Eversource Energy's second quarter looked brutal on the surface. GAAP net income attributable to common shareholders collapsed to $53.7 million, or $0.14 per share, from $352.7 million, or $0.96 per share, a year earlier. Almost the entire decline, however, came from three discrete items rather than from the underlying utility: a non-cash after-tax loss of $111.4 million ($0.30 per share) on the June 30 sale of the Aquarion water business, an after-tax charge of $164.0 million ($0.43 per share) to increase the contingent liability tied to the Revolution Wind offshore wind project sold in 2024, and a first-quarter after-tax charge of $43.9 million ($0.12 per share) for refunds ordered by the Federal Energy Regulatory Commission, or FERC, in a transmission-return dispute that dates back to 2011. Stripping those out, management's non-GAAP recurring measure produced $0.87 per share in the quarter against $0.96 in the prior year, and first-half recurring earnings per share actually rose to $2.60 from $2.45.
The more consequential story this quarter is strategic. On June 30, 2026, Eversource completed the sale of Aquarion to the Aquarion Water Authority, a newly chartered quasi-public corporation of the State of Connecticut, for a total transaction value of approximately $2.4 billion including roughly $650 million of debt repaid or transferred at closing. The adjusted net equity proceeds of about $1.7 billion are earmarked to displace parent-company debt. That transaction completes a multi-year portfolio retreat: the offshore wind development stakes went to Global Infrastructure Partners and Ørsted in 2024, and now the water business is gone too, leaving a pure-play regulated electric and natural gas delivery company serving approximately 4.4 million customers across Connecticut, Massachusetts and New Hampshire. Moody's responded on July 6 by revising the outlook on the Eversource parent and NSTAR Electric from negative to stable, citing the Aquarion closing and Connecticut's approval of deferred storm costs. Management reaffirmed 2026 recurring EPS guidance of $4.57 to $4.72 and its long-term target of 5 to 7 percent cumulative EPS growth through 2030.
The underlying evidence supports the steadier read. First-half operating cash flow rose to $2.41 billion from $2.10 billion, helped by receivables collections and improved regulatory recoveries. Rate increases took effect across the footprint over the past year, at NSTAR Electric in January 2026, at Public Service Company of New Hampshire in August 2025, and at all three gas utilities in November 2025. Electric distribution segment earnings grew $23.1 million in the first half, and natural gas distribution earnings grew $71.4 million, even as interest expense, depreciation and property taxes all climbed.
The strongest counterargument is that the regulatory compact is not uniformly friendly. FERC's March 19, 2026 decision cut the allowed base return on New England transmission equity to 9.57 percent from 10.57 percent, a change management estimates will reduce future annual after-tax earnings by roughly $70 million. Refund exposure tied to that decision spans a wide range, from the $62.0 million already accrued to a pre-tax maximum of $968.4 million if retroactive refunds survive the appeal now pending before the D.C. Circuit Court. Meanwhile, the Revolution Wind contingent liability, which stood at $409.2 million at June 30, has already been marked up once this year, and the company concedes additional material increases are possible as construction finishes.
The variables that will decide the next leg are specific and dated: the CL&P distribution rate case filed July 14 requesting about $451 million of annual base rate increases, with a decision due from Connecticut's regulators by June 29, 2027; the FERC paper hearing on the transmission owners' request to reset the return on equity at 11.39 percent; and the final cost of Revolution Wind, which still determines payments under the 2024 sale agreement. At $71.25, with a market capitalization of $26.8 billion, the stock sits mid-way through its 52-week range of $62.45 to $76.57, trades at 18.3 times trailing earnings and roughly 15 times the midpoint of 2026 guidance, and pays a 4.49 percent dividend yield. The market is pricing Eversource as a boring utility with a fixed set of problems. The regulatory docket over the next twelve months will determine whether that bargain holds.