Credit rating service Moody’s lowered the outlook for Bridgeport-based Aquarion Water Co. to “negative” on Monday amid a regulatory environment it called “unpredictable.”
The change from a stable to negative outlook follows a March 15 decision by the Public Utilities Regulatory Authority rejecting a rate increase requested by Aquarion.
In the decision, PURA approved an annual revenue requirement of $195.5 million for the water company, which serves 208,000 customers in 59 cities and towns, primarily in western Connecticut. The revenue requirement is expected to deliver a return on equity of 8.7% for Aquarion, significantly less than in prior years.
In August 2022, Aquarion applied for a roughly $37 million increase in distribution revenues and a 10.35% return on equity.
PURA not only rejected Aquarion’s request, but decreased the company’s annual revenue requirement by $2 million from its current level – about a 1% reduction.
Also, PURA reset the Water Infrastructure Conservation Adjustment surcharge to zero. The rate cut will result in an 11% decrease in rates for Aquarion customers, a savings of about $67 per year, according to PURA.
Aquarion appealed the decision in New Britain Superior Court and a temporary stay on enforcement of PURA’s decision was granted.
A hearing on Aquarion’s motion for a permanent stay was held before Superior Court Judge Matthew Joseph Budzik on Monday. As of Thursday morning, he had not yet issued a decision.
A spokesman for Aquarion, Peter Fazekas, said the change from a stable to a negative outlook “poses significant risks for Connecticut customers as they will pay more for the necessary infrastructure for the reliable delivery of high-quality drinking water.”
