John M. Moreira
Executive Vice President, Chief Financial Officer and Treasurer at Eversource Energy
Thank you, Joe, and good morning, everyone. This morning, I will cover our 2023 financial results, the offshore wind impairment, the 2023 regulatory update, an update of our five-year investment forecast for our regulated businesses, and I'll wrap up with our 2024 recurring earnings guidance, long-term financing plan and five-year earnings and dividend growth guidance.
I'll start with 2023 results on Slide 10. Our GAAP results for the year were a loss of $1.26 per share compared with GAAP earnings of $4.05 per share in 2022. In the fourth quarter, results were a loss of $3.68 per share, compared with GAAP earnings of $0.92 per share in the fourth quarter of 2022.
Results for the full year 2023 include an after-tax impairment charge of $5.58 per share related to our offshore wind investment and $0.02 per share after-tax charge related to our non-recurring costs. Results for 2022 include a $0.04 per share charge primarily related to transition costs associated with a completed integration of EGMA. Excluding these charges in the offshore wind impairment, our non-GAAP recurring earnings were $4.34 per share in 2023 as compared to $4.09 per share in 2022.
Breaking down our 2023 full year non-GAAP recurring earnings of $4.34 into segments. Electric transmission earned $1.84 per share for 2023 as compared with earnings of $1.72 per share in 2022. Improved results were driven by continued investments in our transmission system and lower income tax expense.
Our electric distribution earnings were $1.74 per share in 2023 as compared with earnings of $1.71 per share in 2022. A base distribution increase at NSTAR Electric was partially offset by higher interest expense, property taxes, and depreciation.
Our natural gas distribution segment earned $0.64 per share in 2023 as compared to $0.67 per share in 2022. Increases in depreciation and interest expense, higher effective tax rate, and the impact of certain reconciliation charges exceeded the revenues we received from capital trackers and base rate increases at NSTAR Gas and EGMA that became effective November 1st of 2022.
Our water distribution segment earned $0.09 per share in 2023 compared with $0.11 per share in 2022. Lower results were driven by higher depreciation, O&M expense and interest expense. The results reflect the impact of a very disappointing decision in Connecticut from PURA for the Aquarion Water rate case, which is under appeal.
Eversource parent and other companies earnings were $0.03 per share in 2023 as compared with a loss of $0.12 per share in 2022. The improved results reflect a lower effective tax rate and the gain on our planned liquidation of a renewable energy fund, partially offset by higher interest expense and a contribution to the Eversource charitable foundation.
Let me now turn to offshore wind, starting with the highlights of our sale of South Fork and Revolution Wind to GIP. With South Fork Wind expected to be in service before the transaction closes, our construction contingency is primarily related to Revolution. The terms of the transaction include a capital cost sharing agreement. Under this agreement, capital expenditure overruns incurred for the 50% interest in the project, up to approximately $240 million, will be shared equally between Eversource and GIP. Above this threshold, 50% of any project cost overruns would be borne by Eversource.
If the final project costs come in under the current construction forecast, Eversource will receive a payment for this difference. The terms and pricing of this agreement with GIP are assumed in the impairment charge and in our long-term financing plan.
Let me review the offshore wind impairment as shown on Slide 11. In 2023, we recorded impairment charges on our offshore wind investment of approximately $2.17 billion pretax, or $1.95 billion after tax. As you can see on this slide, the impairment charge was driven by a lower-than-expected sales value of approximately $400 million for the three projects after completing our strategic review in the second quarter of last year.
As a result of adverse developments in the fourth quarter, including the further reduction in the expected sales price driven by higher project costs and the October 2023 denial of the OREC pricing petition for Sunrise Wind, we realized an additional impairment charge in the fourth quarter of approximately $1.77 billion. The Sunrise Wind project drove about $1.22 billion of the impairment charge, in large part due to the OREC repricing denial, which led to a lower assumed revenues and ultimately an evaluation of the potential abandonment cost of Sunrise if it is unsuccessful in the New York RFP 4 solicitation.
As a reminder, to participate in the process to submit a rebid in the solicitation, NYSERDA required any existing projects to terminate their current OREC agreements. This potential loss of both a contract revenue stream and ultimate project viability and any related termination costs was factored into our impairment analysis. Therefore, we assume that if Sunrise is not successful in the rebid, this would result in no sales proceeds and no value attributable to the ITC adder. These items, coupled with estimated cancellation costs for the project, net of any salvage value, drove the additional impairment charge.
Although we have factored this downside set of assumptions and probabilities into our impairment analysis, if Sunrise is ultimately successful in the RFP, Eversource would then sell its ownership interest in the project to Orsted under the terms of our recently announced agreement. With the completion of that sale, our interest in Sunrise would be terminated. We would not be subject to any further construction contingencies or project cancellation costs. If we are successful selling Sunrise to Orsted, it would provide a full exit for the offshore wind business.
Turning to Slide 12, I'll walk you through the carrying value of our offshore wind investment as of December 31, 2023. The carrying value that I will discuss reflects the impact of our fourth quarter impairment charge by project. As you can see, the value of both Sunrise and Revolution were impacted by the fourth quarter impairment. The value of South Fork was not impacted.
The fourth quarter impairment charge assumes a set of scenarios regarding potential construction contingencies for Revolution Wind. The charge also assumes that Sunrise Wind would be abandoned. We are very disappointed by the financial impact recognized on these early-stage offshore wind projects. However, we are comfortable with the impairment charge assumptions. We have reflected these assumptions in our long-term financial plan, which I'll cover in a minute.
As we move forward and finalize the sale of these projects, including the result of the recent New York RFP 4, the ultimate carrying value of our offshore wind investment could change accordingly. On a regulatory front, we had another busy year. Our key 2023 regulatory items are highlighted on Slide 13.
Starting with Massachusetts, we completed proceedings on our 2018 to 2021 storm cost recovery request of approximately $136 million. I'm pleased to report that the Massachusetts DPU conducted a very thorough review and we received approval to recover 100% of our request. This approval highlights the importance of our storm response and acknowledges the tremendous effort from my Eversource colleagues and our contractors to restore customers as quickly and as safely as possible.
Also in Massachusetts, we received approval of our first annual revenue adjustment under NSTAR Electric's PBR plan. This adjustment included an increase of a capital adjustment factor, or K-Bar, as we call it.
Turning to New Hampshire, we received a final order approving $47 million of storm cost recovery for weather events occurring in 2020 and in 2021. Again, we were granted nearly 100% of our request. We expect to file a general rate review in New Hampshire later this year to recover the cost of investments that we have made over the last four years to significantly improve reliability for customers in New Hampshire. In total, we are now recovering approximately $400 million in rates over the next five years for storm costs in Massachusetts and New Hampshire.
In Connecticut, at the end of December, we filed our request for a prudency review of approximately $635 million of storm costs related to weather events that occurred from 2018 through 2021. The Connecticut filing contains more than 10,000 pages of support for costs incurred for these significant weather events. We look forward to working through the prudency review with PURA in 2024.
Lastly, in our Aquarion's appeal of its March 2023 rate decision, oral arguments were held on January 11th, and we expect a court decision over the coming months.
Turning to our regulated utility capital plan, Slide 14 reflects our five-year utility infrastructure investments by segment, updated through 2028. As a reminder, this plan reflects projects that we have a good line of sight on from a regulatory approval perspective. Over this five-year period, we expect to invest approximately $23.1 billion in our regulated electric, natural gas, and water businesses to continue providing customers with safe and reliable service to meet ongoing load growth and to achieve progress on clean energy objectives.
Starting with transmission. Our plan includes nearly $6 billion of transmission infrastructure investments over the next five years. These investments include replacement of aging infrastructure to harden the system and increase resiliency during extreme weather events, innovative substation projects undertaken for reliability and electrification purposes, and interconnection projects adding clean energy resources to the grid.
Our transmission capital plan includes a large-scale innovative project to build a substation in Cambridge, Massachusetts, completely underground. We are working closely with the city on this project, which includes nearly $1 billion of investments to interconnect four existing transmission lines. This project will increase capacity to enable electrification and improve the reliability of electric service for customers.
Turning to electric distribution. Our updated capital forecast now reflects nearly $10 billion of planned utility infrastructure investments with a continued focus on system resiliency and our top-tier reliability for electric service. Our planned electric distribution investments include over $0.5 billion of our AMI program in Massachusetts. The AMI program will allow customers to save money through heightened control over their own energy consumption and to experience higher service levels through faster outage restoration and other service functions.
On the natural gas side, our five-year plan reflects nearly $5.5 billion of investments and is centered around reliability and safety. The plan is highlighted by our bare steel and cast iron pipe replacement programs in Massachusetts and Connecticut. Across our natural gas system, we'll continue to thoughtfully engage with our states to ensure our investments enable an equitable transition to a clean energy future.
Turning to the water segment. Our five-year investments are forecasted to be over $1 billion, supporting investments in water treatment facilities and water main replacements to improve water quality. Rounding out our Eversource capital plan are investments in technology and facilities that's forecasted at $1.1 billion.
Moving to Slide 15. Our updated capital plan reflects a $1.6 billion increase in utility infrastructure investments from 2024 through 2027 versus the prior plan. This increase reflects greater visibility on the work needed to serve our customers over the next four years. An important consideration in relation to our five-year capital plan is what has not been included.
On the right-hand side of the slide, we show some potential infrastructure investments not currently included in our forecast, which would be additive to the plan. These opportunities total up to $2 billion in the forecast period, with Connecticut AMI at the top of the list at nearly $700 million. The resultant impact from our updated capital plan is shown on Slide 16. The customer focused core business investments included in our capital plan would result in 7.7% growth in rate base from 2022 through 2028.
Next, I will turn to our 2024 earnings guidance on Slide 17. We are projecting a non-GAAP recurring earnings per share range of $4.50 per share to $4.67 per share for 2024. Positive drivers this year include transmission investments for system resiliency and increased electric demand, distribution base rate increases in Massachusetts and New Hampshire, continued focus on controlling O&M expense and a lower effective tax rate.
In 2024, our planned distribution rate increases include the first rate base roll in for EGMA, which will adjust rates to recover six years of capital investments. This rate adjustment will take effect in November of this year. These positive drivers are expected to be partially offset by higher expenses related to increased capital investments and share dilution.
Turning to our long-term financing plan, I'll start with our cash flow assumptions regarding offshore wind as shown on Slide 18. As I said earlier, our wind impairment reflects a set of assumptions that we have also embedded in our long-term financing plan. Let me walk you through what is assumed in our financing plan.
First, we assume cash inflows from the announced sale of South Fork and Rev Wind of $1.1 billion. These proceeds include the value of the 10% ITC adder for Revolution Wind of approximately $170 million. Also assumed in our financing plan is the realization of our tax equity investment in South Fork Wind, which we expect will bring in around $500 million of cash over the next 24 months. The last item is related to our sale of Sunrise Wind to Orsted, which is not assumed in our long-term financing plan. If Sunrise is successful in the New York RFP 4, that would be a positive to our plan.
I'll now cover a number of drivers that are expected to enhance our FFO to debt ratio from 2023 to 2025 as you can see on Slide 19. These drivers include the offshore wind proceeds that I just discussed, planned rate increases at our utilities, recovery of storm cost deferrals, scheduled equity issuances and proceeds from a potential sale of our water business.
In terms of the equity assumed in our plan over the next several years, we expect to issue up to $1.3 billion of equity through our existing ATM program. We will also continue to be opportunistic with our alternatives. As Joe mentioned, we are undertaking a review of our water distribution business. Proceeds from a successful sale are assumed in our long-term financing plan, reducing the level of equity that would otherwise be needed.
As you can appreciate, we cannot provide any additional details beyond what we've disclosed. We will keep you updated on any decisions from this evaluation and any changes in our financial guidance.
Closing out on Slide 20. Our robust five-year capital plan and long-term financing plan drive our 5% to 7% EPS growth rate through 2028. To be clear, the 5% to 7% is based off of our 2023 recurring EPS of $4.34.
Before we get to your questions, I'll turn the call over to Joe for his closing remarks.
