Hartford Business Journal

22 HARTFORDBUSINESS.COM | JUNE 16, 2025 In addition to tax-exempt debt, AWA, similar to RWA, will partially fund capital improvements through the revenue it generates, Kowalski said. "RWA has a long-standing record of utilizing tax-exempt financing and continues to increase the portion of its capital program funded through internal funds, demonstrating the bene- fits of local control and regulation in the water utility sector," Kowalski said. Public vs. private The conversion of Aquarion from a publicly traded company to a not-for- profit, quasi-public entity means it will join nearly 150,000 other water utilities in the public sector. Most U.S. water companies are owned by quasi-government entities, Kowalski said. The U.S. has nine publicly traded water companies — Aquarion is currently the largest in New England and seventh-largest overall. Some believe the quasi-public, nonprofit model is advantageous for consumers. According to information from the state's Consumer Counsel Claire Coleman, customers of private, investor-owned water companies pay higher rates for water, largely because private companies are required to pay four taxes — the state's corporation business tax, federal income tax, local real estate and property tax in all towns where they own property, and sales tax — that don't apply to not-for-profit water authorities. Even still, there are some concerns about the deal. At the beginning of the 2025 legisla- tive session, Sen. Ryan Fazio (R-Green- wich) and Rep. Tracy Marra (R-Darien) proposed legislation that would have effectively blocked the sale of Aquarion Water Co. to a quasi-public entity. Fazio and Marra told the CT Mirror earlier this year that they feared the change in ownership would make water bills more expensive. Their proposal was referred to the Planning and Development Committee, where it died. Fazio and Marra did not return requests for comment on this story. Meantime, Fairfield First Selectman William A. Gerber, whose town is among the interveners, in a May 22 letter to constituents described the deal as a leveraged buyout — a way of acquiring a company by using a significant amount of borrowed money — and "extremely risky for Aquarion customers." He raised concerns about the $2.4 billion sales price and how AWA would be able to repay it without significantly increasing rates on consumers. Gerber, a Democrat, noted that over the past four years, Aquarion has generated profits running from $33.1 million to $44.6 million. "RWA has presented in their PURA filings virtually no meaningful evidence this deal works from a bottom line or cash flow perspective," Gerber said. "Until proven otherwise through transparent disclosures by RWA, one must assume that $2.4 billion in debt, all falling on AWA customers to repay, will eventually lead to massive rate increases and significant cuts to taxes Aquarion currently pays to municipal- ities. RWA's promises of holding rates and taxes steady are as empty as they are vague." Other interveners in PURA's regu- latory review of the deal include the towns of Shelton, Wilton, New Canaan, Westport and Ridgefield. Regulatory filings show they are worried the sale will substantially decrease tax revenue because towns that host Aquarion infrastructure would receive payments in lieu of taxes from the new nonprofit owner, instead of tax payments based on assessments and periodic property revaluations. Aquarion is one of the highest taxpayers in Fairfield, where it contrib- utes about $1.8 million in annual tax revenue to the town. Notably, the deal has been well received on Wall Street. Financial analysts at Guggenheim Securities said Aquarion's $2.4 billion sales price was about $200 million higher than they anticipated. It includes about $1.6 billion in cash and $800 million of net debt that will be extin- guished at closing. It's unclear whether entities aside from AWA placed bids for Aquarion. An Eversource spokesperson said the bids were confidential. RWA's acquisition of Aquarion would mark the third time the water company has traded hands in 20 years. Eversource originally bought Aquarion in 2017 in a deal valued at $1.675 billion. Prior to that, Aquarion was owned by Macquarie Bank, which purchased it for $860 million in 2006. The Lake Whitney Dam in New Haven is managed by the Regional Water Authority. The Aquarion Water Authority will share resources with the Regional Water Authority, including a board of directors and executive staff, but will remain a separate entity. CONTRIBUTED PHOTO Sea Change Continued from page 21 860.482.7613 | www.borghesibuilding.com 2155 East Main Street, Torrington, Connecticut 06790 Check out our new website! Building Ideas That Work... Building Ideas That Work... © 2011 BlueScope Buildings North America, Inc. All rights reserved. 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