🔒Avangrid CEO calls CT’s regulatory environment ‘toxic’ as PURA dramatically cuts electric utility’s rate increase

State utility regulators have dealt a sharp blow to United Illuminating Co., recommending approval of just a fraction of the Bridgeport-based utility's requested rate increase in a proposed decision that underscores tension between Connecticut's utilities and their overseers. In an interview with the Hartford Business Journal, José Antonio Miranda Soto, CEO of Avangrid — UI’s parent company — sharply criticized PURA's proposed decision. "We have absolutely normalized relationships with New York, with Maine, with Massachusetts," Miranda Soto said Thursday. "In the power generation business, we are operating in 23 states, and we have very good relationships with those communities. And the only case where we have this toxic environment is here in Connecticut." In a proposed final decision on Sept. 10, the Public Utilities Regulatory Authority (PURA) approved an annual revenue requirement of $413.5 million for United Illuminating beginning Nov. 1, 2025. That represents an increase of about $28.7 million — far below the $105.4 million hike the Avangrid subsidiary had sought. The CEO said PURA's proposed funding levels would essentially force UI to operate on the same budget it had 12 years ago, without accounting for inflation. "If someone is asked to run his own businesses with the same budget that they had 12 years ago, the answer is that it is absolutely impossible, and our answer is the same: absolutely impossible," he said. UI had argued it needed a 27.4% boost in distribution revenues, along with an increase in its return on equity from 9.1% to 10.5%. Instead, PURA initially set the allowed ROE at 9.25%, and then cut it further to 8.75% to reflect what regulators described as "performance and management shortcomings." The authority cited ongoing issues with UI's handling of costs related to the long-delayed remediation of New Haven's English Station power plant, as well as lapses in complying with previous orders on advanced metering and other initiatives. Miranda Soto disputed claims about poor performance, saying UI's performance in Connecticut "is actually very, very good. Actually, it is in the first quartile of the highest performance across the different states in New England." PURA’s decision came as UI faces mounting financial pressure, with the company reporting just one day earlier that its return on equity (ROE) had fallen to a mere 3.13% — well below its authorized rate — and insufficient to attract the investment needed for critical infrastructure projects. Miranda Soto noted that the company's return on equity is so low that "our money will be better placed sitting in a bank account doing nothing, and we'll get a 4% or 5% return doing nothing," rather than investing in utility infrastructure.

Staffing, infrastructure concerns

The proposed decision includes significant cuts that Miranda Soto said would severely impact operations. PURA disallowed 71 positions from UI's headcount — representing about 10% of the company's workforce. "Can you imagine, do we have to start to fire 71 people just after the final decision comes?” he said. “That’s 10% of our staff, it is crazy." The CEO also criticized PURA for disallowing funding for the "Make Ready" project, which involves attaching devices to utility poles to facilitate rapid deployment of fiber optic cables throughout Connecticut. The project has been promoted by the state government itself, he pointed out. "What is going to happen now? We have to stop the program affecting all the deployment of the optic fiber in the state?” Miranda Soto questioned. Storm response capabilities would also be severely curtailed under the proposed decision. "For storms, normally, we're running a budget of $3 million. And what is being allowed here is a budget of 10% of that, which is $300,000 to $400,000. How can we respond to storms with such a tiny fraction of the budget that we know is going to be needed?" Miranda Soto said.

Long-term impact

The CEO warned that the funding cuts would force UI to operate on "a budget that is less than half of the budget that we need to maintain the system properly," with serious long-term consequences. "What is going to happen is that very soon along the road, you will see that the systems are starting to fail, and starting to create problems for our customers, and our customers will not have the quality service that they deserve," he said, comparing it to deferring home maintenance for years only to face major problems later. Attorney General William Tong, however, praised PURA's proposed decision, saying the utility's rate application was inflated with unjustified costs. "United Illuminating does not need more money,” Tong said. “It's Connecticut families who need a break from these relentless revenue grabs and unaffordable energy bills.” He added: "We combed through every page and penny of their application, and it was padded with unsupported expenses and unjustified corporate profits. PURA was right to cut this demand."

Broader Regulatory Battle

The rate case decision reflects a broader conflict between Connecticut's utility regulators and the companies they oversee. Under PURA Chairwoman Marissa Gillett, who took over in 2019, the agency has adopted more aggressive oversight practices that have drawn praise from consumer advocates, but fierce criticism from utilities and the investment community. Moody's Ratings has called Connecticut "the least credit supportive utility regulatory environment in the U.S.," and has downgraded multiple Connecticut utilities over the past year. Meantime, Bank of America has advised investors that Connecticut has "probably" the "worst regulatory environment in the U.S." Credit downgrades can raise the cost of borrowing for utilities, and those expenses are typically passed on to ratepayers. UI noted: "A utility company that is not able to attract investment in the market has only two options: either the company must offer investors a premium to incentivize their investment, which is paid for by customers; or the company must defer capital investments." UI serves more than 341,000 customers in 17 towns and cities in southwestern Connecticut, making it the state's second-largest electric utility after Eversource.

What's Next

PURA's Sept. 10 decision is only a proposed ruling. The final decision is expected on Oct. 28, after the parties have had the opportunity to file exceptions. "We are a very transparent company. We want that ‘the truth and nothing but the truth’ is known. And of course, we are going to file exceptions," Miranda Soto said. The company will continue to seek its original $105.4 million revenue increase request. "This is what it takes in order to maintain the lights on and to keep the grid in a sound condition," Miranda Soto said. If the final decision mirrors the proposed ruling, Miranda Soto said the company would consider legal action, while warning of deteriorating service quality for customers. When asked what would improve UI's relationship with PURA, Miranda Soto said: "We just want to have a clear recognition that to maintain the grid, you need a budget that is sensible and that is prudent. And this is not the case and that has not been happening in the last years."