Citing Inflation And Need For Investment In Grid, Eversource To Request 11% Increase Starting Next Year

Eversource notified state regulators Wednesday that it is requesting its first formal rate review in eight years — including an 11% average increase from Connecticut ratepayers — to raise an additional $503 million in revenue starting July 1, 2027.

According to its letter to the Public Utilities Regulatory Authority (PURA) and Steve Sullivan, president of Connecticut Electric Operations, the $503 million deficiency is not a surprise considering the impact of inflation since the utility’s last rate review was settled in 2018.

Specifically, the utility says more revenue is needed to continue ongoing maintenance, vegetation management, and critical system investments. But the letter says the company’s filing — expected in mid-July — will show that inflation in the general economy, as measured by the Gross Domestic Product Price Index, trended at approximately 30% from 2016 through 2025. By comparison, the letter states, Eversource’s operating and maintenance (O&M) expenses increased by about 16% over the same time frame, saving customers an estimated $45 million per year.

The utility also said it has not yet recovered $600 million of $3.3 billion invested in Connecticut’s electric infrastructure since 2017.

The remaining 50 percent of the revenue deficiency, according to the letter, is to cover higher costs for core operating needs, including operating and maintenance (“O&M”) expenses, vegetation-management costs, and increased costs to restore the electric system after typical storm conditions and to fund restoration and response efforts from the more sporadic major weather events.

“A rate review typically means a rate increase,” Sullivan said. “So we’ve been doing everything we can to kind of hold the line, stay within those rates while still being able to deliver on our reliability. And right now it’s just at that point with the level of investments that we’ve made and what we can see coming forward, we just won’t be able to do that anymore. We can’t continue to make investments to not only improve, but really even hold on to the reliability that we have, and that’s why we’re going in for this rate review.”

Securitizing $1.4 Billion In Deferred Storm Recovery Costs

Further, Sullivan said Eversource is hoping to take advantage of a new state law allowing the utility to securitize — with the state’s backing — the recovery of about $1.4 billion in as-yet unpaid restoration costs for 43 storm events and 10 pre-staging events from 2018 through 2023.

Sullivan said that without securitization, adding those costs to the utility’s intended rate hike would push the $503 million request out to $781 million in 2027.

Securitization — a common utility practice in hurricane-prone states in the South — will lower the interest rate and allow ratepayers to cover the $1.4 billion over 20 years instead of six.

“Eversource estimates that securitization would reduce the bill impact for residential customers from approximately $12 per month, under traditional cost recovery, to approximately $4 per month, assuming a 20-year securitization term,” the letter says of the storm cost recovery. 

The 11% rate hike without those storm costs will require the approval of the newly reconfigured PURA board following a year-long review, and according to the letter will add about $25 a month to the average customer’s electricity bill.

‘Something Has Changed’

Sullivan also said that the utility’s filing will acknowledge a new reality and be direct in saying things have changed.

“We think that, you know, whatever you want to call it, climate change, whatever it is — storms are more frequent and more severe,” Sullivan said, adding that going forward, Eversource is recognizing that “something has changed. We have a lot more frequent storms, and let’s plan for at least this level of kind of frequent storm and handle anything that’s outside of that, you know, kind of an exogenous storm — potentially you would then use securitization.”

Easing The Acrimony?  

The rate review request arrives at what could turn out to be the end of a long period of acrimony between PURA and the state’s two largest utilities, Eversource and United Illuminating.

The utilities accused former PURA Chair Marissa Gillett of violating open records laws and trying to control rate-making decisions on what was then a three-member PURA board. Gillette resigned amid litigation from both utilities and Gov. Ned Lamont then agreed to fill the two open seats on a reconstituted PURA board.

Based on those disputes, Eversource in 2024 said it would defer $500 million in investments in the state’s grid over a five-year period. Asked about that decision Tuesday, however, Sullivan said it had had a noticeable impact on the grid’s performance in just 18 months.

“If you look close at our reliability numbers, just cutting back on investment for that one and a half year period, we flattened out. We actually dipped a little bit last year,” Sullivan said. “So, I mean, that’s how sensitive this system is. It’s a massive system. Even with all the investment we’ve been making … it continues to age because it’s so huge.”

Elected Officials Decry Rate Hike

Over the course of the day Wednesday, elected officials released statements of concern increasing costs on state residents.

“Connecticut families are getting crushed by unaffordable energy costs while Eversource executives crow to Wall Street over surging profits and rake in multimillion dollar bonuses,” said Attorney General William Tong. “But they choose now to demand hundreds of millions of dollars more. Why? Because after years of litigation and lobbying, they finally ran their chief regulator out of town. They want a rate hike now not because they need one, but because they think they can get away with it. We’re going to scrutinize every profit, every bonus, every perk and every padded expense in their application and we’re going to be fighting for Connecticut families and small businesses at every step of this process.”

Following the publication of this story, Eversource said that “there are no CEO, CFO or company president salaries or variable pay included in our rate request.”

Senate President Pro Tempore Martin Looney, Senate Majority Leader Bob Duff, and state Sen. Norm Needleman, released a joint statement:

“Eversource profits are soaring. Eversource executives are getting huge bumps in pay. And they’re asking Connecticut ratepayers to foot the bill. At a time when the Trump administration’s tariffs, oil price hikes and push for AI and data centers are putting more pressure on our grid and spurring national rate shocks, at a time when we finally see the start of progress in pulling Connecticut electric rates back down, Eversource is asking for more. Why wouldn’t they? When do they not?”

They continued: “It’s not lost on us that the company’s own statement seems to dangle the state approving its storm securitization funds, which would increase consumer costs, in reducing its proposal – another attempt to threaten the state so the company gets what it wants, and a no-win situation for Connecticut households struggling to make ends meet. Yet again, it’s Wall Street vs. Main Street, and Eversource again hopes to elevate shareholders over ratepayers. Connecticut ratepayers can’t afford this. We encourage PURA to be diligent and skeptical in examining every aspect of this request.”

While Eversource cited as positive the removal of the public benefits charges from customers’ bills as progress on controlling costs for ratepayers, Senate Republicans decried remaining chargers there as a continued problem.

Senate Minority Leader Stephen Harding and Sen. Ryan Fazio released a statement:

“As overburdened Connecticut families and businesses brace themselves for potential double-digit hikes next year, they should remember this: Two weeks ago, every State Senate Democrat lawmaker voted  ‘no’ on legislation that would have reduced ratepayers’ electricity bills by hundreds of dollars per year. This legislation, offered by Senate Republicans, would have moved the hidden ‘public benefits’ tax from electric bills. Republicans will continue to make the case for getting those charges off your bills, and we will keep supporting affordability measures, but we need more Republicans at the State Capitol if we ever hope to see relief.”

EDITOR’S NOTE: This story has been updated for clarity.