This story was updated on Jan. 7 to correct the name of the gas company owned by Eversource.
BERLIN –Eversource cautioned on Dec. 30 that it is reducing its capital spending plan by 15% in 2025 due mainly to the regulator’s action and subsequent credit rating downgrades, the utility company said in a letter to state regulator PURA.
The company, which operates Connecticut Light & Power and Yankee Gas, reported in the letter penned by its general counsel Vincent Pace that it is significantly reducing its capital program budget in 2025. It revised its capital expenditures from $557.9 million to $475 million. That includes $411.9 million for core capital programs and $63.1 million for system reliability/resiliency programs, the letter stated.
“There is no dispute that S&P’s credit downgrades will increase the cost of financing capital investment for customers,” Pace wrote. “However, what is notable about the S&P credit downgrades for Eversource and Avangrid, as well as the subsequent Moody’s downgrade for Avangrid and other public investor analysis, is the widespread market acknowledgement that the implausible revenue cuts that PURA has imposed on Aquarion, United Illuminating and now, CNG and SCG, are the product of an unpredictable, inadequate and continuing regulatory climate in Connecticut that is not credit or investment supportive.”
On Nov. 18, the Public Utilities Regulatory Authority issued its final decisions in Avangrid’s CNG and SCG rate cases, which resulted in approximately $35 million in total revenue reductions for those utilities. CNG’s revenue cut amounts to $24.6 million, while SCG faces a $10.8 million reduction.
That action led to the credit downgrades from S&P and Moody’s shortly after.
“In the past seven years, CL&P’s total capital expenditures have averaged about $537 million annually, trending from approximately $470 million in 2018 to $678 million in 2023,” the letter stated. “At the reduced budget level, the company’s capital expenditures for electric system infrastructure are now approximately 35% below the level that would be optimal to maintain the high level of reliability that electric customers have come to rely on, given the age and condition of the electric system and ongoing capacity demands.
Pace went on to write that in order to achieve the expenditure reduction, the company has had to shift away from programs that involve proactive replacement and system advancement. Those capital reductions will affect substation infrastructure upgrades, underground cable replacements, aging distribution line asset replacements and the installation of smart switches on the distribution system that enable the automatic rerouting of power and quick isolation and resolution of customer outages, according to Pace.
The impact of budget reductions over multiple years is expected to result in a drop in system reliability in the range of 12%-15% over the next five years, Pace wrote. This comes after more than 10 years of steady improvement in CL&P’s reliability metrics, including a 14% reduction in the average frequency of customer outages; a 17% reduction in the average duration of customer outages; and prolonging the months between interruptions by 17% to 19.3 months.
