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May 2, 2024

Eversource plans to cut investment in CT by $500M over 5 years due to regulatory ‘uncertainty’

HBJ PHOTO | ANDREW LARSON Regional utility company Eversource operates this Hartford substation.
By Andrew Larson

Eversource Energy officials said during an earnings call Thursday morning that the utility company plans to cut its capital expenditures in Connecticut by nearly $100 million in 2024, and by $500 million over the next five years, as a result of the state’s “uncertain” regulatory environment.

John Moreira, Eversource’s executive vice president, CFO and treasurer, said the reductions will continue “until we see Connecticut's regulatory decisions come back into alignment with law and state policy.”

Eversource President and CEO Joe Nolan added that he has “serious concerns” about the company’s ability to implement clean energy technologies, and to reduce carbon emissions, in light of the ongoing dispute over cost recovery.

“As it stands, regulatory policies in Connecticut discourage investment in utility innovation, as well as our participation in a wide range of clean energy initiatives that rely on our balance sheet and our capital resources,” Nolan said.

Asked by an analyst what the cuts would entail, Nolan said they could affect the reliability of service in Connecticut, which he said is currently “best in class.”

“Our investment objectives in Connecticut have been centered around safety and reliability, as you'd expect,” Nolan said. “We will not reduce our safety spending. The reduction will likely come from reliability areas.”

At the crux of the ongoing dispute between utilities and their regulator, the Public Utilities Regulatory Authority, is whether utilities can recover costs for upfront capital investments. Nolan said cost recovery cannot be deferred into the future, under uncertain terms.

However, PURA has said that utilities “may only earn a return on capital assets that are complete and servicing customers.”

The question is being debated in court.

An Eversource subsidiary, water utility Aquarion, has appealed a Superior Court’s decision in March which upheld most of PURA’s decision to cut $40 million from Aquarion’s proposed revenue increase last year. Aquarion has filed an appeal in Appellate Court and is asking to have the case sent to the state Supreme Court for review.

Meanwhile, Eversource is continuing to move forward with plans to sell Aquarion, Nolan said.

Connecticut’s other electric utility, United Illuminating, also has appealed a rate decision by PURA.

Nolan said he was encouraged by PURA’s decision last month to approve an $873 million rate adjustment for Eversource, which he said includes reimbursement of deferred public policy costs. The rate increase of about 18% goes into effect July 1, but should be mitigated by lower supply costs for ratepayers.

An Eversource spokesman said the rate adjustment is not for capital projects, but for pass-through costs.

The news came as Eversource reported net income of $523.7 million during the first quarter of 2024, an increase from $493 million in the year-ago period.

Eversource serves more than 4 million customers in Connecticut, Massachusetts and New Hampshire. It provides electricity in 149 towns and cities in Connecticut.

Last month, Eversource announced that it was suspending its new electric vehicle charging rebates due to “uncertain regulatory treatment” in Connecticut.

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