Eversource’s $500M spending cut could affect state
It just one of tens of thousands of behind-the-scenes spending decisions in Connecticut a few years ago, as Eversource touched base with a Stonington home owner on the best way to screen the sight lines to an electric substation it was expanding next door. They reached common ground, with Eversource agreeing to plant a tree at the cost of a few hundred dollars or more.
Coming off a year in which it rang up more than $1.1 billion in capital expenses in Connecticut, Eversource is now serving notice it will prune that amount by $100 million a year amid continuing rancor with state regulators and lawmakers. With major projects underway already in many parts of the state that have taken years to plan, it is anyone’s guess how that decision will cascade into the Connecticut grid and all the extra little touches that work requires — along with any accompanying impact on jobs for the external contractors that Eversource hires for some of the work.
Eversource is the dominant utility company in Connecticut, providing electricity to some 1.27 million customers in all but 20 cities and towns. The company also meters water through its Aquarion subsidiary it is now looking to sell, and natural gas in portions of Connecticut.
Last year, Eversource spent more than $1.1 billion on its historic Connecticut Light & Power territories for new lines, transformers and myriad other capital needs, a $174 million increase from 2022 or 18 percent. The company increased electricity infrastructure capital expenditures even more in Massachusetts last year, however, by 36 percent including for solar power generations facilities it owns there.
Speaking on a conference call last week, Eversource’s finance chief John Moreira told investment analysts “emerging infrastructure needs across our system provide ample opportunity for capital deployment in lieu of using those valuable resources in Connecticut.”
An Eversource manager put it more bluntly in an April hearing with commissioners of the Connecticut Public Utilities Regulatory Authority, as the company seeks approval to charge customers more for costs it is shouldering under varying state regulations and laws.
“We are not a bank or a credit card company,” said Doug Horton, vice president of rates and regulatory requirements for Eversource, speaking in April. “We cannot finance these public-policy programs without timely recovery. And if we’re not getting timely recovery for the current state-mandated contracts, we won’t be able to support any new contracts that the state might want us to sign.”
Profits down in Conn., up in Mass.
After reporting a $435 million loss last year largely to account for an aborted foray into wind power, Eversource recouped that amount in the first quarter with a $522 million profit that was a 6 percent increase from a year earlier.
Its Connecticut electricity operations saw net operating profits drop last year, however, by $14 million to $519 million for a 2.6 percent decline. The 2022 results had been impacted by $72 million in credits Eversource extended customers after 2021 settlement agreement with PURA, which included compensation for extended outages caused by damage from the August 2020 storm Isaias.
By comparison, operating profits across Massachusetts and New Hampshire were up 11.5 percent last year.
Eversource added close to 100 employees at its CL&P operations last year, but its workforce has stayed fairly constant dating back a decade, with a about 20 fewer employees entering this year compared to 2014. Across all its operations in Connecticut, Massachusetts and New Hampshire, Eversource added about 550 staff last year, pushing its total to about 10,170 people; about 4,000 of that number work for its Eversource Services operation, which handles work across all three states depending on needs.
As of Friday morning, Eversource had about 135 job openings in Connecticut, a handful more than in Massachusetts where CEO Joe Nolan and other senior executives work. An Eversource spokesperson said the company’s decision to scale back capital expenses in Connecticut would have no impact on its staffing levels.
In March, Eversource projected a roughly 0.7 percent annual increase in electric demand in Connecticut over the next decade, and peak demand increasing by more during heat waves when households keep air conditioners running around the clock.
The state also wants “smart” meters installed at homes, more electric vehicle charging stations, and increased adoption of ductless air conditioning and heating units in homes that can offer energy savings over central air conditioning and furnaces.
To keep up with those increasing electric demands, upgrading the grid is critical, which takes spending and hiring contractors to complete the work. Eversource lists just over 23,600 circuit miles of local distribution lines in its historic CL&P territories, about 2,850 miles more than in Eversource’s NStar territories in Massachusetts.
Eversource lists five major projects underway in Connecticut, from relocating Walk Bridge transmission lines in Norwalk as construction ramps up to replace the bridge; to new 115-kilovolt lines along the west bank of the Housatonic River, Stratford, Shelton and Monroe; to swapping out aging transmission cable in underground conduits in Hartford with upgraded lines.
Speaking last week in Norwalk, Gov. Ned Lamont said worries for the future capacity and reliability of the Connecticut grid are among his biggest in the context of a growing Connecticut economy.
“Energy — that’s one thing that we don’t control,” Lamont said. “Energy prices and electricity prices are a bigger and bigger piece of everything we do.”