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For the second consecutive year, Eversource reported profits of more than $1.2 billion – and those profits for 2021 would have been even higher if the company hadn’t been penalized for its response to Tropical Storm Isaias in 2020.
The $1.22 billion in profit Eversource reported for 2021 – which includes the company’s electric, gas and water subsidiaries in Connecticut, Massachusetts and New Hampshire – is an increase of about $15.3 million (1.3 percent) from the record profits the company reported in 2020, and an increase of $311.4 million (34.3 percent) from the profits it reported in 2019.
The company reported $9.86 billion in total operating revenues in 2021 – of which $3.6 billion came from Connecticut Light & Power, the Eversource subsidiary that provides electric service to 1.2 million customers in Connecticut. The company’s total revenues were up from $8.9 billion in 2020 and $8.5 billion in 2019, according to the company’s annual report to the U.S. Securities and Exchange Commission.
Despite higher revenues, increased costs led Connecticut Light & Power to record a net income of $401.7 million in 2021 – a decrease from a $457.9 million profit in 2020, and a $410.8 million profit in 2019.
Eversource said a settlement it reached with Gov. Ned Lamont and Attorney General William Tong in October, to resolve the state regulator’s investigation into the electric utility’s handling of the damaging August 2020 storm, cost the company $86.1 million in 2021.
Without that cost, and $23.6 million it spent on its acquisition of Columbia Gas of Massachusetts, the company would have made $1.33 billion in 2021, according to a report Eversource made to its investors.
Revenues from newly-acquired Columbia Gas – which serves about 330,000 customers across 60 towns in western Massachusetts – drove a $69 million (51 percent) increase in Eversource’s total natural gas distribution profit between 2020 and 2021. The company’s natural gas profits have now more than doubled from 2019, when the company earned $96.2 million on its gas distribution business.
Eversource’s profit was also driven by a $42.1 million increase (8.4 percent) in electric transmission revenues across its electric subsidiaries in Connecticut, Massachusetts, and New Hampshire – a total of $544.6 million in profit from transmission that the company credited to “a higher level of investment in Eversource’s electric transmission system.”
Not counting the cost of the Isaias settlement, Eversource reported earning $12.2 million (2.24 percent) more in profit from electric distribution in 2021 than it did in 2020 – a total of $556.2 million. The company said higher distribution revenues were “partially offset” by higher operations and maintenance costs, depreciation, property taxes and interest.
Eversource spent over $1.1 billion on the transmission system in 2021, mostly replacing “obsolete equipment,” CFO Phil Lembo said in a call with analysts on Thursday. The higher distribution revenues are mainly from the company’s investments to improve reliability and resiliency of its distribution system, Lembo said.
The company expects to spend another $1.1 billion on transmission in 2022, and $18.1 billion between 2022 and 2026, he said. The company expects to spend nearly $400 million in distribution in the same time period on grid modernization and electric vehicle charging in Massachusetts, but isn’t assuming similar expenses in Connecticut and New Hampshire at this time, Lembo said.
Executive compensation
James Judge, who stepped down as president and CEO on May 5 and became executive chairman of Eversource, was the highest-paid executive the company reported in its annual report to the SEC – earning a total compensation of $10.22 million, a significant drop off from the $14.57 million he earned in 2020 and the $19.8 million he earned in 2019.
Joe Nolan – who replaced Judge as president and CEO on May 5 after previously serving as the company’s executive vice president of customer and corporate relations – was the company’s second-highest paid executive in 2021, earning about $6.47 million in total compensation, including pension gains.
Nolan earned a base salary of just over $1 million after spending a little more than half the year as Eversource’s chief executive. Judge earned a base salary of about $1.13 million in 2021, and earned a base salary of $1.37 million in 2020 – his final, full year as President and CEO.
Aside from Nolan, compensation for all of Eversource’s top executives was down in 2021 due to lower pension earnings. For example, Lembo, the CFO, earned $4.14 million in total compensation in 2021 – about $410,000 less than he reportedly earned in 2020, as the value of his pension grew about $713,000 this year, compared to growing $1.25 million in 2020.
The compensation of Steve Sullivan, who the company named the first president of Connecticut operations in December as part of the Isaias settlement, was not included in the 2021 filing.