Eversource financial security jeopardized by Trump administration's halt orders on offshore wind projects: Fitch report
In a series of developments, Eversource, a prominent energy company serving approximately 4 million customers in New Hampshire, Connecticut, and Massachusetts, finds itself embroiled in a complex situation concerning the Revolution Wind offshore wind farm and rate hikes.
Eversource sold its 50% stake in the Revolution Wind project to Global Infrastructure Partners (GIP) last year, but it remains obligated for certain project costs. The company must ensure that GIP receives a 13% pre-tax internal rate of return on its investment in Revolution Wind, a requirement that has sparked controversy.
The Office of the Consumer Advocate, representing the interests of New Hampshire utility consumers, contends that the Return on Equity (ROE) should be 8.1% given the low-risk investment environment for utilities in the state. This disagreement led to the Office challenging the rate hike last month, urging the Public Utilities Commission (PUC) to reverse various aspects of its decision.
The PUC's decision included a $61.2 million temporary rate increase, a significant portion of the $100.7 million rate hike approved for Public Service Co. of New Hampshire. However, the New Hampshire Governor, Kelly Ayotte, a critic of the rate hike, did not reappoint Commission Chairman Daniel Goldner, initiating a search for a replacement to ensure regulatory transparency and accountability.
The Trump administration's issuance of a stop-work order on the Revolution Wind offshore wind farm has further complicated matters. This order could lead to large cost overruns or abandonment, according to Fitch Ratings, which placed Eversource Energy and its utility subsidiaries on "rating watch negative" as a result.
Ørsted, which owns half of the Revolution wind project with GIP, has petitioned the U.S. District Court in Washington, D.C., to lift the work-stop order on the project. Jefferies equity analysts, meanwhile, expect Eversource's distribution rates to be largely locked-in for a period of time, despite the negative reaction of some stakeholders.
The Office of the Consumer Advocate is particularly concerned about a fixed charge that could climb over time to $43 a month from $14 last year. They aim to prevent such an increase, fearing its impact on consumers.
In a worst-case scenario, the stop-work order could lead to a one-notch credit rating downgrade for Eversource and its subsidiaries, a serious blow for the company. As the situation unfolds, Eversource and its stakeholders grapple with the implications of these developments, navigating a challenging path towards a resolution.
As of now, no information is available regarding the person proposed to fill the position of Chairman of the New Hampshire Public Utilities Commission, further adding to the uncertainty surrounding the situation.
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