On October 4, the Public Utilities Regulatory Authority (PURA) issued Draft Decisions in the Connecticut Natural Gas (CNG) and Southern Connecticut Gas (SCG) rate cases. While the companies had requested marginal rate increases, PURA made an unprecedented move:

Despite years of inflation and increased costs of doing business, PURA not only rejected CNG and SCG’s request for increased revenues – they cut the revenues of the companies by an astounding $75 million combined. That’s more than the combined net profit of the companies last year, which topped out at $63 million.

Bankrupting CNG and SCG is in no one’s best interest. Our Accounting team is certain that if anything close to the revenue cuts PURA proposed go into effect, both companies will immediately see credit rating downgrades.

Utility companies are extraordinarily capital-intensive businesses, which means they need to be able to access capital by selling their bonds. As investors are evaluating whether they want to buy those bonds, they look at the companies’ credit ratings to see whether it would be a safe investment. Credit rating agencies are already warning that the Connecticut regulatory environment is driving down the credit ratings of the state’s utility companies. CNG and SCG will then have to sell their bonds at a premium, which will drive up costs for Connecticut customers, even as it drives down the quality of service as investments are deferred.