing denial for Sunrise Wind, resulted in Eversource conducting an impairment evaluation and recognizing an additional pre-tax other-than-temporary impairment charge of $1.77 billion ($1.62 billion after-tax) and establishing a new cost basis in the investments as of December 31, 2023. The Eversource statement of income for the year ended 2023 reflects a total pre-tax other-than-temporary impairment charge of $2.17 billion ($1.95 billion after-tax) in its offshore wind investments. The impairment charges were non-cash charges and did not impact Eversource’s cash position at the time of the impairment. Eversource’s offshore wind investments did not meet the criteria to qualify for presentation as a discontinued operation. The 2023 impairment evaluations involved judgments in developing the estimates and timing of the future cash flows arising from the expected sales price of Eversource’s 50 percent interest in the wind projects, including expected sales value from investment tax credit adder amounts, less estimated costs to sell, and uncertainties related to the Sunrise Wind re-bid process in New York’s offshore wind solicitation in 2024. Additional assumptions in the fourth quarter 2023 assessment included revised projected construction costs and estimated project cost overruns, management’s assumption that the Sunrise Wind project would ultimately be abandoned, estimated termination costs, salvage values of Sunrise Wind assets, and the value of the tax equity ownership interest. The assumptions used in the discounted cash flow analyses were subject to inherent uncertainties and subjectivity. All significant inputs into the impairment evaluations were Level 3 fair value measurements. A summary of the significant estimates and assumptions included in the 2023 impairment charges is as follows:
|  | Second Quarter 2023 |  | Fourth Quarter 2023 |  | Total
(Millions of Dollars) |  |  |
Lower expected sales proceeds across all three wind projects |  | $ | 401 |  |  | $ | 525 |  |  | $ | 926 |
Expected cost overruns not recovered in the sales price |  | — |  |  | 441 |  |  | 441 |
Loss of sales value from the sale price offered by GIP, including loss of ITC adders value, cancellation costs and other impacts assuming Sunrise Wind project is abandoned |  | — |  |  | 800 |  |  | 800 |
Impairment Charges, pre-tax |  | 401 |  |  | 1,766 |  |  | 2,167 |
Tax Benefit |  | (70) |  |  | (144) |  |  | (214) |
Impairment Charges, after-tax |  | $ | 331 |  |  | $ | 1,622 |  |  | 1,953 |
A summary of the carrying value by investee and by project as of December 31, 2023 is as follows:
| Investments Expected to be Disposed of |  | Investment to be Held |  |
| North East Offshore |  | South Fork Class B Member, LLC |  | South Fork Wind Holdings, LLC Class A |  | Total Offshore Wind Investments
(Millions of Dollars) | Sunrise Wind |  | Revolution Wind |  |  |
Carrying Value as of December 31, 2023, before Impairment Charge | $ | 699 |  |  | $ | 799 |  |  | $ | 299 |  |  | $ | 485 |  |  | $ | 2,282 |
Fourth Quarter 2023 Impairment Charge | (1,218) |  |  | (544) |  |  | — |  |  | (4) |  |  | (1,766) |
Carrying Value as of December 31, 2023 | $ | (519) |  |  | $ | 255 |  |  | $ | 299 |  |  | $ | 481 |  |  | $ | 516 |
During 2024, Eversource sold its interest in the North East Offshore and South Fork Class B, Member LLC equity method investments and recognized an aggregate, net after-tax loss on the sale of its offshore wind investments of $524 million. Capital contributions in the offshore wind investments, including the 2023 contribution for the tax equity investment in South Fork Wind, were included in Investments in Unconsolidated Affiliates on the statements of cash flows. Proceeds received from the sale of the investments in 2024, and proceeds received from the 2023 sale of the unused lease area and from an October 2023 distribution of $318 million received primarily as a result of being a 50 percent joint owner in the Class B shares of South Fork Wind which was restructured as a tax equity investment, were included in Proceeds from Unconsolidated Affiliates on the statements of cash flows. Liquidation of Renewable Energy Investment Fund: On March 21, 2023, Eversource’s equity method investment in a renewable energy investment fund was liquidated by the fund’s general partner in accordance with the partnership agreement. Proceeds received from the liquidation totaled $147.6 million and were included in Proceeds from Unconsolidated Affiliates on the statement of cash flows for the year ended December 31, 2023. A portion of the proceeds was used to make a charitable contribution to the Eversource Energy Foundation (a related party) of $20.0 million in 2023. The liquidation benefit received in excess of the investment’s carrying value and the charitable contribution were included in Other Income, Net on the statement of income. NSTAR Electric: As of December 31, 2024 and 2023, NSTAR Electric's investments included a 14.5 percent ownership interest in two companies that transmit hydro-electricity imported from the Hydro-Quebec system in Canada of $11.5 million and $9.6 million, respectively.

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- Definition The entire disclosure for equity method investments and joint ventures. Equity method investments are investments that give the investor the ability to exercise significant influence over the operating and financial policies of an investee. Joint ventures are entities owned and operated by a small group of businesses as a separate and specific business or project for the mutual benefit of the members of the group. + References Reference 1: http://www.xbrl.org/2003/role/recommendedDisclosureRef -Topic 740 -SubTopic 323 -Name Accounting Standards Codification -Section 50 -Paragraph 2 -Subparagraph (f) -Publisher FASB -URI https://asc.fasb.org/1943274/2147478156/740-323-50-2 Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Topic 323 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 3 -Subparagraph (a)(3) -Publisher FASB -URI https://asc.fasb.org/1943274/2147481687/323-10-50-3 Reference 3: http://www.xbrl.org/2003/role/disclosureRef -Topic 323 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 3 -Subparagraph (d) -Publisher FASB -URI https://asc.fasb.org/1943274/2147481687/323-10-50-3 Reference 4: http://www.xbrl.org/2003/role/disclosureRef -Name Accounting Standards Codification -Topic 323 -Publisher FASB -URI https://asc.fasb.org/323/tableOfContent + Details
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