HARTFORDBUSINESS.COM | APRIL 7, 2025 43
Opinion & Commentary
Biz Starts
OTHER VOICES
Customers lose when utilities have their credit downgraded
By John Quackenbush
F
or decades, electric companies
were seen as having steady
operations, overseen by state
regulators who provided the utili-
ties with an opportunity to make
a fair return on their investments
in exchange for ensuring that their
customers had reliable
and resilient service,
year-round and day in,
day out.
But when state regu-
lation becomes erratic,
unfavorable or unpre-
dictable, that stability
can fall dangerously out of alignment
and suddenly, customers are caught
in the crossfire.
Unfortunately, that situation is
playing out in a few states, but
most glaringly in Connecticut. All
of the Nutmeg State's utilities have
received credit downgrades so
egregious that Bank of America has
said Connecticut is "probably…the
worst regulatory environment in the
United States."
It's so bad that an all-out war has
erupted between the Public Utilities
Regulatory Authority (PURA), electric
companies and some legislators. This
situation is creating two different, and
serious, risks for the state.
First, Connecticut's business
community is watching this crisis
closely. If credit downgrades result in
less investment in the electric grid, it
could lead to companies that depend
on affordable, reliable and increas-
ingly clean electricity to seek more
stable business environments.
Unfortunately for Connecticut,
more reliable alternatives do exist.
Consider that after New Jersey
was struck by Superstorm Sandy,
regulators there made a massive and
long-term commitment to strength-
ening the electric grid.
Could you blame business leaders
for moving to markets where regu-
lators and lawmakers recognize the
importance of reliable power and are
taking clear steps to ensure afford-
able electricity for years to come?
For example, Connecticut could lose
out on the massive economic boom of
artificial intelligence, or AI. Businesses
focused on this new, powerful and
heavily energy-dependent technology
could avoid the state. That would
mean fewer high-paying jobs and less
tax revenues for many towns, cities
and the state of Connecticut.
The second serious risk for
Connecticut is that an electric compa-
ny's credit rating is directly linked to the
rates customers pay, and the quality of
service they get.
Electric companies that invest in
the distribution grid are subject to
a state-regulated "return on equity,"
designed to balance the costs to
ratepayers while ensuring utilities
have enough money to deliver afford-
able, reliable electricity service to
their customers.
It is often misstated that the return
on equity is guaranteed, but it is not.
And as a matter of fact, PURA and
the Connecticut attorney general's
office argued that returns are not
guaranteed for utilities, despite
claims from other politicians, during
oral arguments to the Connecticut
Supreme Court last month.
The only guarantee is that the
return companies get back on their
investments cannot exceed a pre-de-
termined level established by the
state utility commission. But that
return usually falls significantly short
in Connecticut.
Finding that sweet spot is an essen-
tial factor in the long-established
"regulatory compact." The regulatory
compact is a unique agreement that
creates, in well-regulated jurisdic-
tions, a give-and-take dynamic.
The trade-off between the electric
companies and their regulator is
simple. The companies must serve
all the customers in its territory
in exchange for agreeing to have
the regulator thoroughly review its
finances and determine a fair return
on the company's investments.
However, in poorly or erratically
regulated environments, this sweet
spot is missed. If the regulator gives
too low of a return on equity, credit
ratings agencies take notice, and
credit rating downgrades can follow.
Just as a bad credit score makes it
more expensive for everyday people
to get loans or mortgages, a lower
credit rating means higher borrowing
rates for companies. Since a utility's
cost to deliver electricity is passed
onto the consumer, higher borrowing
costs mean higher electric bills.
Worse, if the utility has higher
borrowing costs due to a credit
downgrade, it can create a situation
that slows utility investment in their
electricity infrastructure.
Failing to invest in the electric grid
also means less reliable power, and
longer and more frequent black-
outs. This is especially true when
severe weather hits. A stronger
power grid means fewer failures
and quicker repairs to restore power
to customers.
In states like Connecticut, where the
regulatory balance has been lost, things
are likely to get worse before they get
better unless there is a change.
In the meantime, fewer businesses
may move to the state, costing
Connecticut many good jobs that
will simply go elsewhere. This, plus
higher power bills and a less reliable
electric grid, makes it clear that the
state's regulators need to recalibrate
to ensure a return to Connecticut
having fully functional utilities.
John Quackenbush served as
chairman of the Michigan Public Service
Commission from 2011 to 2016.
John
Quackenbush
LOCAVOR LLC
700 BLOOMFIELD AVENUE
BLOOMFIELD
MAX@LOCAVOR.ONMICROSOFT.COM
SULLY'S BEAUTY LOUNGE LLC
107 OLD WINDSOR RD
BLOOMFIELD
LASHEDBYSULLYY@GMAIL.COM
CHAZANI LLC
8 S BARN HILL RD
BLOOMFIELD
CHAZANIDOUGLAS@GMAIL.COM
TF EXPRESS LLC
9 JEFFREY LN
BLOOMFIELD
TANIELFEARON@TFEXPRESSLLC.ONMICROSOFT.COM
4ANGELLA LLC
42 REPUBLIC DR
BLOOMFIELD
1NIAEAST@GMAIL.COM
PINK THERAPEUTIC ART LLC
3 DALE AVE
BLOOMFIELD
PINKTHERAPEUTICART@GMAIL.COM
ETERNAL CROSSING LLC
364 WESTWOOD RD
BRISTOL
DJC@ETERNALCROSSING.COM
NICKLE SHINE CAR WASH LLC
2 DALLAS AVE
BRISTOL
NICKLE.SHINE25@OUTLOOK.COM
PAGAN PROPERTIES, LLC
99 CURTISS STREET
BRISTOL
GABRIEL7PGN@YAHOO.COM
TREASURE CHEST 607 LLC
78 SUMMER STREET 1ST FLOOR
BRISTOL
TREASURECHEST607@GMAIL.COM
KRYPTIC MYSTIK LLC
51 GRIDLEY ST
BRISTOL
GKNITE4R27@GMAIL.COM
SCSL WHOLESALE LLC
137 LAKE AVE
BRISTOL
SCSLWHOLESALERS@GMAIL.COM
BNRLANDSCAPING L.L.C.
67 ARBOR CT
BRISTOL
DON@BNRLANDSCAPINGLLC.COM
148 GEORGE STREET LLC
1019 FARMINGTON AVE
BRISTOL
ALARGENT@LEGACYLAWPARTNERS.COM
ZERO EFFORT BEAUTY LLC
1019 FARMINGTON AVE
BRISTOL
PHIBROWSEVELYN@GMAIL.COM
NANOSKIN FORMULATIONS LLC
137 IPSWITCH RD
BRISTOL
EFILE1234@INCFILE.COM
154 GEORGE STREET LLC
148 GEORGE ST
BRISTOL
ALARGENT@LEGACYLAWPARTNERS.COM
158 GEORGE STREET LLC
148 GEORGE ST
BRISTOL
ALARGENT@LEGACYLAWPARTNERS.COM
SPLASH BROS LLC
1424 STAFFORD AVE
BRISTOL
SEANW@SPLASHBROSLLC.COM
164 GEORGE STREET LLC
148 GEORGE ST
BRISTOL
ALARGENT@LEGACYLAWPARTNERS.COM
SEVAN'S INVESTMENT LLC
3 RUDOLPH PL
BRISTOL
SPOURHARTON91@GMAIL.COM
SUNFLOWER FREQUENCIES LLC
130 JEFFERSON AVE
BRISTOL
SUNFLOWERFREQUENCIESLLC@GMAIL.COM
MCJ PROPERTIES LIMITED LIABILITY
COMPANY
35 ARLENE DRIVE
BRISTOL
KYLEHARRIS42884@ICLOUD.COM
VESTA EMPIRE LLC
356 IVY DR
BRISTOL
PROPERTIES@VESTAEMPIRE.COM
NEOPOLIS STRATEGIC LLC
195 S MERIDEN RD
CHESHIRE
DALE.SALSMAN@GMAIL.COM
ARC INNOVATIONS LLC
530 WEST MAIN STREET
CHESHIRE
COFRANCESCOAUSTIN@GMAIL.COM
MARTIN STRATEGIC WEALTH, LLC
240 HIGHLAND AVE
CHESHIRE
TOM.MARTIN@MARTINSTRATEGICWEALTH.COM
J HEAVENS PHOTOGRAPHY LLC
60 ROSEMARY LANE
CHESHIRE
JHEAVENSPHOTO@GMAIL.COM
WEDDING COUTURE, LLC
240 HIGHLAND AVE
CHESHIRE
SUSIE@WEDDINGCOUTUREPHOTO.COM
HEAVENLY LOVE STOP CORP
46 WOODYCREST DR
EAST HARTFORD
HEAVENLYLOVESTOP@OUTLOOK.COM
HEROLASER CORP
111 ROBERTS STREET
EAST HARTFORD
HEROLASERMAKE@GMAIL.COM
HAOSHERO CORP
111 ROBERTS ST
EAST HARTFORD
HEROLASERMAKE@GMAIL.COM
MENTAL WELLNESS FOR THE HUMAN
EXPERIENCE LLC
9 ARNOLD DR
EAST HARTFORD
MALLORY.FREEMANAPRN@GMAIL.COM
AFRICA DELIGHT LLC
16 LILAC ST
EAST HARTFORD
GODELPHINE1@GMAIL.COM
LORE & LANTERNS LLC
33 BURNSIDE AVE APT B6
EAST HARTFORD
EFILE1234@INCFILE.COM
