Attorney General William Tong urged state regulators on Friday to block the proposed sale of the Aquarion Water Company to a quasi-public utility, the South Central Connecticut Regional Water Authority.
The proposed sale, worth $2.4 billion, was announced in January by Aquarion’s owner, Eversource, and is currently under review by the Public Utilities Regulatory Authority.
In his comments on Friday, Tong echoed the concerns of other critics of the deal who have pointed to the higher rates paid by RWA customers along with the fact that publicly-owned utilities — unlike those held by for-profit companies — do not have their rates set by PURA.
“This transaction is a costly loser for Connecticut families who simply cannot afford higher water bills right now,” Tong said in a statement. “This is about Eversource wanting to offload Aquarion because they didn’t get the multimillion-dollar rate hike they demanded. Don’t be confused by the complicated legal maneuvers. This is an end run around PURA to double bills, and it should be rejected.”
In filings made to PURA earlier this year, utility officials projected annual rate increases for Aquarion customers of between 6.5% and 8.35% over the next decade, followed by more modest increases in subsequent years.
A spokesperson for the RWA referred comment on Friday to Eversource.
In a joint statement issued on behalf of both entities, Eversource spokeswoman Jamie Ratliff said that Tong’s claim that the deal would cause water rates to “double” was inaccurate.
“Regardless of ownership, any future rate changes for local water customers will be a function of the costs of significant investments needed to meet federal and state environmental regulations, including remediation of forever chemicals in our water supply — an issue that Attorney General Tong and lawmakers on both sides of the aisle have strongly supported for years,” Ratliff said.
PURA held a series of evidentiary hearings on the proposed sale last month, and is expected to reach a final decision on the sale in mid-November.
The deal would create a new quasi-public, nonprofit entity, the Aquarion Water Authority, to take over the company’s existing service area based mostly in Fairfield and Litchfield counties. Together with the New Haven-based RWA, the two entities would serve more than one-third of all water customers in the state.
Proponents of the deal have argued that it would place the water utility under local control, resulting in greater long-term stability and efficiencies due to its relationship with the RWA.
Ratliff said that the utilities have presented an analysis to PURA showing that the sale would save customers money over the next decade under authority ownership due to reduced costs and access to lower interest rates.
“The RWA has a longstanding track record of strong performance and industry-leading reliability providing safe, high-quality drinking water to residents and businesses in the state thanks to its sound management and financial stewardship,” she said.
In his letter sent to PURA on Friday, however, Tong criticized RWA’s governing structure — known as the Representative Policy Board — for its history of approving rate increases. In addition, he said it was “problematic” that the board has the power to appoint members of the Office of Consumer Affairs to advocate on behalf of water customers.
“This structure not only lacks actual independence, but it also fails to inspire confidence in consumers that their voices can be heard,” Tong said.
If regulators do decide to approve the deal, Tong said that they should add stipulations preventing transaction costs from being passed along to ratepayers, along with reforms to the authority’s rate-making process.
The sale itself was authorized as a result of a law passed during a special session last year that enabled the RWA to place a bid on Aquarion.
After the proposed sale was announced earlier this year, two Republicans from Aquarion’s service territory attempted to repeal sections of that law to block the sale — though their effort was unsuccessful.
