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3 Utilities at Risk

Regulatory hurdles may prevent these companies from capitalizing on Biden's infrastructure push.

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As the Biden administration pushes its American Jobs Plan and clean energy agenda, utilities will be cast in a leading role. Utilities in constructive regulatory environments with timely cost recovery and attractive returns on investment have a big growth opportunity under President Joe Biden's ambitious plans. For those in less constructive regulatory environments, however, more investment could constrain cash flow and become a liability.

Eversource Energy is well positioned to benefit from the infrastructure investment that will be required as the Northeast moves toward a carbon-free energy mix. Offsetting this growth potential, however, is a challenging regulatory environment that we don't think the market appreciates. Connecticut has a long history of favoring customers over Eversource's investors. This is a key reason that Eversource is one of the few utilities we cover with no economic moat. We're hesitant to assign any incremental shareholder value to what we estimate could be $2 billion of offshore wind investment, given the regulatory, financial, and logistical hurdles that remain.

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