By Ryan Fazio
This stinks.
That is what I warned in the Senate during July’s special legislative session when a potential acquisition of Aquarion Water Company by the quasi-governmental Regional Water Authority (RWA) was given legal approval without any public hearing and only a few hours’ notice.
Now that the New Haven-based RWA has been announced as the winning bidder for Eversource-owned Aquarion, the public can see that the fix was in all along. And most of us in western Connecticut will be paying the price for it.
Let’s review and revisit the sins committed:
First, giving the RWA the ability to purchase Aquarion could result in major rate hikes for water customers. According to a preliminary analysis by the Office of Consumer Council, RWA customers pay roughly 50% more than similar Aquarion customers. That equates to a $269 increase for a normal customer annually. There are multiple reasons for that but clearly RWA has a higher cost structure than Aquarion’s more efficient operations.
Second, Aquarion’s rates are currently regulated and approved by PURA, which provides protection to consumers against regulated monopolies. The RWA’s rates, to the contrary, are regulated and set by their own Policy Review Board which does not have either the independence nor capability to probe and check rate increases that PURA does.
Third, the RWA gets to charge the full purchase price of the asset to Aquarion customers where another bidder would only be allowed to charge a lower cost, the book value of the assets, to customers.
Fourth, the governing board of the new RWA is expected to consist of 6 members in the legacy RWA area and 5 members from the new Aquarion area (mostly Fairfield and Litchfield County) even though the legacy New Haven RWA area serves about 430,000 people and the new Aquarion area serves about 625,000 people. There will not be fair representation on the board that runs the company.
Fifth, as a quasi-governmental utility, the RWA will not be legally required to pay full property taxes to their resident towns and cities and will instead make a “Payment In Lieu Of Taxes.” While I appreciate that RWA has said they will negotiate in good faith with towns, there is no legal requirement to make the same payments as Aquarion and therefore a strong possibility of revenue loss for our municipalities which will require a property tax increase on the rest of us.
Sixth, there were at least two other competitive bids for Aquarion from two other viable companies who likely would have maintained more cost effective operations and who would have rates regulated by PURA. The higher bid was rumored only $200 million below the RWA bid of $2.4 billion. For just an 8 percent difference, Aquarion customers will be deprived of all the protections mentioned. The cake was baked, however. RWA would always likely bid higher because it can charge customers more. Its rates are not regulated by PURA and it can charge the entire purchase price back to customers.
Seventh, the RWA bid required emergency legislation allowing their expansion which was passed in a special session of the legislature in July. The topic and policy change, which has billions of dollars of consequence, was never once the topic of public debate or a public hearing in my two years on the Energy Committee. It was not vetted, explored, or investigated. It wasn’t even mentioned. Perhaps with vetting we could have made changes to make this new arrangement more acceptable, like giving PURA cognizance over rates.
Instead, all legislative norms about openness and deliberation were thrown out the window. The legal change allowing an RWA acquisition of Aquarion was only publicly known when news was broken by a CT Mirror reporter two days before the special session of the legislature. The 50-page legislation it entailed was only released hours before we voted on it. Even the Democratic chairmen of the Energy Committee expressed skepticism of the change. This change was imposed on Connecticut by the highest levels of leadership in the legislature and the governor’s office. Because there is a one-party supermajority in the state, there was no natural check in the process to force openness, bipartisanship, or deliberation.
Connecticut residents deserve lower cost of living, affordable utilities, and trustworthy government. Unfortunately, the Aquarion sale to Regional Water Authority, which their elected officials foisted upon them will deliver higher utility bills and diminished trust. The only remaining check on the sale is now PURA. I strongly urge them to investigate this matter before them and use do whatever within their legal right to stop this transaction if the evidence aligns with what I have said above.
I hope I am wrong about all of this. Unfortunately, everything I said in July when I argued against this change in the Senate has proved truer in January. We can do better as a state and, in the future, I hope that we will.
Ryan Fazio represents Greenwich, Stamford, and New Canaan in the state Senate.
