A Superior Court on Thursday reversed a decision by state utility regulators that blocked the contested, $4.2 billion sale of Aquarion Water to a nonprofit regional water authority, but left open the possibility that stronger customer protections can be built into the transaction.
The decision is certain to raise new complaints from Aquarion’s mostly southern Connecticut customers who have fought the sale for months, arguing it will lead to a swift and sharp increase in water rates.
Judge Matthew Budzik said in a written decision published Thursday that the Public Utility Regulatory Authority acted “illegally” when it voted in November to kill the sale because it exceeded its authority by effectively nullifying an act by the Legislature authorizing the transaction and establishing its terms in explicit detail.
Eversource Energy offices at 107 Selden St., Berlin.
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“To hold otherwise would render (the Public Act ) superfluous and meaningless, and render the legislature subservient to the policy decisions of PURA, not the other way around.,” Budzik wrote.
Aquarion applauded the decision.
“Today’s clear decision from the court provides a path forward which we believe should be focused on collaboration and reaching a practical resolution that supports long-term infrastructure investment, protects customers, and ensures safe, reliable water service across Connecticut,” the company said. “We appreciate the Court’s direction and will continue engaging with PURA and all stakeholders as this matter moves forward.
Attorney General William Tong, who argued against the sale to Budzik, was considering further opposition.
“We are reviewing the decision and evaluating next steps. But this remand does not change the fundamental truth of this transaction — it’s a costly loser for Connecticut families and it shouldn’t happen,” Tong said.
The Legislature voted in June 2024 to allow Aquarion owner Eversource to sell Aquarion to the the non profit South Central Connecticut Regional Water Authority. The sale of a regulated public utility to an unregulated nonprofit required a legislative exemption. The Democratic leadership introduced such legislation, which was hurriedly enacted without a public hearing during a special session and signed by Gov. Ned Lamont.
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PURA voted to block sale, saying it was not in the public interest.
PURA based its conclusion on the proposed “form” and “structure” of the merged companies’ board of directors, a board voting formula that PURA said would under represent former Aquarion customers and on the lack of “rigor” in an Office of Consumer Affairs to be established within the merged regional authority to advocate for the interests of former Aquarion customers.
Budzik said that PURA overstepped its authority by substituting its view of the public’s interest for that of the legislature, which created it.
“The court holds that PURA has no authority to overrule, or to ignore the explicit, plain decisions made by the Legislature and set forth in statute with respect to the foregoing issues when considering whether the application complies with Connecticut law,” Budzik wrote.
On the question of whether the nonprofit’s Office of Consumer Affairs can protect the interests of former Aquarion customers, Budzik left open the possibility that an agreement can be reached to establish a more vigorous consumer watchdog office within a new, merged water company. Budzik said that since the legislative act did not include explicit language on staffing, funding and authority of a consumer office, those issues can be negotiated.
Although Budzkik ruled that PURA acted illegally by second guessing the legislature, he did not exercise the court’s authority to order PURA to approve the sale. Rather, he sent the matter back to PURA with clear direction on which of its actions were illegal and where there is room for discussion.
“Thus, the court concludes that it is PURA’s duty to exercise its clear statutory responsibility, engage in reasoned decision making, and grant or deny the application in PURA’s regulatory discretion, but within the parameters established by Connecticut law It is Pura’s duty to make the difficult decisions involved in regulating Connecticut’s public utilities, not the court’s,” Budzik wrote.
The decision Thursday is another milestone in a series of controversial regulatory decisions affecting Aquarion. Owner Eversource decided to put the company on the market after complaining that a decision by PURA to slash its rates had eroded its profitability and ability to maintain its infrastructure.
Consumer groups and local governments in Fairfield County have lined up in court and at PURA hearings in opposition to the certain rate increases if a sale goes through. They argue that PURA can limit rate increase but that a nonprofit Aquarion is not subject to PURA regulation after a sale.
If it cannot sell the water subsidiary, Eversource said it will seek a rate increase of as much as 42 percent from PURA to pay for infrastructure improvements and return to profitability. The Aquarion Water Authority, the entity that would control a non profit Aquarion after the sale, said it would be forced to raise rates beginning in 2027 but at levels significantly below those proposed by Eversource.
The water company sale, along with broader debate about electric rates, has become a political issue as state and local elections approach.
If combined, Aquarion and the regional water authority would serve more than one million people in 74 municipalities.