Moody’s Ratings downgraded its credit outlook on Tuesday for the state’s largest electric utility, Eversource subsidiary CL&P, based on what its analysts called Connecticut’s worst-in-the-nation regulatory environment.

“The downgrade of The Connecticut Light and Power …primarily reflects a Connecticut regulatory jurisdiction that is currently the least credit supportive utility regulatory environment in the U.S.,” said Moody’s VP and Senior Ratings Officer Jeff Cassella. “This environment has been characterized by higher political scrutiny as well as inconsistent regulatory decisions and rate case outcomes.

“Given the challenging Connecticut regulatory environment, it is uncertain whether CL&P will be able to consistently maintain strong financial metrics going forward.”

Based on the analysis, Moody’s lowered its CL&P rating from A3 to Baa1.

The drop is the latest in a succession of Connecticut utility credit downgrades, all based on what analysts have called the state’s adverse or negative regulatory environment. The downgrade is likely to escalate what already has become a long, angry and increasingly political fight over how the Public Utilities Regulatory Authority enforces regulatory law and policy.

The state’s dominant utilities, Eversource and Avangrid, are challenging recent PURA decisions in a variety of forums in court and before the regulatory agency. The utilities claim PURA, under the leadership of current Chair Marissa Gillett, has shown an anti-utility bias and is making arbitrary rate decisions that violate regulatory law and precedent.

Gillett, whose confirmation to a second term overcame a political challenge earlier this year, has left much of her defense to her political allies, including Gov. Ned Lamont, who argue that the utilities are exaggerating financial problems and are complaining because Gillett is holding them to account for business decisions.

PURA did not respond to an inquiry about the credit downgrade. A Lamont spokesman declined to comment. An Eversource spokesperson was not immediately available

The Moody’s decision became public Tuesday afternoon as Eversource and Avangrid were in Superior Court in Hartford, pressing a lawsuit that accuses PURA of bias and of operating in a fashion that has allowed Gillett to conceal the fact that she is making decisions unilaterally — and illegally — by freezing fellow commissions out of the rate setting process.

Hartford Attorney Thomas J. Murphy, arguing for both utilities, asked Superior Court Judge Kaitlin A. Halloran to give the utilities access to PURA records and the opportunity to question authority officials on subjects that could support the utility claims. Assistant Attorney General James Caley, defending PURA, argued against disclosure, saying the suit should be dismissed.

Halloran said she will issue a written opinion.

A day earlier, Avangrid subsidiaries Southern Connecticut Gas and Connecticut Natural Gas were in Superior Court in New Britain trying to force PURA to disclose a text message exchange involving Gillett that discussed an unusual anti-utility news opinion column, or op-ed.

After fighting disclosure of the text messages for months, PURA acknowledged in court Monday that it cannot comply with an order to produce the exchange because it was destroyed late last year by an automatic deletion program on Gillett’s personal cell phone.

The gas companies believe the text messages will show bias on PURA’s part in a decision that reduced their rates and precipitated credit downgrades for both companies. Superior Court Judge Matthew J. Budzik said he will issue a written decision on how to proceed.

Both Moody’s and S&P Global Ratings downgraded both gas company ratings in December. Before that, S&P downgraded Eversource and its subsidiaries. Earlier this year Bank of America advised investors that Connecticut has “probably” the “worst regulatory environment in the US.”

Under their business model, lower credit ratings mean that utilities face higher costs when borrowing the hundreds of millions of dollars with which they finance operations.

In its decision Tuesday, Moody’s said that its downgrade was based in part on delays by PURA in approving CL&P’s recovery through rates of about $800 million in debt it has been carrying for years to cover the costs of damage from storms between 2018 and 2023.

PURA is expected to decide later this year how much of the estimated $800 million in repair costs Eversource should be allowed to recover through customer bills. Whatever PURA’s decision, how much the repair costs increase customer bills and when will not be decided until the next CL&P rate case, which may not occur until late 2026. That means the company will continue to carry the debt for another year.

“Virtually all other state regulatory jurisdictions provide their utilities with much more expedited and timely recovery of costs incurred during storms,” Moody’s wrote in its analysis.

The recovery of storm costs became an issue in debate over energy policy during the recently concluded Legislative session. In the closing hours of the session, the legislature enacted a law to allow the electric utilities to securitize or bond storm damage costs. Under the law, customers would remain responsible for whatever costs are approved by PURA, but repay them in smaller monthly installments over a longer period.

“Many other states already have securitization provisions in place, which has supported the credit profiles of utilities in those jurisdictions,” the Moody’s analysts wrote.