What Eversource’s Latest Rate Hike and A Credit Downgrade Means
Eversource’s January Rate Increase and Credit Downgrade: What It Means for Connecticut Consumers
As 2025 begins, Connecticut residents are grappling with another significant electricity rate increase. Effective January 1, Eversource Energy raised its standard service rate from 8.99 cents per kilowatt-hour (kWh) to 11.19 cents per kWh—a staggering 24% hike. For the average residential customer using 750 kWh per month, this translates to an additional $15 on their monthly bill. Unfortunately, this is just one piece of a larger puzzle, as Eversource also faces a downgraded credit rating, potentially setting the stage for even more rate increases this year.
January’s Rate Hike: A Familiar Pain Point
This latest increase isn’t an isolated incident. Eversource has consistently raised rates, with many residents now questioning how they can keep up. Over the years, spikes have become an expected yet frustrating reality. Just last winter, customers faced a 41% rate increase in their total bills, reflecting a volatile trend that has burdened households for years.
Town of Vernon petitions against Eversource's proposed rate increase https://t.co/KaY8MlU2mY
— FOX61 (@FOX61News) April 4, 2024
The January 2025 rate hike is attributed to higher costs of procuring electricity from the wholesale market. Eversource maintains that these supply charges are pass-through costs, meaning the company doesn’t profit from them. Yet, the growing financial strain on consumers suggests a more systemic issue within the energy sector.
Credit Downgrade: A Looming Threat
Adding fuel to the fire, S&P Global Ratings downgraded Eversource’s credit rating from ‘A-’ to ‘BBB+’. While this rating is still considered investment grade, it signals greater financial risk for the utility. A lower credit rating means Eversource will now face higher borrowing costs, which are often passed directly to consumers through rate increases.
Eversource itself has acknowledged the potential impact. “The downgrade will increase borrowing costs for future infrastructure investments,” the company said in a recent statement. David Sacco, a finance lecturer at the University of New Haven, explained it simply: “The lower the credit rating, the higher the interest cost it is for them to borrow money.” (NBC Connecticut).
According to Daily Energy Insider, this downgrade is expected to impact customers for decades, as higher borrowing costs trickle down to ratepayers through higher bills.
How This Affects You
The convergence of these two events—the rate hike and the credit downgrade—is a perfect storm for Connecticut ratepayers. While the January increase is already straining household budgets, the credit downgrade creates an environment where further hikes are almost inevitable. Experts warn that customers could see additional rate adjustments later this year as Eversource seeks to offset its rising financial obligations.
Eversource warns Conn. communities of reduced investments, higher costs https://t.co/DvXAlr1LyK
— FOX61 (@FOX61News) January 2, 2025
For many families, this means continued financial stress. As utility costs rise, residents are forced to make difficult decisions, such as cutting back on other expenses or dipping into savings to cover monthly bills.
What’s Next?
The ongoing rate increases and Eversource’s financial struggles highlight the need for systemic change. Investing in renewable energy solutions like solar can provide long-term relief for consumers while contributing to environmental sustainability. With solar, homeowners can reduce their dependence on grid electricity, locking in lower energy costs and insulating themselves from the volatility of rate hikes.
Eversource’s challenges also underscore the importance of regulatory oversight and transparency in the energy market. Policymakers must address the root causes of these issues to ensure that residents aren’t continuously burdened by escalating costs.
Conclusion
Eversource’s January rate hike and recent credit downgrade paint a grim picture for Connecticut energy consumers. While the company navigates financial challenges, households are left to bear the brunt of the cost. Proactive steps, such as investing in solar energy and advocating for policy changes, can help mitigate the impact of these increases.
Sources:
• NBC Connecticut: Here’s what Eversource’s credit downgrade could mean for customers
• CT Insider: Credit rating agency blames Connecticut regulatory climate for downgrades
