EVERSOURCE ENERGY (ES) Risk Factors

Item 1A. Risk Factors

In addition to the matters set forth under "Safe Harbor Statement Under the Private Securities Litigation Reform Act of 1995" included immediately prior to Item 1, Business, above, we are subject to a variety of material risks. Our susceptibility to certain risks, including those discussed in detail below, could exacerbate other risks. These risk factors should be considered carefully in evaluating our risk profile. There may be additional risks and uncertainties (either currently unknown or not currently believed to be material) that could adversely affect our financial position, results of operations, and cash flows.

Cybersecurity Risks:

Cyber events, including acts of war or terrorism, targeted directly on or indirectly affecting our systems or the systems of third parties on which we rely, could severely impair operations, negatively impact our business, lead to the disclosure of confidential information and adversely affect our reputation.

Cyberattacks that seek to exploit potential vulnerabilities in the utility industry and seek to disrupt electric, natural gas and water transmission and distribution systems are increasing in sophistication including artificial intelligence, magnitude and frequency. Various geo-political conflicts and acts of war around the world continue to result in increased cyberattacks against critical infrastructure. In addition to intentional attacks, we also face risks from other cybersecurity events, such as software defects, misconfigurations, system integration failures and problematic third-party software or firmware updates that can cause widespread outages or disruptions even in the absence of a deliberate attack. A successful cyberattack or other significant cyber event affecting technology systems that control our transmission, distribution, natural gas and water systems or other assets could impair or prevent us from managing these systems and facilities, operating our systems effectively, or properly managing our data, networks and programs. The breach or failure of certain information or operational technology systems could adversely affect our ability to correctly record, process and report financial information. A major cyber event could result in significant expenses to investigate and to repair system damage or security breaches and could lead to litigation, fines, other remedial action, heightened regulatory scrutiny and damage to our reputation.

We have instituted safeguards to protect our technology systems and assets; however, we cannot guarantee that our security efforts will prevent or deter cyberattacks. We deploy substantial technologies to system and application security, encryption and other measures to protect our computer systems and infrastructure from unauthorized access or misuse and to detect and respond to cyber events. Specifically, regarding vulnerabilities, we patch systems timely where patches are available to deploy and have technologies that detect exploits of vulnerabilities and proactively block the exploit when it happens. We also interface with numerous external entities to improve our cybersecurity situational awareness. The FERC, through the North American Electric Reliability Corporation (NERC), requires certain safeguards to be implemented to deter cyberattacks. These safeguards may not always be effective due to the evolving nature of cyberattacks. We maintain cyber insurance to cover damages, potential ransom and defense costs related to breaches of network or operational technology, but it may be insufficient in limits and coverage exclusions to cover all losses.

For further information, see Item 1C, Cybersecurity included in this Annual Report on Form 10-K.

The unauthorized access to, and the misappropriation of, confidential and proprietary Company, customer, employee, financial or system operating information could adversely affect our business operations and adversely impact our reputation.

In the regular course of business, we, and our third-party suppliers, rely on information technology to maintain sensitive Company, customer, employee, financial and system operating information. We are required by various federal and state laws to safeguard this information. Cyber intrusions, security breaches, theft or loss of this information by cybercrime or otherwise could lead to the release of critical operating information or confidential Company, customer or employee information, which could adversely affect our business operations or adversely impact our reputation and could result in significant costs, fines and litigation. We employ system controls to prevent the dissemination of certain confidential information and train employees on phishing risks. We maintain cyber insurance to cover damages, costs related to a system disruption, potential ransom and defense costs arising from unauthorized disclosure of, or failure to protect, private information, as well as costs for notification to, or

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for credit monitoring of, customers, employees and other persons in the event of a breach of private information. This insurance covers amounts paid to address a network attack or the disclosure of personal information and costs of a qualified forensics firm to determine the cause, source and extent of a network attack or to investigate, examine and analyze our network to find the cause, source and extent of a data breach, but it may be insufficient to cover all losses. While we have implemented measures designed to prevent network attacks and mitigate their effects should they occur, these measures may not be effective due to the continually evolving nature of efforts to access confidential information.

We are increasingly integrating artificial intelligence (AI) into our operations, and while these technologies offer operational benefits, they also introduce significant risks that could adversely impact our business and results of operations.

We deploy AI tools and models in areas such as weather forecasting, grid planning, asset management, customer service and internal support functions. This deployment is overseen by an internal governance and oversight committee, which has established policies and procedures and reviews and approves the use of AI throughout the organization. AI systems may produce inaccurate, biased or otherwise unreliable forecasts or recommendations due to flawed algorithms, limited training data or unforeseen conditions which could result in service disruptions, regulatory penalties and reputational harm. Evolving AI regulations may impose new compliance and reporting obligations or restrict usage and stakeholders may raise concerns about transparency, bias, and accountability. Despite implementing a governance framework and policies and controls in place related to AI use, including human oversight of critical decisions and outputs, these risks could negatively affect operations, expose us to litigation or regulatory penalties or fines, increase costs and impair our ability to meet customer expectations, which could have a material adverse impact on our financial position, results of operations, and cash flows.

Regulatory, Legislative and Compliance Risks:

The actions of regulators and legislators could result in outcomes that may adversely affect our earnings and liquidity.

Rate Regulation, Cost Recovery and Affordability

Our electric, natural gas, and water utility companies are subject to regulation by federal and state agencies and each is required to engage in regulatory approval proceedings as a part of the process of establishing the terms and rates for service. Our regulated companies are entitled to charge rates that are sufficient to recover prudently incurred costs and a reasonable return on investment on invested capital. Regulatory decisions may require us to cancel, delay, or reduce planned investments or incur costs we cannot recover. Rates are subject to prudency reviews, refunds or disallowances and may not align with the timing of costs incurred. Adverse outcomes, including reductions in allowed rate of return, disallowance of costs or delays in rate adjustment, could adversely affect our financial position, results of operations and cash flows.

Customer affordability concerns, driven by volatility in energy supply costs, evolving public policy mandates and inflationary pressures, may limit our ability to recover costs or fund infrastructure upgrades. Regulators may respond by imposing stricter cost recovery standards, delaying or denying rate increases or cost recovery or requiring alternative funding mechanisms increasing financial uncertainty. Heightened political and public scrutiny of rate-setting processes may also lead to additional compliance obligations or reputational risk. These factors could adversely affect our financial position, results of operations and cash flows.

State-Level Risks

State commissions regulate rates, operations, accounting and certain financing activities. Rates are set in comprehensive base rate proceedings based on an analysis of invested capital, expenses and other factors, subject to periodic review and adjustments. Regulatory proceedings typically involve multiple parties who have differing concerns and can challenge our current or future rates, and these proceedings can be contentious, lengthy, and subject to appeal. This may lead to uncertainty as to the ultimate result of those proceedings.

Regulatory commissions may challenge the reasonableness or prudency of operating expenses (including storm restoration costs) incurred or capital investments made by our regulated operating companies and deny the full recovery of cost of service in rates. Established rates are subject to subsequent prudency reviews by state regulators, whereby various portions of rates could be adjusted, subject to refund or disallowed, including cost recovery mechanisms. The ultimate outcome and timing of regulatory rate proceedings or challenges to certain provisions in our distribution tariffs could have a significant effect on our ability to recover costs timely, or at all, or earn an adequate return. We have incurred significant storm restoration costs that are not yet approved by the regulatory commissions, and though we believe those costs were prudently incurred, it is possible that some amount may be disallowed. Regulators may also impose penalties or reduce allowed returns, which would adversely affect our financial condition. Additionally, catastrophic events at other utilities could lead to new requirements that increase costs. We continue to monitor the evolving regulatory environment in Connecticut, including changes in the composition of PURA, which may affect our electric, natural gas and water businesses in that state. Adverse decisions in our proceedings could adversely affect our credit ratings, financial position, results of operations, and cash flows.

Regulatory approval is also required for certain dispositions of property and plant, mergers and consolidations and issuances of long-term securities, and construction and operation of facilities. Failure to obtain required approvals on a timely basis, or at all, could result in increased costs, the postponement or cancellation of planned transactions or projects, changes in financing strategies, and an adverse effect on our financial condition, results of operations, and ability to implement our business strategy.

Federal-Level Risks

The FERC has jurisdiction over our transmission cost recovery and our allowed ROEs on transmission investments. If FERC changes its methodology on developing ROEs or eliminates certain transmission incentives, it could negatively impact our financial position, results of operations and cash flows. From time to time, various matters are pending before FERC relating to transmission rates, incentives, interconnections and transmission planning. Depending on the outcome, any of these matters could materially impact our results of operations and financial

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condition. Additionally, outside parties have filed four complaints against transmission-owning electric companies within ISO-NE, alleging that our allowed ROEs are unjust and unreasonable. An adverse decision in any of these four complaints could adversely affect our financial position, results of operations and cash flows.

Further, FERC's policy has encouraged competition for transmission projects as it looks to expand the transmission system to accommodate state and federal policy as well as to enhance reliability and resilience for extreme weather events while lowering costs. Implementation of FERC's goals may expose us to competition for construction of transmission projects, which could result in being exposed to cost caps or a reduced ROE in order to win a project bid, additional regulatory considerations and potential delay with respect to future transmission projects, which may adversely affect our results of operations and lower rate base growth.

New processes and planning frameworks, including ISO-NE’s Longer-Term Transmission Planning (LTTP) competitive solicitation process and advisory role as asset condition reviewer, introduce uncertainty around project timing, scope and cost recovery. Competitive solicitations for certain transmission projects may require us to compete against non-incumbent developers, rather than relying on traditional cost-of-service recovery. Failure to secure projects through these processes could reduce transmission investment opportunities and associated incentives, adversely affecting our financial position, results of operations and cash flows.

Changes in tax laws, as well as the potential tax effects of business decisions or other actions by the federal government such as Presidential executive orders could negatively impact our business, financial position, results of operations and cash flows.

We are exposed to significant reputational risks, which make us vulnerable to increased regulatory oversight or other sanctions.

Our electric, natural gas and water utility subsidiaries serve large customer bases and are subject to adverse publicity regarding service safety, reliability and response times to outages, leaks or other interruptions, including those related to storms or climate change. Negative publicity can harm our reputation, influence legislative and regulatory bodies, and result in unfavorable outcomes, such as stricter operational standards, vegetation management requirements, fines, penalties or other sanctions.

We also depend on third-party suppliers for power and natural gas. Factors such as inflation, tariffs, geopolitical conflicts, rising energy demand, supply costs, and public policy charges contribute to high customer bills in New England. In extreme cases, ISO-NE may require load shed if regional power capacity is insufficient. High customer bills or failure to meet energy needs could reduce customer satisfaction adversely affecting our business, reputation, financial position, results of operations, and cash flows.

Addressing adverse publicity, regulatory actions or legal proceedings is costly and time-consuming and can negatively impact employee morale and relationships with regulators, customers and counterparties. Future legislative or regulatory changes are unpredictable, and we cannot ensure we are able to respond adequately. The direct and indirect effects of negative publicity may materially affect our financial position, results of operations, and cash flows.

Costs of compliance with environmental laws and regulations, including those related to climate change, may increase and have an adverse effect on our business and results of operations.

The costs of compliance with existing legal requirements may increase in the future. Although we have recorded liabilities for known environmental obligations, these costs can be difficult to estimate due to uncertainties such as the extent of contamination, remediation alternatives, the remediation levels required by state and federal agencies, change in environmental regulations, and the financial ability of other potentially responsible parties. An increase in such costs, unless promptly recovered, could have an adverse impact on our business and our financial position, results of operations and cash flows.

Our subsidiaries’ operations are also subject to extensive and increasing federal, state and local environmental statutes, rules and regulations that govern, among other things, water quality (including treatment of PFAS (Per- and Polyfluoroalkyl Substances) and lead), water discharges, the management of hazardous material and solid waste, and air emissions including greenhouse gases. Compliance with these requirements requires us to incur significant costs relating to environmental permitting, monitoring, maintenance and upgrading of facilities, remediation, and reporting. For our water business, compliance with water quality regulations, including those for PFAS and lead, could require the construction of facilities and replacement of customer lead service lines, respectively.

In each of the states that we operate, there are requirements for purchases of renewable energy credits from the generation of renewable energy. As the requirement for credits increases and outpace the renewable energy coming online, we may be required to pay higher prices and make alternative compliance payments to the states. Unless renewable energy availability is increased to meet these credit requirements, we will face the risk of increasing costs.

For further information, see Item 1, Business – Other Regulatory and Environmental Matters, included in this Annual Report on Form 10-K.

Offshore Wind Contingent Liability and Tax Risk:

Variability in the costs and final investment returns of the Revolution Wind and South Fork Wind offshore wind projects no longer owned by Eversource and the inability to monetize investment tax credits could have an adverse impact on our financial position, results of operations, and cash flows.

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Following the sale of our 50 percent ownership share in the South Fork Wind and Revolution Wind projects, we have continuing financial exposure as it relates to the purchase price post-closing adjustment payments under the terms of the sale agreement with Global Infrastructure Partners (GIP) for these projects. Our future obligations under the sale terms primarily include a capital expenditure overrun sharing obligation, an obligation to maintain GIP’s internal rate of return through the construction period for each project, and obligation for other future costs prior to commercial operation. Post-closing purchase price adjustment payments are owed following the commercial operation of Revolution Wind. Factors that could increase the post-closing adjustment payments owed to GIP include the ultimate cost of construction and timing and extent of cost overruns for Revolution Wind, delays in construction such as from federal governmental stop work orders, damage to equipment, and weather conditions, which would also impact the economics associated with the purchase price adjustment, and Revolution Wind’s eligibility for federal investment tax credits (ITCs) at a value lower than assumed and included in the purchase price. New information that becomes available or future developments that arise as the construction of Revolution Wind progresses could result in increased costs of the project that would ultimately be owed to GIP. Adverse changes in facts and circumstances, regulations or Presidential executive orders could increase the obligation under the sale agreement above the amount accrued and result in additional losses, which could have a material adverse effect on our financial position, results of operations, and cash flows.

The purchase price included the sales value related to a 40 percent level of federal ITCs, 10 percent of which is the energy community ITC adder included in the Inflation Reduction Act related to Revolution Wind. If the project does not meet the qualifications under federal tax law for the full value of the ITC or there are changes to tax law, it could have a material adverse effect on our financial position, results of operations, and cash flows.

Additionally, we hold a tax equity investment in South Fork Wind that is expected to result in cash flow benefits from ITCs at a 30 percent level. The tax treatment of the ITCs could be challenged and is subject to audit by the IRS. If the project does not meet the qualifications under federal tax law, we may be unable to monetize the ITCs that support this investment, which could have a material adverse effect on our financial position, results of operations, and cash flows.

Risks Related to the Environment and Catastrophic Events:

The effects of climate change, including severe storms, could cause significant damage to any of our facilities or assets requiring extensive expenditures, the recovery for which is subject to approval by regulators.

Climate change creates physical and financial risks to our operations. Physical risks from climate change may include an increase in sea levels and changes in weather conditions, such as changes in precipitation, extreme heat and weather events, including the effects of significantly stronger wind-related events. To the extent weather conditions are affected by climate change, customers’ energy and water usage could increase or decrease depending on the duration and magnitude of the changes.

Severe weather induced by climate change, such as extreme and frequent ice and snowstorms, tornadoes, micro-bursts, hurricanes, floods, droughts, wildfires, landslides, excess humidity and other natural or weather-related phenomenon, may cause outages and property damage, which may require us to incur additional costs that may not be recoverable from customers. The cost of repairing damages to our operating subsidiaries' facilities and the potential disruption of their operations due to the increase in frequency and severity of storms, natural disasters or other catastrophic events could be substantial, particularly as regulators and customers demand better and quicker response times to outages. If, upon review, any of our state regulatory authorities finds that our actions were imprudent, some of those restoration costs may not be recoverable from customers and could result in penalties or fines. The inability to recover a significant amount of such costs could have an adverse effect on our financial position, results of operations and cash flows. We maintain property insurance, but it may be insufficient in limits and coverage exclusions to cover all losses. Additionally, these types of weather events risk interruption of the supply chain and could disrupt the delivery of goods and services required for our operations.

Transitional impacts related to climate change may have an adverse effect on our business and results of operations due to costs associated with new technologies, evolving customer expectations and changing workforce needs.

Initiatives to mitigate the impacts of climate change, support a transition to cleaner energy, and reduce emissions, may have a material adverse financial impact on our business. These impacts include the costs associated with the development and implementation of new technologies to maintain system reliability and resiliency and lower emissions, including grid modernization and energy storage. An increase in such costs, unless promptly recovered, could have an adverse impact on our financial position, results of operations, and cash flows. There may also be financial and reputational risks if we fail to meet evolving customer expectations, including enabling the integration of residential renewables and providing low carbon solutions, such as electric vehicle infrastructure and energy efficiency services. Additionally, actions to mitigate climate change may result in a transition in our workforce that must adapt to meet the need for new job skills. Associated costs include training programs for existing employees and workforce development as we transition to new technologies and clean energy solutions. Further, the view of natural gas as an attractive fuel source for heating and power generation may be at risk. Certain environmental activist groups, investors and governmental entities continue to oppose natural gas delivery and infrastructure investments because of perceived environmental impacts associated with the natural gas supply chain and end use.

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Adequacy of water supplies and contamination of our water supplies, the failure of dams on reservoirs providing water to our customers, or requirements to repair, upgrade or dismantle any of these dams, may disrupt our ability to distribute water to our customers and result in substantial additional costs, which could adversely affect our financial position, results of operations, and cash flows.

Our water business faces an inherent strategic risk related to adequacy of supply (i.e., water scarcity). We expect that climate change will cause both an increase in demand due to increasing temperatures and a potential for a decrease in available supply due to shifting rainfall and recharge patterns. Regulatory constraints also present challenges to permit new sources of supply in the region. In Connecticut, where most of our dams are located, impounded waterways are required to release minimum downstream flow. New regulations are being phased into effect over the next one to five years that will increase the volume of downstream releases required across our Connecticut service territory, depleting the volume of supply in storage that is used to meet customer demands. This combination of factors may cause an increased likelihood of drought emergencies and water use restrictions that could adversely affect our ability to provide water to our customers, and reputational/brand damage that could negatively impact our water business.

Our water supplies, including water provided to our customers, are also subject to possible contamination from naturally occurring compounds and elements or non-organic substances, including PFAS. Although we believe our water supply facilities, dams, reservoirs, and groundwater sources are structurally sound and well-maintained, significant damage to these facilities, or a significant decrease in the water supplies (reservoirs and groundwater), could adversely affect our ability to provide water to our customers until the facilities and enough water can be restored. A failure of a dam could result in personal injuries and downstream property damage for which we may be liable. The failure of a dam would also adversely affect our ability to supply water in sufficient quantities for our customers. Any losses or liabilities incurred due to a failure of one of our dams may not be recoverable in rates and may have a material adverse effect on our financial position, results of operations, and cash flows. We maintain liability insurance, but it may be insufficient in limits and coverage exclusions to cover all losses.

Physical attacks, including acts of war or terrorism, both threatened and actual, could adversely affect our ability to operate our systems and could adversely affect our financial results and liquidity.

Physical attacks, including acts of war or terrorism, both threatened and actual, that damage our transmission and distribution systems or other assets could negatively impact our ability to transmit or distribute energy, water, natural gas, or operate our systems efficiently or at all. Because our electric transmission systems are part of an interconnected regional grid, we face the risk of widespread blackouts due to grid disturbances or disruptions on a neighboring interconnected system. Similarly, our natural gas distribution system is connected to transmission pipelines not owned by Eversource. If there was an attack on the transmission pipelines, it could impact our ability to deliver natural gas. If our assets were physically damaged and were not recovered in a timely manner, it could result in a loss of service to customers, a significant decrease in revenues, significant expense to repair system damage, costs associated with governmental actions in response to such attacks and liability claims, all of which could have a material adverse impact on our financial position, results of operations and cash flows. We maintain property and liability insurance, but it may be insufficient in limits and coverage exclusions to cover all losses. In addition, physical attacks against third-party providers could have a similar effect on the operation of our systems.

Business and Operational Risks:

Strategic development or investment opportunities in electric transmission, distributed generation, or clean-energy technologies may not be successful, which could have a material adverse effect on our business prospects.

We are pursuing investment opportunities in electric transmission facilities, distributed generation and other clean-energy infrastructure, including interconnection facilities. The development of these projects involves numerous significant risks including federal, state and local permitting and regulatory approval processes, scheduling or permitting delays, increased costs, tax strategies and changes to federal tax laws, new legislation impacting the industry, including clean energy programs, economic events or factors, environmental, community, and customer affordability concerns, design and siting issues and difficulties in obtaining required rights of way. Also, supply constraints in New England have led to significant increases in commodity costs which may impact our ability to accomplish our strategic objectives. Further, regional clean energy goals may not be achieved if local, state and federal policy is not aligned with integrated planning of our infrastructure investments or if goals result in a significant increase to customer rates.

Our transmission and distribution systems may not operate as expected, and could require unplanned expenditures, which could adversely affect our financial position, results of operations, and cash flows.

Our ability to safely and properly operate our transmission and distribution systems is critical to the financial performance of our business. Our transmission and distribution businesses face several operational risks, including the breakdown, failure of, or damage to operating equipment, information technology systems, or processes, especially due to age; labor disputes; disruptions in the delivery of electricity, natural gas and water; increased capital expenditure requirements, including those due to environmental regulation; catastrophic events resulting from equipment failures such as wildfires and explosions, or external events such as a solar event, an electromagnetic event, or other similar occurrences; increasingly severe weather conditions due to climate change beyond equipment and plant design capacity; human error; global supply chain disruptions; and potential claims for property damage or personal injuries beyond the scope of our insurance coverage. If the in-service date for one or more of our transmission projects is delayed due to economic events or factors, or regulatory or other delays, including permitting and siting, the risk of failures in the electric transmission system may increase. We also implement new information technology systems from time to time, which may disrupt operations. Any failure of our transmission and distribution systems to operate as planned may result in increased capital costs, reduced earnings or unplanned increases in operations and maintenance costs. The inability to recover a significant amount of such costs could have an adverse effect on our financial position, results of operations, and cash flows.

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New technology and alternative energy sources could adversely affect our operations and financial results.

Advances in technology that reduce the costs of alternative methods of producing electric energy to a level that is competitive with that of current electric production methods, could result in loss of market share and customers and may require us to make significant expenditures to remain competitive. These changes in technology, including micro-grids and advances in energy or battery storage, could also alter the channels through which electric customers buy or utilize energy, which could reduce our revenues or increase our expenses. Economic downturns or periods of high energy supply costs typically can lead to the development of legislative and regulatory policy designed to promote reductions in energy consumption and increased energy efficiency and self-generation by customers. Additionally, in response to risks posed by climate change, we may need to make investments in our system including upgrades or retrofits to meet enhanced design criteria, which can incur additional costs over conventional solutions.

We rely on third-party suppliers for equipment, materials, and services and we outsource certain business functions to third-party suppliers and service providers, and substandard performance or inability to fulfill obligations by those third parties could harm our business, reputation and results of operations.

We outsource certain services to third parties in areas including information technology, transaction processing, human resources, payroll and payroll processing and certain operational areas. Outsourcing services to third parties could expose us to substandard quality of service delivery, which may result in missed deadlines or other timeliness issues, non-compliance (including with applicable legal requirements and industry standards) or reputational harm, which could negatively impact our results of operations. Our contractual arrangements with these contractors typically include performance standards, progress payments, insurance requirements and security for performance. The global supply chain of goods and services generally has stabilized; however, certain specialized equipment has long lead times and inflated prices, as well as competition from within and outside the utility industry. Additionally, rising geo-political tensions could negatively impact the global supply chain. If significant difficulties in the global supply chain cycle or inflationary impacts were to reemerge, they could adversely affect our results of operations, or adversely affect our ability to work with regulators, unions, customers or employees.

The loss of key personnel, the inability to hire and retain qualified employees, or the failure to maintain a positive relationship with our workforce could have an adverse effect on our business, financial position and results of operations.

Our operations depend on the continued efforts of our employees. We cannot guarantee that any member of our management or any key employee at the Eversource parent or subsidiary level will continue to serve in any capacity for any period. Our workforce in our subsidiaries includes many workers with highly specialized skills safely maintaining and servicing the electric, natural gas and water infrastructure that cannot be quickly replaced due to the technically complex work they perform. We have developed strategic workforce plans to identify key functions and proactively implement plans to ensure a ready and qualified workforce, but we cannot predict the impact of these plans on our ability to hire and retain key employees. Labor disputes, work stoppages or an inability to negotiate future collective bargaining agreements on commercially reasonable terms, as well as the increased competition for talent or the intentional misconduct of employees or contractors, may also have an adverse effect on our business, financial position and results of operations.

Financial, Economic, and Market Risks:

Limits on our access to, or increases in, the cost of capital may adversely impact our ability to execute our business plan.

We use short-term debt and long-term capital markets as a significant source of liquidity and funding for capital requirements not obtained from our operating cash flow. If access to these sources of liquidity becomes constrained, our ability to implement our business strategy could be adversely affected. Interest rate increases on future credit facilities and debt offerings could be higher than current levels, causing our financing costs to increase accordingly, which could adversely impact our financial position, results of operations and cash flows. Downgrades of our credit ratings or events beyond our control, such as a disruption in global capital and credit markets, could increase our cost of borrowing and cost of capital or restrict our ability to access the capital markets and negatively affect our ability to maintain and to expand our businesses.

Market performance or changes in assumptions may require us to make significant contributions to our pension and other postretirement benefit plans.

We provide a defined benefit pension plan and other postretirement benefits for a substantial number of employees, former employees and retirees. Our future pension obligations, costs and liabilities are highly dependent on a variety of factors, many of which are beyond our control. If our assumptions prove to be inaccurate, our future costs could increase significantly. In addition, various factors, including underperformance of plan investments and changes in law or regulation, could increase the required contribution amount to fund our pension plan in the future. Additional large funding requirements, when combined with the financing requirements of our construction program, could impact the timing, amounts, and number of future financings and negatively affect our financial position, results of operations and cash flows.

Goodwill and long-lived assets if impaired and written down, could adversely affect our future operating results and total capitalization.

We have a significant amount of goodwill on our consolidated balance sheet, which, as of December 31, 2025 totaled $4.23 billion. The carrying value of goodwill represents the fair value of an acquired business in excess of the fair value of identifiable assets and liabilities as of the acquisition date. We test our goodwill balances for impairment on an annual basis or whenever events occur, or circumstances change that would indicate a potential for impairment. A determination that goodwill is deemed to be impaired would result in a non-cash charge that could materially adversely affect our financial position, results of operations, and total capitalization.

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We assess our long-lived assets for impairment whenever events or circumstances indicate that the carrying amount of the investment may not be recoverable. To the extent the value of the investment becomes impaired, the impairment charge could have a material adverse effect on our financial position and results of operations.

Our counterparties may not meet their obligations to us or may elect to exercise their termination rights, which could adversely affect our earnings.

We are exposed to the risk that counterparties to various arrangements that owe us money, have contracted to supply us with energy or other commodities or services, or that work with us as strategic partners including on significant capital projects, will not be able to perform their obligations, will terminate such arrangements or, with respect to our credit facilities, fail to honor their commitments. Should any of these counterparties fail to perform their obligations or terminate such arrangements, we might be forced to replace the underlying commitment at higher market prices and/or delay the completion of, or cancel, a capital project. Should any lenders under our credit facilities fail to perform, the level of borrowing capacity under those arrangements could decrease. In any such events, our financial position, results of operations or cash flows could be adversely affected.

As a holding company with no revenue-generating operations, Eversource parent's liquidity is dependent on dividends from its subsidiaries, its commercial paper program, and its ability to access the long-term debt and equity capital markets.

Eversource parent is a holding company and as such has no revenue-generating operations of its own. Its ability to meet its debt service obligations and to pay dividends on its common shares is largely dependent on the ability of its subsidiaries to pay dividends to, or repay borrowings from, Eversource parent, and/or Eversource parent's ability to access its commercial paper program or the long-term debt and equity capital markets. Prior to funding Eversource parent, the subsidiary companies have financial obligations that must be satisfied, including among others, their operating expenses, debt service, preferred dividends of certain subsidiaries, and obligations to trade creditors. Should the subsidiary companies not be able to pay dividends or repay funds due to Eversource parent or if Eversource parent cannot access its commercial paper programs or the long-term debt and equity capital markets, Eversource parent's ability to pay interest, dividends and its own debt obligations would be restricted.