This story has been updated.
Connecticut regulators gave final approval to the proposed sale of the Aquarion Water Company on Wednesday, paving the way for the state’s largest water utility to become a public entity.
The Public Utilities Regulatory Authority voted 3-0, with two members abstaining, to allow Aquarion parent company Eversource to sell the utility to the South Central Connecticut Regional Water Authority, or RWA.
The decision was final, but it could face legal challenges from a group of towns that have opposed the sale.
PURA previously signaled its intention to approve the sale in a draft decision earlier this month.
In a joint statement released shortly after the vote, Eversource along with the RWA praised the decision as being in the best interest of the utility’s roughly 226,000 customers.
“This approval allows the Aquarion Water Authority to move forward with the acquisition and transition to a locally governed, not-for-profit model focused on reliable service, accountability, and sustained investment in the system,” the statement said. “We look forward to working with communities across the region to ensure a smooth transition and deliver lasting value for customers.”
The $2.4 billion sale would transform Aquarion into a quasi-public entity similar to the RWA, with its rates and operations overseen by a board made up of members appointed by the 59 municipalities within the utility’s service area. Aquarion would operate as its own public authority, separate from the RWA.
The sale — along with the structure of the new entity — was the result of legislation hastily passed during a special session in 2024, allowing RWA to bid on Aquarion.
Opposition to the deal has emerged, however, within many of the 59 cities and towns in the utility’s service area due to concerns that the RWA’s rates have, historically, been higher than those paid by Aquarion customers. In addition, as a nonprofit, Aquarion would be exempt from paying local property taxes.
In a statement Wednesday morning, state Senate Minority Leader Stephen Harding, R-Brookfield, called the decision “a backbreaker” for customers. (Harding was among a majority of Republicans who opposed the legislation authorizing the sale.)
“Aquarion customers will get crushed by a tsunami of annual water rate hikes,” Harding said. “The deal stunk from Day One.”
Attorney General William Tong, a Democrat, has also sharply criticized the deal, arguing customers would have to pay off billions of dollars in debt service on top of the costs of the sale.
“Literally no one wanted this deal except for the utility executives looking to cash out,” Tong said in a statement Wednesday. “The economics of this deal made zero sense. It’s a costly loser wrapped in a bunch of fuzzy math and empty promises. PURA had every ounce of authority and every reason to reject this deal, but they simply caved.”
To address the widespread concerns, officials at the utility pledged to avoid any rate increases for six months after the sale, while also entering into payment-in-lieu-of-tax agreements to ensure towns do not lose any existing revenues.
Still, officials at both Aquarion and the RWA acknowledge that additional revenue will be needed to keep up existing services for customers. The deal would result in annual increases of between 6.5% and 8.35% starting next year and lasting through 2040, according to the utilities’ estimates.
Eversource had pledged to seek even steeper rate increases if regulators blocked the deal.
In a written order explaining their decision on Wednesday, regulators said the public benefits of the proposed transaction sat on a “knife’s edge” due to the substantial cost of the sale. In the long run, however, the commissioners found that tax benefits and lower capital costs associated with public ownership outweighed those concerns.
“The [Aquarion] authority will be under public ownership, not a creature of private equity and no longer subject to sale when the winds of the market grow adverse,” said interim commissioner Holly Cheeseman.
Cheeseman was joined by interim commissioner Janice Beecher and Vice Chair David Arconti in voting in favor of the deal. Interim Chair Thomas Wiehl and interim Commissioner Everett Smith recused themselves from the vote.
Claire Coleman, the head of the Office of Consumer Counsel which advocated against the deal, released a statement on Wednesday expressing her disagreement with PURA’s analysis.
“Ratepayers should never be asked to subsidize a restructuring of this magnitude unless it lowers costs and presents a credible, detailed plan to improve services and protect customers,” Coleman said. “This deal does none of those things. To the contrary, the evidence showed that Aquarion customers will see immediate and sustained bill increases from the transaction, in addition to being saddled with paying off the debt service for decades to come. PURA had the tools to prevent this outcome and chose not to use them.”
PURA originally voted in November to reject the sale, citing concerns about the governing structure established by a 2024 law allowing the RWA to bid on the private utility. A judge laterreversed that decision, however, saying regulators could not second-guess lawmakers who created the structure.
Frustrated by the way the deal has worked out,lawmakers are now considering legislation that would give PURA continued oversight of Aquarion in the event the sale goes through. That legislation, House Bill 5249, has yet to receive a vote in either the House or Senate.