As a 15-year veteran of the utility industry, I can tell you with certainty there’s nowhere like Connecticut. In other states, when utility companies receive downgrades in their credit rating, regulators and consumer advocates haul them into hearings, demanding to know their plans to rectify them.
Not so in Connecticut, where regulators themselves are named as the reason for the downgrades, and policymakers like the Office of Consumer Counsel and the Chairs of the legislature’s Energy and Technology Committee work overtime to provide political cover.
Meanwhile, the scope of these downgrades – from S&P and Moody’s, two of the most respected financial institutions in the world – extend statewide, from two Avangrid companies, Eversource and all its subsidiaries, to even a small water company .
Whatever the political rhetoric, the impacts are serious and the damage long-term. Building a grid for Connecticut’s future will require billions in new investment over the decades to come, and with the downgrades warning investors to be increasingly skeptical of Connecticut utilities, every single dollar just got more expensive.
The state has a long list of goals for its economy and clear objectives for its utilities: build a modern, sustainable, reliable, resilient, renewable, innovative electric grid capable of supporting massive capacity increases from electrification and data centers. Alienating the investment community does nothing to further those goals; it only makes them less attainable.
But until PURA and state policymakers abandon their anti-utility bias, they will continue to miss today’s golden opportunity to build the energy system of tomorrow –- an opportunity other states are rigorously pursuing. Instead, the excellent reliability that customers rely on, built through a long legacy of investment, will be whittled away even as costs continue to rise.
This, to a question that Sen. Norm Needleman and Rep. Jonathan Steinberg raise in their editorial, is why companies like ours “care” if our credit rating is downgraded. We are not so short-sighted as to shrug off the consequences of higher costs for our customers.
But even more significant are the consequences to long-term energy investment in Connecticut. Utilities are some of the most capital-intensive businesses in the country. We rely on selling bonds to finance safe, reliable, high-quality service through investments like new substations, battery storage, flood walls, microgrids and more.
Downgrades signal to investors they should pull their loans, leaving us with insufficient capital to advance these innovations. Instead, utilities are forced to put what limited capital we can raise (through higher premiums on our bonds) into the most basic, fundamental projects, like storm restoration efforts or pole replacements after traffic accidents.
Accepting – and even incentivizing – PURA to enable meager investments to support only the most basic service puts Connecticut out of step with our neighbors, as other northeastern states are doing the hard work of system planning for the future. It’s no coincidence that Eversource is putting forward 30-year investment plans in Massachusetts while pulling $500 million in investments from Connecticut. Nor should it be surprising that Avangrid company New York State Electric & Gas (NYSEG) is building two 1-megawatt battery energy storage systems that tap directly into New York substations, a major resiliency investment, while nothing of the sort is happening in Connecticut.
Regulators in Massachusetts and New York are far from easy or passive. They have high standards that utilities must work hard to meet, and they do not get everything they ask for, as Needleman and Steinberg baselessly claim is our demand.
What Massachusetts and New York do is set the rules of the road for utility companies. They set clear standards of performance they expect from utility companies – in everything from the level of detail in rate cases to their forward-looking investment plans – and they hold them accountable.
That is not the case in Connecticut. Legislators can obfuscate, downplay, or even offer fictitious conspiracy theories -– most incredibly, that we would pay credit rating agencies, which are independent referees under federal law , to downgrade our credit ratings when downgrades are good for no one.
But none of these political games change the fact that energy companies cannot invest in a state in which PURA puts politically expedient rate cuts over its stated objectives. Nor will they alleviate the underinvestment these policymakers are apparently willing to accept in favor of the fabrication that PURA is “simply holding utilities accountable.”
I fear Connecticut’s energy infrastructure, and the economy it’s built on, will be left behind as other states move forward with a clear vision. The golden opportunity for investment in the energy future is now, and we are at serious risk of missing it as our regulators and policymakers prioritize waging political war on the state’s utilities. The longer they dally, the more likely it is that PURA’s actions and inaction will leave us in the dark.
Charlotte Ancel is the Vice President of Investor Relations at Avangrid, the parent company of United Illuminating, Connecticut Natural Gas, and Southern Connecticut Gas.
