MONROE, Conn. — The Public Utilities Regulatory Authority (PURA) is expected to make a final decision on the sale of Aquarion Water Company to the South Central Connecticut Regional Water Authority (RWA), a new nonprofit, on March 25, after recently rendering a preliminary approval.
Eversource’s sale of the water company has sparked controversy between state and municipal leaders, who have expressed strong concerns over the potential for steep rate increases for customers as RWA takes on massive debt for the $2.4 billion purchase.
Though RWA’s representatives contend the structure of the newly created Aquarion Water Authority as a nonprofit would save millions through lower interest rates on borrowing, no need to divert earnings to shareholders and not having to pay state and federal income taxes.
An article by Dan Haar of CT Insider says rates are expected to increase with or without a sale, because of massive infrastructure improvements that must be made.
Attorney General William Tong, D, is one of the biggest critics of the sale. PURA initially denied the transaction on Nov. 19, but Aquarion appealed and the court remanded the matter back to PURA for reconsideration. Tong issued a press release on March 6 following its preliminary approval.
“Again, what the hell. PURA caved,” Tong said of the most recent decision. “We need to understand exactly what happened here. This is an economic disaster for Connecticut families and municipalities and is not in the public interest.”
Rochelle Kowalski, chief financial officer for RWA. released a statement expressing a willingness to let the process play out.
“We remain focused on participating in the regulatory process ahead of the final decision scheduled for March 25,” she said. “PURA has been reviewing this transaction for several months through a process that has included testimony, filings, and public input. It’s important that the commission be allowed to complete its work and reach a decision based on the facts developed during that review.”
One of Tong’s main arguments against the transaction is the loss of regulatory oversight by PURA, which in 2023 rejected Aquarion’s bid to raise rates by nearly 30 percent. The company appealed and the Connecticut Supreme Court recently largely affirmed PURA’s decision, according to the press release from Tong’s office.
Rather than being regulated by PURA, nonprofit utilities such as RWA are governed by their own board, comprised of representatives from the towns they serve. The board, making decisions for both the RWA and AWA in this proposed transaction, must either accept or reject a rate request in its entirety, with no ability for line-item adjustments as before PURA, Tong said.
“Eversource executives and shareholders are going to be rolling in cash, while the rest of us are saddled with $6 billion in transaction costs for decades upon decades,” Tong said. “Your bills are going to go up to pay for this boondoggle. Not just a little bit. A lot. And the board set up to approve those rate hikes? Never, not once, ever, have they said no to a rate hike. PURA had, and has, all the authority and all the reasons to reject this costly loser. This decision, coming just days after they decided to toss another $2 million to United Illuminating is a very bad sign of what it is to come.”
In a letter to municipal leaders, RWA promised to have “a $10 million Rate Stabilization Fund, enforceable by PURA, to help offset future rate impacts and provide an added layer of customer protection.”
Property Taxes
Monroe First Selectman Terry Rooney is among the municipal leaders opposed to the purchase out of concern over the potential impact on customers’ rates. He participated in a press conference at the State Capitol Building in Hartford on March 4, along with many other municipal leaders.
“This has the potential to impact a large loss of tax revenue to Monroe due to RWA having tax exempt status,” Rooney late told the Monroe Town Council at a meeting. “Much is yet to be revealed in this highly televised and controversial topic.”
However, in a letter to municipal leaders AWA had offered municipal revenue protection: “payments in Lieu of Taxes that will never be less than Aquarion’s current property tax payments at closing, ensuring that no community is financially disadvantaged by the transition.”
The draft of PURA’s approval makes this binding. However, the buyer concedes there are no offsetting increases to property value (from revaluation, capital investment, new land or facility purchases), “so depreciation would cause a year-over-year decrease in PILOT payments.”
Aquarion Company and its Connecticut subsidiaries, Aquarion Water Company of Connecticut (AWC-CT) and Torrington Water Company (TWC), is currently by far the largest water company in the state, serving approximately 722,000 people in 62 municipalities across Connecticut.
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