PURA Decision Eliminates $70 Million in UI Investment Projects, Delays Critical Grid Upgrades
Due to PURA’s 2023 rate case decision, the company is operating on a 50 percent reduction in capital budget, impeding proactive measures to strengthen reliability and modernization efforts and increasing long-term costs for customers
UI’s new investment plan, expected to be decided by PURA in October 2025, requests $105 million in additional distribution revenue to support the critical reliability investments and grid upgrades that PURA has forced the company to defer
ORANGE, Conn. — March 19, 2025 — United Illuminating, a subsidiary of Avangrid, announced today the company has reduced its capital investments by $70 million as a result of the Public Utilities Regulatory Authority (PURA)’s 2023 decision in its last rate case (Docket No. 22-08-08). PURA’s decision to underfund the company’s rate request by 87 percent has required UI to cut its capital budget in half. As a result, the company has been forced to defer programs and projects that involve proactive replacement and system advancement, such as substation infrastructure upgrades, underground cable replacements, aging distribution line asset replacements, system capability investments, fleet vehicle replacements, and Information Technology (IT) investments. The cuts will also significantly delay grid infrastructure upgrades, including clean energy projects.
“We are deeply concerned about the number of projects and programs that PURA’s decisions have forced us to defer, with direct impacts on our customers, communities, and our front-line workforce,” said Frank Reynolds, President and CEO of UI. “The financial uncertainty brought on by Connecticut’s unstable regulatory environment is forcing us to implement a bare-bones investment plan while deferring proactive system upgrades, which will lead to more frequent outages, slower response times, and higher costs for our customers. Until we receive the necessary support from state regulators, more cuts will likely need to be made, demonstrating what happens when utilities are prohibited from collecting the revenue needed to support reliability and sustainability for our valued customers.”
Despite the budget cuts, UI’s actual Return on Equity (ROE), a measure of its profitability, has continued its downward trajectory, falling to 3.55 percent for the 2024 year-end report in its most recent quarterly filing with PURA; by comparison, PURA’s decision in the company rate case set an allowed ROE of up to 8.63 percent. The company’s degrading profitability is eroding investor confidence in Connecticut utility companies, which will raise the costs of debt and thereby increase costs for customers.
As a consequence of the unstable regulatory environment and the resulting impacts on utilities’ financial viability, rating agencies are expressing increased concern over the regulatory environment in the state. Recently, Bank of America commented that Connecticut has “probably” the “worst regulatory environment in the US.” In December, S&P and Moody’s issued credit rating downgrades for UI’s sister companies, Connecticut Natural Gas (CNG) and Southern Connecticut Gas (SCG), and S&P similarly downgraded Eversource Energy and all its subsidiaries. Credit rating downgrades force utility companies to offer premiums to investors to sell their debt, which is used in part to finance the infrastructure investments that enable a safe and reliable energy system. These premiums are borne by customers in the form of higher energy bills, raising rates in the medium- to long-term.
“UI’s financial condition has a direct impact on our ability to invest in our infrastructure to serve our customers best-in-class reliability and resiliency,” said Reynolds. “With a new rate case now before PURA, state regulators now have the opportunity to correct the harms to customers that their 2023 decision has created. We are committed to doing everything we can to advocate for the support we need from PURA to invest in the safety, reliability, and resiliency of the electric grid we proudly maintain for 345,000 residents and businesses across south-central Connecticut.”
For more information on UI’s new 2024-2025 rate case and investment plan, click here.
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Sarah Wall Fliotsos
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