Eversource Energy’s second-quarter earnings collapsed under the weight of a federal transmission return-on-equity reset and mounting offshore wind impairment charges, exposing how regulatory lag and troubled renewable investments are squeezing even well-capitalized utilities. The New England-based company reported a sharp income decline driven primarily by a FERC-ordered reduction in its transmission ROE and pre-tax charges tied to its offshore wind portfolio, while analysts simultaneously questioned the economics of its Connecticut subsidiary’s $1 billion smart-meter deployment plan.
The transmission hit stems from a long-running FERC proceeding that ultimately lowered the base ROE for New England transmission owners, forcing Eversource to record a cumulative adjustment for prior periods. This regulatory overhang has plagued the sector for years, creating uncertainty around the returns on critical grid infrastructure just as investment needs accelerate. For Eversource, which operates one of the region’s largest transmission networks, the ROE reset directly erodes the cash flow that funds both maintenance and the clean-energy buildout regulators demand.
Offshore wind delivered the second blow. Eversource took charges related to its stake in the Sunrise Wind project, reflecting broader industry headwinds — supply-chain inflation, interest-rate sensitivity, and permitting delays — that have forced multiple developers to renegotiate or abandon power-purchase agreements. The write-down underscores a structural mismatch: utilities are expected to underwrite early-stage offshore wind risk with regulated balance sheets, yet the revenue certainty that makes that model work has frayed as offtake prices diverge from project economics.
Jefferies’ skepticism toward Connecticut Light and Power’s $1 billion advanced metering infrastructure proposal adds a third dimension. The firm highlighted a negative benefit-to-cost ratio, arguing that the deployment’s projected savings — largely from avoided meter-reading and outage-management improvements — fail to justify the capital outlay. The critique mirrors a growing debate across the sector: as AMI becomes table stakes for grid modernization, regulators and investors are demanding sharper pencils on cost-benefit analyses, especially when ratepayers foot the bill.
Taken together, the quarter illustrates a utility caught between three converging pressures: compressed regulated returns on existing assets, stranded-cost risk on new renewable investments, and heightened scrutiny on grid-modernization spending. Eversource’s challenge is not unique — it is a preview of the capital-allocation discipline the entire sector must demonstrate as the energy transition moves from policy aspiration to balance-sheet reality.
Read the full report at Utility Dive.