Water system remains part of Eversource

By Joe Kelly

A proposal to convert the Aquarion Water Company into a non-profit authority was rejected last month by Connecticut’s Public Utilities Regulatory Authority (PURA), which faulted the proposed management structure of the new entity as “unworkable.”

The decision means that Aquarion, which is Connecticut’s largest water company and serves 59 municipalities across the state, including Norfolk, will for the time being remain part of Eversource Energy.
When Eversource spent $1.67 billion to buy Aquarion in 2017 it became one of numerous electric utilities across the country that saw the water business as a safe path to diversification. But when interest rates rose after the COVID pandemic, those debt-laden transactions became a burden—and now the utilities want out.

Eversource put Aquarion on the market in 2024 and a year later accepted a $2.4 billion offer from the South Central Connecticut Regional Water Authority (RWA), which serves New Haven and nearby communities. As part of the deal, Aquarion would have operated independently as the Aquarion Water Authority (AWA), but both organizations would have shared an executive team and separate, but identical, 11-member boards.

In its 33-page decision, PURA declared that while the proposed transaction “meets financial and technological suitability and responsibility requirements”—and would enable Aquarion to continue as a safe and reliable source of water—it found that “the proposed transaction does not meet managerial suitability and responsibility requirements and contravenes the public interest.” In particular, PURA concluded that having the same 11 individuals serve on the boards of both entities simultaneously would lead to “irreconcilable fiduciary conflicts.”

In their decision, PURA noted concerns over the regulation of water rates. As a non-profit, Aquarion’s rates would no longer have been subject to PURA oversight, but would have been under the purview of a Representative Policy Board with delegates from each of the 59 municipalities in Aquarion’s service area getting a weighted vote. However, because the weighting would have been based on population and amount of land in the town owned by Aquarion, 30 of the 59 municipalities would have held weighted votes of zero, giving them no say on rates and other policy decisions. As few as seven towns could have banded together to control 51 percent of the votes on any issue. Norfolk would have ended up with one vote.

While Aquarion serves several towns in northwest Connecticut—besides Norfolk, its service area includes Salisbury, Sharon, Goshen and Kent—the proposed sale has garnered little attention in the area. The Northwest Council of Governments, for example, barely touched the issue. By contrast, Fairfield County became a hotbed of resistance, with concerns voiced over both rate hikes and possible loss of property tax revenues that could occur in those towns had Aquarion become a non-profit.

The transaction assumed political overtones from the outset. Because it is chartered by the state, the RWA needed special legislation to allow it to make its bid for Aquarion. Democrats obliged, with legislators hurriedly passing the needed provision last year in a special session with no public hearing and then getting the signature of Governor Ned Lamont, a Democrat.

Republicans took issue with that and actively campaigned against the transaction, with State Senator Ryan Fazio (R-Greenwich), who is running for the Republican nomination for governor, playing a prominent role. At the same time, Republicans were challenging the authority of PURA Chair Marissa Gillett (a Lamont appointee), precipitating her resignation in October, just before the decision on Aquarion.
Ultimately, the current PURA commissioners—all either appointed by Lamont or his Democratic predecessor, Dannel Malloy—voted to deny the application 4-0 with one abstention.

A representative from the RWA said the authority is reviewing the PURA decision. Aquarion officials said the same and also announced plans to seek a $60 to $70 million hike in water rates in 2026.