Eversource Energy’s ES long-term capital investment plans to expand its transmission and distribution infrastructure boost its service reliability. The company is also set to benefit from its renewable operations.
However, it faces risks related to substandard performance from third parties and stringent regulations.
Factors Favoring Eversource
Eversource operates a capital-intensive business with relatively steady revenue streams. Its capital investments serve as a proxy for future organic growth. The company expects a capital investment of $24.2 billion during 2025-2029, out of which it plans to invest nearly $16.2 billion in electric and natural gas distribution networks and $6.8 billion in the electric transmission segment.
Systematic expenditure enables ES to expand and strengthen its transmission and distribution operations, as well as serve its electric and natural gas customers efficiently. The company will invest nearly $2 billion in the replacement of aging infrastructure, $1.5 billion in the cable underground program, $1 billion in substation development and $0.5 billion in clean energy through 2028.
Eversource continues to lead the energy transition in New England, with nearly $2 billion in transmission and distribution energy investments in Massachusetts through 2029, supporting its clean energy goals. Electrification plans are expected to double electric demand in New England by 2050. Winter peak electric demand is expected to more than triple by 2050. The company is evaluating the benefits of clean energy projects, including large-scale solar projects.
Headwinds for ES
The company’s operations are subject to federal, state and local legislative requirements, as well as extensive environmental regulations. Any modification in the existing regulations or introduction of new mandates might affect its financial performance.
Eversource outsources its certain business functions to third-party suppliers and service providers. Substandard performance by these third parties could harm its business, reputation and results of operations.
Utilities’ Focus on Infrastructure Investments
A rise in temperature not only increases the demand for electricity but also poses a threat to electric infrastructure due to overheating, amplifying the risk of equipment failures and fires. Inspections, maintenance tasks and investments are crucial to maintaining service reliability and ensuring customer satisfaction.
Along with ES, other electric power companies like FirstEnergy FE Dominion Energy D and Exelon Corporation EXC are also taking initiatives to strengthen their infrastructure.
FirstEnergy’s ‘Energize365’ is a multi-year grid evolution platform, focused on enhancing customer experience while maintaining its strong affordability position with rates at or below its in-state peers.
With planned investments of $28 billion between 2025 and 2029, FirstEnergy aims to install advanced equipment and technologies that will strengthen and modernize its transmission and distribution infrastructure.
Dominion Energy has a well-chalked-out long-term capital expenditure plan to strengthen and expand its infrastructure. After spending $6 billion during the 2018-2022 period, the company plans to invest $12.1 billion in 2025 and $52.3 billion over the 2025-2029 period to further strengthen its operations.
Dominion Energy plans to upgrade its electric infrastructure by installing smart meters and grid devices, as well as enhance services to customers through its customer information platform.
Exelon invests substantially in infrastructure projects and plans to spend nearly $38 billion during 2025-2028 in regulated utility operations. The new capital expenditure plan indicates a 10% increase from the prior one and will be utilized to support customer needs and grid reliability.
EXC is set to invest $21.7 billion in electric distribution, $12.6 billion in electric transmission and $3.8 billion in gas delivery in the 2025-2028 period. These strategic investments should further improve its operations.
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Exelon Corporation (EXC): Free Stock Analysis Report FirstEnergy Corporation (FE): Free Stock Analysis Report Dominion Energy Inc. (D): Free Stock Analysis Report Eversource Energy (ES): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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