🔒Attorney General Tong opposes $2.4B Aquarion sale, warning of water rate hikes

Attorney General William Tong urged state regulators Thursday to reject Eversource Energy's proposed $2.4 billion sale of Aquarion Water Co. to a newly created nonprofit authority, warning the deal could double household water bills while reducing consumer protections. Tong called the deal "a costly loser for Connecticut families" and characterized it as an attempt to circumvent state oversight. Regulators rejected the utility's bid for a nearly 30% rate increase in 2023 — a decision that was recently upheld by the state’s high court. "This is about Eversource wanting to offload Aquarion because they didn't get the multimillion-dollar rate hike they demanded," Tong said. "This is an end run around PURA to double bills, and it should be rejected." In a joint statement, Eversource and Aquarion Water Authority refuted claims about rate increases. "Despite false claims, water rates will not double as a result of Eversource’s sale of Aquarion to the Aquarion Water Authority (AWA)," Eversource said in a statement "Regardless of ownership, any future rate changes for local water customers will be a function of the costs of significant investments needed to meet federal and state environmental regulations, including remediation of forever chemicals in our water supply – an issue that Attorney General Tong and lawmakers on both sides of the aisle have strongly supported for years. Over the next decade, every water company whether public or private will need to serve the interests of water customers and protect the local water system. Analysis presented to PURA shows that customers under the AWA model will pay less over the next 10 years in the new authority model due to the ability to access lower financing costs for necessary investments and other lower costs associated with authority ownership." The proposed sale would transfer Connecticut's largest water utility, which serves about 722,000 people in 62 municipalities, from investor-owned Eversource to the Aquarion Water Authority, a quasi-public nonprofit entity created specifically for the acquisition. The Public Utilities Regulatory Authority held evidentiary hearings in July on the controversial deal, which faces mounting opposition from local officials, consumer advocates and environmental groups. A three-member PURA commission has until October 2025 to determine whether the transaction serves the public interest. Under the proposal, the new Aquarion Water Authority would operate alongside the existing South Central Connecticut Regional Water Authority (Regional Water Authority), sharing executive leadership, board members and operational resources. The purchase would be financed through tax-exempt bonds. Eversource announced the sale in January following legislation passed during a special session in June 2024 that enabled the regional water authority to bid on Aquarion. The deal comes as Eversource refocuses on its core electric and natural gas operations after losing about $200 million on offshore wind investments. Aquarion's application projects annual rate increases between 6.5% and 8.35% through 2035, with additional hikes expected every five years thereafter. These increases could double water bills for Connecticut families over the next decade, according to the attorney general's analysis. Six towns — including Fairfield, Shelton, Wilton, New Canaan, Westport and Ridgefield — have been granted intervener status in PURA's review of the sale. Community leaders say they’re concerned the acquisition will substantially decrease local tax revenue since the new nonprofit owner will make smaller payments in lieu of taxes rather than pay traditional property tax assessments. There are competing views, however, about the consumer impact. Supporters argue the quasi-public model will benefit consumers through access to lower-cost, tax-exempt debt financing. "(Aquarion Water Authority’s) ability to issue tax-exempt debt for capital improvements will allow it to finance infrastructure improvements at a lower cost than a private company," Rochelle Kowalski, chief financial officer of the Regional Water Authority, previously told the Hartford Business Journal. Regional Water Authority customers currently pay average monthly bills of $64.66 compared to $44.71 for Aquarion customers, according to the state Office of Consumer Counsel. Another key concern involves the shift in regulatory oversight. As an investor-owned utility, Aquarion is regulated by PURA, which has authority to make line-item adjustments to rate requests. Under the nonprofit model, the water authority would be governed by its own board of municipal representatives who must accept or reject rate requests in their entirety. The Regional Water Authority's board has never rejected a rate increase request, according to Tong. Environmental group Save the Sound has also raised concerns about maintaining conservation protections under the new structure. The organization asked PURA to require conservation easements on Aquarion land greater than 10 acres as a condition of the sale. Aquarion operates eight reservoir systems, 251 wells, nine surface water treatment plants and roughly 3,300 miles of water mains across Connecticut. If approved, the deal is expected to close in late 2025. Tong also urged specific consumer protections if the sale proceeds, including prohibiting the use of ratepayer funds for transaction costs and requiring the new board to have line-item rate adjustment authority. In their joint statement, Eversource and AWA also said: "The Connecticut General Assembly enacted legislation last year, which was signed into law by Governor Lamont, authorizing and supporting a path forward for the Regional Water Authority (RWA) to submit a bid on the purchase of Aquarion on behalf of AWA, allowing an opportunity for local control of two of the state’s major water utilities which provide critical services for hundreds of thousands of customers in Connecticut. The RWA has a longstanding track record of strong performance and industry-leading reliability providing safe, high-quality drinking water to residents and businesses in the state thanks to its sound management and financial stewardship, and this operational success is poised to continue for customers under a newly created public water authority that will leverage Aquarion’s longstanding expertise and service quality."