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    Sunday, July 21, 2024

    State vs. Eversource feud fails the public

    Politics and personalities have well and truly gummed up the regulatory process for utilities in Connecticut.

    The state already has a reputation for being a tough environment for the utilities, which operate as a combination of regulated, public interest utility and publicly traded company. But the relationships between state government and utilities including United Illuminating, Eversource, and Eversource subsidiaries CL&P and Aquarion have reached new lows just when their cooperation is most needed for readying the state for climate change.

    Basically, the system is structured to serve two masters: the ratepayers, whose need for affordable, reliable power includes all the state’s residents; and the investors who expect a reasonable rate of return for providing the capital to fund growth and upgrades. The referee between the competing priorities is supposed to be PURA, the Public Utilities Regulatory Authority.

    Customers have been focused on the PURA-approved rate increase that will go into effect July 1, estimated at $8 per month on the average residential bill. But Moody’s Ratings, which rates companies for guidance to potential investors, this week lowered the outlook for CL&P, the Eversource power distribution subsidiary, from stable to negative. This is the latest in a series of reactions by the financial markets to what Moody’s termed a “challenging Connecticut regulatory environment.”

    The effect of a downgrade from stable to negative is typically less favorable borrowing rates, which translates into higher costs for financing capital projects. Eversource alone spends more than a billion dollars a year in infrastructure investments that at the very least are expected to keep the power on and restore it quickly after a storm. So the interests of the the ratepayers and the investors come down to the same goals.

    The wild card, or maybe we should say, the jokers in the deck, are Connecticut’s executive and legislative branches, which are showing little leadership in developing the short- and long-term policies needed for organized strategic planning. Gov. Ned Lamont, piqued by the utilities’ unsubtle message that PURA Chair Marissa Gillet is the problem, responded by instantly extending her term.

    Legislators meanwhile failed to pass two significant climate change bills that would have addressed the state’s goals for reducing greenhouse gas emissions and resiliency in the face of climate changes already underway.

    Eversource responded by canceling plans for about $100 million in improvements for each of the next five years. While that might be taken as a dramatic gesture, Eversource executives who met with The Day Editorial Board Monday said cutting the annual expenditure -- in effect, by 10 percent or less -- is a way to accept the regulatory limitations and still serve investors.

    Perhaps they already feared the news that came Wednesday from Moody’s.

    One thing that the ordinary consumer of electricity could do to signal displeasure with the standoff between the state and its largest public utility is to understand and speak up on both the way the system operates and what is at stake.

    Simply put, producers of power -- nuclear, fossil-fueled, wind, solar -- sell their products in the open market where other companies buy and transmit the electricity. The generation companies are busy developing new technologies that will provide more and cleaner power. FERC, the Federal Energy Regulatory Commission, oversees the middleman -- the transmission companies -- and is working on reliability and capacity, including the newest technologies. Distribution, right to the customer’s home or business, is the oversight duty of Connecticut’s PURA.

    Right now the state is in the middle of shifting to performance-based regulation, which will among other things build in accountability for reliable service, including recovery from outages. The aim is to avert long-term hardships experienced after past storms. But in reality the state started practicing performance-based penalizing after some of those storms, and has withheld hundreds of millions of dollars from the power companies.

    If the governmental focus stays on past inadequacies, however, the state will not be ready for the storms of the future, which may be the worst seen yet. The governor and the legislature need to vigorously pursue not just long-term goals but the strategies that will get us to those. The only partners who can help carry out those projects are the utilities. No feud is a good feud, but this one costs way too much -- in dollars, in progress and in the future of a stable Connecticut.

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