Eversource Energy (ES) Q4 2018 Earnings Conference Call Transcript
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Eversource Energy (NYSE: ES)
Q4 2018 Earnings Conference Call
Feb. 21, 2019, 9:00 a.m. ET
Contents:
Prepared Remarks
Questions and Answers
Call Participants
Prepared Remarks:
Operator
Good morning and welcome to the Eversource Energy Fourth Quarter and Year End 2018 results. My name is Brandon and I'll be your operator for today. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session. (Operator Instructions). Please note this conference is being recorded. And I will now turn it over to Jeffrey Kotkin, you may begin sir.
Jeffrey Kotkin -- Vice President for Investor Relations.
Thank you, Brandon. Good morning and thank you for joining us. I'm Jeff Kotkin, Eversource Energy's Vice President for Investor Relations. During this call, we'll be referencing slides that we posted last night on our website. And as you can see on slide 1, 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 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 31, 2017, and on Form 10-Q for the three months ended September 30th, 2018.
Additionally, our explanation of how and why we use certain non-GAAP measures is contained within our news release and the slides we posted last night and in our most recent 10-K. As you can see on slide 2, speaking today will be Jim Judge, our Chairman, President and CEO; and Phil Lembo, our Executive Vice President and CFO. Also joining us today are Lee Olivier, our Executive Vice President for Enterprise Energy Strategy and Business Development; John Moreira, our Treasurer and Senior VP for Finance and Regulatory; and Jay Buth our VP and Controller.
Now I will turn to slide 4 and turn over the call to Jim.
James Judge -- Chairman, President and Chief Executive Officer
Thank you, Jeff, and thank you everyone for joining us this morning. I'm happy -- very pleased to discuss our successful performance in 2018 in the very strong future we see for Eversource. Our 8,000 talented and dedicated employees undertake their work every day to improve the experiences of our customers, support approximately 500 communities and execute the forward looking Clean Energy policies of our states. In doing so we have created a solid very long track record of delivering significant value to our shareholders and doing so in a way that effectively manages the risks of our business.
Our regulated business cannot be successful without (technical difficulty) with its regulators. We firmly believe that our success in achieving top-tier reliability and safety performance when combined with our success in reducing our O&M costs by more than 20% since 2012 enables us to create constructive regulatory frameworks that are fair to both customers and investors. As you can see on slide 4, we settled two major distribution rate cases in Connecticut in 2018, one for our Electric business and one for our Natural Gas business. The Connecticut Light & Power settlement was the first electric rate case settlement in Connecticut since 1986 and underscores the level of trust and transparency that we've developed with other parties.
Less than seven months after the 3-year CL&P settlement went into effect, we implemented a separate 3-year rate settlement for Yankee Gas. Both CL&P and Yankee Gas settlements provided us with forward-looking rate mechanisms that allow us to step up our investments in our infrastructure to better serve our customers without suffering the earnings consequences of rate lag. In 2018, we also moved ahead with some of our strategic initiatives to support (inaudible) focus on sustainability and greenhouse gas reduction.
In addition to the divestiture of our costly units, we successfully completed the build-out of 62 MW of solar in Massachusetts. The solar investment totals approximately $170 million. In addition, we also began implementing separate initiatives in Massachusetts to invest a total of $233 million in battery storage, electric vehicle infrastructure and other grid modernization projects. They all support Massachusetts state energy policy and by the middle of next year we do to file a new plan for the next 3-year cycle beginning with 2021.
Our progress in these areas is being recognized. Various ESG rating firms consistently rank Eversource to be at the very top of their rating scales, and we now have more than 130 separate socially responsible funds that have invested in our company. We also have achieved strong returns for our shareholders while managing our risk profile. Across the board our credit ratings remain very strong, among with the highest in the industry.
Turning to slide 5, you can see that our total return continues to outperform, both the utility index and the broad market on a short-term and long-term basis. While past performance is certainly no guarantee of future returns it can be a good indicator. If past performance does validate our contention that the company that excels at is service to customers can also excel in delivering value to shareholders.
Turning to slide 6, you can see that dividend growth remains a central feature of our total return profile. On February 6, our Board of Trustees approved the $0.12 annualized increase in our common dividend. The 6% increase is consistent with the midpoint of our 5% to 7% long-term growth rate and exceeds the average dividend growth in our industry. As you can see on slide 7, we continue to forecast growth of 5% to 7% long-term, a continuation of what we have delivered since our merger closed in 2012. Forecast that Phil will discuss with you shortly extends five years or through the year 2023, that's a two-year extension to our prior guidance that we went through to 2021. As you expect, we continue to plan even longer term for our growth. As you can see on slide 8, we made an announcement earlier this month that we believe will have a very positive impact on our results well through the next decade.
On February 8th we announced the purchase of a 50% share of some of the projects in offshore with energy leases that Orsted acquired when they bought Deepwater Wind late last year. Our latest transaction builds upon the partnership we first developed with Orsted in 2016, when we acquired a 50% interest in Bay State Wind. This month's announcement relates to leases for more than 250 square miles of ocean off the Massachusetts coast that are adjacent to the 300 square miles Bay State lease that we jointly own.
These lease areas are among the best sites for offshore wind in the entire United States and on a prime location to meet the growing appetite for offshore wind in New England and New York. Together, the Bay State Wind and Deepwater Wind sites could host at least 4,000 MW and we share the partnership 50-50 with Orsted, the world's largest most successful and most experienced developer of offshore wind. The Deepwater portfolio in which we now have 50% share includes contracts for about 830 MW of off-shore wind that will be sold to utilities in Connecticut, Rhode Island and New York.
The 830 MWs represent the largest concentration of offshore wind contracts currently awarded in North America. These projects still must go through deciding process and will have very limited impact on our earnings growth through to 2023. But beginning in 2024, we expect our investment to be a significant source of earnings for Eversource. And those 830 MW are likely just the beginning. Last week we've been into a New York off-shore RFP that is expected to be awarded this spring. And later this year we expect to bid into the second Massachusetts offshore wind RFP where the state seeks another 400 MW to 800 MW of clean generation.
All told, New England and New York have announced targets or adopted legislation that could result in the development of up 15,000 MW of off-shore wind by the year 2035. Phil will have more to say about the expected financial impact of this announcement. However, I want to underscore how pleased we are with this transaction. How pleased we are with our partner Orsted and the opportunity to bring a significant source of locally produced Clean Energy to our region.
A major factor in our decision to expand our relationship with Orsted is our partner's unequaled global experience and track record of delivering offshore wind projects on time and on budget. Orsted has more than a 25% worldwide market share much larger than it's nearest competitor. Of the seven projects Orsted recently completed, six were delivered below the budget that was set when a final investment decision was made. This factor combined with Orsted's record of completing projects on schedule has allowed the company to consistently deliver on its return expectations. Orsted also shares our philosophy of being a disciplined bidder who will not sacrifice returns to win business. So while we don't expect to win every offshore wind RFP, we fully expect that are successful bids will achieve a level of profitability commensurate with the project risk, I believe is the largest energy company and the largest developer of energy infrastructure in our region.
Collectively, New England has very ambitious greenhouse gas reduction targets seeking to reduce emissions by 80% by the year 2050. New York has established aggressively global targets as well. Offshore wind will be central to meeting this region's carbon reduction and renewable development goals. And through this partnership we're quite pleased to play a leading role in executing the region's energy policies. We're also pleased with the long-term earnings growth opportunities these investments will provide to our shareholders.
Now I'll turn the call over to Phil.
Philip Lembo -- Executive Vice President and Chief Financial Officer
Thank you, Jim. And today my part of the call will cover the 2018 results, an update on our key regulatory dockets, look at 2019 guidance, our new 5-year financial forecasts, and a discussion of our financing plans during that forecast period. As Jim said we had a strong 2018 from both an earnings and operational perspective. Beginning with slide 10, we earned $3.25 per share for the full year compared with $3.11 in 2017. A year ago we had projected earnings of between $3.20 per share and $3.30. So we're right inline with that projection. Our electric distribution segment earned $1.44 per share in 2018 compared with earnings of $1.57 in 2017. The decrease was primarily due to lower generation earnings as a result of the divestiture of our New Hampshire generating unit assets also offsetting the higher revenues or increases in depreciation, interest and property tax expense.
Our electric transmission segment earned $1.34 per share in 2018, compared with $1.23 in 2017, improved results primarily reflect our increased investment in that business. Our Natural Gas distribution business earned $0.29 per share in 2018 compared with $0.23 in 2017. The increase was primarily due to higher revenues at our Yankee Gas Connecticut property, which were not decoupled until late in the year, as well as the outcome of our Yankee Gas rate review in the increased revenues related to our capital investment tracker mechanism. On the water distribution segment, we earned $0.10 per share in 2018 and we acquired Aquarion in December, so no 2017 results to report there. Eversource parent and other earned $0.08 per share in 2018, including two non-recurring items that we discussed in the third quarter. The $0.08 per share write-off of our investment in Access Northeast and a $0.06 gain from various tax reform items. I know that the number of analysts may or may not have adjusted their estimates accordingly for these events.
Fourth quarter 2018 earnings totaled $0.73 per share compared with $0.75 in the fourth quarter of 2017. Transmission earnings were down to penny compared with the fourth quarter of 2017, primarily due to a higher effective tax rate in that business in 2018, which cost us about $0.03 per share.
Electric distribution was up by $0.09 per share in the fourth quarter, due in part to the essence of the generation earnings due to the divestiture, as well as higher depreciation interest in storm damage restoration costs. Conversely, our natural gas distribution segment earnings were up by $0.06 per share in the quarter benefiting from capital tracker mechanisms, colder weather and some increased revenue coming from the Yankee Gas rate decision. We also had a penny per share in the fourth quarter of 2018 from our water business.
Slide 11 summarizes the constructive resolution of our three distribution rate reviews in 2018 for Connecticut Light & Power, Yankee Gas and Aquarion in Massachusetts. We expect far less state rate activity in 2019. Though for the first time in nearly a decade we expect to file a general rate review in New Hampshire. Other service in New Hampshire is under earning on its allowed ROE of 9.67%, despite significant cost management success across that business since 2012.
In New Hampshire rate reviews take about a year to complete, but utilities have the opportunity to request interim rate increases, subject to refund if they expect to under earn their previously authorized ROEs while the rate review is pending. As a result, we are planning to file for interim rate release in New Hampshire in April and full rate review in May of this year.
Next to cover is FERC. This past fall, I'm sure you know FERC issued a proposed new methodology for determining whether it should initiate new proceedings concerning transmission ROEs, and if so what methodology should be used to decide on that. As you can see on slide 12, there are still four complaints pending against the ROEs earned by the New England electric transmission owners of which we have a (inaudible).
Initial briefs on the FERC methodology were filed in January with (inaudible) due in a couple of weeks. We're hopeful that in 2019 this long running dispute will be resolved by FERC and that FERC toward as a standard that in the future we'll make this type of serial complaints we've had New England highly unlikely. In 2018, I'd like to turn to slide 13 and discuss our 2019 guidance. We expect to earn between $3.40 and $3.50 per share in 2019. As you can see on the slide, we expect to benefit from our multi-year rate review outcomes in 2018 from our Massachusetts Electric jurisdictions and our Connecticut electric and natural gas utilities.
NSTAR Electric implemented roughly $32 million increase in base distribution rates on January 1st of 2019 as part of its five year performance-based rate plan approved by the Massachusetts DPU in November of '17. This increase will help fund reliability enhancement and customer service initiatives. At CL&P, base distribution rates will rise by an incremental $31.1 million on May 1st of 2019.
Here again this increase provides us timely recovery for us system improvements. Yankee Gas implemented a $1.4 million rate increase on November 15, 2018. The increase was the first of three approved in a multi-year agreement with Connecticut PURA with the second increase effective beginning in 2020. Yankee Gas also received approval for a tracking mechanism for cast iron and unprotected steel pipe replacement.
Finally, Aquarion in Massachusetts implemented a $2 million rate increase just before the end of last year. In the transmission business, we expect to benefit from our continued investment in our FERC regulated facilities. We invested just shy of $1 billion in the transmission facilities at CL&P and NSTAR Electric and Public Service in New Hampshire in the year 2018. And transmission investments in '19 are expected to be at similar level at 990 million as we complete some of our major transmission projects in Connecticut, New Hampshire and continue to address our overhead and underground maintenance activities.
In terms of O&M, although overall O&M is expected to increase in 2019 as areas of spending where we have regulatory commitment and recoveries in place. The O&M that affects earnings is expected to decline by about 1% to 2% in 2019. Our growth will also be as a result of distribution capital tracking mechanisms in the areas such as replacement of older cast iron and unprotected steel pipes and our natural gas business and older water mains at Aquarion.
Somewhat offsetting the additional revenues associated with these investments are higher depreciation, interest expense and property taxes. So turning from the recent investments to future capital expenditures, I'll move on to slide 14. Overall we expect to invest nearly $13 billion in our core electric, natural gas and water delivery systems from 2019 through 2023. We expect to invest nearly $8 billion over the next three years. So, $8 billion out of $13 billion over the next three years. This represents a significant increase from the $6.5 billion forecast we provided to you last year from our core business for those same years. As a contributor to continuing our outstanding service reliability to our customers into the expansion of our 5% to 7% growth rate through 2023. As you can see on slide 15, every segment of the business is forecasting higher expenditures with the electric transmission and distribution business showing the greatest growth.
As shown on slide 16, we expect these increases to move our regulated rate base from $16.6 billion at the end of 2017 to $24.5 billion by the end of 2023. That's a 6.7% compound annual growth rate that is expected to maintain our safe, secure and reliable delivery systems and drive our 5% to 7% EPS growth over that period. This is the basis of why we believe we can grow earnings around the midpoint of our range on average over the next five years, confident in that ability.
On the transmission side, the increased investment aligns with our asset management oversight process and anticipates completion of our larger projects in Greater Boston, our New Hampshire, Seacoast, and our Greater Hartford suite of projects. It also includes significant regional projects such as substation investments in Greenwich, Connecticut and in Cambridge, Massachusetts, as well as a number of smaller projects to improve the resilience and security of the transmission system. These include replacing overhead structures an upgrading some of our underground infrastructure due to age and asset conditions.
Turning to slide 17, you see that many of the larger projects we've spoken about to you over recent years are moving ahead toward final completion. The Greater Hartford Central Connecticut reliability family of projects should be complete by the end of this year. We received a written order on January 31st of this year from the New Hampshire Site Evaluation Committee approving a Seacoast reliability project and that is expected to be complete by the end of this year. The Greater Boston Reliability Project continues to progress, this is a joint solution with National Grid. We're responsible for 28 of these projects of which 25 should be complete by the end of this year.
In the electric distribution segment we forecast capital expenditures of nearly $3.5 billion from 2019 through 2021, compared with last February's forecast of $2.9 million for the same year. We also expect to invest another $2.25 billion over the course of the years 2022 and 2023 in electric distribution. There are a number of factors driving the increase as we discussed previously, we've identified many additional automation and storm hardening opportunities, following a rash of nor'easters and tornadoes that struck our overhead electric system last March and May. We also are seeing faster customer growth in certain areas of Greater Boston including the (inaudible) area and cities of Summerville and Cambridge, we'll be making incremental substation investments. These investments are being made to meet the growing demands of customers in these areas.
In the natural gas business, we now forecast $2.33 billion of capital expenditures over the next five years with about $1.4 billion occurring in the next three. These expenditures include an acceleration of pipe replacement in both Connecticut and Massachusetts. In the recent Yankee Gas rate case the Connecticut PURA shorten the period for replacing the older cast iron and unprotected natural gas distribution pipes from 13 years to 11 years. Our new forecast also reflects a more rapid replacement of cast iron and unprotected steel pipe in our larger Massachusetts system. We're also making additional plant and system investments in our Hopkinton LNG facility that we're doing in parallel with our current liquifier and major systems upgrade.
On slide 18, you can see our forecasted pipe replacement capital budget for the next five years. You may recall that as a result of the Yankee Gas rate settlement we now have fully reconciling pipe replacement and tracking mechanisms in place in both states. In addition to pipe replacement we continue to see some growth from new construction, new customers, additional fuel cell application and the installation of new combined heat and power systems in customer facilities fueled by natural gas.
This growth requires additional investments in our natural gas infrastructure, which drives the distribution rate base growth by an annual average of more than 12% through 2023, far fast than any of our other regulated segments. Rate base is expected to receive $3.5 billion here by the end of 2023.
Turning to slide 19, in our water segment, we invested about $102 million in Aquarion systems in 2018, about 50% more than Aquarion's prior role as we're investing each year. We expect to invest nearly $625 million in Aquarion systems over the next five years or about $125 million per year. As you can see on the slide we're projecting rate base reaching approximately $1.2 billion by the end of 2023.
Turning to slide 20, you can see about a third of that investment is designed to improve Aquarion's ability to meet the water supply needs of southwestern Fairfield County in Connecticut. We now have reconciling mechanisms to recover pipe replacement investments in each state Aquarion serves.
In addition to growing Aquarion through investments in our existing service territory, we continue to seek out opportunities to acquire smaller and existing systems, particularly in Connecticut. About three weeks ago state regulators approved Aquarion's purchase of assets of two smaller water companies in South East Connecticut for the small acquisitions and not before regulators for approval. I mentioned the number of items that are included in our five-year nearly $13 billion capital forecast. On slide 21, we list some potentially significant items that are not in our core business CapEx forecast and may come to fruition during the forecast period. In the CapEx forecast we've been conservative I'd say in terms of what may come out of the grid modernization dockets in the states we serve. In Connecticut we wait the release of Connecticut PURA report on a year-long review of distribution companies long range planning which there was considerable discussion about Advanced Metering Infrastructure or AMI, also discussion of energy storage, increased real time monitoring of lines and substation conditions and other topics. Because the review has extended longer than we had anticipated, we opted not to include any AMI or basic incremental grid modernization spending at CL&P in this forecast. We also did not include any basic grid mod in New Hampshire in this forecast, but expect to make some proposals in New Hampshire's upcoming general rate review or in separate filing following the New Hampshire PUC's issuance of a final decision in their ongoing grid modernization proceedings. In Massachusetts, you can see on slide 22, we are currently implementing $233 million of the approved investment in core grid modernization, storage and electric vehicle infrastructure.
Beyond these programs the DPU has at the utility, the state's electric utilities to propose next year a new three-year grid modernization program for the period of 2021 through 2023. Our forecast includes spending on incremental core grid mod programs through to 2023. Like Connecticut we expect Massachusetts to also consider the rollout of Advanced Metering Infrastructure or AMI, but we've not reflected any rollout of AMI in this forecast. Separately, we've not included any investments in Northern Pass in this forecast.
In terms of O&M, we expect O&M to remain relatively flat during the during years two through five of our five-year forecast after the decline of 1% to 2% for '19 that I mentioned earlier.
Turning to our financing plan, as illustrated at the end of the appendix, we have modest level of maturities that will need to be financed this year and next year. However, we do have a significant core business capital program that I described earlier. In addition, we have approximately $100 million of excess deferred income taxes that will be refunded to customers over the next few decades and the cash flow benefits of bonus depreciation as everybody knows has ended.
These factors are positive for customers and positive for long-term growth. Over the past four years we've invested nearly $10 billion in our infrastructure to maintain great performance for our customers. Annual capital expenditures grew from about $1.9 billion in 2015 to more than $2.8 billion in 2018, which contributed to our top quartile reliability and service response for customers.
We also entered the water business by acquiring New England's largest investor-owned water company back in December of 2017. We continue to evolve our business to meet the growing needs of our customers, as well as the clean energy mandates of our region. In order to finance this growth this five-year forecast period does include issuance of both new debt and equity to finance investment in a balanced way as you can see on slide 23.
We expect to issue approximately $2 billion of new equity over the next five years. This equity will help fund nearly $13 billion of core business and capital investments we expect to make through 2023 and also our 50% of the capital requirements associated with the construction of the offshore wind facilities for which we and Orsted have secured PPAs that Jim talked about earlier.
We'll also use treasury shares that satisfy our dividend reinvestment program needs. Our expectation to grow earnings per share around the midpoint of the 5% to 7% range through 2023 anticipates the issuance of this equity over the five years. I repeat that. We expect to grow earnings per share around the middle of our 5% to 7% growth rate through to 2023 even while issuing approximately $2 billion of equity through new common share issuance and with the Eversource shares coming out of the treasury for our dividend and reinvestment program.
We'll be opportunistic about the equity issuance as will time them accordingly over the next several year. The PPAs we have for offshore wind did not produce revenues or earnings until the turbines begin producing energy, construction cost including interest on debt will be capitalized into the cost of the projects, but there will be no earnings on the equity investment until the turbines are operating. By 2024 we expect all 830 megawatts of off-shore wind to be fully operational, being additive to our earnings growth trajectory in a meaningful way going forward. Cash flow is also expected to rise significantly once the offshore wind turbine are fully operational. On the fixed income side, we continue to carry very strong credit ratings for all agencies. We've always maintained a balanced approach here, achieving above average strong earnings and dividend growth and also strong credit ratings.
We prided ourselves on delivering strong financial performance and strong financial condition, display and accomplishes both in a balanced way, delivering 5% to 7% EPS growth in maintaining the strong financial condition and metrics that we currently have.
To summarize, on slide 24 as Jim said earlier, 2018 was a very strong year for us. Our reliability and safety metrics remains in the upper tier of the industry. Our customer service metrics continue to improve and we are introducing innovative technology to improve the customer experience in many ways including more mobile access. We continue to play a vital role in implementing our state's clean energy initiatives. We continue to provide our investors with strong earnings and dividend growth and have to provide an attractive future growth opportunity. Going forward, our core business continues to be the engine for our 5% to 7% EPS growth outlook for 2023. Our underlying rate base growth is 6.7% and we continue with our strong focus on our O&M costs. And we see off-shore wind as being additive to our earnings growth in a meaningful way beyond 2023.
Look forward to seeing many of you at the equity and fixed income conferences coming up in Boston and New York over the next weeks, and I'll turn the call back to Jeff for Q&A.
Jeffrey Kotkin -- Vice President for Investor Relations.
Thank you, Phil. And I'm going to return the call to Brandon to remind you how to enter your question.
Questions and Answers:
Operator
Thanks, Jeff. We will now begin the question-and-answer session. (Operator Instructions).
Jeffrey Kotkin -- Vice President for Investor Relations.
Thank you, Brandon. First question this morning is from Mike Weinstein from Credit Suisse. Good morning, Mike.
Michael Weinstein -- Credit Suisse Securities -- Analyst
Good morning, guys. Thanks for the big update. Question on the equity coming out. Can you give us, I mean I know that you said it's going to be opportunistic, but can you give us a sense of whether some of it is back end loaded for the wind part? I think you said that you wouldn't be investing in the wind projects until they online, right, so that would be pretty far out. I mean that -- I think the Orsted deal was only $225 million so that wouldn't be that much of the 2 billion equity to account for that. Maybe you can give us a sense of what that equity is for, like why do you need equity now. I understand that with bonus depreciation ruling off you're a cash taxpayer at some point in this plan. So that would be a contributor. Can you just tell us what's driving the 2 billion of equity and when you'll need most of it, is it back-end loaded or front-end loaded?
Philip Lembo -- Executive Vice President and Chief Financial Officer
So Mike, let me just add to something that you mentioned or clarify a few things. The capital program of $13 billion and the construction of 830 MW is included over the next five years, not just that initial payment that you referenced to from partnership in Orsted. So it's the construction of the 830 MW worth of turbines and our CapEx program. So, as I said, we'll be opportunistic and assess what our needs are over that time period. No rush to need to do anything, but we'll take our time to look at what our construction program looks like over that time period and make some determination over the course of that period. So, I wouldn't say that any of it is front-end or back-end loaded, I just say we'd be opportunistic of how we're going to approach it going forward.
Michael Weinstein -- Credit Suisse Securities -- Analyst
How much of it is driven by the fact that you are becoming a cash taxpayer again? Does it mean -- just a few years ago we were talking about the possibility of stock buybacks, right, so this is the flip of that. I'm just wondering what's the driver of the $2 billion?
Philip Lembo -- Executive Vice President and Chief Financial Officer
We've been a tax cash payer, actually we're tax cash payer this year and we expect to be a tax cash payer next year. We had about $160 million of cash taxes in '18 and will probably be in the $130 million to $150 million range in 2019 in terms of cash payment. And just to clarify in terms of, you know, we have not really discussed share buyback. We got question a lot but I've always and we've always said that our focus is on investing in the infrastructure of business and we didn't see that we would be in that mode of buying shares back and we would be continuing to invest in the business, and as I said we've had a significant capital program over many years and the next five years is even larger as I described going forward.
James Judge -- Chairman, President and Chief Executive Officer
Mike, this is Jim. Just to add to a point that Phil made earlier in his comments. I think it's important to recognize that we're guiding toward 6%, the midpoint of the range through 2023 and in the process we're not only funding the core business CapEx, but we're funding the build out of the offshore wind as well with virtually no earnings contribution from that business until 2024, when revolution wind comes online. So we're basically guidance of 6% even with the drag associated with the offshore wind investment.
Michael Weinstein -- Credit Suisse Securities -- Analyst
Got you. And then offshore wind investment is just the Orsted for now, just 50% investment for now, right?
James Judge -- Chairman, President and Chief Executive Officer
That is our partnership with Orsted, 50% of the investment.
Michael Weinstein -- Credit Suisse Securities -- Analyst
Okay, great. Thank you.
Jeffrey Kotkin -- Vice President for Investor Relations.
Thanks, Mike. Next question. Pardon me -- its from Insoo Kim from Goldman. Good morning, Insoo.
Insoo Kim -- Goldman Sach -- Analyst
Good morning. Maybe to ask the timing of the equity in a different way. So, I think you have mentioned in the past that you wanted to keep the current Moody's credit rating intact. Do you have any sense of -- does that imply target FFO to debt of let's say 14% to 15%? And if so what time period do you look to I guess achieve or at least maintain that level?
Philip Lembo -- Executive Vice President and Chief Financial Officer
Well, certainly we like where our Moody's credit rating is and you are right that we would target to maintain that credit rating. And you're also right that that would indicate FFO to debt at those levels which -- so that would imply we would be targeting that to maintain those ratings. So, there's really no change there. And I think that as we get into our -- kind of our spring forecast period with the rating agencies, we obviously have discussed any press release that comes out and we'll provide an updated forecast as we go forward.
Insoo Kim -- Goldman Sach -- Analyst
Understood. And then regarding the 5% to 7% EPS CAGR through this time period. Do you expect that to be a little bit lumpy given a lot of the regulator -- the bulk of -- the increase of the regulated investments during the next three years and then you have a lot of the wind construction financing without the earnings benefit coming in the latter half of that period. I'm just trying to gauge whether it's more of stable or whether we could expect some lumpiness?
Philip Lembo -- Executive Vice President and Chief Financial Officer
I'd say it's more stable. Yes, I mean certainly any particular quarter could have particular things in it but I'd say you should expect us to be in a stable growth environment.
Insoo Kim -- Goldman Sach -- Analyst
Understood. And just one more if I could. What's the total potential opportunities for AMI at least over this five-year period that could add to the rate base growth?
Philip Lembo -- Executive Vice President and Chief Financial Officer
Well, in our -- when you look at it I'll say first, nothing has been approved, right, so...
Insoo Kim -- Goldman Sach -- Analyst
Right.
Philip Lembo -- Executive Vice President and Chief Financial Officer
If you did a full rollout in Connecticut and Massachusetts, you might be at $1 billion for full rollout everywhere for AMI, to proceed with the program like that would be over multiple years to get that installed. So that's the sizing that we should be thinking about there.
Insoo Kim -- Goldman Sach -- Analyst
Got it. Thank you very much.
Jeffrey Kotkin -- Vice President for Investor Relations.
Great! Thanks, Insoo. Next question is from Julien Dumoulin-Smith from Bank of America. Good morning, Julien.
Julien Dumoulin-Smith -- Bank of America Merrill Lynch -- Analyst
Hey, good morning, team. Thank you. Perhaps just to kick off on the offshore side, if I can. Can you elaborate a little bit on how you think about the size of the equity check now. I know you've put down something of a down payment here with the 225. I know that you're targeting regulated like returns on this investment. But what is the equity check that you're going to need just to kind of back door, if you will, into the 2024-ish earnings profile that we're talking about here?
James Judge -- Chairman, President and Chief Executive Officer
Yes, actually, this is Jim. I don't know, you mentioned regulated returns. Orsted is identified high single-digit IRRs as an appropriate return target and importantly it's living on that. So that translates more to mid-teens ROE for us. We would expect the offshore wind to be our highest earning business segment.
Julien Dumoulin-Smith -- Bank of America Merrill Lynch -- Analyst
Okay, to run and reconcile with that, mid-teen returns on what kind of equity check and should we include the 225 that you've paid as part of that equity -- as part of the denominator and that ROE?
James Judge -- Chairman, President and Chief Executive Officer
Yes, I mean, certainly the 225 is part of the total cost of the project, there will be construction cost that go in there, but you can imagine that given the competitive nature of this business that discussing specific construction costs or other assumptions will be sort of I think letting a little bit too much out of the bag in terms of competitor. So I'd say we'll try to be transparent. I think you probably have an assessment of your own as to what a megawatt cost to build or something like that, but the 225 is part of just getting started and there will be construction cost that get added to that as we go forward.
Julien Dumoulin-Smith -- Bank of America Merrill Lynch -- Analyst
Sorry, maybe this might be a little more (inaudible) way to ask it. What about like an equity contribution like a percentage of the capitalization. I know you've ITCs in the capitalization, but we think 50-50, 30-70, kind of high conceptually?
James Judge -- Chairman, President and Chief Executive Officer
Julien, I'll try it another way. We're not going to sort of disclose the financing construct of our bids, but we are saying that the dramatic increase in our core business CapEx coupled with the cost estimates that we have to build out the offshore winds suggests that we want to go about a $2 billion equity issued through this five-year window to continue to maintain the track record that we have and that track record is one that's worth noting in terms of credibility and consistency. I mean if you look at the slide 5, we have had a remarkable run whether you look at 135, 10-year performance of outperforming the index and outperformed the S&P 500 and I go back -- if you looked at 20 years, I was CFO of NSTAR 20 years ago. I think the results -- the performance results are even more dramatic.
So there's consistency and I believe credibility given the track record. And while the financial performance has been top tier, for the majority of that window of time we're also in the top tier in terms of financial condition. So, we've put together a financing plan here that's going to allow us to again be a top tier financial performer, at the same time of having a top tier credit rating. So, the financings are fundable, right, in terms of -- we have cash needs whether its core business or whether its offshore winds, and what we've sized here I think is one that's going to allow us to continue a wonderful track record that we've had and we've got commitment and conviction to deliver on that 5% to 7% earnings growth and dividend growth that we've had going for so many years.
Julien Dumoulin-Smith -- Bank of America Merrill Lynch -- Analyst
If I can just jump in real quickly on the 5% to 7% obviously you're rebasing after 325, how are you thinking about sort of the shape of that to get to the midpoint. I mean you just raise CapEx, the same time raising equity, seems like its about a nickel decline versus the prior baseline for 2021, but I'm sort of curious, as you see this play out through 2023, are you still saying the midpoint of that 5% to 7% versus the prior baseline?
James Judge -- Chairman, President and Chief Executive Officer
Yes, we are, absolutely. And again just in terms of the (inaudible) planning comment, traditionally our track record has been that each year we would move into the new year and then add another year, and this year we're adding two more years into that. So it's very traditional as to how we've addressed giving you the long-term guidance, but certainly conviction in a stable way with being at the middle of that range is clearly what we're confident in delivering.
Julien Dumoulin-Smith -- Bank of America Merrill Lynch -- Analyst
All right, excellent. I'll leave it there. Thank you all very much.
Jeffrey Kotkin -- Vice President for Investor Relations.
Thank you, Julien. Our next question is from Stephen Byrd from Morgan Stanley. Good morning, Steven.
Stephen Byrd -- Morgan Stanley -- Analyst
Good morning. I wanted to talk about offshore wind as well and just conceptually with your partnership with Orsted, obviously Orsted is a very accomplished offshore wind developer. At a high level, how have you all determined the allocation of risk? Is it sort of essentially a true partnership where all rest are shared equally between the partners or is there a bit of a different delineation in terms of responsibility and risk between the two partners?
James Judge -- Chairman, President and Chief Executive Officer
It's a shared risk 50-50. We collaborate on where its been to the RFP, the basis for the returns that we expect from those bids. So it's a true 50-50 partnership from a risk perspective.
Stephen Byrd -- Morgan Stanley -- Analyst
Understood. And then when I think about the permitting process, I'm just not familiar with everything that would be involved or sort of other approval elements, I'm just thinking through permitting risk and other risks here, at a high level again don't need to go through every permit, but how do you think about execution risk for these projects. You obviously have PPAs in place, which is a huge element here. But how do we think about the potential risk of execution here?
James Judge -- Chairman, President and Chief Executive Officer
That's about 24 months permitting and siting calendar and site assessment work that has to go on and then the U.S. BOEM is a key agency and then you get state and local permitting as well. Construction then is another 24 months. So, right now where we are in the cycle is we expect Southfork site to be finished by the end of 2022 on that calendar and the revolution win which is the larger one, 700 megawatts of PPAs to be done by the end of 2023.
Stephen Byrd -- Morgan Stanley -- Analyst
Okay, understood. And then just one last question, just on Northern Pass, you highlighted on the slide, which is really helpful, all the permits and I guess the two next steps that I'm thinking about are the New Hampshire Supreme Court review and the Army Corps of Engineers process, would you mind just talking a little bit further about next steps there and sort of how we think about those -- those two pending processes?
Philip Lembo -- Executive Vice President and Chief Financial Officer
Sure. So the process has kicked off at the New Hampshire Supreme Court, they agreed to hear our case, received briefs on the case. So we expect that oral arguments would soon be determined in New Hampshire probably in the May timeframe, and then there really is no precise deadline or timeframe that's required for the court to decide, but we would expect some decision to be by the end of the year type of thing. So the Army Corps permit is really -- there's been a preliminary assessment of that and really at this stage once all of the other approvals in May, we don't see any issue in moving through that Army Corps permitting process.
Stephen Byrd -- Morgan Stanley -- Analyst
Great. That's all I had. Thank you.
Jeffrey Kotkin -- Vice President for Investor Relations.
Thanks, Stephen. Next question is from Praful Mehta of Citi. Good morning, Praful.
Praful Mehta -- Citigroup Global Markets, Inc. -- Analyst
Good morning, guys. How are you doing?
Philip Lembo -- Executive Vice President and Chief Financial Officer
Good, Praful. How are you?
Praful Mehta -- Citigroup Global Markets, Inc. -- Analyst
Great! Sorry, but I'm going to dig into a little bit of the off-shore wind again, and I think the question from my side is more conceptual as in you really on this call gone headlong into offshore wind, right, the focus on offshore wind has increased significantly, obviously the partnership with Orsted. And I think the skeptics -- still there are plenty of skeptics on offshore wind, more around the concerns on execution risk, clearly it's been done in Europe, but the risks around large projects, execution approvals still seems to be pretty high among investors in the U.S. How did you get comfortable with that risk, and do you believe that there would be -- that this would be executed on time, on budget, or do you see any big risks that you worry about?
James Judge -- Chairman, President and Chief Executive Officer
Yes, I think it's a good question. I do think it's important to note that while there's a lot of discussion on the off-shore wind, but particularly notable is that the dramatic increase in our core business CapEx, for the three years in particular its about 25% increase for the next three years and that's driving a lot of our growth prospects along with the rate platforms that we have in place. Orsted has a long track record in many countries of going through the sighting process of delivering on projects and actually coming in under budget and on schedule. I understand that it's a new process here in the U.S., the sense that we get is that the policymakers in particularly in the states in New England have a very strong appetite for more off-shore wind have been through some of the site assessment plan already in 2017 has been actually completed already. So, we're basically -- what we thought would be from a siting and permitting perspective. And I think there's a lot of excitement around the demand and the interest in offshore wind. We are making commitments in the various states in terms of economic development, et cetera. So I have reason to believe that the spending that we have in the plan of 2022-2023 is likely to take place as we go through the permitting process and begin construction.
Philip Lembo -- Executive Vice President and Chief Financial Officer
Just to add a couple of things to that another -- more information that you have and the more certainty you have going into the process certainly reduces the risk exposure and we've been at this for multiple years, three years basically to do site analysis to start the ball rolling in terms of permitting. So, the lack of surprises there is somebody who maybe has just been a winner of a lease who has bid but really hasn't been able to do multiple years of wind and sea bed assessments and those types of things. So, another comfort factor I'd add would be the amount of preliminary engineering and preliminary work that has identified and move forward on number of these items.
Praful Mehta -- Citigroup Global Markets, Inc. -- Analyst
Got you. That's super helpful color. And just in terms of returns, clearly the return sounds pretty good based on the current views and the forecast. Is there in your assessment given you've done so much analysis on it. Where are the big levers that could drive returns downwards or upwards? Is it just construction or there are other factors that we should be thinking about as well?
Philip Lembo -- Executive Vice President and Chief Financial Officer
Certainly, construction is a big element in terms of -- and as Jim mentioned our track record for our projects being completed on time and on schedule and force that track record for completing projects on time and on schedule are pretty high up on the list. So construction costs could be one of them.
James Judge -- Chairman, President and Chief Executive Officer
It could but we have a fair degree of confidence and did a lot of due diligence with our Board in terms of entering into this Deepwater transaction. I think what's important to recognize is that now with Orsted we have the one and two closest leases to the mainland that means that the construction costs, the water depth are appealing in terms of the build out. We were -- it's worth noting that the Orsted lease that we entered into in 2016 cost us of $600,000 and again the lease is very close to shore. Leases that are out another 20 to 25 miles in deepwater (inaudible) transmission cost just sold a couple of weeks ago for $135 million piece. So, I think that's a pretty good indication that there's a lot of value here, that is robust interest in offshore wind build out and we have some significant advantages in cost, in construction, because of the locations of our two appealing leases.
Praful Mehta -- Citigroup Global Markets, Inc. -- Analyst
Got you. That's super helpful again. Thanks so much guys.
Jeffrey Kotkin -- Vice President for Investor Relations.
Thank you, Praful. Our next question is from (inaudible) from Bank of America. Good morning, (inaudible).
Unidentified Participant -- -- Analyst
Hey, guys. Thanks for the taking my question. Just wanted to get a quick sense of new debt financing needs this year beyond the debt maturities.
Philip Lembo -- Executive Vice President and Chief Financial Officer
Typically, we don't give a precise schedule of our debt financing needs throughout the course of the year or the exact timing of it, but I do expect that for the maturities that we have -- we have $800 million of maturities that we would be financing, refinancing those and depending on levels of short-term debt we could be doing issuances that are incrementally higher than that. So, most of those would be at the various operating entities in who have needs because they have their own construction programs and they finance their construction with internal funds plus debt financing. So, 800 million is what the maturities are and I would expect we'll probably do something above that to keep our short-term debt levels down.
Unidentified Participant -- -- Analyst
Got it and then over the five year period, so you have (inaudible) of CapEx. You have this $2 billion of equity, $500 million combined of treasury shares. And then I mean cash from ops, you probably doing at least $2 billion a year. So if you had a diesel all up, you have very limited incremental debt issuance over the period. Is that the right way to think about this?
Philip Lembo -- Executive Vice President and Chief Financial Officer
Yeah. And then we have as we've mentioned a few times that we are additive to that $13 billion capital plan is the build out of the offshore wind that I didn't hear in that list of items.
Unidentified Participant -- -- Analyst
Got it, OK. Thank you.
Jeffrey Kotkin -- Vice President for Investor Relations.
Thank you (inaudible). Next question is from Angie Storozynski from before the Macquerie. Good morning, Angie.
Angie Storozynski -- Macquarie Capital -- Analyst
Good morning. No questions about offshore wind for a change. But a different angle. So, would you be interested in expanding your T&D business in New England if there were to be potential asset sales in New England?
James Judge -- Chairman, President and Chief Executive Officer
Hi Angie. This is Jim. We would be obviously interested at the right price in terms of expanding our T&D as our core business. We have a long track record of being a disciplined bidder when you look at the transactions that were done 20 years ago a company that formed NSTAR was done and is seen as hugely positive from a shareholder perspective over that 20 year period. Seven years ago now we did the deal with (inaudible) and NSTAR and so its now Eversource, again a deal that was widely recognized as being a big win for investors as well as customers.
And then we did lot of acquisition deal that we did last year which to reform with the limit on and was accretive to earnings in the first year as we had indicated in the earnings performance outperformed our budget, our expectations for that business. So whether it's T&D, water business, we think our core platform is a successful one and we would be interested in expanding, but there have been dozens and dozens of transactions in this region that have taken place that we didn't win, because again we were disciplined bidders. So it will all come down to the value that we could bring to the transaction and what the asking price would be for the acquisition.
Angie Storozynski -- Macquarie Capital -- Analyst
But none of this is envisioned or embedded in that $2 billion of equity issuances, right, this is just to finance your comments, CapEx plans and then you're not trying to show up the balance sheet to a potential M&A deal.
Philip Lembo -- Executive Vice President and Chief Financial Officer
No, it's strictly for, as I mentioned the capital plans we have and the investment activities that are in the five-year horizon.
Angie Storozynski -- Macquarie Capital -- Analyst
Great. That's all I have. Thank you.
Jeffrey Kotkin -- Vice President for Investor Relations.
Thanks, Angie. Next question is from Andrew Weisel from Scotia Howard Weil. Good morning. Adrew.
Andrew Weisel -- Scotia Capital -- Analyst
Hey, good morning everyone. That was a long time did not talk about offshore wind, kidding, of course. But just one or two going back to that topic, strategically Orsted obviously now onto Block Island and is developing offshore in the Mid-Atlantic. Would you consider expanding beyond New England and New York or are you going to stick to your former corporate name of Northeast Utilities?
Philip Lembo -- Executive Vice President and Chief Financial Officer
So, well, Northeast Utilities is an old name. But certainly the assets that we acquired in the transaction with Orstead was the deepwater Northeast asset, there were other assets that were not part of the transaction, so we see our competency in this particular region as opposed to across the U.S.
James Judge -- Chairman, President and Chief Executive Officer
Proximity was a factor. There were other leases that Orsted bought in the process that were further down the East Coast and mid Atlantic area and we didn't buy into those properties. So, at this stage we feel that the proximity is important. These two leases are write-off the coast of Massachusetts, in Rhode Island close to our core operations. So that was a factor and the decision at this point.
Andrew Weisel -- Scotia Capital -- Analyst
Okay. Then I know that you guys are very confident that the construction will be on time and on schedule. My question is mechanically or procedurally what happens if you're not able to deliver on the obligations under the various PPAs. In other words how does (inaudible) treat that potential scenario where the turbines aren't spending on time.
Leon -- Executive Vice President, Enterprise Energy Strategy
I think, yeah, this is Lee, Andrew. The issue of the PPAs has certain provisions and that essentially required you to post more credit, letter of credit but the penalties are relatively speaking to the investment are minimal if we don't meet the in-service states.
Andrew Weisel -- Scotia Capital -- Analyst
Okay, very good. Just a quick one on the equity. If I heard correctly, Phil, I think you said that grip needs would come from the treasury stock for the bulk of the $2 billion number though should we expect block issuances as needed or would there be more like an equity forward deal?
Philip Lembo -- Executive Vice President and Chief Financial Officer
There are many different ways of doing that whether they be a block trade or roadshows or forward or -- so in terms of an ATM kind of programs, so not really prescribing specifically the intent but certainly all of those are the method, all of those methods will be evaluated and we would move forward again opportunistically and in a manner that we felt was appropriate for the time.
Andrew Weisel -- Scotia Capital -- Analyst
Got it. And in past few years what have the (inaudible) obligations been?
Philip Lembo -- Executive Vice President and Chief Financial Officer
It's $90 million to $100 million annually.
Andrew Weisel -- Scotia Capital -- Analyst
Got it. Thank you very much.
Jeffrey Kotkin -- Vice President for Investor Relations.
Thank you, Andrew. Next question is from Paul Patterson from Glenrock. Good morning, Paul.
Paul Patterson -- Glenrock Associates LLC -- Analyst
Good morning. How are you doing? Just a few quick ones. The ROE in New Hampshire, you guys said that you're under earning your ladder. Just wondering if you could you tell us what it was for 2018 ?
Philip Lembo -- Executive Vice President and Chief Financial Officer
We just filed our final numbers are in the process of doing it. I'd say its just shy of 8%, it's below 8%.
Paul Patterson -- Glenrock Associates LLC -- Analyst
Okay. And then with respect to -- I know that grid mod is not in Connecticut or New Hampshire and your forecast, but I also notice that the grid mod docket has sort of been held in advance for some -- I'm not clear why, could you just sort of elaborate a little bit more what might be going on there?
James Judge -- Chairman, President and Chief Executive Officer
Yes, I just comment that with the new governor coming in there have been some changes, the former chair of PURA has now taken a more significant job as the commissioner of deep. So I think it's got to do with the changes organizationally that happened on when the new administration comes in.
Philip Lembo -- Executive Vice President and Chief Financial Officer
And in New Hampshire they typically have a smaller staff and any of the other states, and in fact just recently they started to move forward in a more active way in terms of draft mechanism -- draft position papers that will require more study. So, it's moving along and if there's no particular reason other than staffing at this stage.
Paul Patterson -- Glenrock Associates LLC -- Analyst
And then I think after this year you're expecting O&M to be flat, is that tied in any way to the CapEx that you guys have been investing or is that just the savings that you guys are doing from just what you guys have often been doing in terms of cost containing?
James Judge -- Chairman, President and Chief Executive Officer
We'll, certainly I did highlight on the call that certainly the CapEx investment has driven improvements in high levels of reliability and safety and performance for our customers, but it also helps in terms of taking the costs out of the business. If you repair something that you don't have to go visit two or three times to repair -- if you replace it you have some O&M savings, so certainly the O&M gets reduced as a result of it. So, being flat is really a challenge because you've got inflation, you've got negotiated wage increases. So really you're taking kind of 2% to 3% of cost out of the business just to stay flat.
Paul Patterson -- Glenrock Associates LLC -- Analyst
Okay. And then just on the offshore wind, are you guys thinking of doing (inaudible) EPCs or anything like that with respect to the execution of the actual build-out or how do you guys look at that. I know you mentioned that this Orsted (inaudible) has got a good track record, but other than that I'm just wondering any idea from EPCs or how should we think of that?
Leon -- Executive Vice President, Enterprise Energy Strategy
Yes, Paul, this is Lee. I think the way to think that is that Orsted brings all of the resident competencies that they need that they just coming off building in the process of building over 2200 megawatts after the UK alone, and again as Jim said, all on schedule, below budget, and so they're in very good shape. For them it's a core expertise of what they do. So, really wouldn't make any sense to bring in EPC. There are other developers that clearly will have to bring in an EPC because they just don't have that core competency.
Paul Patterson -- Glenrock Associates LLC -- Analyst
Okay. And then the capacity factor, just could you remind me what it is that you guys are expecting for offshore wind?
James Judge -- Chairman, President and Chief Executive Officer
Capacity factors -- they are on the range of 45% to 50% capacity factors on the wind and it's higher in the winter when prices are the highest in the region, including the arc and so there is a great benefit in that winter period for reliability and price suppression as well.
Paul Patterson -- Glenrock Associates LLC -- Analyst
Okay. And then just finally weather-adjusted sales growth for 2018. Could you tell us what that was?
Philip Lembo -- Executive Vice President and Chief Financial Officer
I didn't tell you what it was but for electric, Paul, it was -- and again I'll preface my answer by saying, as a result of rate plans that we have in place, 90% of our revenues, all of Massachusetts, all of Connecticut are decoupled. So really weather (inaudible) only in Hampshire is the only jurisdiction that is still not decoupled. But weather-adjusted normalized for the year was down slightly lower 0.2%.
Paul Patterson -- Glenrock Associates LLC -- Analyst
Okay, great. Thanks so much.
Jeffrey Kotkin -- Vice President for Investor Relations.
Thank you, Paul. Next question is from Travis Miller from Morningstar. Good morning, Travis.
Travis Miller -- Morningstar -- Analyst
Good morning. Thank you. Return to the offshore wind if you don't mind. The agreement with Orsted outside of projects in the works right now, when we're thinking about that CapEx beyond and thinking out the big potential, what type of obligations as part of that deal with Orsted and partnership with Orsted. Do you have an obligation there to invest if say Orsted were to make a decision to go forward?
James Judge -- Chairman, President and Chief Executive Officer
No, any opportunity would have the right to participate or not, there is no commitment or obligation to fully build out the 4,000 MW. We have an option to proceed or not.
Travis Miller -- Morningstar -- Analyst
Okay. On your own -- things on your own economics and decision, OK. And then in terms of policy to -- again apart from the PPAs in place are there any policies that need to go into effect in any of those Northeastern states to promote offshore winds such that you could make it easier to go forward or are you going to be competing with other renewable sources on some of those non-identified projects?
James Judge -- Chairman, President and Chief Executive Officer
Yes, there's has been a mixture, there's clearly been offshore wind specific RFPs, state of Massachusetts was the first to legislate it, 1600 megawatts need to be bid and its specific to to offshore wind. They've completed 800 of that with the first solicitation, we expect the next one to occur in the first half of '19 here. Additional legislation in Massachusetts is asked the (inaudible) at Energy Resources to take a look at doubling that number to go through 3200 MW. The state of New York has legislated 2400 MW that they're going to do through multiple solicitations. Connecticut and Rhode Island have been active as well. In New York the governor has actually suggested that he thinks that stations got a 9,000 MW of which 2400 MW has been legislated to date. So, the policy is in the form of offshore wind solicitations. One of the Connecticut solicitations that took place last year had offshore wind among other Clean Energy Resources and in that instance our revolution wind project won an additional 100 megawatts, but also solar and nuclear commitments in that process as well. So, the majority of it are off-shore wind specific, but there was some clean energy RFPs that would invite all fuel sources.
Philip Lembo -- Executive Vice President and Chief Financial Officer
I would just mention, Jim, that in Connecticut the Governor Lamont filed a bill yesterday, a Senate bill that would add additional 1,000 MW of off-shore wind. So that's firming up as well.
Travis Miller -- Morningstar -- Analyst
Okay, great, 1000 MW appear offshore wind. Great. Okay, thanks a lot. Appreciate it.
Jeffrey Kotkin -- Vice President for Investor Relations.
Thanks, Travis. Next question is from Andy Levi (ph) from ExodusPoint. Good morning, Andy.
Andy Levi -- ExodusPoint -- Analyst
Hey, guys. Can you hear me?
Philip Lembo -- Executive Vice President and Chief Financial Officer
Yes.
Andy Levi -- ExodusPoint -- Analyst
Okay. I apologize if this was answered. I'd had just hopping around. So, just back on the equity, how much of the $2 billion is allocated for the offshore wind?
Philip Lembo -- Executive Vice President and Chief Financial Officer
Yes, there is no specific allocation, Andy, is the direct answer. We would look at our total portfolio of construction and invest the needs which we've said is $13 billion over the next five years for our CapEx and then add on to that, the build out -- our share of the cost of the 830 MW of build-out of the offshore wind. But looking at the total pot is where we would focus, not specifically you find it to one area.
Andy Levi -- ExodusPoint -- Analyst
No, I understand that, but if you didn't have the offshore wind how much equity would you be issuing?
Philip Lembo -- Executive Vice President and Chief Financial Officer
You're asking at the same way only differently.
Andy Levi -- ExodusPoint -- Analyst
You're good Phil.
Philip Lembo -- Executive Vice President and Chief Financial Officer
As I said the 2 billion of equity support is kind of our total CapEx and offshore (inaudible) for the next five years.
Andy Levi -- ExodusPoint -- Analyst
Okay. So let me ask you different way then. What's the proper capital structure for an offshore wind project?
Philip Lembo -- Executive Vice President and Chief Financial Officer
So that you did miss it because we talked about that earlier.
Andy Levi -- ExodusPoint -- Analyst
Yeah, there you go. What's the bottom line on that?
James Judge -- Chairman, President and Chief Executive Officer
It's a competitive process, obviously.
Philip Lembo -- Executive Vice President and Chief Financial Officer
Cap structure or the (inaudible)
Andy Levi -- ExodusPoint -- Analyst
But I guess your return on investment or however you measure it must be based on kind of how you finance it, right?
Philip Lembo -- Executive Vice President and Chief Financial Officer
Correct.
Andy Levi -- ExodusPoint -- Analyst
Okay, well that's something -- at some point will you share that with us?
James Judge -- Chairman, President and Chief Executive Officer
Yeah, we've been saying based upon actually Orsted has disclosed an 8% unlevered IRR, which is going to give us a return that we think would be transmission like or better when you look at sort of the returns on equity that we expect there.
Andy Levi -- ExodusPoint -- Analyst
Okay. And that's assuming that everything goes as planned or do you have a contingency built into that?
James Judge -- Chairman, President and Chief Executive Officer
We work with Orsted and build an appropriate contingencies, not only in terms of spending but in terms of schedule.
Andy Levi -- ExodusPoint -- Analyst
Got it. Okay, that's very good. Thank you very much.
James Judge -- Chairman, President and Chief Executive Officer
Thanks, Andy.
Jeffrey Kotkin -- Vice President for Investor Relations.
Next question is from Mike Weinstein from Credit Suisse. Good morning, Mike.
Michael Weinstein -- Credit Suisse Securities -- Analyst
Hey, guys. Just one quick follow-up. I just wanted to have you explicitly say that just confirm that you basically have offshore wind -- additional off-shore wind in the equity number but it's not in the CapEx plan, correct?
James Judge -- Chairman, President and Chief Executive Officer
That is correct. It's not CapEx, it's equity investment.
Michael Weinstein -- Credit Suisse Securities -- Analyst
Right. So there is a certain amount that's -- that's why the equity might look high to some people, because it's not as part of that $12 billion to $13 billion CapEx plan.
James Judge -- Chairman, President and Chief Executive Officer
That's exactly correct, Mike.
Michael Weinstein -- Credit Suisse Securities -- Analyst
Okay, but you're not saying how much.
James Judge -- Chairman, President and Chief Executive Officer
That's correct also.
Michael Weinstein -- Credit Suisse Securities -- Analyst
Okay. Just wanted to get that out there. Thank you.
Jeffrey Kotkin -- Vice President for Investor Relations.
Well, thank you very much for joining us today. If you have any follow-up questions feel free to give us a call or send us an email. We look forward to seeing you at the conferences in early March. Take care.
Operator
Thank you. Ladies and gentlemen, this concludes today's conference. Thank you for joining. You may now disconnect.
Duration: 76 minutes
Call participants:
Jeffrey Kotkin -- Vice President for Investor Relations.
James Judge -- Chairman, President and Chief Executive Officer
Philip Lembo -- Executive Vice President and Chief Financial Officer
Michael Weinstein -- Credit Suisse Securities -- Analyst
Insoo Kim -- Goldman Sach -- Analyst
Julien Dumoulin-Smith -- Bank of America Merrill Lynch -- Analyst
Stephen Byrd -- Morgan Stanley -- Analyst
Praful Mehta -- Citigroup Global Markets, Inc. -- Analyst
Unidentified Participant -- -- Analyst
Angie Storozynski -- Macquarie Capital -- Analyst
Andrew Weisel -- Scotia Capital -- Analyst
Leon -- Executive Vice President, Enterprise Energy Strategy
Paul Patterson -- Glenrock Associates LLC -- Analyst
Travis Miller -- Morningstar -- Analyst
Andy Levi -- ExodusPoint -- Analyst
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