Connecticut’s utility regulator gave final approval Wednesday to the $2.4 billion sale of Aquarion Water Co., completing a reversal of its own unanimous denial just four months ago.
The Public Utilities Regulatory Authority approved the change of control in a 3-0 vote, with two commissioners — including Chairman Thomas Wiehl — abstaining.
The deal, when it officially closes, will transfer Aquarion from Eversource Energy to the newly created Aquarion Water Authority (AWA), a nonprofit quasi-public entity affiliated with the South Central Connecticut Regional Water Authority (RWA) in New Haven.
Under the terms of the deal, PURA’s jurisdiction over AWA ends when the deal closes, meaning the agency will no longer oversee its rates or operations. Instead, rates will be set by a Representative Policy Board composed of appointees — with weighted votes — from municipalities in AWA’s service area.
PURA Vice Chairman David Arconti Jr. moved to adopt the decision, Commissioner Holly Cheeseman seconded it and Commissioner Janice Beecher voted in favor.
The approval follows a January ruling by New Britain Superior Court Judge Matthew Budzik, who found PURA could not block a deal structured by the General Assembly’s 2024 enabling legislation and remanded the case for further proceedings.
Peter Kramer, PURA’s managing director of technical and regulatory analysis, presented the decision as a net-positive outcome for consumers.
“The long-term, perpetual benefits of Aquarion Water Authority’s public authority ownership model weigh in favor of the public interest,” Kramer said. “Aquarion customers can expect to pay a lower cost of service over the longer term and in perpetuity due to AWA’s tax advantage model.”
Wiehl abstained from the vote, citing his prior role as an attorney at the Office of Consumer Counsel, where he had personally worked on the case before joining PURA.
“I could not participate in this same proceeding as a commissioner and impartially determine whether some of my own arguments as filed in the record before me are more or less compelling than those advanced by other parties,” Wiehl said.
Commissioner Everett Smith also abstained, saying the record was established largely before he joined PURA in early January and that he could not render a fair and impartial decision.
Cheeseman, invoking Connecticut’s reputation as the “Land of Steady Habits,” cast the decision as a victory for local ownership.
“Connecticut has a number of treasured institutions — like Pepe’s Pizza or Huskies basketball,” she said. “One of its most treasured institutions is the idea and theory of local control.”
She said the deal promotes public ownership, fosters stability and ensures the authority will be “governed by individuals from the communities it serves, not by a board of directors whose main responsibility is providing a return to shareholders.”
Beecher said she had reservations about the financial terms of the transaction, but ultimately endorsed the path forward.
“This change of control is not the demise of Aquarion but a reincarnation that will restore its original identity and ensure its continuity as a Connecticut enterprise,” she said. “Once the transfer is realized, the RWA and AWA teams will bear the burden of earning trust, proving success and delivering the value they promised.”
The decision drew fierce opposition from municipalities, consumer advocates and state officials across party lines.
Attorney General William Tong, who argued against the deal before PURA, issued a statement after Wednesday’s vote:
“PURA had every ounce of authority and every reason to reject this deal, but they simply caved,” Tong said. “This is a $6 billion gift to Eversource, to be paid by Connecticut families and towns over the next 40 years.”
A group of towns — including Fairfield, New Canaan, Ridgefield and Westport — moved last week to stay the Superior Court’s remand order pending an Appellate Court appeal, but the court did not act before Wednesday’s vote.
Thirty-two members of the General Assembly also wrote to PURA urging a delay, warning that the Superior Court’s ruling was likely to be reversed on appeal.
PURA’s decision acknowledged the opposition and noted misgivings about a roughly $494 million “acquisition premium” that will be borne by ratepayers, along with the potential for annual rate increases of between 6.5% and 8.35% through 2035.
However, the authority concluded that the quasi-public model’s long-term cost advantages — stemming from lower-cost tax-exempt debt and the absence of income taxes — ultimately benefit the public.
The decision also pointed to Aquarion’s history of “ownership churn” — it has passed through the hands of a Yorkshire, England-based entity, an Australian investment bank and Eversource over the past 25 years — as a factor favoring the stability of public ownership.
PURA’s original denial hinged primarily on findings that the proposed governance structure — which places Aquarion under an “interlocking board” shared with RWA, with no “truly independent” consumer advocate and potential fiduciary conflicts among board members serving both entities — failed to meet managerial suitability standards. The Superior Court, however, found that PURA could not reject the deal on those grounds.
As conditions of approval, the decision requires Eversource to contribute $10 million to a rate stabilization fund for Aquarion customers before the deal closes, and bars AWA from raising rates for 180 days after closing. The decision also orders AWA to expand its Office of Consumer Affairs — currently staffed by a part-time attorney working an average of 157 hours a year — to a minimum of 0.5 full-time equivalent staff with a minimum annual budget of $300,000.
AWA must also file annual financial statements with PURA for 10 years following the close of the transfer.
Aquarion, the state’s largest water utility, serves about 226,000 customers across Connecticut.
“PURA’s final decision reflects a careful review of the record and an unwavering focus on what is in the best interest of Aquarion customers,” Aquarion, AWA and RWA said in a joint statement Wednesday. “This approval allows the Aquarion Water Authority to move forward with the acquisition and transition to a locally governed, not-for-profit model focused on reliable service, accountability, and sustained investment in the system.”
