Welcome to the Eversource Energy Second Quarter 2019 Results Conference Call. My name is Paulette, and I will be your operator for today's call. At this time, all participants are in a listen-only mode. Later, we will conduct a question and answer session. During the question and answer session, if you have a question, please press star then one on your touch tone phone. Please note that this conference is being recorded. I will now turn the call over to Jeffrey Kotkin. You may begin.
Thank you, Paulette. Good morning, and thank you for joining us. I'm Jeff Kotkin, Eversource Energy's VP for Investor Relations. During this call, we'll be referencing slides that we posted last night on our website. As you can see on slide one, some of the statements made during this investor call may be forward-looking, as defined within the meaning of the Safe Harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. These forward-looking statements are based on management's current expectations and are subject to risk and uncertainty, which may cause the actual results to differ materially from forecasts and projections. These factors are set forth in the news release issued yesterday.
Additional information about the various factors that may cause actual results to differ can be found in our annual report on Form 10-K for the year ended December 31st, 2018, and our Form 10-Q for the three months ended March 31st, 2019. Additionally, our explanation of how and why we use certain non-GAAP measures is contained within our news release and the slides that we posted last night and in our most recent 10-K. Speaking today will be Phil Lembo, our Executive Vice President and CFO. Also joining us today are Werner Schweiger, our Executive Vice President and Chief Operating Officer, John Moreira, our Treasurer and Senior Vice President for Finance and Regulatory, Jay Buth, our VP and Controller, and Mike Ausere, our VP for Business Development. Now I will turn to slide two and turn over the call to Phil.
Thank you, Jeff. Today I'm going to cover our second quarter of 2019 financial results, provide an update on key regulatory dockets, a review of financing activity, and discuss several developments concerning our region support for offshore wind development. Starting with the quarter in slide two, you can see that we recorded an after-tax impairment charge of approximately $205 million in the quarter relating to our Northern Pass transmission project. It was driven by an adverse ruling we received on July 19th from the New Hampshire Supreme Court. The court upheld last year's rejection of a permit for Northern Pass that was issued by the New Hampshire Site Evaluation Committee. Although we've received the vast majority of permits we need to build Northern Pass, the New Hampshire Site Evaluation Committee approval was critical to moving the project ahead.
While we continue to consider Northern Pass a very beneficial project for both New Hampshire and all of New England, from both an economic as well as an environmental perspective, we see no near-term path for the project's success and have no plans to pursue it further. Excluding Northern Pass charge, we earned $0.74 per share in the quarter, compared with earnings of $0.76 in the second quarter of 2018. Transmission earnings totaled $0.37 per share in the second quarter of 2019 and excluding the Northern Pass impairment, compared with earnings of $0.35 in the same period of 2018. The improvement was due to the increased level of transmission facilities in our rate base. In the first half of 2019, transmission capital expenditures at our three electric utilities totaled $447 million.
We continue to forecast core utility transmission investments of nearly $1 billion for the full year. Our electric distribution segment earned $0.33 per share in the second quarter of 2019, compared with earnings of $0.32 in the second quarter of 2018. Previously approved rate increases at Connecticut Light & Power and NSTAR Electric were mostly offset by higher operations and maintenance and depreciation expense. Second quarter 2019 results were down by about $0.01 per share due to the divestiture of our New Hampshire generating facilities in 2018. Our natural gas distribution segment had a small loss in the second quarter of 2019, compared with earnings of $0.02 in the second quarter of 2018. The decrease was primarily related to the implementation of revenue decoupling in 2019, as well as modestly higher O&M costs.
As I mentioned during our first quarter earnings call, the implementation of decoupling as a result of the Yankee Gas settlement last year boosted Yankee Gas results in the first quarter heating period by about $0.03, but would be slightly negative to neutral in other quarters compared to 2018. As we expected, we saw our $0.02 negative impact from the implementation of the new seasonal decoupling mechanism in the second quarter and expect another $0.02 negative impact in the third quarter, but a positive pickup in the fourth quarter. In our water distribution segment, earnings were up by about $800,000 in the second quarter of 2019, compared with the same period in 2018. In total, $0.02 per share.
The higher earnings primarily reflect the recovery of increased level of investment in the Aquarion system, in the outcome of our Massachusetts rate review last year, and a continued focus on realizing operational cost efficiencies throughout the organization. Our parent and other segment earned $0.02 per share in the second quarter of 2019, compared with earnings of $0.05 per share in the second quarter of 2018. The decline was due in part to higher interest expense. We had comparable results in the second quarter of both 2019 and 2018 relating to the marking to market of our investment in certain renewable energy facilities. Overall, we earned $1.71 per share in the first half of 2019, including the Northern Pass impairment charge, compared with earnings of $1.61 per share in the first half of 2018. That's a 6.2% increase.
Excluding the charge, we remain on target to earn between $3.40 and $3.50 per share for the year, which is consistent with our long-term earnings growth rate of 5% to 7%, which we are also reaffirming today. Moving from our earnings discussion to key operating performance results, our continued intense focus on safety continues to show strong results. Our record is among the best in the industry this year, with our safety rate commonly known as days away restricted time at about 0.6 through June. Our electric reliability continues to trend very strong with months between interruptions performance at the very highest levels amongst industry peers. Overall, we are very pleased with our operating performance metrics for the year.
Turning to recent regulatory activity, on June 27th, New Hampshire regulators approved a settlement which had been reached with the Public Utilities Commission staff in the Office of the Consumer Advocate to implement a $28.3 million temporary increase in annualized Public Service Company of New Hampshire-based distribution rates. The temporary increase will go into rates for customers on August 1st and will remain in effect till permanent rates take effect in the middle of the year next year. Our application for a permanent rate increase was filed in late May and requests a $70 million annualized increase in base rates, which incorporates our temporary rate request. In New Hampshire, as you can see on slide three, we proposed a 1.7 MW battery storage project in Westmoreland, New Hampshire, a rural, heavily treed route that our radial distribution circuit must follow to serve load.
The $7 million battery project provides a cost-effective alternative to a new distribution line. We've discussed in the past, we've already started with two battery storage projects that were approved in Massachusetts. The Outer Cape and Martha's Vineyard projects represent $55 million of investment, 30 megawatts of capacity, and 58 megawatt hours of supply. Local stakeholders have been very supportive of the projects, and we expect to receive all necessary land use permits by the end of the year. These projects will increase reliability and in the case of the Vineyard, significantly reduce dependence on high cost and high emissions diesel generation. We expect to have both projects in operation before the end of next year. In Connecticut, we continue to await PURA's decision on its grid modernization docket.
In addition to Advanced Metering Infrastructure, or AMI, we expect that decision to provide us with guidance from PURA on the types of investments to be pursued, as well as the regulatory construct for reviewing such investments. We already have been evaluating a number of potential CL&P battery storage projects for consideration, pending PURA's decision on the Grid Mod docket. In the recently completed session of the Connecticut legislature, lawmakers clarified existing statutes to explicitly allow regulated utilities to participate in the ownership and construction of energy storage facilities that can be shown to benefit customers. With respect to our Massachusetts electric vehicle charging station program, we are on pace to complete our $45 million capital program that supports about 3,500 charging ports by the end of next year.
We currently have more than 1,000 charging points under contract and are on track to have secured commitments by year-end for nearly another 1,000 charging ports. A few weeks ago, we announced that some of the charging ports would be located at seven Mass Audubon wildlife sanctuaries in the state. We're poised to propose a similar electric vehicle charging program in Connecticut, pending guidance from regulators on the broader review of grid mod. In New Hampshire, we are working with state agencies and the state's other utilities to develop a public-private partnership that would leverage publicly available funds with utility infrastructure investment to set up a fast-charging corridor in the state. Turning to financing in slide four, we had a very significant level of financing activity in the second quarter. On June 4th, we closed on the sale of approximately $1.3 billion of new common equity.
The price per share was $72.50. The sale included a forward sale arrangement that delays issuance of about 12 million of those nearly 18 million shares. The forward sale will settle on or before May 29th of 2020. We're thrilled with the investor response to the offering. More than 60 institutional investors participated, and demand for the shares was about three and a half times the supply. We're also pleased with the price. The price performance since then has performed very well, immediately and for the longer term after the offering. We expect this sale to be the only block issuance for Eversource shares during our five-year forecast period. We expect to issue another $700 million of shares through an at-the-market program later in the forecast period as our funding needs develop.
This would complete the $2 billion of new equity through 2023 that we first discussed during our February earnings call. As we discussed earlier, we also expect to utilize approximately $100 million of treasury shares each year through 2023 to meet our dividend reinvestment and employee retirement plan requirements. Through July, we've distributed about 750,000 treasury shares this year to meet those plan requirements. I will cover our recent offshore wind RFP award in New York later. I believe it's important to state here that we do not expect to issue additional blocks of equity like we did back in May, even after considering the 880-megawatt award in New York.
Should there be any future equity need beyond the current forecast period, we expect it to be minor, given the significant cash flows that we expect from the South Fork and Revolution Wind projects as they enter service beginning in 2022, and it would most likely be satisfied through a small at-the-market issuance program if needed. On the long-term debt side, NSTAR Electric issued its first green bond in May, selling $400 million of senior unsecured notes with a coupon of 3.25%. It was the tightest spread ever on an unsecured green bond in our industry. It attracted some new investors to Eversource and our strong, very sustainable investment profile. We had about 90 investors on informal call interested just shortly before the issuance.
While we're very pleased with the investor interest in our recent equity and debt issuances, we're also very disappointed with S&P's rating action last week concerning the Eversource system. We believe the combination of our robust financial profile, industry-leading cost management, strong operating history, positive regulatory environment, which includes multiple multi-year settlements, and a diverse regulatory jurisdiction exposure should have allowed us to preserve our previous ratings, or at least limited any downgrades. Nonetheless, there are no electric utility holding company peers with higher ratings than Eversource at S&P, and we expect to continue to be able to finance at very favorable levels that will continue to benefit our customers. From financing, I'll turn to offshore wind, and on Slide 5, on July 18th, New York Governor Andrew Cuomo announced nearly 1,700 megawatts of offshore wind awards, including 880 megawatts to Sunrise Wind, the partnership between Eversource and Ørsted.
1,700 megawatts represented the largest offshore wind award to date in the U.S., and a major first step in reaching New York's target of 9,000 megawatts by 2035. We are targeting an in-service date for our facilities of 2024, and we signed a memorandum of understanding with Con Ed and the New York Power Authority to work together on certain transmission facilities relating to our winning bid. We expect to complete negotiations with the state on a contract for the project within a few months. As you can see from the slide, this is our second successful bid that we've made in New York, with South Fork being the first and most advanced. This slide provides you with a summary of where we've won contracts to date, where we are in the federal siting process, and when we expect the facilities to enter service.
In Rhode Island, the PUC issued its written decision in June approving a 400-megawatt contract that is part of our Revolution Wind project. A contract for a separate 200 megawatts of offshore wind from Revolution was previously approved by Connecticut regulators. A contract for another 104 megawatts is now before PURA. In terms of future RFPs, I'll turn to Slide six. In Connecticut, Governor Lamont signed a bill on June 7th that authorized the state to procure another 2,000 megawatts of offshore wind by 2030, with an RFP for 400 megawatts starting within two weeks of the governor's signature. Preparation for the RFP is now underway, and bids expected to be due in late September, and awards in November. In Massachusetts, the state issued the Commonwealth's second offshore wind RFP in May, requesting bids for at least 400 megawatts of offshore wind.
As they did in the first RFP, they said bidders can also offer up to 800 megawatts or as little as 200 megawatts of offshore wind. We are currently evaluating the investment profile and timeline for both the Connecticut and Massachusetts RFPs in order to develop and refine appropriate bid strategies. We continue to view our partnership with Ørsted as a terrific combination of two highly performing organizations that view risks, financial return thresholds, and operating excellence similarly. Ørsted's the largest and most successful developer of offshore wind in the world. We're New England's largest utility with strong stakeholder relationships and the deepest knowledge of the region's bulk power delivery system, and one of the industry's strongest financial profiles. This combination of attributes continues to make us very competitive in the region offshore wind solicitation.
We continue to expect our offshore wind partnership will provide a significant source of earnings and cash flow growth as the offshore wind turbines enter service beginning in late 2022. We expect that the awards we have won will continue to enhance our current five-year earnings growth profile as we move into 2024 and beyond. As we've noted previously, there will likely be increasing competition for future offshore wind solicitations in New England and New York. We do not expect to win all of the state solicitations that are ahead, but when we do win, we are confident that it'll be with a disciplined bid that would allow us to achieve returns that are well above those in our regulated business in commencement with the profile of offshore wind business model. That concludes my comments, and now I'll turn the call back to Jeff.
I'm going to turn the call over to Paulette just to remind you how to enter questions. Paulette?
Thank you. If you have a question, please press star then one on your touch tone phone. I'll now turn the call back to Jeffrey Kotkin.
Thank you, Paulette. Our first question this morning is from Michael Weinstein from Credit Suisse. Good morning, Mike.
Hi. Good morning, guys. Hey, thanks for the update and thanks for the update on the equity plans going forward. How much of the offshore wind, I guess, at this point is everything that's been announced already expected to be in that guidance range that you've already put out there? Is any of this now above where your guidance is?
Mike, this is Phil Lembo. How are you doing? Our current guidance, the 5%-7% range goes through 2023. As I've said before, when you get to 2023, there'll really only be South Fork, which will be fully in service for a year, and then Revolution Wind will be coming in during the year. Those projects are baked into the guidance that we have. The Sunrise Wind will come in beyond what our current guidance period is, and we'll pick that up when we update our guidance on our year-end earnings call.
What kind of returns are you expecting in these investments at this point?
What we stated is that on an unlevered basis, Ørsted has publicly stated that they target, and we would support sort of an unlevered return of about 8%. That translates into a mid-teens ROE if you're in the Eversource world.
Gotcha. Also, has the rating agency action on the downgrade, does that have any material effect on your earnings guidance going forward?
No, it doesn't, Mike.
Okay. Just wanted to check on that. All right. Thanks very much. I'll get back in the queue.
Thanks, Mike. Next question is from Sophie Karp from KeyBank. Good morning, Sophie.
Hi. Good morning, guys.
Hi.
Thanks for taking my question. Just wanted to ask you philosophically, what is your appetite for projects similar to NTP in maybe scale and complexity outside of the offshore wind where obviously you're participating. How do you think about that going forward?
Well, Sophie, welcome to the Eversource call. It's good to hear your voice. Our region has aggressive targets for carbon reduction and a strong appetite for clean energy solutions. There's nothing on the drawing board that we see right now other than the offshore wind opportunities that we're involved with. I'm certain that in the future, as the region's needs change and as more clean energy requirements come into play, that other projects could develop. Right now, there's nothing in our plan and nothing in the drawing board for the region that's not already been announced out there.
Got it. Thank you. On the offshore wind, obviously there's been headlines about the issues that Avangrid's having with the permitting on the federal level. What are your thoughts on that? Obviously, you've given yourself way more time to deal with that as far as the timeline goes. Generally, if you could just give us some color or thoughts on how you expect the permitting process to shape up.
Sure. Not knowing specifically what their situation is, the details would be in their court. Really from an Eversource and Eversource Ørsted side, we recognize how important siting and permitting is to the success of these projects, and we're focused in our siting efforts to filing complete siting and permitting applications really based on thorough offshore site investigations. We've done a lot of upfront work. Our approach is to complete an extensive amount of survey work to the fullest extent possible prior to submitting applications. We think that's the best way to make it through the permitting process. On our projects, we've had a fleet of survey vessels. We've spent millions of dollars to assess the characteristics of our lease areas. Those are critical to the filing of a complete application.
We were the first in the U.S. to develop and deploy these measurement buoys that are in our lease area to study wind speed and wave height. We put a lot of effort into thoroughly investigating the sites before moving forward. We also understand that there's constituencies out there that you have to address. The fisheries industry, we have full-time liaisons. We've modified our wind farm layouts to avoid impacts on our designs. We were the first developer to announce changes in proposed turbine layouts based upon input from local fishermen. That, plus the fact that we were the first developer to partner with a group called the Responsible Offshore Development Alliance, and really it provides a unique partnership for how fishermen can provide direct input to us.
Really, that combined with the combined strength, I'd say, of the Eversource and Ørsted teams in this area, I think, really is a differentiator.
Great. These are great comments. Thank you so much. I'm going to jump back into the queue.
Thanks, Sophie.
Thank you.
Next question is from Steve Fleishman from Wolfe. Good morning, Steve.
Hi. Good morning. Just a couple of things. First, Phil, could you just clarify, I think in the past, the Revolution Wind, even though it starts in 2023, was really not going to benefit till after the forecast period. Is that still the case?
That's correct, Steve.
Okay. Is there any information you can give on pricing for Sunrise Wind or any idea when that'll be made public?
As I mentioned in my comments, we're probably a few months away from finalizing a contract with NYSERDA. The expectation really is within 30 or 60 days after that. After that period, at some point, there's an expected disclosure of pricing.
Okay. It sounds like maybe you could give a little more color on the comments on financing future growth in the offshore wind. It sounds like high level thought process is that as the first projects come on, they generate cash flow that helps to basically fund the new growth.
That's it.
That's kind of high level how you're thinking about this. Okay.
Right. In the early years of those, there's a significant amount of cash flow that's generated from projects once they go into service. That will be used to fund and finance some of the construction costs as we go forward.
Okay.
I think that helps us, and it really gets to the conclusion that other than doing some minor at-the-market issuances, we have no future needs for block equity.
For example, that might be as you're going to book, you're going to get the ITC from those projects, and then you can kind of reinvest that into the growth projects.
Right. There's cash generated from the tax.
Okay.
Correct.
Okay.
Really, as I've said, if you take that and the success we've had on the future projects, we expect that our growth will accelerate beyond the midpoint of our five to seven as we move forward here.
Right. Okay. Just one other question on the offshore wind. Just in terms of the actual booking of the accounting for the tax credit, a rough sense of how you're planning to book the accounting of the ITCs?
Yeah. The booking of it would be over the life of the asset or the life of the contract, so over a time period. That's one option. The other is to do it over a 10-year period. We're sort of looking at both of those at this stage.
Okay. You're definitely going to spread it out?
Yes. Correct.
Okay. All right. Great. Thank you.
Thanks, Steve.
Thanks, Steve. Our next question is from Praful Mehta from Citi. Good morning, Praful.
Morning, guys. Maybe just picking up on the tax side, just to clarify on the ITC, is the assumption that the sharing of the ITC and the depreciation, will that be based on the ownership percentage, or is there a disproportional sharing or a tax equity component related to any of the tax credits?
When you look at the partnership is a 50/50, and I guess the best way to look at it is there's many ins and outs and gives and takes, but the economic value is shared 50/50 between the two partners.
Right. The economic value in total, the combination, I'm assuming, of cash flows and tax credits, but you could split the tax credits different from the 50/50. Is that a fair way to understand it?
Any category could be, within the category, split differently than 50/50. If one category is 40, then another category has to be 60 to offset. Overall, all the categories that relate to the economic value are shared 50/50, but not each one of them has to be 50/50.
Got you. Just remind us, your tax profile post the 2022 timeframe, you are a full cash taxpayer at that time?
That's correct.
Got you. Understood. That's helpful. Then in terms of the equity offering, you've talked about 12 million shares being done over some time period. Is there any color you can provide on how to think about matching of the timing of the forward with when you would want to do it, depending on when the CapEx hits, just to understand that timing?
Sure. The forward was put out for a year, so the expectation is that by the end of May of next year, that those 12 million shares would be issued.
I got you. You would delay that as much as you can effectively is a good way to think about that?
Yeah, I think the best way to think about it is, we would assess what our needs are and what the opportunities are and, again, be opportunistic about when we do it, but we're not going to issue it before we need it. That's correct.
Understood. Finally, just on the growth profile that you talked about, the 5%-7%, there clearly wasn't any Northern Pass in your forecast through 2023. Is that right, from a growth perspective?
Right. The capital investment was removed from our plan. That is correct.
Right. Was there any underlying base earnings or any AFUDC or anything else related to Northern Pass that was in the plan?
Yes, there was. I think we've talked about that in addition to earning a return on the investment under the transmission service arrangement that we have, there was kind of $0.03-$0.04 of AFUDC annually in our forecast. We know that will not occur, but we're very comfortable in reaffirming our 5%-7% target. I will say that, for the remainder of this year, because of the impairment, there'll probably be about $0.02 of AFUDC that would have been booked had the project been active, that we will not be reflecting, but that we will, as we always do, look for ways, and I'm confident that we'll find opportunities to offset that for the rest of this year and going forward.
Got you. Super helpful, and just to confirm, the 5%-7%, so you're still comfortable within the midpoint of that range, even throughout through 2023?
Yes, that is correct.
Really appreciate it, guys. Thank you.
Thank you, Praful.
Thank you, Praful. Next question is from Paul Patterson from Glenrock. Good morning, Paul.
Good morning. I wanted to touch base with you on offshore wind and this declining price cap legislation, I guess, the amendment to sort of eliminate it. Just sort of how you view that in the context of offshore wind economics. Kind of a dramatic move, I guess, on the part of the state legislature and the governor. How should we think about that in the context of, I guess, what Massachusetts is experiencing?
Thanks for the question, Paul. I hope everything's going well. Late last night, I think you're probably referring to, or maybe you haven't caught up with yet, that the cap in Massachusetts, there was legislation that, I'm not sure if the governor actually signed it early this morning or will be signing it, but effectively, that does lift the cap for one year. For this upcoming solicitation, the cap in Massachusetts is removed, and I think that's just recognition that there's many things that they hadn't thought of at the time when the cap was instituted, but they still are focused on costs going forward. The legislation was passed by both the Senate and the House that removed the cap for this current solicitation. There is no cap for this current solicitation.
Is that because, I guess, they feel that the economics are such that we might see higher prices in this upcoming solicitation as opposed to what was achieved previously? Is that safe to say?
Yeah. I think there's recognition, if you've kind of followed the different proposals that were out there, Paul. Folks really honed in on the tax credits changing. When they passed the legislation, they were at 24% or 30%, and they've been reducing each year. I think that there is a recognition that all other things being equal, if you lose or have lower tax credits, that that's going to impact the pricing. Rather than sort of engineering every particular aspect of the bid, they just decided it's easiest to just remove the cap for a year and then go forward.
Okay. On the Connecticut Grid Modernization, I'm sorry if I missed this. What's the timing that you're expecting on that?
Well, I'll just give a little bit of history there that, this was a docket that has been completed and all the testimony has been done. In the interim, there was changes. Katie Dykes, who was the chair of PURA, has sort of been moved into a higher position, and there's a new chair at Connecticut PURA. There was legislation in Connecticut to increase the size of PURA by adding two more commissioners. There's been a little bit of evolution in the Connecticut PURA. Right now, we believe that is certainly one of the issues that is on the front burner of the agenda at PURA. It's hard to say precisely when we expect it. We do expect it to come out this year.
We have been working on proposals that we would make in response to it so that we're ready to go when something does come out. Just to refresh your memory, this is not a prescriptive, per se, order that's coming out. The expectation, it'll be more directional, and then ask each company to submit specific proposals to address it. In the anticipation of that, we are working currently on our specific proposals, again, so that we're ready when the order comes out.
It's been kind of dormant there, though, I guess since January or something, it seems to me. I'm just wondering, you expect an order, though, just to sort of show up? Is there any other process that'll happen between? In other words, are we just waiting for an order now? Is that pretty much where we're at?
There's no indication that there's any other process that would be done. At this stage, we're just awaiting an order.
Okay. Just finally on the battery stuff, how do you see the economics of your battery investments vis-à-vis peakers? We're hearing different things from different players in the sector around the country. Cheaper than a peaker, that kind of thing, when it's combined with renewables and what have you. I'm just sort of wondering, since you highlighted the deployments that you're making in your service territory, how do you see the economics of that going forward?
Well, as I described in our applications, there's many different applications for the storage. Some of it is purely based on a cost displacement of a peak resource. Some of it has to do with reliability. Providing battery storage, as our application in Provincetown on the Cape really provides an opportunity to improve reliability there. Then we don't have to construct a line through the National Seashore type of thing. Certainly, there's a myriad of benefits, price being one of them, emissions being one of them, reliability being one of them. I think battery storage, as a package, can address a lot of those things. Then if you can combine it with intermittent resources, it even has a better application. Certainly, there's opportunity for cost to come down, I believe, in that area as there's improvements made in storage technology.
I think the early applications are going to kind of prove some of these things out, and we have a great opportunity here to really demonstrate the real value that it brings on many fronts.
Okay, great. Thanks so much, guys.
All right.
Thanks, Paul. Next question is from Travis Miller from Morningstar. Good morning, Travis.
Good morning. Thank you. On the green bonds, I was wondering if you could talk about your decision to go with that type of bond versus your, obviously, traditional type. How much capacity do you have to continue issuing those types of bonds given the pricing you get?
Thanks for the question, Travis. I'd say that if you look at the bottom line, we believe that pricing was tighter in a green bond than it would have been in an alternative issuing, a non-green bond issuance for what we needed. Pricing, there's certainly a lot of interest. Our ESG profile really contributes to attracting investors. As you know, with the green bonds, there needs to be a green reason to use it. Certainly, as we move forward with all of our clean energy applications, there could be more opportunities to issue green bonds going forward. I guess the capacity for them is dependent upon what you're doing that's green, and we do a lot of things that are green. I would expect that we'd have much more capacity to issue green bonds as we move forward.
I can't give you a specific dollar amount or application right now, but the basis for the green bond that we did issue was the $500 million a year that we spend on energy efficiency and some of our other green initiatives. As those become more and more part of our business, there's more and more opportunity to issue those green bonds.
Okay. Do those have to sit, not the ones you issued, I know, have to sit at the parent, but is there opportunity or capacity to issue green bonds down at the utilities for some of the stuff, the batteries or anything else that you're doing?
This one was at, in fact, this one was at NSTAR Electric.
Oh
absolutely can go at the utilities.
Okay. I guess I'll ask the reverse then. Could you do it at the parent-?
At the parent
to fund some of the offshore wind?
It can go both ways. Yeah.
Okay. Just real quick, clarification on the equity. How much would you have needed if you weren't doing the offshore wind? Was there a need there either on the parent refinancing side or down at the utilities?
What we said, and what we would continue to say is we have a robust $13 billion capital program, in our forecast time period. That, combined with the activities we were performing in the wind area, really drove the need for the equity issuance. I hesitate to allocate X amount to one category versus the other, but certainly, when you look at, we do have a robust capital plan that was a big driver of that need.
Okay, great. I appreciate the thought.
Thanks, Travis.
Thank you, Travis. Next question is from Julien Dumoulin-Smith of Bank of America. Good morning, Julien.
Hey, good morning, everyone. How are you?
Good, Julien. How are you?
Good. Excellent. Thank you. Just coming back to some of the prior questions on tax credits. I was just curious, do you have any more specificity you can talk to about both the specific ITCs tax year that you're going to try to qualify for each of the different offshore projects? Also, just to come back to this, what is the amortization year? I know this was kind of indirectly asked earlier, but I just want to be very specific about it, and I recognize that you may not have yet made up your mind with respect to these decisions either.
Thanks for the questions, Julien. I'd say that the specificity we've given on tax years or whatever are to say that, they're appropriate considering the timing of when we bid and what the construction schedule would be. We have not, nor would we plan to, identify a specific year or a specific item, that type of thing. I will say that we've accounted for being conservative, having schedule changes, et cetera, in our tax planning profile. No more specific than that at this stage. In terms of the number of years, I'd say, I pointed out there's different ways of showing that. Obviously, you get cash in early, then you could reflect that. We would do it in the most attractive way, but we're still evaluating how it best fits into our tax profile going forward.
It's hard to say what that looks like right now, but we're going to make the best use of that in the years ahead.
Let me frame it this way, perhaps. By the time that you're ready to roll forward your outlook to 2024, will you be reflecting a decision with respect to tax recognition in that guidance? This would seemingly be a pretty material piece of how you establish your future guidance, I would think.
Yeah, sure. I'd say there'd have to be some baseline assumption that we would make there that would be appropriate to discuss.
Got it. Just to come back to Praful's question earlier about the value sharing. I had thought that Ørsted had confirmed that they indeed were going to provide you with their tax credits as a quasi-tax equity counterparty. Can you elaborate, to the extent possible, about how they and you are talking about monetizing their tax component? Also, if possible, how you would think about recognizing that again in your income statement to the extent to which you are taking on their portion of tax credits.
As I said, there are many categories to divvy up the 50/50 economic value of the partnership. Certainly, if Eversource has more of an ability to utilize more efficiently the tax benefits of the partnership, then we'd be foolish not to make that determination. I'd say at this stage, Julien, that the specific how that's going to work and what the numbers are still in flux, still something that we look at all the time as part of our partnership, what makes the most sense for the partnership returns going forward and how we can best utilize the financial profile and the operational knowledge, in fact, of each party to be the most successful financially and operationally here.
I think it's just common sense that if somebody can better do something, rely on them, whether it be constructing something, if there's a better tax appetite, if you can finance cheaper. All of these different items, we're going to pick the best way to do it, and if that means that category isn't exactly 50/50, so be it, but the overall division is going to be 50/50. Some of these-
Got it. Sorry, quick, yeah, go for it.
Some of these decisions evolve as you go through time.
Got it. Quick clarification if I can summarize here. How do you think about the equity net injection needed for these offshore projects? The thought process being trying to tie back the balance sheet, the equity you've raised here against your outlook over the five-year period. How should we think about these projects?
I understand that their cash flow profile shifts pretty dramatically depending on the specific year. Upfront, 30% equity? How would you frame it?
I'd say that the way that you should look at it, and the way that we've guided, is to say you should assume that it's an Eversource profile cap structure, and that would be 64.
Okay, great. Thank you very much for your patience.
All right. You're welcome.
Thanks, Julien. Next question is from Andrew Weisel from Scotiabank Howard Weil. Andrew?
Hi. Thank you. Good morning, everyone. I have a question on your appetite for more offshore wind. You've committed to 50% of over 1,700 megawatts. How big would you be willing to let that business go get for you? Is it a question of the earnings mix or the balance sheet or the physical lease capacity space? What would happen with the partnership with Ørsted if you and they wanted to move at different paces?
Thanks, Andrew. I guess this is a question of, is bigger better, I guess, is the nature of your question. Our lease sites can handle 4,000 megawatts of capacity, and that's what we're in partnership with Eversource and Ørsted. Really, I'd say, there's not a race to get to the full capacity. There's many thousands on the drawing board of offshore wind RFPs and needs that are expressed in New England and New York. Those come in over many years. Our lease areas, in my view, are the very best. You look at the proximity of where they are to shore, you look at all the wind speed and other depth characteristics of those sites, and I'd rather have my sites than anything else out there.
There'll be plenty of opportunities to grow this as we move forward, but we're going to do it in a way that is disciplined, and we're going to look at each RFP in terms of what the schedule is, what we already have on our plate, what we can do going forward, and what the financial profile is of that RFP. It has to be not necessarily bigger, but it has to fit the profile and be financially additive to what we're doing going forward.
Notwithstanding cost, I know you can't get into the details for bidding reasons, but it sounds like you will be pursuing all of these reasonably aggressively, right?
I didn't say that. I said we would look at each one and make a determination as to what the schedule that the RFP is looking for, what we already have on our plate, what we think the financial bid price would be, what that would mean in terms of returns, and then we would make a determination based on that in terms of what our bid strategy would be for each specific RFP.
Okay. Got it. Just to confirm, am I right that for all of these offshore wind projects, the interest will be capitalized and therefore it'll impact cash flows during construction but not earnings? Is that the right way to think of it?
That is. Yes, you are correct.
Okay, great. One last one, if I may. How do you think about affordability in New England, given the higher cost of these projects? I understand that your utilities are in rate freezes, over the next several years, is affordability a concern, especially given the high starting prices for rates in the region?
Affordability for our customers is always a primary concern, as well as the reliability and the quality of service that we provide. Certainly affordability of energy supply costs, affordability of our own distribution rates, affordability is top of list for customers and top of our list. We continue to evaluate that, and you look at that in relation to what the alternative is. If you're in a region, as we are in the three states that we serve, and in a region that has very aggressive carbon reduction targets, you need to see how is it that you're going to meet those targets and provide the level of capacity and service to customers that they deserve. What might seem like high cost to some is relative depending on the region you're in and the alternatives that you have. Certainly affordability is important to us.
Thank you very much for the details.
Thank you, Andrew. Next question is from Michael Weinstein at Credit Suisse. Mike?
Hey, guys. One quick follow-up. Just wanted to know if you had heard anything from FERC on transmission ROEs and the decision on that upcoming. I'm sorry if I missed this answer earlier.
Mike, you didn't miss any answer on that. The answer is that we have not heard anything from FERC on the status of our four open ROE complaints.
Okay. Yeah, just wondering because they've been actually issuing a few decisions lately. Just wondering if there's been any movement.
Yeah, nothing that we're aware of or that we've seen.
Okay, thanks.
All right. Thanks, Mike. We have nobody else in the queue, so we want to thank you all for joining us this morning. If you have any follow-ups, feel free to give us a call or send us an email. Thanks a lot and have a good day.
Thank you, ladies and gentlemen. This concludes today's conference. Thank you for participating, and you may now disconnect.