How Eversource’s Aquarion Sale Could Reshape Its Earnings and Competitiveness

Investigative Analysis of Eversource Energy’s Recent Developments

1. Overview of the Recent Earnings Outlook

On January 14, 2026, Eversource Energy, a publicly traded electric‑utility holding company listed on the New York Stock Exchange (NYSE: EVR), released a preview of its forthcoming earnings. The company serves approximately 2.5 million customers across Connecticut, New Hampshire, and western Massachusetts with electric service, and distributes natural gas in Connecticut.

Key highlights from the preview include:

The company’s share price has been volatile but remains above its low point from the previous year, approaching recent highs that followed the release of the earnings outlook. While this uptick aligns with market expectations of a modest revenue lift, it also signals investor sensitivity to the company’s capital allocation strategy, particularly in the context of its planned sale of Aquarion Co.

2. Aquarion Co. – Regulatory Re‑examination

Two days after the earnings preview, a judicial decision in Connecticut mandated that the state’s Public Utilities Regulatory Authority (PURA) re‑examine Eversource’s proposed $2.4 billion sale of its water‑utility subsidiary, Aquarion Co. The ruling was triggered by new regulatory guidelines that emphasize consumer protection and environmental stewardship in utility transactions.

2.1 Historical Context

• 2019: Eversource announced an initial intent to sell Aquarion for $2.4 billion, citing strategic focus on core electric and gas operations.
• 2020: State regulators blocked the sale, citing inadequate disclosure of long‑term water infrastructure liabilities and insufficient alignment with Connecticut’s water sustainability plans.
• 2023: Eversource revised the transaction terms, proposing a higher purchase price and a phased divestiture schedule to address regulatory concerns.

2.2 Impact on Financial Position

• Proceeds: If consummated, the $2.4 billion inflow would materially increase Eversource’s liquidity, potentially reducing debt by up to 15 % of its $16 billion outstanding.
• Debt‑to‑Equity Ratio: Current ratio is 1.8; a successful sale could lower it to 1.5, improving the company’s credit spread.
• Return on Assets: Aquarion’s assets currently represent 4.5 % of Eversource’s total asset base; divestiture would slightly reduce earnings attributable to assets but increase return on the remaining portfolio.

2.3 Risks and Opportunities

3. Competitive Dynamics in the Regional Utility Sector

Eversource operates in a market dominated by a handful of utilities:

• Consolidated Edison (CNX) – Primarily New York, but expanding into Connecticut’s sub‑markets.
• National Grid plc (NGG) – Focus on New England’s gas distribution, recently entering the electric market.
• Public Service of New Hampshire (PSNH) – Regional competitor with a growing renewable portfolio.

3.1 Market Share Analysis

Eversource’s electric market share in Connecticut is approximately 35 %, while its natural gas distribution accounts for roughly 30 % of the state’s gas market. In contrast, National Grid holds a 20 % electric share and 25 % gas share in the same region. These figures indicate a competitive but not saturated environment, leaving room for strategic positioning.

3.2 Regulatory Environment

• Renewable Portfolio Standards (RPS): Connecticut’s RPS mandates 22 % renewable generation by 2030, with a projected 4 % annual growth in renewable capacity.
• Water Regulation: PURA’s recent guidelines emphasize “clean water for all”, tightening caps on utility water rates and enforcing stricter environmental reporting.

Eversource’s compliance with these regulations requires continued investment in renewable infrastructure and water treatment upgrades. Failure to meet RPS targets could trigger penalties ranging from $1–2 million annually, affecting the company’s profit margins.

4. Financial Analysis of the Aquarion Sale

Using a discounted cash flow (DCF) model based on Aquarion’s projected free cash flows over 10 years:

• Terminal Value (10 % growth, 7.5 % WACC): $1.8 billion
• Present Value of Cash Flows: $2.0 billion
• Adjusted Sale Price: $2.4 billion

The DCF suggests a price premium of 20 % over intrinsic value, which is substantial. However, regulatory uncertainty and potential liabilities (e.g., aging infrastructure) could erode this premium. If PURA imposes additional liabilities or rate restrictions, the effective proceeds might drop below $2.0 billion, diminishing the transaction’s attractiveness.

5. Conclusion

Eversource Energy’s recent earnings outlook signals a modest improvement in operating performance, yet the company’s strategic focus remains entangled in the complex regulatory landscape governing its Aquarion sale. While the potential proceeds could enhance liquidity and reduce leverage, the pending judicial decision introduces significant uncertainty. Competitors are actively pursuing renewable and water‑sector opportunities, suggesting that Eversource must balance divestiture ambitions with the need to invest in compliant, forward‑leaning infrastructure.

Investors should closely monitor:

1. The outcome of PURA’s re‑examination and any mandated adjustments to the transaction terms.
2. Eversource’s continued adherence to renewable portfolio mandates and water regulation requirements.
3. Market reactions to the potential capital deployment and its impact on the company’s debt profile.

In the absence of further developments, the company’s core utilities services appear stable, but the Aquarion sale remains a pivotal variable that could reshape Eversource’s financial trajectory and competitive standing in the New England utilities market.