The Public Utility Regulatory Authority reversed itself Friday and issued a proposed decision approving the sale of the Aquarion Water Co., affecting hundreds of thousands of predominantly western Connecticut customers.
The proposed final decision approving the $2.4 billion sale is tentative and parties to the transaction, among them government and consumer groups, can submit comments and proposed changes. PURA has said it will issue its final decision on March 25.
The transaction would transfer Aquarion, an Eversource subsidiary, to a newly created and nonprofit Aquarion Water Authority, called AWA, affiliated with and sharing resources with the South Central Connecticut Regional Water Authority. The Regional Water Authority would borrow the money to cover transaction, consisting of $1.6 billion in cash and $800 million in debt.
Critics of the sale complain it will result in a spike in rates. But there is substantial evidence indicating that rates will go up whether Aquarion remains with privately-owned and regulated Eversource or is transferred to the non profit, unregulated regional authority. The proposed final decision, suggests, contrary to claims by critics, that rates will increase more slowly under authority ownership.
“The Proposed Final Decision is a constructive step forward for this transaction and does the right thing for customers and communities,” Aquarion and Authority officials said in a joint statement.
“We appreciate the commission’s work to reach this point. The decision recognizes the Aquarion Water Authority’s ability to access lower-cost capital as a public authority and reflects commitments we have made, including full payments (in lieu of taxes) to support municipalities and the stabilization fund we proposed to help mitigate future rate impacts.”
Critics continued to complain about the sale and accused PURA, which was created as an impartial arbiter of rate questions, of abandoning consumers.
“Again, what the hell,” said Attorney General William Tong, a consistent utility critic. “PURA caved. We need to understand exactly what happened here. This is an economic disaster for Connecticut families and municipalities and is not in the public interest. Eversource executives and shareholders are going to be rolling in cash while the rest of us are saddled with $6 billion in transaction costs for decades upon decades. Your bills are going to go up to pay for this boondoggle. Not just a little bit.”
Senate Minority Leader Stephen Harding, R- Brookfield, predicted the sale will “bring about a tsunami of annual water rate hikes for ratepayers across Connecticut.”
Eversource put the water company on the market after PURA slashed the rates it can charge to a level below what they had been more than a decade ago, turning the subsidiary into what the utility called a drag on the corporate bottom line.
The regional water authority emerged as the best-positioned, prospective buyer.
CT is in the middle of major water fight. What the sides contend, including that ‘the deal stinks.’
The legislature hurriedly endorsed the sale during a special session in 2024, adopting — without a public hearing — the enabling legislation needed to allow an unregulated, nonprofit company to buy a regulated water utility. The legislation included a detailed governance structure that satisfied lenders’ by giving the borrower, the South Central Connecticut Regional Water Authority, control over decision making for three years after the deal closed.
In November, PURA, which has authority over transactions involving regulated utilities, blocked the sale. The regulators said the sale was not in the public interest because, among other things, Aquarion customers would initially be under-represented in combined company decision-making under the legislature’s governance structure.
Eversource appealed the decision and within weeks, a Superior Court reversed PURA. The court said PURA overstepped its authority by substituting its view of the public interest for that of the legislature. The court sent the question back to PURA with instructions that effectively required the regulators to approve the sale.
PURA’s proposed final decision Friday pointed to aspects of the sale that it said “implicate the public interest.” The regulators said there are ways to address what it perceives as shortcomings in the transaction, but acknowledged the court’s conclusion that the legislature had the final word in establishing terms of the sale.
“The Authority concludes that this transfer of ownership is essentially a creature of statute and, as such, should be viewed as subject to structural or financial modification by the parties, statute, or judicial decree to address the myriad of valid concerns raised by ratepayers, municipalities, the Office of the Attorney General, and the Office of Consumer Council,” the proposed final decision said.
The PURA decision recommends creation of a stronger consumer advocacy office within the new company, something the court said is possible under the enabling legislation. It contends the interests of Aquarion customers will be initially under-represented in the combined company. It also complained an acquisition premium could eat into savings and raise rates, but acknowledge it lacks the authority to alter the sale terms.