By Ron Brisé
As a former utility regulator, I understand the desire by public officials to do everything they can to keep water, gas and electric bills as low as possible. All Americans know that the cost of living in this country is going up too fast, putting many families under severe economic strain.
But Connecticut’s utilities are in the news lately. At the end of 2024, credit rating agencies downgraded several utilities that serve Connecticut. For example, S&P Global reduced Eversource’s credit rating from A- to BBB+. Four other utilities in the state, including water and natural gas companies, were also downgraded by S&P. Following suit, another credit rating agency, Moody’s, also downgrading utilities in Connecticut.
Credit downgrades are typically in response to poor performance or bad business decisions made by corporate leadership. But in this case, things are a little different. Here is a quote from an analyst at Moody’s about the downgraded utilities. “The rate outcome is evidence of a challenged regulatory environment, where the disparity between filed rate requests and ultimate rate orders has become considerable. Absent a return to more constructive political and regulatory decisions, both utilities could see further credit deterioration over the next two years.”
In other words, these credit downgrades are in response to a challenging regulatory environment with the Connecticut Public Utilities Regulatory Agency.
What do these credit downgrades mean for the average person in Connecticut who relies on water, electricity, and natural gas? Ultimately it will mean higher utility bills for customers in Connecticut. This is because the credit downgrade means the cost for the utilities to borrow money from investors will increase because these ratings agencies see more risk in Connecticut. Worse, this will hamper investment in Connecticut’s critical infrastructure and the electric grid.
All of this is deeply concerning to me, because Connecticut is not immune to severe weather like winter storms and tropical systems, and the state should be making more investments in its critical infrastructure to make communities more resilient to challenging weather. As a former Florida regulatory commissioner, I learned first-hand that investing in these critical infrastructure projects before severe weather strikes is vital to reducing the time between when the storm strikes and services being fully restored. Thanks to the investments Florida has made into our critical infrastructure, we can weather a massive storm and have power, and many essential services restored in just a few days for most customers.
Another challenge for Connecticut, is that as the state’s electric needs go up – due to data centers, Artificial Intelligence and people plugging in their electric vehicles – the state is going to need investments in grid infrastructure to connect new sources of power like wind and solar. Those enhancements cost money, and now they are going to cost more money because borrowing costs just went up for two of the largest electric utilities operating in Connecticut.
Because those borrowing costs are rising for these electric companies, the utilities must make tough decisions about which critical infrastructure improvements to make, and which to hold off on because they now cost too much. A less reliable electric grid exposes people and business in Connecticut to more and longer blackouts.
Finally, Florida’s electric grid and utilities are resilient today, because our regulators worked with the state’s utilities to carefully balance their needs while ensuring Florida’s utility customers have fair bills and resilient services. My hope is that things can improve in Connecticut for the sake of customers and the state’s economy.
Ron Brisé is a former Chair of the Florida Public Service Commission and is an electricity regulatory expert.
This article was originally published by RealClearEnergy and made available via RealClearWire.
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