Calling Connecticut “the least credit supportive utility regulatory environment in the U.S.,” Moody’s Ratings downgraded the credit ratings of Eversource Energy subsidiary Connecticut Light and Power Co. on Tuesday.
Moody’s said the decision reflects an unsupportive regulatory environment, which has led to CL&P’s persistent financial volatility.
“This environment has been characterized by higher political scrutiny as well as inconsistent regulatory decisions and rate case outcomes,” said Jeff Cassella, Moody’s vice president-senior credit officer.
Moody’s lowered CL&P’s issuer rating to Baa1 from A3, and changed its outlook to stable from negative.
CL&P is the largest subsidiary of Eversource, providing electricity to 1.3 million Connecticut customers.
Meantime, it affirmed parent company Eversource’s Baa2 issuer and senior unsecured ratings, along with its negative outlook.
Moody’s further affirmed Eversource subsidiary NSTAR’s A2 issuer and senior unsecured ratings, and its negative outlook.
Moody’s said that, while CL&P’s financial metrics began to recover this year, “it is uncertain whether CL&P will be able to consistently maintain strong financial metrics going forward.”
Moody’s also cited the Public Utilities Regulatory Authority’s pending review of about $800 million of deferred costs related to storms incurred by CL&P from 2018 to 2023.
PURA is expected to rule on the matter in the third quarter of this year. The decision will determine the amount of costs that are deemed “prudent” and can be recovered by CL&P.
“However, the timing of this recovery will not be established until a formal rate case proceeding is filed, which we expect to occur some time in late 2026,” Moody’s said in its rationale for the downgrade. “Virtually all other state regulatory jurisdictions provide their utilities with much more expedited and timely recovery of costs incurred during storms.”
Moody’s said that Eversource’s negative outlook reflects “continued uncertainty about its ability to improve its financial profile,” as it works to sell its Aquarion Water Co. subsidiary.
