"While we continue to work diligently to support state policy leaders on thoughtful and reasonable policies aimed at increased adoption clean energy technologies," Nolan said, without predicable regulation, "we cannot move forward to put additional capital resources on the table."

The cuts in spending follow a 3-year fight on several fronts between Eversource and the Public Utilities Regulatory Authority, especially the chair, Marissa Gillett, over how and whether Eversource can recover costs in Connecticut. PURA and Gillett, who was appointed by Gov. Ned Lamont in 2019, have said they are carrying out the state's duty to look critically at whether utility spending is reasonable and prudent.

The cuts are in capital projects, not regular daily operations. They will reduce Eversource's spending on major projects in Connecticut by about 16 percent from a level of about $600 million a year. Eversource is not expected to cut staff jobs as a result of the move but Connecticut suppliers are likely to see less work.

Safety of the grid remains a top priority and will not be compromised, Nolan said. But he was clear that reliability could suffer, meaning, though he didn't spell it out, this lower spending could lead to more power outages. He noted that Eversource has seen dramatic improvements in reliability in Connecticut over the last 10 years, making it "best in class."

Nolan said directly that the cutback will mean Connecticut's drive for energy efficiency and modernization of the grid, especially for electric vehicles and smart meters, will slow because Connecticut regulatory actions "discourage investment and utility innovation." The company received approval several months ago to install more than 1 million smart meters, make more clean-energy initiatives possible.

Customers will not see a change in rates as a result of lower Eversource capital spending and it's unclear how or whether rates would change in the long run. In theory, the less the company spends, he less it can bill ratepayers. But that can be perilous, like a homeowner delaying a roof repair.

"Eversource has a legal obligation to maintain grid reliability and we are confident they will uphold that commitment," Lamont spokeswoman Julia Bergman said in a written response. "The governor has been clear in his support of Connecticut's shift toward performance-based regulation and his support for Marissa Gillett as chair of Connecticut's Public Utilities Regulatory Authority."

A spokesperson for PURA did not return calls seeking comment Thursday.

Rate disputes on several fronts

Gillett has championed performance-based ratemaking, under which regulated companies are able to recover expenses not only based on whether they fit the definition of "prudent and reasonable" but also on how well the company delivers services. That system is evolving in Connecticut and both Eversource and United Illuminating, which also has pushed back against PURA, have said the authority is imposing the new system without rules in place.

The public sees rates going up, of course, and that adds pressure on all sides regardless of what causes the increases. For example, last month Eversource received PURA approval to recover $784 million it spent due to state-imposed policies including a contract to bail out the Millstone nuclear power plant and an order preventing Eversource from shutting off power to customers who don't pay their electric bills.

That charge, about $27 a month for a typical customer starting this summer, led to a divided decision in which Gillett dissented, saying PURA should have spread out the recovery over two years instead of ten months.

"It feels like we're being held hostage," Sen. Norm Needleman, D-Essex, a supporter of Gillett and co-chair of the legislature's Energy and Technology Committee, said in a text response. "This is an extremely discouraging approach to working as the regulated public monopoly in the state."

Needleman said he's been "careful about not trying to escalate this anymore" with new legislation. But he said Eversource is ultimately recoiling at "a more rigorous look at their books" under Gillett.

"Unfortunately, if they neglect the grid and something happens it's going to be on them," Neddleman said.

Part of the dispute is about the timing of Eversource seeking a rate case, the lengthy legal proceeding that leads to a true-up in customer charges based on money the company has spent. "The administration believes the best way for Eversource to have a fair review of their recovery costs is by coming in for a ratemaking case," Bergman said.

Eversource executives say PURA under Gillett is delaying or denying payments due the company and that a rate case would not lead to a fair result for the company. For example, PURA initially declined to allow Eversource to seek interim approval of $634 million of storm costs incurred between 2018 and 2021, then moved slowly on the request, then launched a case that is not eligible for appeal. Massachusetts and New Hampshire, by contrast, approved storm costs quickly and with little fuss.

Then there's the UI rate case in which PURA denied expenses that company said were legitimate. Although that case doesn't directly affect Eversource, it has signaled to financial markets that Connecticut is a poor place to invest, executives of both companies have said.

Nolan and John Moreira, the Eversource chief financial officer, said the company is moving ahead with its planned sale of Aquarion Water Co., where a disputed rate case is in the courts. Nolan said Eversource has asked the state Supreme Court to take the case, in which a Superior Court judge recently upheld PURA's rejection of a rate hike request and instead ordered a rate cut.

'Connecticut has a phenomenal opportunity'

Nolan and Moreira praised Connecticut's energy-savings goals and said the company has good relations with Lamont and other state agencies, including the state Attorney General's office. They also said Connecticut's improvement in reliability has shown dramatic results, with the average duration between outages now two years, compared with ten months a decade ago.

"Connecticut has a phenomenal opportunity to be really a leader in clean energy," Nolan said, "but unfortunately it's been a real challenge."

By contrast, the Eversource executives said Massachusetts and New Hampshire are both working well with the company on regulatory issues. They said the total Eversource spending on capital projects will not change, implying that some Connecticut money will now be spent elsewhere.

Asked by an analyst what it will take to resume full capital investment in Connecticut, Nolan said, "We're looking for a roadmap for recovery of the money we've spent....We expect to have an orderly recovery process just like we have in Massachusetts. We will not spend dollars until such time as we have a constructive regulatory environment."

Whether Connecticut ratepayers and officials view the move by Eversource as unwarranted vengeance or as a reasonable response, this standoff now hits the state hard both directly in the form of slowed progress on the grid, and indirectly in reputation. Nolan, whose staff is loaded up with former state lawmakers and top government officials, said he's committed to "working seven days a week" to fix the issue.

"If we don't collaborate, it makes it very, very difficult," Nolan said. "In my 48 years we have always had strong working relations so it's a disappointment to me and it's a priority to me as we try to focus on Connecticut."

Lamont has so far not stepped in to mediate directly. His style is to allow his people to do their jobs with broad oversight, bringing down the hand of authority only in crises such as the COVID-19 pandemic, when he issued dozens of orders, some hotly contested.

This standoff calls for action on that order by the governor.

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