In a year that Eversource faced near constant public criticism over high customer bills, and perceived failures in its response to Tropical Storm Isaias — leading Connecticut lawmakers to tie future electric rates to measures of performance — the New England energy provider nevertheless made a considerable amount of money for its shareholders as its profits grew to $1.2 billion.
In its annual report to shareholders and regulators issued Wednesday, Eversource boasted a profit of $1.2 billion across its subsidiaries, an increase of $304.3 million – or 34 percent over 2019.
The company attributed the gains mainly to electric rate increases, recovering the costs of capital investments through rates, and earnings from its growing natural gas distribution business in Massachusetts.
Connecticut Light & Power, the Eversource subsidiary that provides electric service in the state, saw its profits grow more than either of the company’s other major subsidiaries – NSTAR of Massachusetts and the Public Service Company of New Hampshire.
Connecticut profits grew $47 million, or 11.4 percent, over 2019 – totaling $457.9 million in 2020. That accounted for 64 percent of Eversource’s overall profit growth, as its other two companies posted more modest gains.
Operating revenues from Connecticut increased $314.9 million, more than the company as a whole, after NSTAR posted a $103.5 million decline in revenue for the year. Revenues from distribution increased across the board due to rate increases in each state, as well as to transmission rates which increased with investments in transmission infrastructure.
The growth in revenue came even as electric sales dropped almost 3 percent in Connecticut and 3.4 percent in Massachusetts — this due to the fact that revenues aren’t tied to the volume of sales by state regulators to avoid creating disincentives to energy efficiency.
A hike in the “federally mandated congestion charge,” which Eversource blamed for the July rate increase, added $120 million to CL&P revenues for the year. Eversource tied that to the state contract meant to keep the Millstone Nuclear Power Station in operation.
Eversource also tied the Millstone contract to a $233 million increase in the cost of purchasing power for CL&P – while NSTAR saw a decrease of $142 million, and New Hampshire’s power costs decreased by $43 million.
The added cost in Connecticut of purchasing power from Millstone was somewhat offset by the lower average prices that drove savings in Massachusetts and New Hampshire, according to Eversource.
CL&P revenues grew almost 3 percent as a proportion of Eversource’s total revenues. As a proportion of Eversource’s total profits, CL&P grew about 1.5 percent, overtaking NSTAR as the company’s largest source of profit.
At the same time that revenues were rising, Eversource’s operating expenses decreased about $20.3 million – largely due to $239.6 million in sunk costs from the cancelled Northern Pass transmission line project coming off the company’s books in 2020.
As NSTAR saw its operating expenses decline $130.9 million, largely because of lower costs for the company to buy power, operating expenses for CL&P increased $256.2 million, largely because of the added cost to purchase power from Millstone, according to Eversource.
Storm restoration costs were level across the region, increasing $11.4 million in Connecticut, $9 million in Massachusetts, and $9.4 million in New Hampshire.
The report also disclosed the compensation for five top officials at Connecticut Light & Power, numbers that drew scrutiny after Tropical Storm Isaias last year.
Total compensation for the five executives declined about $14 million, or 35 percent, from last year, even as base salaries and stock awards increased. The declining compensation was driven mainly by reduced pension and deferred earnings compared to last year, with those dropping about $7 million, or 38 percent.
The company’s highest paid executive, Eversource CEO James Judge, saw a salary increase of $52,383 to bring his base pay to $1.37 million. His pension earnings were down about $5 million from what he earned last year, and his total compensation is down $5.2 million – 26 percent – to $14.5 million as a result.
Executives will not receive a usual raise to their base salaries in 2021. The company’s compensation committee did not approve raises due to what it described as “the hardships experienced by Eversource Energy’s customers and communities as a result of COVID-19 and the extended outages that took place in CL&P’s service territory in 2020 following Storm Isaias, and in spite of excellent overall performance by Eversource Energy’s executives in 2020.”
The compensation committee also changed its long-term incentive programs for executives, from a 50-50 mix of restricted stocks and performance shares – which are granted upon meeting set targets – to a mix of 75 percent performance shared and 25 percent restricted stocks. The changes were made in response to shareholder comments, the report states.
The initial reporting on this story misstated, by a matter of degree, the annual report to shareholders, with the company enjoying substantially better profit growth than originally reported.