By Elizabeth Barhydt
On January 27, Eversource Energy announced the sale of Aquarion Water Company to a newly formed quasi-public entity, the Aquarion Water Authority (AWA), operating alongside the South Central Connecticut Regional Water Authority (RWA). The $2.4 billion transaction, which includes $1.6 billion in cash and $800 million in debt, was described by Eversource CEO Joe Nolan as a strategic decision to refocus the company’s core operations. “This transaction reinforces our commitment to our core electric and natural gas operations,” Nolan stated in the release. Yet for many in Connecticut, the announcement was not a cause for celebration but rather confirmation of fears that had been mounting since July: a high-stakes deal was set in motion with little public scrutiny, leaving customers and municipal officials questioning its long-term impact.
The sale’s approval process—steeped in legislative maneuvering and last-minute amendments—has been a point of contention. State Senator Ryan Fazio, one of the sale’s most vocal critics, minced no words in his January 29 op-ed (see page 5), calling the deal “a fix” from the start. “This was a major change that appeared out of nowhere,” Fazio had warned in September. Now, with the sale finalized pending regulatory approval, his concerns have only intensified. “The legal change allowing an RWA acquisition of Aquarion was only publicly known when news was broken by a reporter two days before the special session of the legislature,” he wrote. He pointed out that the 50-page legislation enabling RWA to bid was released only hours before it was brought to a vote, leaving no opportunity for substantive debate.
The sale’s implications stretch far beyond process. A key concern among local officials is the likely increase in water rates for Aquarion customers. Unlike Aquarion, which has been regulated by the Public Utilities Regulatory Authority (PURA) and imposed only an 8.5% rate increase over the past decade, RWA has raised rates by more than 40% in that same period. First Selectman Dionna Carlson, speaking last fall when the sale was first being discussed, expressed skepticism about RWA’s financial management. “RWA’s claim that it would hold rates steady after the acquisition is difficult to believe given their track record,” she said at the time. The deal effectively removes Aquarion’s 625,000 customers from PURA’s oversight, leaving future rate increases to be determined by RWA’s Policy Review Board—an entity Fazio argues lacks both independence and enforcement authority.
The sale also introduces another layer of financial uncertainty: the shift from a private company to a quasi-governmental entity means that towns like New Canaan could see a loss in tax revenue. Under its current structure, Aquarion pays more than $300,000 annually in property taxes to the town. RWA, by contrast, is exempt from property taxes and instead makes payments in lieu of taxes (PILOT). Carlson, in her previous remarks, expressed doubts about the reliability of PILOT payments, particularly since RWA has indicated it would not increase them, even if it invests in infrastructure improvements. “PILOT payments are not a reliable replacement. They’re static, which means they won’t keep pace with inflation or improvements,” she warned last fall.
Adding to the concerns is the governance structure of the new authority. The proposed board of directors would grant disproportionate representation to the New Haven-based RWA region, despite the fact that Aquarion serves a larger population. “There will not be fair representation on the board that runs the company,” Fazio stated, pointing out that RWA customers in Greater New Haven—about 430,000 people—would be given six board seats, while the 625,000 Aquarion customers would receive only five. “New Canaan’s representation would be minimal compared to these larger cities, and we would have little say in how decisions affecting our water service are made,” Carlson had warned previously.
The deal’s financing structure also raises questions. While competitive bids were submitted by other private companies, Fazio suggested that RWA was always positioned to outbid them—because, unlike private bidders, it could recoup the full purchase price by passing costs directly onto customers. “The higher bid was rumored only $200 million below the RWA bid of $2.4 billion,” he stated. “The cake was baked, however, because RWA would always likely bid higher because it can charge its customers more.” Unlike a private buyer, which would be required to charge only a book-value rate, RWA has the ability to pass its full acquisition cost onto its new customers.
For those opposed to the sale, the last hope of intervention now lies with PURA, which must approve the transaction before it is finalized. “The only remaining check on the sale is now PURA,” Fazio wrote, urging the agency to scrutinize the deal’s structure and potential impact on consumers. The transaction must also pass regulatory hurdles in Massachusetts and New Hampshire, as well as undergo review under the Hart-Scott-Rodino Antitrust Improvements Act. While approval is expected by late 2025, opponents are hoping that regulatory agencies will demand stricter oversight before signing off.
Fazio’s conclusion was blunt: “Connecticut residents deserve lower cost of living and trustworthy government. Unfortunately, the Aquarion sale to Regional Water Authority, which their elected officials foisted upon them through special legislation, will deliver higher utility bills and diminished trust.” Carlson, meanwhile, had previously called for local residents to stay informed and engaged. “This sale could have long-lasting effects on our town’s finances and water service,” she had stated. “We need to make sure that residents are fully informed about what’s at stake and that we, as a community, are involved in the process.”
As the regulatory review unfolds, the question remains whether those most affected—Connecticut’s water customers—will have any real influence over a deal that has, from the outset, been driven by forces beyond their control.
