Connecticut’s funding hangs on Trump’s policies
PAUL HUGHES
HARTFORD – A whipsawed state government continues to grapple
with federal spending directives tied to President Donald Trump’s policy agenda
after the White House last week ordered and then rescinded a 90-day pause on
payments from many federal grant, loan and assistance programs within 48 hours.
While the Office of Management and Budget pulled back the
order that potentially applied to $3 trillion in federal spending Wednesday,
the Trump administration made clear that all the president’s orders on federal
spending remain fully in effect, and now the implications of these far-reaching
orders are coming into sharper focus.
Gov. Ned Lamont had been playing down an executive order
Trump issued during his first week in office temporarily halting disbursement
of remaining funds appropriated under the Infrastructure Investment and Jobs
Act and the Inflation Reduction Act.
He had been saying he thought Trump would likely pull back
on elements of the IRA like tax incentives for investments in clean energy and
electric vehicle programs, but the president was a builder, and he believed
Trump was unlikely to cut off IIJA funding for road, bridge and rail
construction projects.
Then, the state Department of Transportation became aware
Thursday morning that U.S. Transportation Secretary Sean Duffy issued a memo
Wednesday that linked federal transportation funding to policies on masks,
vaccines, tolls, population growth, and immigration enforcement. Lamont and the
governor’s office reported other state agencies besides the DOT had received
communications from federal agencies concerning the president’s executive
orders, including the state Department of Public Health, the state Department
of Labor, and the state Department of Energy and Environmental Protection.
“Now we’re finding that each and every one of the
departments are coming out with their own special set of restrictions and rules
that could harm us,” an exasperated Lamont said.
THE DUFFY MEMO STATED the Trump administration would rank
federal transportation funding for highway tolling projects and for projects
serving communities that have higher marriage and birth rates than the national
average. Ironically, Lamont tried repeatedly, but was unable to win legislative
support for highway tolls in his first year as governor, and he has since given
up on tolls. Connecticut is one of the oldest states by population age, and the
state’s birth rate is usually lower than the national birth rate, and the
marriage rate fluctuates, but most recently was just below the national
average.
The Duffy memo also said federal transportation funding
would be denied to recipients that impose vaccine and mask mandates, and it
required local compliance and cooperation with federal immigration enforcement,
and goals and objectives specified by the president or the transportation
secretary.
Lamont used emergency powers to impose vaccine and mask
mandates in Connecticut during the COVID-19 outbreak. He also signed a state
law that eliminated a religious exemption for required school vaccinations,
leaving only a medical exemption.
A state law, adopted in 2013 and expanded in 2019 under
Lamont, known as the TRUST Act, limits state and local cooperation in federal
immigration enforce. Before the 2019 changes, U.S. Department of Justice in the
first Trump administration determined that Connecticut’s existing law had
complied with all federal requirements, including a prohibition against
impeding communications with U.S. Immigrations and Customs Enforcement.
Duffy also signed a second directive to eliminate, among
other things, orders, regulations, funding agreements and programs that
reference climate change, greenhouse gas emissions, racial equity, gender
identity, diversity, equity and inclusion goals, or environmental justice.
State Labor Commissioner Danté Bartolomeo received a Jan. 22
communication from the U.S. Department of Labor directing state labor agencies
to cease all DEI activities under their federal awards, and advising any costs
incurred after Jan. 22 would be disallowed.
Katie S. Dykes, the commissioner of the Department of Energy
and Environmental Protection, said she and her staff had been reviewing federal
funding supports and assessing how cutbacks might affect operations before
Trump administration announced its temporary spending freeze last Monday. The
U.S. Environmental Protection Agency also had issued a notice last Monday
announcing a pause on all unobligated IRA and IIJA funds.
Dykes said DEEP receives $60 million to $70 million in
federal funding, including federal grants that the department passes through to
recipients, and federal funding partially or fully funds approximately 20% of
her department’s workforce of 1,335.
THE U.S. SUPREME COURT has held the federal government can
impose conditions on federal funding to encourage states to adopt a policy, but
those conditions must be related to the federal interest in the projects being
funded, and they cannot be used to coerce states to meet a federal policy
mandate_
U.S. Sen. Richard Blumenthal, D-Conn., a former state
attorney general, said Trump acted illegally when the Office of Management and
Budget last Monday ordered a 90-day pause on payments from many federal grant,
loan and assistance programs while the administration reviews whether the
programs are consistent with the president’s policies and requirements. He said
neither Trump, nor any other president has the authority to unilaterally
withhold funds Congress has appropriated.
The original, two-page OMB memo caused widespread confusion
and uncertainty, and a follow-up memo OMB issued Tuesday provided some more
clarity, but still left many questions, and did little to quell the nationwide
backlash. A federal judge sitting in the District of Columbia had placed a
temporary six-day stay on the original OMB directive shortly before it was due
to take effect at 5 p.m. Tuesday. Nonprofit groups that rely on federal funding
brought that lawsuit. Citing that order, OMB on Wednesday rescinded the order
on the temporary spending freeze.
On Friday, a federal judge in Rhode Island handed the Trump
administration another setback in a separate legal challenge brought by
Connecticut Attorney General William Tong and Democratic attorneys general from
other states to block the temporary spending freeze.
U.S. District Judge John McConnell Jr. granted a temporary
restraining order against the Trump administration based on its actions to
unilaterally suspend federal funds without citing any legal authority “Congress
has not given the executive limitless power to broadly and indefinitely pause
all funds that it has expressly directed to specific recipients and purposes
and therefore the executive’s actions violate the separate of powers,”
McConnell wrote.
The judge’s order did not prohibit the Trump administration
from conducting a review of federal assistance programs covered under the
rescinded OMB directive, but barred the administration from pausing or
terminating any congressionally approved funds.
Eversource spending billions on Massachusetts upgrades as it cuts Connecticut investment sharply
Messages rarely line up as cleanly as they did for
Eversource over the last week, especially sweeping messages to entire states.Ad
On Monday, Jan. 27, the regional utility holding
company agreed
to sell Aquarion Water Co. for $1.6 billion plus debt to the New
Haven-area's Regional Water Authority, nearly a year after putting the business
up for sale. Regulators had nixed an Aquarion rate hike request in 2023.
Then on Tuesday, Eversource CEO Joe Nolan Jr. and his
deputies at Eversource gathered
in Cambridge, Mass. alongside smiling public officials for the
groundbreaking of a $1.8 billion, underground
electrical substation with new urban transmission lines — a substation
that's said to be one of the most advanced in the world, extending more than100
feet below the surface as part of a mixed-use development.
It will take six years to build — the mini-Big-Dig, I call
it — and will emerge as the showpiece of the energy future of metro
Boston.
"The
innovative project will also enable the interconnection of more new
clean energy resources to support additional electric supply and increase the
grid’s capacity as electrification continues to grow," Eversource said in
a written statement.
In addition to the Aquarion exit and the Cambridge
investment, Nolan personally announced to Wall Street analysts last May
that the company would cut
its spending on the Connecticut grid by $500 million over five years,
or about 15 percent. The company later slashed another $83 million of 2025
spending and it might cut even more beyond that.
Spending in Massachusetts? It's up sharply.
In his speech, Nolan said nary a negative word about
Connecticut. He didn't have to. The multi-billion-dollar actions spoke loudly
enough: In Connecticut, we will invest the bare minimum to maintain reliability
and we might see some slippage on that front.
In Massachusetts, we are full speed ahead, the company is
saying.
The long-running war
of words and lawsuits between Connecticut public officials and Eversource has
now grown into a war of action. And it's happening at a terrible time.
Predictions call for dramatic increases in electricity demand over the next 10
years to power heat pumps and electric vehicles.
All of this clean energy demand will need a so-called smart
grid including advanced meters and systems that meld small-scale solar
generation smoothly into the network. Connecticut? We stand to miss the wave
if Eversource carries out its promise.
A desperate need for settlement talks
To punctuate the message, Eversource Energy and
United Illuminating Co., the other large utility business in Connecticut,
filed a lawsuit Thursday, charging that Marissa Gillett, the chair of the
Public Utilities Regulatory Authority, has illegally
usurped decision-making power from her fellow commissioners.
That lawsuit, which the state immediately rebuked, is likely
to turn on narrow technical grounds. But make no mistake, Eversource and UI
meant it as a broad statement about how they are being regulated.
This war has to stop. No one is the winner as the bickering
turns to disappearing dollars. Someone, preferably Gov. Ned Lamont, must
step in and mediate a power treaty.
"We've got to start working together a little bit
better," Lamont said when I asked him about mediating.
The governor then sided with PURA and Gillett, and
called on Eversource to "lower the temperature and stop blaming the
Connecticut regulatory environment." On Friday, Lamont told John
Moritz of the CT Mirror he believes the utilities are in a "full-court
press" to have Gillett ousted.
Lamont, who last month nominated Gillett for a new,
4-year term at PURA, has convened some meetings to talk about the clashes. Now
the governor must step it up; either stop taking sides and instead mediate the
dispute himself, or launch formal, outside mediation to settle a war that
includes multiple lawsuits.
Or the courts should assign a judge to do it.
Until we find a way out of this, we will still pay among the
highest rates in the nation, but for a lesser electric grid.
"I will admit I’ve got Massachusetts envy," state
Rep. Jonathan Steinberg, D-Westport, co-chairman of the legislature's Energy
and Technology Committee. "They’re doing things in Mass. that I’d like to
see them do in Connecticut."
Dramatic spending numbers
In the five years from 2018 to 2022, Eversource spent
$2.6 billion on capital investments in the Connecticut distribution system,
meaning equipment such as transformers and switches along with poles and wires
that will last many years.
The spend in Massachusetts in those five years was $3
billion, roughly on par considering the company's somewhat larger electrical
footprint in the Bay State. (Eversource was created in 2012 when Hartford-based
Northeast Utilities with its Connecticut Light & Power and Western Mass.
Electric subsidiaries merged with NSTAR Electric & Gas of Boston.)
The plan for 2024 to 2028: Connecticut will see $2.8 billion
in distribution capital spending, the company said in documents, making it
clear that amound could fall lower. Massachusetts will see $5.5 billion —
including $1.5 billion for clean energy upgrades, compared with almost no clean
energy grid upgrades in Connecticut.
And it's worse than that. Eversource has said nothing about
paring back on transmission projects in Connecticut, as those are regulated by
a federal agency, not the states, and they bring nice profits to the company.
But consider that the $1.8 billion Cambridge project is $460 million of
distribution, the rest transmission. If distribution upgrades enable more clean
power delivery, where would you guess the larger and glitzier transmission
work will end up?
Some of the spending imbalance, Steinberg said, is that
Boston is a much bigger city than anyplace in Connecticut. It has old, urban
infrastructure that needs replacing, along with faster growth to support the
upgrades.
The core of the legal battles is that Eversource and
Avangrid, the parent of UI, insist PURA decisions under Gillett are
improperly denying compensation to the utilities for their spending. But
there's also a generalized anger at the utilities that peaked in July when heat
waves led to spiking bills.
Eversource makes the point that only about 40 percent of the
average bill covers for costs Eversource can control. For the rest, namely
power supply from generators and public benefits mandated by the state,
Eversource is just a pass-through, earning zero profit. And those are the costs
most out of line with the rest of the nation.
As the tensions have risen in
Connecticut, Massachusetts has moved faster in demanding specific
modernization moves to meet the era. Connecticut does have clear goals.
Massachusetts has something better: mandated plans.
A frustrating dispute
Despite some past meltdowns in restoring power after storms,
notably Isaias
in the summer of 2020, Eversource has a strong reliability record in
Connecticut, top 25 percent in the industry nationwide. And its storm outage
recovery seems dramatically better.
We'd like to think reliability, like safety, is
non-negotiable. But Nolan
told Wall Street analysts last spring, in a remarkably blunt concession for
a public-company CEO, that yes, reliability could suffer in Connecticut.
It's not clear, publicly at least, how and where Eversource
is cutting back on its capital spending. Claire Coleman, the state Consumer
Counsel, who represents ratepayers in cases before regulators, has asked
Eversource to document its plans.
Some critics in the legislature including Steinberg,
the energy committee co-chair, and Senate co-chair Norm Needleman, D-Essex, say
it might come down to the state enforcing Eversource's franchise
responsibilities.
What's most frustrating about this is that PURA, the
regulatory agency, has not actually ruled against Eversource's Connecticut
electric operations; not one rejection of a rate hike request, not one
rejection of a storm cost claim. Those cases are coming later this year and in
2026, along with a new set of guidelines for grid upkeep and new rules on how
PURA will approve electric rates.
Even without any of those PURA cases, Eversource has seen
what it calls draconian rulings from PURA against
Aquarion, Connecticut Water Co., two natural gas suppliers and UI. Those
rulings, some still in court appeals, signal that the company must plan to
spend less on infrastructure because PURA will not reimburse the higher
outlays, Eversource executives say.
"You’re always looking at decisions that come out of a
regulator, and decision after decision after decision has focused on driving
investment levels down. So as a regulated utility, you have to react to
that," said Steve Sullivan, president of Connecticut electric operations,
earlier this month. "We’ve been doing the best we can to communicate what
we feel is the broader picture."
Wall Street has taken notice, sending Eversource shares down
37 percent since the summer of 2022 even as the broader markets rose by 45
percent.
Lots of blame; my house is open for talks
Critics say the company grew accustomed to lax regulation
that changed starting with Lamont's appointment
of Gillett as the PURA chair in 2019. They say Eversource
overpays executives and posts record profits at ratepayers' expense. And they
say the stock tumble was caused by a $2 billion loss in offshore wind power
ventures. (Eversource says Connecticut regulation is the main cause, as the
losses happened two years ago and the stock slide has continued.)
"They are existentially afraid that what we’re doing in
Connecticut is going to catch on and put a crimp in their business
model," Steinberg told me Wednesday. In the past, he added,
"They could almost guarantee double-digit rates of return, which was a
pretty good racket to have....They should have seen this coming."
Steinberg mused that maybe Eversource could spend some
proceeds from Aquarion on Connecticut electric upgrades. In fact, the company
took a $300 million loss on the sale of the water utility it bought in 2017. As
for profits, Connecticut electric operations are hardly a cash cow.
The dispute has grown personal
and nasty with dueling letters between the company and Democratic
state legislators, each accusing the other side of intimidation.
This is not progress. My conclusion: It's fixable.
Eversource is calling for collaboration, saying it has no
problem with tough regulation requiring it to justify costs. "I just want
it to be real as opposed to a headline or a sound bite," implored Doug
Horton, vice president for rates.
It's too late for the political system and the courts to
solve this piecemeal. Formal mediation is the only way out. They can meet at my
house in West Hartford, preferably in mid-summer. I have no air conditioning so
it should be quick.
Land clearing begins in Danbury for 24-unit apartment building at site of the former ‘barracks’
DANBURY – A heavy excavator was clearing land on Monday to
make space for a 24-unit apartment building just outside the city’s downtown limits,
where a row of three apartment houses known as "the
barracks" were once a blighting influence.Ad
“We have a good city with some new housing coming in, and
there’s going to be more of it popping up,” said Joseph
DaSilva, a landlord and developer who is building the new four-story
apartment house on Town Hill Avenue in Danbury. “We are going to
excavate the site, set our foundation, and proceed from there.”
DaSilva was referring to a hilltop property that overlooks
the downtown area and its distinctive
domed Fairfield County former courthouse and St.
Peter Church steeple, both on Main Street. DaSilva’s half-acre
property starts at the dead-end of Park Place and slopes uphill to Town Hill
Avenue, at the intersection with Cottage Street.
He received approval before the COVID-19 pandemic to build
the new multifamily housing and to raze three 1929 apartment houses that were
“a real problem for us in terms of the way they looked,” according former Mayor
Mark Boughton.
Recently DaSilva had to go back to the city for approval of
revisions for the 24-unit apartment house when he changed the stormwater
management plan.
“The site has been difficult,” DaSilva told Hearst
Connecticut Media on Monday.
Plans call for three studios, four two-bedroom apartments,
and a balance of one-bedroom apartments, which will rent at market rates, he
said.
The city’s professional Planning Department gave its
approval Jan. 15 requiring, among other conditions, that “the on-site storm
drainage system shall remain private, and regular maintenance is crucial for
the system to continue to function as intended.”
The start of construction for DaSilva Apartments comes one
week after the city updated its downtown
development rules to bring the city’s Main Street corridor back to
life. Much of the downtown zoning update involves incentives to encourage more
housing and mixed-use development in a once-thriving corridor that has lagged
behind the residential growth on the city's west side and
the commercial success of the busy east end.
Town Hill Avenue, which runs parallel to south Main Street,
is just east of the official downtown boundary.
A half mile to the north on Main Street, Ives Bank has razed
three buildings to make room for a new headquarters building.
The construction on Town Hill Avenue marks a new chapter for
the site and for the landlord.
DaSilva was convicted
of negligent homicide and sentenced to 18 months in prison for the
death of an Ecuadorian immigrant on the property who DaSilva pushed down
the stairs in 2009.
“I regret my actions of that day, and I’m very sorry for
this,” DaSilva
said during his sentencing hearing. “I have tried during my life to do
positive things for Danbury.”