Environmental, Social & Governance

Factors and Credit Ratings

October 22, 2019

Eversource is the Largest New England Utility

and 1 of the 15 Largest in the United States

Eversource

Electric Customers 3.2 million

Natural Gas Customers 535,000

Water Customers 230,000

Employees 8,000

Assets $39 billion

2018 Net Income $1.04 billion

We Serve New England’s Most Populous States:

All Have Aggressive Renewable and GHG Targets

Regional Greenhouse Gas Emission TargetsMMTCO2e

2019 2020 2025

CT 27.5% 29.0% 38.0%

MA 24.9% 27.7% 38.96%

NH 19.7% 20.7% 25.2%

Renewable Portfolio Standards in Place

(Percentage of electricity that must come from

qualifying renewable facilities)

Eversource Addressing Largest Sources of New

England Carbon Emissions: Transportation, Space

Heating & Power Generation

48.4%

36.7%

29.0%

10.3%

16.7%

34.8%

5.9%

18.2%

0%

20%

40%

60%

80%

100%

New England U.S.

2016 Energy Carbon Emissions by SourceNew England vs. U.S.

Transportation

Space heating

Power generation

Industrial

Source: U.S. Energy Information Administration

Most Effective Method of Reducing Emissions:

Improve Energy Efficiency

14

4 21

1

5

3

Retail Customer Count Up 3% Since 2013, While KWH Sales Down 3.5%

Eversource MA, #1 Most Energy Efficient Utility in the United StatesAccording to ACEEE, in their second edition of the Utility Energy Efficiency Scorecard

#1 Energy Efficiency Provider in the NationAccording to Ceres most recent benchmarking report

Source: American Council for an Energy-Efficient Economy 2018 Scorecard

Note: The lower the number…the more effective the Energy Efficiency Programs

Another Critical Effort to Reduce Emissions:

Low-Carbon Energy Solutions

MA Grid Modernization:

• Approved $133 million in grid facing investments in visibility and automation

• New 2021-2023 plan due to DPU by mid-2020

• CT and NH considering grid mod initiatives as well

Battery Storage:

• Constructing $55 million of projects on

Cape Cod and Martha’s Vineyard -

Completion expected in late 2020

• Two projects proposed in New

Hampshire

EV Infrastructure:

• Building infrastructure to support

3,500 charge ports in MA by the

end of 2020

• Similar rapid expansion likely in CT

to support 150K EVs by 2025

Generation:

• Eversource divested last of its fossil plants in January 2018

• Ørsted-Eversource JV largest developer of offshore wind in N. America

• Completed construction of 70 MW of solar in Massachusetts

Typical Topics of ESG Reviews:

Eversource Generally Scores Well

Environmental

• GHG & energy use

• Air quality

• Coal ash

• Water stewardship

• Energy efficiency

Social

• Community engagement

• Human resource and

compensation policies

• Health & Safety

• Grid reliability

• Lobbying

Governance

• Board diversity

• Board experience

• Independence

• Incentives & compensation

• Tax strategy

Source: PwC U.S. Power & Utilities team

And Here Are the Results

Number of SRI Funds Holding Eversource Shares

72

86

95

108

143

0

25

50

75

100

125

150

2014 2015 2016 2017 2018

1. CMS ENERGY CORP

2. EVERSOURCE ENERGY3. XCEL ENERGY INC

4. EXELON CORP

5. DTE ENERGY CO

6. PINNACLE WEST CAPITAL

7. PUBLIC SERVICE ENTERPRISE

8. NISOURCE INC

9. PG&E CORP

10. NATIONAL GRID

11. AMERICAN ELECTRIC POWER

12. NEXTERA ENERGY

13. WEC ENERGY GROUP

14. PPL CORP

15. ENTERGY CORP

16. CONSOLIDATED EDISON

17. EDISON INTERNATIONAL

18. AES CORP

19. DUKE ENERGY CORP

20. ALLIANT ENERGY CORP

21. CENTERPOINT ENERGY

22. AMEREN CORP

23. OGE ENERGY CORP

24. DOMINION ENERGY, INC25. FIRSTENERGY

26. SOUTHERN CO

27. MDU RESOURCES

2019 Sustainalytics Ratings For Electric Utilities

R

a

n

k

Eversource Has Also Co-Chaired Electric Industry

Efforts to Standardize ESG Reporting

• In 2017, EEI members became the first industry in the US to offer investors standardized

qualitative and quantitative ESG disclosure

• In 2018, AGA members began offering comparable disclosure

• In 2019, we merged the two templates into one

• All posted on website with links

• Very positive reaction from equity, fixed-income, buy-side, sell-side analysts

• Has helped reduce error rate in third party reporting

• Has highlighted very significant progress made in recent years to reduce GHG emissions

Fitch Ratings Ltd -

ESG & Credit Ratings, Making The Connection

October 2019

Andrew Steel

Global Head of Sustainable Finance

We Measure Which ESG Risks Appear in Our Ratings

Credit Risk

• Which specific ESG risks are

potentially relevant for each

issuer’s credit profile.

• Which ESG risks are relevant

for different sectors, and even

countries or regions.

• Which ESG risks have risen to

a level where they are an

active factor in the rating

decision, on an issuer-by-

issuer basis.

• Which ESG risks actually led

to a rating change.

How Are We defining Relevance - Issuer Scale

4 5

Irrelevant to the

entity rating and

irrelevant to the

sector

Conceptually

inapplicable

from a credit

perspectivefor the sector

Irrelevant to the

entity rating, but

relevant to the

sector

Conceptually

applicable from

a credit

perspectivefor the sector, but

unlikely to impact a

rating.

Minimally

relevant to

rating, either

very low impact

or actively

managed in a

way that results

in no impact on

the entity rating.

Relevant to

rating, but not a

key rating driver,

but has an

impact on the

entity rating in

combination

with other

factors.

Highly relevant,

a key rating

driver that has a

significant

impact on the

entity rating on

an individual

basis.

Baseline neutral valueLowest relevance Credit-relevant to issuer

Source: Fitch Ratings

Introducing the ESG Relevance Navigator

Analyst Commentary Extract 4’s & 5’s Report

Source: Fitch Ratings, Introducing ESG Relevance Scores for Corporates

ESG.RS Output Summary For 1,534 Corporate Issuers

No Impact78%

Some Impact22%

Relevance to Issuer Portfolio

0

50

100

150

200

250

300

Environmental Social Governance

(No.)

ESG Elements Driving Issuer Credit Impact(ESG Score of 4 or 5)

ESG.RS Output Summary for 345 Utility Issuers

0

5

10

15

20

25

30

35

40

45

50

Environmental Social Governance

(No.)

ESG Elements Driving Issuer Credit Impact (ESG Score of 4 or 5)

Some Impact16%

No Impact84%

Relevance to Issuer Portfolio

ESG.RS for 159 Oil & Gas Issuers

Some Impact41%

No Impact59%

Relevance to Issuer Portfolio

0

10

20

30

40

50

60

Environmental Social Governance

(No.)

ESG Elements Driving Issuer Credit Impact(ESG Score of 4 or 5)