Without a public hearing or other vetting, the state Senate is scheduled to vote Wednesday on a measure that would allow a New Haven-based public water authority to acquire one of the nation’s largest investor-owned water companies, Aquarion Water Company.
The enabling legislation sought by the South Central Connecticut Regional Water Authority would allow it to bid on Aquarion, a Bridgeport-based company that Eversource Energy acquired for $1.675 billion in 2017 and is now attempting to sell in a volatile market roiled by Connecticut’s regulatory environment.
Public authorities are outside the jurisdiction of the Public Utilities Regulatory Authority, so Aquarion’s operations, finances and rates no longer would be subject to the approval of state regulators if the company is obtained by the Regional Authority, or RWA.
The Regional Water Authority’s interest in Aquarion was not widely known until The Connecticut Mirror reported Friday that Gov. Ned Lamont and legislative leaders had agreed to include the topic in the call for a special session. The issue is one of several addressed in a single omnibus bill to be debated Wednesday.
“It was totally out of left field,” said Rep. Jonathan Steinberg, D-Westport, co-chair of the Energy and Technology Committee. “Obviously, there’s some measure of emergency if they want to bid in, but that’s not adhering to the typical process, and that’s a pretty big concern.”
“This is rather sudden, and it’s a major change in public policy. I’m open to it,” said Sen. Ryan Fazio of Greenwich, the ranking Republican on the energy committee, but he wants to know more. “It’s not something we discussed in the past session.”
One question is why the authority did not seek the legislation, or at least broach its potential need, during the regular session that opened on Feb. 7 and ended on May 8. Eversource disclosed its intentions to explore an Aquarion sale on Feb. 13, the same day it posted a full-year loss of $442 million for 2023.
“In a better world, we’d have more time to vet it,” said Sen. Norm Needleman, D-Essex, the other co-chair of the energy committee.
In lieu of the formal vetting required in a regular session, Steinberg spoke Tuesday with Larry Bingaman, the president and chief executive of the RWA, quizzing him on governance, oversight and setting of rates, and other issues. Bingaman noted, among other things, that the bill would enhance the likelihood of Aquarion remaining under local control, Steinberg said.
“I’m certainly still on the fence,” Steinberg said.
The proposed legislation was not available Tuesday night, but CT Mirror obtained a draft bill that would create, if a purchase were successful, an Aquarion Water Authority with the nearly identical powers as the RWA, including the ability to purchase and condemn property and issue bonds.
Representatives of the member towns would sit on a 60-member policy council that would advise and appoint five people to the authority’s 11-member governing board.
Lawmakers and others were trying to assess whether the Regional Water Authority, whose rates would not be set by PURA, could afford to make a higher bid for Aquarion than regulated competitors.
The Connecticut Water Co. also is considering making a bid, said Craig Patla, its president. But a non-regulated bidder would have a clear advantage, he said.
“I would say that having having a non-regulated entity in the Regional Water Authority being able to bid and potentially pay a premium for this utility — and not have PURA oversight — would definitely put the thumb on the scale” in any competitive bidding, Patla said.
PURA could review the terms of a sale of Aquarion but not its rates if purchased by RWA.
Kevin Watsey, the director of public affairs for the RWA, said the authority’s board would provide sufficient oversight of the new entity’s operations and rates.
“There is a voice of the people,” he said.
Aquarion is one of the seven largest investor-owned water utilities in the U.S., with 236,000 customer accounts in 72 cities and towns, most of them in Connecticut, and 13 in Massachusetts and New Hampshire. A key part of its business is supplying water to a small but densely population portion of Fairfield County, including Bridgeport, Norwalk, Stamford and Greenwich.
It had net income of $33 million on a $1.3 billion base rate in 2023.
An Aquarion rate case was one of the early flash points in the contentious relationship between the state’s largest utility, Eversource, and PURA, a regulatory authority that has grown more aggressive in scrutinizing utility rates and expenses since Marissa P. Gillett was appointed as its chair.
Rather than grant an increase, PURA instead cut Aquarion’s rates. A Superior Court judge rejected the company’s administrative appeal, prompting a request for a review by the Connecticut Supreme Court. Wall Street has responded negatively to PURA’s oversight.
The Senate is scheduled to meet at 11 a.m. Wednesday to consider the single bill. In the draft reviewed by CT Mirror, 58 of its 139 pages involved the RWA and Aquarion. The House will convene on Thursday. Neither chamber is expected to be in session for more than a few hours.
A special session has been discussed since shortly after the regular session ended without passing a legislative fix needed to prevent an increase in motor vehicle taxes this fall, an unintended consequence of a 2022 bill.
The fix would continued to classify commercial vehicles as motor vehicles, and it would clarify that current law allows municipalities to establish mill rates on motor vehicles that are lower than mill rates on real property and personal property.
The agenda has steadily grown, mainly with technical proposals involving regulation of banking, insurance and the state’s publicly available retirement savings program.
At the governor’s request, the bill would roll back a liberalizing of school construction bidding rules that was included in a fiscal bill in the last days of the regular session.
A more contentious provision, which was floated only last week, would streamline the process by which the State Historic Preservation Office reviews the redevelopment of historic properties.
The leaders of the legislature’s Commerce Committee, who have sought the changes, did not return calls for comment.
House Minority Leader Vincent J. Candelora, R-North Branford, said the historic preservation issue was the only one to be taken up in special session that is not time-sensitive.
But Candelora said the issue had been publicly vetted by the Commerce Committee in regular session.
