The state’s utility regulator has issued draft decisions imposing $75 million in cuts on two natural gas utilities, which their parent company, Orange-based Avangrid Inc., says will cause infrastructure upgrades to be deferred and lead to higher prices for customers.

Last week, the Public Utilities Regulatory Authority (PURA) issued a draft decision in a rate case for utility companies Connecticut Natural Gas (CNG) and Southern Connecticut Gas (SCG), reducing each company’s revenue by more than $35 million.

In the draft decision for CNG, PURA set a revenue requirement of $403.4 million, which is $38.8 million less than the utility’s current funding level, or an 8.8% decrease.

CNG requested a 4.46% increase in revenue, which it said would fund “essential reliability and resiliency projects across its service area.”

For SCG, PURA set the company’s revenue requirement at $399.4 million, which is $36.6 million less than the utility’s current level, or an 8.4% decrease.

SCG requested a 9.92% increase in revenue, also for reliability and resiliency projects.

CNG and SCG had not requested an increase in rates since 2018 and 2017, respectively.

The president and CEO of both utilities, Frank Reynolds, said the companies oppose the revenue cuts.

“These exorbitant decreases, which exceed the net income the companies earned last year, will almost certainly lead to immediate credit rating downgrades, even by more than one rating,” Reynolds said. “Already, credit agencies are evaluating these draft decisions as ‘worse than expected, ‘punitive’ and demonstrative of ‘a challenging regulatory environment in Connecticut’ – all of which signal downgrades on the horizon.”

A credit rating downgrade would affect the utilities’ ability to access capital at affordable rates, he said.

That would cause investments in system reliability and sustainability to be deferred, and customers will see higher prices as the companies have to sell bonds at higher prices, Reynolds said.

PURA rejected nearly all funding for cybersecurity, which could put customers’ personal identifying information at risk, he added.

PURA denied capital expenditures that it determined were "not used and useful." Under PURA's new ratemaking policy, it will allow a utility to earn a reasonable return on invested capital once the project has been completed and is providing a benefit to the public.

For example, CNG sought to recover costs for gas mains that have not yet gone into service, claiming that "the mains are used and useful because they are capitalized consistent with generally accepted accounting principles..."

PURA wasn't convinced.

"Nonetheless, while the mains may meet the company's definition of used and useful for accounting purposes, they do not meet the used and useful standard for utility service."

The draft decisions denied funding for any capital infrastructure investments after April 2024, which Reynolds said “paralyzes our ability to build an energy system of the future, forcing us to meet tomorrow’s demands with yesterday’s resources.”

Together, CNG and SCG serve 391,000 customers in Connecticut.

Final decisions in the rate case are expected on Nov. 18.