Hartford Business Journal

14 Hartford Business Journal • May 7, 2018 • www.HartfordBusiness.com By Gregory Seay gseay@HartfordBusiness.com W ith the battle for Connecticut Water Service Inc. (CWS) entering a new phase, questions are being raised about whether out- of-state ownership and control of Connecticut's most valuable natural resource is in the best interests of residents and its economy. Clinton-based CWS, which serves consumers in Connecticut and Maine, has pending a $750-million buyout offer from SJW Group, a San Jose, Calif., hold- ing company that owns a water utility and a commercial land-developer. But Connecticut's biggest electric- water utility, Eversource, has burst onto the scene with a competing bid for CWS, citing its local ties and thirsty residents' growing reliance on it since last year's $1.8 billion buyout of Bridge- port water supplier Aquarion Water Co. Eversource has urged Connecticut Water Service stockholders to reject the overtures of SJW, itself the target of a $1.9 billion buyout offer from another California water utility. Ever- source contends it is well-equipped as a state utility to absorb Connecti- cut Water and to continue with tens of millions of dollars in annual investments in upgrades and expansions. While that high-stakes corporate melo- drama plays out, concerns are be- ing raised among lawmakers and consumers about the concentration of ownership of Connecticut's water resources, particularly in the hands of an out-of-state player. CWS itself has been an active ac- quirer in recent years, spending $60 million in 2017 to purchase two local water utilities: Southbury's Heritage Village Water and Avon Water Co. Combined, they serve about 104,000 metered customers in Connecticut, or a population of about 350,000. "Conglomeration of water interests is a cause for concern, just like concentration of such resources in any industry,'' said state Rep. Jonathan Steinberg (D-West- port), who co-chairs the legislature's Pub- lic Health Committee. "We already have issues with powerful special interests in our country. I'm not saying it's a problem per se, but it does give me pause." Whether or not Eversource prevails, the battle for control of a share of Con- necticut's 2,500 public water systems that provide nearly nine of every 10 state residents with potable water comes at a crucial juncture. A drought gripped parts of Con- necticut in 2016, triggering some communities to limit certain water uses. That occurred amid ongoing concerns about the impact of climate change on historical and projected rain- and snowfall totals, which serve to recharge Connecticut's surface and below-ground water reserves. Also pending right now is a 616-page draft of Connecticut's state water plan, which spells out for current and future water-drinkers this state's mission and ambitions for monitoring, using and conserving its vast water resources. Connecticut is renowned for some of the most protective water policies in the nation; it is the only state that mandates drinking water come from sources untainted by sewage discharge. Just last week, Gov. Dannel P. Mal- loy attended the groundbreaking for a $54-million makeover of Groton's aging water plant serving residents and businesses, such as Electric Boat, and urged lawmakers to adopt the proposed state water plan for develop- ing and conserving Connecticut's vast system of surface and underground water resources, water/sewer lines and related infrastructure. Perhaps more importantly, Malloy told his Groton audience, the plan estab- lishes water as a "public trust,'' one the state has a responsibility to protect. That wording in the water plan, however, has drawn ire from, among others, the Connecticut Water Works Association (CWWA), a statewide lobby of 45 public and private water purvey- ors serving about 500,000 household and commercial customers, or some 2.5 million individuals. The state's private and municipal water utilities, said CWWA Executive Director Betsy Gara, are concerned that labeling water as a public trust could limit the pool of water sources available to them. The Connecticut Business & Industry Association also is concerned for the broad, unresolved interpreta- tions of a 47-year-old state statute that stipulated air, land and water as public trusts, said Eric Brown, a CBIA lobbyist. Could, for example, the state prevent utilities from tapping certain Con- necticut waterways if major and lasting droughts take hold in the state? Environmentalists have lobbied strongly for the public trust language in the water plan, which Malloy also supports. "The plan was drafted after an 18-month transparent and public pro- cess with extensive input from con- sumers, environmental advocates, and water utilities," Malloy said. "The idea that these same utilities are now trying to derail the entire process in order to protect their private interests and prof- its should be of concern to every citizen in our state." Given a choice between Eversource, with joint Hartford/Boston headquar- ters and SJW Group owning Connecti- cut Water Service, Malloy said through his office spokesperson, "we would strongly prefer local ownership." Merger battle Eversource insists that its purchase of CWS would enhance the state's long- term water ambitions while benefiting customers. The utility says its fore- casted capital investments at Aquarion CT weighs water plan The Connecticut Water Planning Council, which is made up of four state agencies with oversight or regulatory responsibility for water management, has prepared and approved a state water plan that aims to help planners, regulators and lawmakers make decisions about managing Connecticut's water systems. The plan, which was created in response to a state law passed in 2014 and requires legislative approval, has received some pushback, particularly from water utili- ties that bristle at language calling water a "public trust" resource, which they say could limit the pool of water sources available to them. Regardless, the plan includes scientific information, policy recommendations, and forward-looking steps that aim to frame future water management laws and regula- tions in the state. Among the report's conclusions was that many river basins in the state have enough water to satisfy both in-stream (ecological, recreation) and out-of-stream (drinking, industry, agriculture, energy) needs most of the time, but they can't all supply these needs during drought, or even typical summer conditions. Some of the plan's recommendations include: • Maintaining the highest standard (Class A) of drink- ing-water quality in the nation. • Having water management policies follow scientific examples. • Encouraging innovation in agricultural water practices. • Centralizing water data in a single database or portal. • Encouraging broader education and use of water conservation techniques. • Encouraging regional water solutions when practical. Water Wars Water-utility bids raise concerns about control of Connecticut's water resources Killingworth Reservoir is among 253 in-state reservoirs and wells Connecticut Water Service Inc. taps to provide potable water to about one in 10 Connecticut residents. Environmentals and consumers insist water is a "public trust." Gov. Dannel P. Malloy (second from left) broke ground April 30 on a $54-million upgrade of Groton's water-treatment plant. PHOTOS | CONTRIBUTED

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