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Connecticut News

Corporate News

Eversource Statement on Credit Rating Downgrades

Dec 10, 2024

Financial news

BERLIN, Conn. (Dec. 10, 2024) – Following yesterday’s announcement that S&P has downgraded Eversource’s credit rating due to the continuing pattern of adverse regulatory developments for investor-owned utilities operating in Connecticut, Eversource issued the statement below from Vice President of Distribution Rates and Regulatory Requirements, Douglas Horton. Eversource’s subsidiaries in Connecticut – Connecticut Light and Power Co. and Yankee Gas Services Co. – were downgraded to ‘A-’ from ‘A’ and to ‘BBB’ from ‘A-’, respectively. 
 
“This latest ratings action is independent confirmation that the Connecticut regulatory environment is harming the ability of electric, water and gas companies to hold financing costs down for customers, particularly residents and businesses who are feeling the burden of high energy costs. Credit ratings are a report card on the financial health of a state’s business environment, and this new ratings action shows that not only is Connecticut failing that test, there is now a ripple effect for our customers in Massachusetts and New Hampshire as well. The negative impact of these credit rating downgrades will be long-lasting, costing customers more money for decades, extending far beyond any single rate cycle. This ratings action will ultimately impact the availability of capital resources needed to fund utility operations at a favorable cost and our company’s ability to invest in initiatives to implement public policy, including power purchase agreements. Across the states where we operate, the impact of utility investment accounts for billions of dollars in annual Gross Domestic Product. Putting the utility industry into such a precarious position financially is already causing poor results for our customers and the broader regional economy. We will continue to engage constructively with state officials to achieve a more balanced operating environment and to open the door for real progress on the broader energy issues vexing the State of Connecticut. Moving forward, we remain committed to collaborating with all stakeholders across our three-state service territory on cost-effective solutions to ensure safe, reliable service for our customers while supporting local goals at the state level.” 
 
Here’s what these credit downgrades mean for customers:
 
  • Credit downgrades have a long-lasting negative impact for any company and once a downgrade occurs, it takes many years to turn around. Providing essential utility services is an extremely capital-intensive process and a higher cost of capital will cost customers more across the board to maintain the system. 
  • Utilities spend much more than they take in through customer rates to make critically needed infrastructure investments, and debt lenders and equity investors are needed to finance the gap. Without money from external investors, utilities cannot fund their operations and therefore cuts in ongoing capital project work and other operating cost would have to occur.
  • Credit ratings dictate the cost and availability of funds for borrowing. The cost increase due from any credit downgrade will result in higher overall customer rates for decades. 
  • For example, Eversource’s electric and gas subsidiaries in Connecticut have $3 billion in planned long-term borrowing over the next five years. Due to the increased cost of borrowing resulting from a credit downgrade, customers could pay as much as $270 million in additional costs over the life of these loans, depending on market circumstances at the time of issuance. 
  • The long-lasting impact beyond five years is even greater. If depressed credit ratings are not reversed, the cost increase will affect 100% of the company’s borrowing as it comes due year-to-year. 
  • Eversource has approximately $15 billion invested in the state of Connecticut. Of that amount, roughly $7 billion is financed by long-term debt – all of which will be affected by higher financing costs.

Eversource (NYSE: ES), celebrated as a national leader for its corporate citizenship, is among the top energy companies in Newsweek’s list of America’s Most Responsible Companies for 2024 and recognized as a Five-Year Champion, appearing in every edition of the list. Eversource transmits and delivers electricity to 1.28 million customers in 149 cities and towns, provides natural gas to 251,000 customers in 74 communities, and supplies water to approximately 217,000 customers in 59 communities across Connecticut. Eversource harnesses the commitment of more than 10,000 employees across three states to build a single, united company around the mission of safely delivering reliable energy and water with superior customer service. The #1 energy efficiency provider in the nation, the company is empowering a clean energy future in the Northeast, with nationally recognized energy efficiency solutions and successful programs to integrate new clean energy resources like a first-in-the-nation networked geothermal pilot project, solar, offshore wind, electric vehicles and battery storage, into the electric system. For more information on our water services, visit aquarionwater.com.

CONTACT:
Tricia Taskey Modifica
860-665-4605