🔒‘This will go down in flames’: Fairfield County towns seek to derail Eversource’s sale of Aquarion

Leaders in Fairfield County are ramping up their opposition to the pending sale of Aquarion Water Co. to a nonprofit, quasi-public entity for roughly $2.4 billion. In January, Eversource Energy announced that it would sell its water subsidiary, Aquarion, to the newly created Aquarion Water Authority (AWA). Eversource has said it expects the deal to close in late 2025. But if opponents have their way, the sale won’t happen at all. As the sale awaits approval from the Public Utilities Regulatory Authority, the Connecticut Metropolitan Council of Governments (MetroCOG) has hired former Aquarion CEO Charles Firlotte as a consultant in an effort to derail the sale. An evidentiary hearing before PURA is set to begin next week. “They're going to have to put on a PT Barnum road show to convince anyone this has a benefit to the customer,” Firlotte said in an interview with the Hartford Business Journal. “And I think that is where this will go down in flames.” MetroCOG, along with the Western Connecticut Council of Governments and five municipalities – Fairfield, New Canaan, Ridgefield, Westport and Shelton – have secured intervener status in the case. On July 1, the interveners filed with PURA a “motion to correct a deficient application,” which claims Aquarion’s application for the ownership change erroneously names AWA as the acquiring party in an attempt to mislead the public. The deficiency "would be fatal to the application," if not corrected, the motion states. "They fronted Aquarion Water Authority as the acquirer, which is just a piece of fiction, because the Aquarion Water Authority is nothing more than an enabling piece of legislation," Firlotte said. "And I believe they have done this deliberately to confuse the public." The “enabling piece of legislation” refers to a change, which the legislature approved during a hastily called special session last summer, to the charter of the Regional Water Authority (RWA) allowing the acquisition to occur. RWA is a nonprofit, quasi-public water utility that serves 14 towns and cities in south central Connecticut, including New Haven. Following the sale, AWA and RWA will share executive leadership, but will exist as distinct, standalone entities. On July 8, RWA filed a response to the interveners' motion, denying their claim that RWA is the "controlling party" in the transaction. The interveners' claim ignores the statutory framework governing the transaction, according to RWA. “Rather than identifying any valid ‘deficiency’ in the joint application, the public intervenors raise a contrived (and incorrect) factual dispute and effectively seek a premature ruling from PURA on the substantive merits of the joint application,” the filing states. If approved, the deal will be financed through AWA’s issuance of tax-exempt bonds. Firlotte says that debt will ultimately be repaid by AWA customers, leading to higher rates. “I think what they're really trying to do is shift the risk from the shareholder to a captive customer body,” Firlotte said. “If this were a private entity buying Aquarion, the difference between the rate base and the price paid – the acquisition premium, if you will – would never be put on the backs of the customers, because their economic regulator, in this case, PURA, would not allow that.” However, RWA contends that the sale will help stabilize rates because, as a nonprofit, AWA can obtain lower-cost debt financing than a for-profit company. Over time, that means AWA can invest in the water infrastructure at a lower cost, proponents say. Fairfield County towns are also concerned about the loss of tax revenue from Aquarion’s conversion to a nonprofit. Many towns collect millions of dollars in property taxes from the company. Critics fear AWA will be able to indiscriminately increase water rates, as it would no longer be supervised by PURA. The sale of Aquarion has invoked a longstanding debate about whether utilities operate more effectively as investor-owned entities or as nonprofit groups. It’s unusual for an investor-owned company to be sold to a quasi-public entity, Firlotte said, and RWA epitomizes the reasons why a nonprofit model doesn’t work. He said RWA charges rates that are about 30% higher than Aquarion's. RWA would not confirm that figure Friday, but said there are “multiple reasons that rates vary by utility.” PURA expects to issue a proposed final decision on Aquarion’s application by Oct. 22. The evidentiary hearing is set to begin Thursday at PURA’s headquarters in New Britain. The interveners include 25 municipalities, the state Department of Public Health, the Office of the Attorney General and Save the Sound. In addition, the National Association of Water Companies has secured intervener status and plans to provide a national perspective about the performance of investor-owned utilities in comparison to government-run entities. Connecticut Water Co., a subsidiary of investor-owned H2O America, based in San Jose, California, has also obtained intervener status. Bridgeport-based Aquarion provides water service to 57 municipalities and owns eight reservoir systems in Connecticut.