Avangrid, Inc. [AGR] Filings

10-Q 1 agr-20240630.htm 10-Q agr-20240630

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 10-Q


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2024


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to i

Commission File No. 001-37660

Avangrid, Inc.

(Exact Name of Registrant as Specified in its Charter)


New York		14-1798693
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)
180 Marsh Hill Road
Orange,	Connecticut	06477
(Address of principal executive offices)		(Zip Code)

Registrant’s telephone number, including area code: (207) 629-1190

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol

Name of exchange on which registered

Common Stock, par value $0.01 per share

AGR

New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large Accelerated Filer

☒

Accelerated Filer

☐

Non-accelerated Filer

☐

Smaller Reporting Company

☐

Emerging Growth Company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of July 23, 2024, the registrant had 386,911,024 shares of common stock, par value $0.01, outstanding.

Avangrid, Inc.

REPORT ON FORM 10-Q

For the Quarter Ended June 30, 2024

INDEX


GLOSSARY OF TERMS AND ABBREVIATIONS		3
PART I. FINANCIAL INFORMATION		4
Item 1.	Financial Statements	4
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	49
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	66
Item 4.	Controls and Procedures	66
PART II. OTHER INFORMATION		67
Item 1.	Legal Proceedings	67
Item 1A.	Risk Factors	67
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	68
Item 3.	Defaults Upon Senior Securities	69
Item 4.	Mine Safety Disclosures	69
Item 5.	Other Information	69
Item 6.	Exhibits	69
SIGNATURES		70

GLOSSARY OF TERMS AND ABBREVIATIONS

Unless the context indicates otherwise, the terms “we,” “our” and the “Company” are used to refer to Avangrid, Inc. and its subsidiaries.


2023 Joint Proposal						Joint proposal of NYSEG and RG&E and certain other signatory parties approved by the NYPSC on October 12, 2023, for a three-year rate plan for electric and gas service with effective date November 1, 2023.
AOCI						Accumulated other comprehensive income
ARHI						Avangrid Renewables Holdings, Inc.
ARP						Alternative Revenue Programs
ASC						Accounting Standards Codification
Avangrid						Avangrid, Inc.
BGC						The Berkshire Gas Company
BSEE						U.S. Bureau of Safety and Environmental Enforcement
PBR						Performance-Based Regulation
CAIDI						Customer Average Interruption Duration Index
CfDs						Contracts for Differences
CBP						U.S. Customs and Border Protection
CFIUS						Committee on Foreign Investment in the United States
CL&P						The Connecticut Light and Power Company
CMP						Central Maine Power Company
CNG						Connecticut Natural Gas Corporation
DEEP						Connecticut Department of Energy and Environmental Protection
DIMP						Distribution Integrity Management Program
DOC						Department of Commerce
DPA						Deferred Payment Arrangements
DPU						Massachusetts Department of Public Utilities
EBITDA						Earnings before interest, taxes, depreciation and amortization
ESM						Earnings sharing mechanism
English Station						The former generation site on the Mill River in New Haven, Connecticut
Exchange Act						The Securities Exchange Act of 1934, as amended
FASB						Financial Accounting Standards Board
FCC						Federal Communications Commission
FERC						Federal Energy Regulatory Commission
FirstEnergy						FirstEnergy Corp.
Form 10-K						Avangrid, Inc.’s Annual Report on Form 10-K for the year ended December 31, 2023, filed with the Securities and Exchange Commission on February 22, 2024.
HLBV						Hypothetical Liquidation at Book Value
HSR						Hart-Scott-Rodino Antitrust Improvements Act of 1976
IRA						Inflation Reduction Act
Iberdrola						Iberdrola, S.A.
Iberdrola Group						The group of companies controlled by Iberdrola, S.A.
Installed capacity						The production capacity of a power plant or wind farm based either on its rated (nameplate) capacity or actual capacity.
ISO						Independent system operator
Klamath Plant						Klamath gas-fired cogeneration facility located in the city of Klamath, Oregon.
KW						Kilowatts
Merger						The merger with Iberdrola, S.A. and Merger Sub on the terms and subject to the conditions set forth in the Merger Agreement, with Avangrid, Inc. continuing as the surviving corporation and as a wholly-owned subsidiary of Iberdrola.
Merger Agreement						Agreement and Plan of Merger, dated as of May 17, 2024, among Avangrid, Inc., Iberdrola, S.A. and Merger Sub.
Merger Sub						Arizona Merger Sub, Inc., a New York corporation and wholly-owned subsidiary of Iberdrola.
MNG						Maine Natural Gas Corporation
MPUC						Maine Public Utility Commission
MtM						Mark-to-market
MW						Megawatts
MWh						Megawatt-hours
NECEC						New England Clean Energy Connect
Networks						Avangrid Networks, Inc.
Non-GAAP						Financial measures that are not prepared in accordance with U.S. GAAP, including adjusted net income, adjusted earnings per share, adjusted EBITDA and adjusted EBITDA with tax credits.
NRC						Nuclear Regulatory Commission
NYPSC						New York State Public Service Commission
NYSE						New York Stock Exchange
NYSEG						New York State Electric & Gas Corporation
NYSERDA						New York State Energy Research and Development Authority
OCI						Other comprehensive income
PJM						PJM Interconnection, L.L.C.
PURA						Connecticut Public Utilities Regulatory Authority
Renewables						Avangrid Renewables, LLC
RDM						Revenue Decoupling Mechanism
RG&E						Rochester Gas and Electric Corporation
ROE						Return on equity
SAIFI						System Average Interruption Frequency Index
SCG						The Southern Connecticut Gas Company
SEC						United States Securities and Exchange Commission
SOFR						Secured Overnight Financing Rate
Tax Act						Tax Cuts and Jobs Act of 2017 enacted by the U.S. federal government on December 22, 2017
TEF						Tax equity financing arrangements
UFLPA						Uyghur Forced Labor Prevention Act
UI						The United Illuminating Company
UIL						UIL Holdings Corporation
Unaffiliated Committee						The Unaffiliated Committee of the board of directors of Avangrid, Inc., comprised solely of independent and disinterested directors
U.S. GAAP						Generally accepted accounting principles for financial reporting in the United States.
VIEs						Variable interest entities

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

Avangrid, Inc. and Subsidiaries

Condensed Consolidated Statements of Income

(unaudited)


	Three Months Ended June 30,				Six Months Ended June 30,
	2024		2023		2024		2023
(Millions, except for number of shares and per share data)
Operating Revenues	$	1,923	$	1,587	$	4,340	$	4,053
Operating Expenses
Purchased power, natural gas and fuel used	429		385		1,153		1,362
Operations and maintenance	819		634		1,611		1,395
Depreciation and amortization	310		285		608		565
Taxes other than income taxes	164		157		360		340
Total Operating Expenses	1,722		1,461		3,732		3,662
Operating Income	201		126		608		391
Other Income and (Expense)
Other income	57		29		111		54
Earnings from equity method investments	5		4		11		6
Interest expense, net of capitalization	(122)		(99)		(247)		(194)
Income Before Income Tax	141		60		483		257
Income tax expense (benefit)	13		9		33		(9)
Net Income	128		51		450		266
Net loss attributable to noncontrolling interests	41		34		70		64
Net Income Attributable to Avangrid, Inc.	$	169	$	85	$	520	$	330
Earnings Per Common Share, Basic	$	0.44	$	0.22	$	1.34	$	0.85
Earnings Per Common Share, Diluted	$	0.44	$	0.22	$	1.34	$	0.85
Weighted-average Number of Common Shares Outstanding:
Basic	387,010,149		386,749,135		386,963,191		386,747,077
Diluted	387,440,241		387,108,271		387,336,593		387,092,223

The accompanying notes are an integral part of our condensed consolidated financial statements.

Avangrid, Inc. and Subsidiaries

Condensed Consolidated Statements of Comprehensive Income

(unaudited)


	Three Months Ended June 30,				Six Months Ended June 30,
	2024		2023		2024		2023
(Millions)
Net Income	$	128	$	51	$	450	$	266
Other Comprehensive Income (Loss)

Amortization of pension cost, net of income tax of $0 and $1 for the three months ended, respectively, and $0 and $1 for the six months ended, respectively	1		2		1		2
Unrealized (loss) gain from equity method investment, net of income taxes of $(1) and $1 for the three months ended, respectively, and $(1) and $1 for the six months ended, respectively	(2)		6		(2)		5
Unrealized gain during the period on derivatives qualifying as cash flow hedges, net of income taxes of $2 and $12 for the three months ended, respectively, and $17 and $11 for the six months ended, respectively	7		34		46		32
Reclassification to net income of losses on cash flow hedges, net of income taxes $1 and $6 for the three months ended, respectively, and $3 and $24 for the six months ended, respectively	1		15		8		67
Other Comprehensive Income	7		57		53		106
Comprehensive Income	135		108		503		372
Net loss attributable to noncontrolling interests	41		34		70		64
Comprehensive Income Attributable to Avangrid, Inc.	$	176	$	142	$	573	$	436

The accompanying notes are an integral part of our condensed consolidated financial statements.

Avangrid, Inc. and Subsidiaries

Condensed Consolidated Balance Sheets

(unaudited)


	June 30,		December 31,
As of	2024		2023
(Millions)
Assets
Current Assets
Cash and cash equivalents	$	136	$	91
Accounts receivable and unbilled revenues, net	1,375		1,588
Accounts receivable from affiliates	5		11
Notes receivable from affiliates	4		4
Derivative assets	79		68
Fuel and gas in storage	173		185
Materials and supplies	331		310
Prepayments and other current assets	419		429
Regulatory assets	801		718
Total Current Assets	3,323		3,404
Total Property, Plant and Equipment ($2,601 and $2,643 related to VIEs, respectively)	34,063		32,857
Operating lease right-of-use assets	198		195
Equity method investments	914		718
Other investments	49		46
Regulatory assets	3,180		2,811
Other Assets
Goodwill	3,119		3,119
Intangible assets	274		284
Derivative assets	213		162
Other	356		393
Total Other Assets	3,962		3,958
Total Assets	$	45,689	$	43,989

The accompanying notes are an integral part of our condensed consolidated financial statements.

Avangrid, Inc. and Subsidiaries

Condensed Consolidated Balance Sheets

(unaudited)


	June 30,		December 31,
As of	2024		2023
(Millions, except share information)
Liabilities
Current Liabilities
Current portion of debt	$	1,468	$	612
Notes payable	1,933		1,347
Notes payable to affiliates	14		13
Interest accrued	108		104
Accounts payable and accrued liabilities	1,739		1,924
Accounts payable to affiliates	35		—
Dividends payable	170		170
Taxes accrued	71		66
Operating lease liabilities	14		16
Derivative liabilities	68		64
Other current liabilities	617		662
Regulatory liabilities	207		261
Total Current Liabilities	6,444		5,239
Regulatory liabilities	2,657		2,694
Other Non-current Liabilities
Deferred income taxes	2,547		2,451
Deferred income	961		996
Pension and other postretirement	526		554
Operating lease liabilities	201		199
Derivative liabilities	114		111
Asset retirement obligations	314		306
Environmental remediation costs	235		254
Other	527		525
Total Other Non-current Liabilities	5,425		5,396
Non-current debt	8,312		9,184
Non-current debt to affiliate	2,000		800
Total Non-current Liabilities	18,394		18,074
Total Liabilities	24,838		23,313
Commitments and Contingencies
Equity
Stockholders’ Equity:
Common stock, $.01 par value, 500,000,000 shares authorized, 388,008,132 and 387,872,787 shares issued; 386,911,024 and 386,770,915 shares outstanding, respectively	4		4
Additional paid in capital	17,705		17,701
Treasury stock	(47)		(47)
Retained earnings	2,195		2,015
Accumulated other comprehensive income (loss)	28		(25)
Total Stockholders’ Equity	19,885		19,648
Non-controlling interests	966		1,028
Total Equity	20,851		20,676
Total Liabilities and Equity	$	45,689	$	43,989

The accompanying notes are an integral part of our condensed consolidated financial statements.

Avangrid, Inc. and Subsidiaries

Condensed Consolidated Statements of Cash Flows

(unaudited)


	Six Months Ended June 30,
	2024		2023
(Millions)
Cash Flow from Operating Activities:
Net income	$	450	$	266
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	608		565
Regulatory assets/liabilities amortization and carrying cost	(16)		(59)
Pension cost	(6)		(7)
Earnings from equity method investments	(11)		(6)
Distributions of earnings received from equity method investments	8		14
Unrealized gain on marked-to-market derivative contracts	—		(4)
Deferred taxes	24		(22)
Other non-cash items	(56)		(11)
Changes in operating assets and liabilities:
Current assets	143		459
Noncurrent assets	(334)		(62)
Current liabilities	(119)		(457)
Noncurrent liabilities	(52)		54
Net Cash Provided by Operating Activities	639		730
Cash Flow from Investing Activities:
Capital expenditures	(1,935)		(1,635)
Contributions in aid of construction	97		77
Proceeds from sale of assets	2		17

Distributions received from equity method investments	2		2
Other investments and equity method investments, net	(193)		(18)
Net Cash Used in Investing Activities	(2,027)		(1,557)
Cash Flow from Financing Activities:

Non-current debt issuance with affiliates	1,200		—
Repayments of non-current debt	(14)		(203)
Receipts of other short-term debt, net	586		1,296

Repayments of financing leases	(5)		(2)

Issuance of common stock	(2)		(3)
Distributions to noncontrolling interests	(48)		(7)
Contributions from noncontrolling interests	56		75
Dividends paid	(340)		(340)
Net Cash Provided by Financing Activities	1,433		816
Net Increase (Decrease) in Cash, Cash Equivalents and Restricted Cash	45		(11)
Cash, Cash Equivalents and Restricted Cash, Beginning of Period	94		72
Cash, Cash Equivalents and Restricted Cash, End of Period	$	139	$	61
Supplemental Cash Flow Information
Cash paid for interest, net of amounts capitalized	$	183	$	164
Cash paid for income taxes	$	16	$	22

The accompanying notes are an integral part of our condensed consolidated financial statements.

Avangrid, Inc. and Subsidiaries

Condensed Consolidated Statements of Changes in Equity

(unaudited)



(Millions, except for number of shares )	Number of shares (*)	Common Stock		Additional paid-in capital		Treasury Stock		Retained Earnings		Accumulated Other Comprehensive (Loss) Income		Total Stockholders’ Equity		Noncontrolling Interests		Total
As of March 31, 2023	386,640,918	$	3	$	17,697	$	(47)	$	1,985	$	(131)	$	19,507	$	1,003	$	20,510

Net income (loss)	—	—		—		—		85		—		85		(34)		51
Other comprehensive income, net of tax of $20	—	—		—		—		—		57		57		—		57
Comprehensive income																108
Dividends declared, $0.44/share	—	—		—		—		(170)		—		(170)		—		(170)
Release of common stock held in trust	4,299	—		—		—		—		—		—		—		—
Issuance of common stock	41	—		(4)		—		—		—		(4)		—		(4)

Stock-based compensation	—	—		2		—		—		—		2		—		2
Distributions to noncontrolling interests	—	—		—		—		—		—		—		(4)		(4)
Contributions from noncontrolling interests	—	—		—		—		—		—		—		1		1
As of June 30, 2023	386,645,258	$	3	$	17,695	$	(47)	$	1,900	$	(74)	$	19,477	$	966	$	20,443
As of March 31, 2024	386,906,260	$	4	$	17,702	$	(47)	$	2,196	$	21	$	19,876	$	1,013	$	20,889

Net income (loss)	—	—		—		—		169		—		169		(41)		128
Other comprehensive income, net of tax of $2	—	—		—		—		—		7		7		—		7
Comprehensive income																135
Dividends declared, $0.44/share	—	—		—		—		(170)		—		(170)		—		(170)
Release of common stock held in trust	4,764	—		—		—		—		—		—		—		—
Issuance of common stock	—	—		—		—		—		—		—		—		—

Stock-based compensation	—	—		3		—		—		—		3		—		3
Distributions to noncontrolling interests	—	—		—		—		—		—		—		(9)		(9)
Contributions from noncontrolling interests	—	—		—		—		—		—		—		3		3
As of June 30, 2024	386,911,024	$	4	$	17,705	$	(47)	$	2,195	$	28	$	19,885	$	966	$	20,851



(Millions, except for number of shares )	Number of shares (*)	Common Stock		Additional paid-in capital		Treasury Stock		Retained Earnings		Accumulated Other Comprehensive (Loss) Income		Total Stockholders’ Equity		Noncontrolling Interests		Total
As of December 31, 2022	386,628,586	$	3	$	17,694	$	(47)	$	1,910	$	(180)	$	19,380	$	962	$	20,342

Net income (loss)	—	—		—		—		330		—		330		(64)		266
Other comprehensive income, net of tax of $37	—	—		—		—		—		106		106		—		106
Comprehensive income																372
Dividends declared, $0.88/share	—	—		—		—		(340)		—		(340)		—		(340)
Release of common stock held in trust	4,299	—		—		—		—		—		—		—		—
Issuance of common stock	12,373	—		(4)		—		—		—		(4)		—		(4)

Stock-based compensation	—	—		5		—		—		—		5		—		5
Distributions to noncontrolling interests	—	—		—		—		—		—		—		(7)		(7)
Contributions from noncontrolling interests	—	—		—		—				—		—		75		75
As of June 30, 2023	386,645,258	$	3	$	17,695	$	(47)	$	1,900	$	(74)	$	19,477	$	966	$	20,443
As of December 31, 2023	386,770,915	$	4	$	17,701	$	(47)	$	2,015	$	(25)	$	19,648	$	1,028	$	20,676

Net income (loss)	—	—		—		—		520		—		520		(70)		450
Other comprehensive income, net of tax of $19	—	—		—		—		—		53		53		—		53
Comprehensive income																503
Dividends declared, $0.88/share	—	—		—		—		(340)		—		(340)		—		(340)
Release of common stock held in trust	4,764	—		—		—