Eversource Cuts Connecticut Capex, Citing PURA Climate

May 7, 2024
The utility’s leaders said they’ll take $500 million in reliability investments elsewhere. Gov. Ned Lamont said he’ll reappoint the state’s top regulator.

At odds with Connecticut leaders and regulators’ energy policies, Eversource Energy Inc. executives Joe Nolan and John Moreira are cutting $100 million from their 2024 capex budget in the state and plan to do the same each of the next four years.

Nolan, who is chairman, president and CEO of Eversource, and Moreira, the company’s CFO, outlined their plans after reporting first-quarter results. They took aim in their commentary at decisions by the Connecticut Public Utilities Regulatory Authority (PURA) that they say don’t give the utility a “secure and predictable” path to recover its investments.

“Regulatory decisions over the past few years are misaligned with the law and the state policy,” Nolan said on a May 2 conference call with analysts. “And without a secure and predictable cost recovery path, we cannot continue to put additional capital resources on the table.”

PURA has, under the leadership of Chair Marissa Gillett, in recent years sought to bring more performance-based considerations into its work with utilities. Backed by state legislation passed in 2020, the agency has sought to reform revenue mechanisms for energy providers to “more accurately reflect their performance in achieving financial and public policy outcomes that provide a public benefit to ratepayers, and Connecticut as a whole.”

That push hasn’t landed well at Eversource and Avangrid, the parent of United Illuminating Co., both of which have been on the receiving end of rate decisions they didn’t like. Hence the decision to cut capex, which will not compromise safety investments but focus on reliability projects.

“We are expecting to reduce capital investment in Connecticut by $500 million over the next five years until we see Connecticut’s regulatory decisions come back into alignment with law and state policy,” Moreira said on the conference call. “Our decisions on the deployment of our valuable capital resources have to be based on our current experience with regulatory outcomes for utility investment.”

Nolan noted that the capex budget for Eversource as a whole isn’t being cut but that the company’s holdings in Massachusetts and New Hampshire will instead get larger shares. The Eversource team is planning to spend a total of $23.1 billion through 2028.

“We have ample opportunities for capital deployment on our system,” Nolan said. “We feel very, very good about that.”

If Nolan’s words and actions were a poke at Connecticut Gov. Ned Lamont to replace Gillett—which is how many in the Constitution State saw Thursday’s call as well as previous complaints—it didn’t work. The Connecticut Mirror later on May 2 reported that Lamont committed to naming Gillett to a second four-year term.

Eversource earned net profits of nearly $522 million in the first three months of this year on operating revenues of $3.33 billion. A year earlier, those numbers were $491 million and $3.80 billion, respectively. The company’s electric transmission business grew its earnings to $177 million from $155 million in early 2023—and its natural gas distribution profits rose by a similar amount—but earnings from electric distribution rose only slightly.

Shares of Eversource (Ticker: ES) closed at $59.71 May 6, down slightly from the prior Friday and about 3% lower than the day before Nolan and his team reported earnings. They’ve risen about 5% over the past six months, growing the company’s market capitalization to roughly $21 billion.

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