Jefferies Flags Negative Returns in Eversource Connecticut Smart Meter Bid
The CP&L advanced metering proposal's 0.66 benefit-to-cost ratio has analysts expecting state regulators to reject or bypass the $1 billion plan entirely.
Eversource Energy's Connecticut Power & Light subsidiary filed a $1 billion advanced metering infrastructure proposal in mid-July 2026 that Jefferies analysts have effectively written off before state regulators have even ruled on it. In a note issued Friday (2026-07-31), Jefferies said the plan carries a benefit-to-cost ratio of 0.66, meaning for every dollar of projected benefit the program would extract roughly $1.52 from ratepayers, leaving an estimated $350 million in ratepayer costs above the calculated benefits.2
The Connecticut Public Utilities Regulatory Authority has not yet weighed in, but Jefferies told clients it expects the AMI initiative to be "securitized or not pursued," concluding that investors should model no earnings contribution from the project. The analysts described the application as having "such negative net present value" that approval appeared unlikely. If they are right, Eversource loses a potentially meaningful six-year growth driver serving 1.4 million Connecticut customers, at a moment when the parent company's core earnings are already under pressure.2
The earnings picture turned sharply negative in Q2. Eversource reported second-quarter net income of $53.7 million on Friday (2026-07-31), down from $352.7 million in the year-ago quarter, driven by one-time charges rather than any deterioration in underlying regulated operations. The charges included a $111.4 million hit tied to the sale of its Aquarion water business, a $62 million charge for a pending transmission return-on-equity refund, and $164 million in increased liability from Eversource's stake in the Revolution Wind offshore wind project.2
Revolution Wind is the charge with the longest shadow. The 704-megawatt project, being constructed by Ørsted off the New England coast, was 97% complete as of Friday (2026-07-31) and had already begun delivering 300 MW to ISO-NE, according to CEO Joseph Nolan. Nolan said the remaining installation work is straightforward and committed to a full commercial operation date before year-end. But the $164 million liability increase, booked as a one-time item even as turbines were already spinning, illustrates how offshore project accounting stays complicated right up to commissioning.2
Strip out the one-time items and management is holding its line. Eversource reiterated adjusted non-GAAP earnings guidance of $4.65 per share for 2026 and maintained its target of 5% to 7% annual EPS growth through 2030. Neither Revolution Wind nor the Connecticut AMI plan is included in Eversource's current $26.5 billion capital expenditure program, so the five-year growth trajectory relies on existing regulated infrastructure, not either of those contested projects.2
ISO-NE Mass Hub spot power was trading at $56.03/MWh on Wednesday (2026-08-05), the regional grid where Revolution Wind capacity will ultimately settle. New England's generation mix has remained heavily weighted toward natural gas for dispatchable output, making incremental offshore wind relevant over the longer horizon even as the near-term regulatory calendar is cluttered with the AMI proceeding.
The AMI proposal's arithmetic is the sticking point. A benefit-to-cost ratio below 1.0 is not automatically disqualifying in rate-regulated proceedings, since regulators sometimes credit non-quantified benefits, but 0.66 is a wide miss. Jefferies' expectation that securitization is the more likely path implies Connecticut ratepayers could end up financing program costs without the full six-year rollout ever proceeding. For shareholders, that outcome keeps the $1 billion project off the capital plan and off any near-term earnings bridge.2
The broader US metering backdrop adds context to why regulators are scrutinizing cost ratios closely. Analysis from utility infrastructure providers estimated that a nationwide advanced metering overhaul could cost ratepayers at least $100 billion across the industry, including $50 billion to replace approximately 160 million existing meters, $25 billion in manual reading costs during a transition period, and $16 billion in lost consumer benefits from disrupted existing AMI programs. The Edison Electric Institute has estimated individual utility costs at up to $4 billion spread over a 10-to-15-year replacement cycle. Those figures describe a nationwide scenario, not CP&L's Connecticut filing specifically, but they frame the regulatory skepticism Eversource is walking into.1
Eversource's Q3 results will be the next formal occasion for management to address the AMI proposal's standing. The question is whether Connecticut regulators move quickly enough to produce a verdict before then, or whether Jefferies' call for zero earnings contribution goes unchallenged through another earnings cycle.2