Connecticut regulators signaled their intention to approve the sale of the Aquarion Water Company to a quasi-public entity on Friday, reversing course on a previous decision to block the sale that was overturned in court.

In a draft decision released on Friday, the Public Utilities Regulatory Authority said that Eversource’s plan to sell the water utility to the quasi-public South Central Connecticut Regional Water Authority was “reasonably aligned with the public’s interest,” and that regulators lacked the authority to reject the deal despite their misgivings about the potential impact on customers.

Specifically, the draft continued to echo concerns raised in PURA’s original decision from November about the lack of an independent consumer advocate and conflicting interests among members of the consolidated board that would oversee operations of both utilities.

In addition, regulators said the deal threatened to saddle customers with additional costs that would offset the benefits of public ownership.

Despite those concerns, the draft decision determined that PURA lacks the authority to block the sale because it was largely structured around a state law passed during a special session of the legislature in 2024 allowing the RWA to bid on Aquarion. New Britain Superior Court Judge Matthew Budzik said essentially the same thing in January when he ordered PURA to reconsider its earlier decision to block the deal.

“Opponents to the Proposed Transfer have identified a number of concerns, including the governance structure, rate-setting oversight, and rate impact,” the decision states. “However, these concerns are either outside the Authority’s jurisdiction or insufficient to find that the Proposed Transfer, as a whole, is not in the public interest. Nonetheless these material concerns warrant further attention from, and possible remediation by AWA, RWA, or the General Assembly.”

A final decision on the sale is scheduled for Wednesday, March 25.

In a joint statement Friday, Aquarion President Lucy Teixeira and RWA Vice President Rochelle Kowalski said the draft decision represented a “constructed step forward” for the proposed sale.

“We appreciate the commission’s work to reach this point,” the statement said. “The decision recognizes the Aquarion Water Authority’s ability to access lower-cost capital as a public authority and reflects commitments we have made, including full [payment-in-lieu-of-taxes] payments to support municipalities and the stabilization fund we proposed to help mitigate future rate impacts. We will continue engaging in the regulatory process and with stakeholders in the coming weeks as we await the final decision on March 25.”

A spokesperson for the Office of Consumer Counsel, which advocates on behalf of utility customers, released a statement on Friday saying they were reviewing PURA’s rationale in preparation for oral arguments that will be held later this month.

The proposed sale has stoked fierce opposition across Aquarion’s service territory, with lawmakers and local officials in both parties raising concerns about rising water bills, impacts on local property taxes and the loss of state oversight of Aquarion’s operations. Under state law, PURA only approves rates for investor-owned utilities, not those that are publicly owned.

Attorney General William Tong, who represented PURA in Eversource’s successful appeal of the original decision, released a statement on Friday accusing regulators of caving on their earlier opposition to the deal.

“We need to understand exactly what happened here,” Tong said. “This is an economic disaster for Connecticut families and municipalities and is not in the public interest.”

Aquarion serves roughly 226,000 customers in Connecticut. The company also owns assets in New Hampshire and Massachusetts, which Eversource plans to sell to the utility Unitil.

As part of the application submitted to PURA, officials at both Aquarion and RWA had pledged not to seek a rate increase for at least six months following the sale. After that initial period, officials projected that Aquarion would require annual rate increases of between 6.5% and 8.35% over the next few decades in order to maintain its operations. After 2040, the annual increases are expected to fall to around 2%.

One potential complication in the path forward for the sale is pending legislation, House Bill 5249, that would alter the 2024 law enabling RWA to bid on Aquarion and establishing the structure of the new water authority. The proposed changes would give Aquarion one additional seat on the combined authority board, while also giving PURA leeway to reject the sale.

The bill has received a public hearing and support from local officials within Aquarion’s service territory, who urged lawmakers to quickly pass the legislation before PURA hands down its final decision. It has yet to come up for a vote in committee.

The sponsor of the legislation, state Rep. Joe Gresko, D-Stratford, praised Aquarion’s service during a press conference at the state Capitol earlier this week in which several speakers called for immediate action to try and stop the sale from going forward.

“They have been responsible, they have been a good corporate citizen,” Gresko said of Aquarion. “I would prefer it if we didn’t monkey around with that, if we can avoid it.”

Neither the House nor the Senate are scheduled to meet before the 25th, however, and House Speaker Matt Ritter, D-Hartford, said he has not been privy to any discussions about fast-tracking the bill.

“There are many people who feel very strongly about this law and want to see it passed,” Ritter said. “There are other people who feel the other way, or are agnostic.”