Rising Utility Bills: Implications for Eversource and National Grid Rate Hikes

The U.S. energy sector is navigating a complex landscape of regulatory shifts, inflationary pressures, and evolving consumer demands. For utility companies like Eversource Energy and National Grid, recent rate hikes and proposed regulatory overhauls have sparked debates about affordability, transparency, and long-term investment risks. As households grapple with rising electricity costs, investors must weigh the financial implications for these utilities and their stock valuations.

Energy Cost Inflation and Household Budgets

Electricity bills are no longer a static line item for households. In New Hampshire, Eversource's proposed $103 million annual distribution rate increase—part of a broader shift to performance-based ratemaking (PBR)—threatens to embed future cost hikes into an “autopilot” system. Critics argue this reduces regulatory oversight and shifts financial risk to consumers. For example, Eversource's plan to raise the fixed monthly residential charge by 43.4% to $19.81 would disproportionately impact low-usage customers, many of whom are seniors on fixed incomes. In Massachusetts, August 1, 2025, marks a new phase: Eversource's supply rate jumps to 14.8 cents per kilowatt-hour (up from 13.2 cents), while National Grid's rate rises to 15.4 cents (from 14.6 cents). These increases, tied to open-market costs, compound the financial strain on households already navigating inflation in other sectors.

Regulatory Reforms and Stock Valuation Risks

Eversource's push for PBR in New Hampshire exemplifies a broader industry trend: utilities seeking to streamline cost recovery while reducing regulatory friction. However, the proposed system's complexity—such as the “K-Bar” mechanism, which allows automatic capital cost recovery with a 10% buffer—has drawn sharp criticism. Consumer advocates warn this could violate state law and erode public trust. For investors, the key question is whether these reforms will stabilize earnings or invite legal challenges and reputational damage. Eversource's recent financial performance offers some optimism: 2024 earnings surged to $811.7 million (from a $442.2 million loss in 2023), and the company has maintained consistent dividend payments. Yet, a December 2024 credit rating downgrade (to “A-” by S&P) underscores lingering regulatory risks.

National Grid's Strategic Position

National Grid faces a different but equally challenging landscape. Its August 1 rate hike reflects broader market volatility, but the company's regulatory engagement in Massachusetts—such as its proposed seasonal heat pump rate to encourage electrification—positions it as a key player in the clean energy transition. Unlike Eversource, National Grid has not pursued a PBR overhaul, opting instead to maintain traditional rate structures. This could provide short-term stability for investors but may limit long-term flexibility as energy markets evolve.

Investment Considerations

For investors, the interplay between regulatory outcomes and financial performance is critical. Eversource's strategic divestitures, such as the $745 million sale of its offshore wind projects, demonstrate a focus on core operations and capital efficiency. However, the company's high return-on-equity request (10.3%, versus the Consumer Advocate's 8.13%) highlights potential tensions with regulators. National Grid's more conservative approach may appeal to risk-averse investors, but its exposure to rate volatility in Massachusetts could cap growth.

Conclusion: Balancing Risk and Reward

The rising utility bills facing Eversource and National Grid customers reflect a broader energy cost inflationary trend. While these utilities are adapting through regulatory reforms and strategic investments, investors must carefully assess the trade-offs. Eversource's aggressive rate proposals and PBR shift could boost short-term earnings but carry reputational and legal risks. National Grid's measured approach offers stability but may lack the innovation-driven growth of its peer. For households, the message is clear: diversifying energy sources and leveraging community aggregation programs can mitigate rate hikes. For investors, the path forward lies in monitoring regulatory decisions and aligning portfolios with utilities that balance profitability with public trust.

In an era of energy transition, the utilities that thrive will be those that navigate inflation, regulation, and sustainability with agility—and the market is watching closely.