The Public Utilities Regulatory Authority voted unanimously Wednesday to deny Eversource Energy’s proposed $2.4 billion sale of Aquarion Water Co. to a newly created quasi-public authority, dealing a major setback to the closely watched utility transaction.
Eversource shares fell 9.06% to $67.79 Wednesday morning following the decision.
In a 33-page ruling, the five-member panel found that the governance structure of the proposed Aquarion Water Authority, or AWA, failed to meet state standards for managerial suitability — even though the financial and technical elements of the deal passed muster.
The transaction would have transferred Aquarion — the state’s largest water utility, serving about 695,000 customers in 59 communities — from publicly traded Eversource to a nonprofit authority modeled on the South Central Connecticut Regional Water Authority. The $2.4 billion deal included $1.6 billion in cash and $800 million in net debt.
Under the plan, AWA would have operated independently but shared an executive team and board with the Regional Water Authority. Interim RWA President and CEO Sunder Lakshminarayanan would have become CEO of AWA, while Aquarion President Lucia A. Teixeira would have become AWA’s president.
Both organizations would have been overseen by separate boards composed of the same 11 members. AWA would also have created a representative policy board to approve rates — a significant shift from the current process in which PURA sets Aquarion’s rates.
PURA concluded the overlapping governance structure was “unworkable,” finding that board members would face irreconcilable fiduciary conflicts between the two entities. Regulators also noted that 30 of the 59 municipalities in AWA’s territory would have held weighted votes of zero, effectively giving them no say in policy decisions.
In addition, the authority pointed to a sizable rate disparity, noting that RWA’s existing rates are 19% to 39% higher than Aquarion’s rates.
Presenting the decision during a remote hearing, PURA staff attorney Josh Coker said the authority found AWA financially and technologically capable of providing safe and reliable service.
“However, the authority also finds the proposed transaction does not meet managerial suitability and responsibility requirements in a manner consistent with the public interest,” Coker said.
The ruling noted that “every intervenor” representing a municipality in Aquarion’s service area opposed the sale.
Intervenors included the Office of the Attorney General, Department of Public Health, Connecticut Metropolitan Council of Governments, Western Connecticut Council of Governments, the towns of Fairfield, New Canaan, Ridgefield, Westport and Wilton, Save the Sound, the National Association of Water Companies, and Connecticut Water Co.
Attorney General William Tong praised the outcome, arguing the deal would have doubled household water bills over the next decade while eliminating regulatory oversight.
“This deal was a costly loser for Connecticut families and PURA was right to reject it,” Tong said.
The application projected annual rate increases of 6.5% to 8.35% through 2035. Tong noted that unlike PURA-regulated investor-owned utilities, nonprofit authorities rely on their own boards, which must accept or reject rate requests in full.
Republican state lawmakers also backed the decision.
“We thank PURA for voting down this atrocious deal which would have caused a tsunami of unending water rate spikes in cities and towns across Connecticut,” six GOP senators — including Stephen Harding, Ryan Fazio and Tony Hwang — said in a joint statement. They criticized the 2024 enabling legislation approved by Democrats and signed by Gov. Ned Lamont, and called for an open bidding process if Eversource seeks another buyer.
Interim PURA Commissioner Jan Beecher, whose participation drew scrutiny from opponents seeking her recusal over prior comments supportive of public water ownership, voted to reject the sale.
“A change of control in any form and under any terms must be suitable and should be demonstrably beneficial in meeting the public interest standard,” Beecher said, encouraging stakeholders to continue discussions on “stewardship of these vital assets.”
Interim PURA Commissioner Holly Cheeseman, who voted for the enabling legislation as a state lawmaker, said the application failed the standard for managerial responsibility.
Interim PURA Chairman Thomas Wiehl abstained because of his former role at the state Office of Consumer Counsel, which opposed the deal.
Eversource and the Regional Water Authority argued the nonprofit model would lower financing costs and stabilize rates. Eversource, which announced the proposed sale in January, said in its quarterly earnings call on Nov. 5 that it expected the sale to close by year’s end.
Opponents countered that the move would erode local tax bases, increase ratepayer debt and reduce regulatory oversight.
Eversource spokesperson Tricia Modifica said the outcome reflected challenges with the legislative framework.
“The special act approved by legislators in 2024 indicated that the state was interested in an expanded nonprofit model,” Modifica said. “However, once tested, that same special act proved difficult to overcome for PURA to move away from an investor-owned model.”
The ruling arrives amid a leadership shake-up at PURA following the October resignation of former Chair Marissa Gillett after a turbulent five-year tenure. Eversource has owned the Bridgeport-based Aquarion since 2017.
