As part of a late bid to exert some control over the future of the Aquarion Water Company, Connecticut lawmakers on Tuesday proposed keeping the water utility under the purview of state regulators even if it’s sold to a quasi-public entity.
The effort emerged as part of legislation, House Bill 5249, that seeks to amend portions of a controversial 2024 law that cleared the way for the South Central Connecticut Regional Water Authority, or the RWA, to make a $2.4 billion bid for Aquarion.
That deal is now pending before the state’s Public Utilities Regulatory Authority, which has already signaled its intention to approve the sale. A final decision is expected on March 25.
But critics of the deal have grown increasingly vocal. One of their key points of contention is that the sale to a quasi-public entity would mean losing state oversight of Aquarion, which is the largest water utility in Connecticut.
As private, for-profit utility, Aquarion’s water rates are currently reviewed and subject to approval by PURA. If it were acquired by the RWA, however, current law dictates that its rates would be overseen by a board of locally-appointed officials within the utility’s service territory.
On Tuesday, members of the legislature’s Energy and Technology Committee added language to H.B. 5249 giving PURA continued oversight of larger quasi-public water utilities, which they said was intended to apply only to Aquarion. (Following the proposed sale, Aquarion Water Authority would operate as a separate entity from the RWA.)
Lawmakers then voted to advance the bill out of the committee.
“There is a reason to have government and consumer oversight, especially in circumstances like utilities regulation when we have natural monopolies,” said state Sen. Ryan Fazio, R-Greenwich, who is part of a group of lawmakers representing Aquarion towns that have spoken out against the proposed sale of the utility.
“PURA… in its totality, represents that entity that should exist in order to protect consumers and check increasing utility rates,” he added.
A spokesperson for PURA declined to comment on the legislation Wednesday, citing the agency’s ongoing review of the proposed transaction.
Officials at both Aquarion and the RWA have submitted testimony urging lawmakers to reject earlier drafts of the bill, which they said ignored efforts to compromise on several issues raised by opponents. That included a proposed offer of $10 million to offset the cost of future rate increases, if the deal is approved.
“For more than a year, we have participated in the regulatory and legal processes in good faith, engaging stakeholders and advancing a proposal designed to support customers and the communities we serve,” the utilities said in a joint statement Tuesday. “Our compromise proposal remains on the table as a meaningful step toward resolution. We remain focused on the regulatory process and are confident the record clearly reflects the merits of this transaction.”
Prior to the changes made to the bill on Tuesday, H.B. 5249 was intended to shift the balance of the combined board overseeing Aquarion and the RWA to favor the former utility, which serves more customers. The bill also clarified the authority of PURA to reject the proposed sale, after a state judge ruled in January that existing law only gives regulators narrow grounds to do so.
But that version of the bill wasn’t likely to have taken effect in time before PURA is slated to issue its final decision on the sale, March 25.
“I would say that’s not a practical option at this point,” said state Rep. Jonathan Steinberg, D-Westport, who serves as co-chair of the Energy and Technology Committee. He added that the revised bill is “a signal, it’s a communication. It may or may not have any influence on their final decision. It all depends upon what they’re considering.”
In a statement Wednesday, Attorney General William Tong said the legislation provided clarity regarding PURA’s ability to reject the deal. However, he also expressed uncertainty about the new language giving state regulators oversight of a quasi-public utility.
“It’s unclear what regulatory oversight would look like under this proposal,” Tong said. “What is abundantly clear is that no amount of future regulatory oversight will solve the $5.895 billion fundamental problem with this deal. This deal is way too expensive, not in the public interest, and PURA should stand by their original decision to reject it.”
The costs included in Tong’s statement reflect the amount of total debt — including principal and interest — that he and the state’s Consumer Counsel have argued utility customers would be on the hook to pay back over several decades if the deal were approved.
Utility officials have rebutted those claims, saying they would not seek to recoup the costs related to the transaction through rate increases. However, they have said that annual increases between 6.5% and 8.35% over the next decade are necessary in order to maintain Aquarion’s existing operations.
If lawmakers do succeed in passing the bill at this point, Steinberg said he anticipates that one or both of the utilities involved in the sale would likely file a lawsuit seeking to overturn the new law. He also said the new language needs to be clarified so that it does not apply to other large, quasi-public water utilities — including the RWA and greater Hartford’s Metropolitan District.
“I would like to believe that we could prevail, but I have no illusions about the process and how it will likely involve a legal challenge,” Steinberg said.