PURA unanimously denies Eversource’s $2.4B sale of Aquarion Water Co.

The Public Utilities Regulatory Authority voted unanimously Wednesday morning to deny Eversource Energy’s proposed $2.4 billion sale of Aquarion Water Co. to a newly created quasi-public entity, dealing a major blow to the closely watched utility transaction.

The five-member panel rejected the application after determining that the proposed governance structure of the buyer — Aquarion Water Authority — failed to meet state requirements for managerial suitability, despite finding the deal financially and technically sound.

“The authority finds that the proposed transaction meets financial and technological suitability and responsibility requirements and that AWA can reasonably be expected to provide safe, adequate and reliable service for customers,” PURA staff attorney Josh Coker told commissioners during Wednesday’s hearing. “However, the authority also finds the proposed transaction does not meet managerial suitability and responsibility requirements in a manner consistent with the public interest.”

Coker said the proposed structure of the Aquarion Water Authority is “managerially unsuitable due to structural and local control issues.”

The commissioners voted 4-0 to approve the decision to deny the sale, with Interim PURA Chairman Thomas Wiehl abstaining from the vote, due to his former role as legal and regulatory director for the state Office of Consumer Counsel, which submitted testimony opposing the deal.

Interim Commissioner Jan Beecher, whose participation in the case also drew scrutiny after opponents sought her recusal, voted to deny the application.

“A change of control in any form and under any terms must be suitable and should be demonstrably beneficial in meeting the public interest standard,” Beecher said.

Interim Commissioner Holly Cheeseman, who disclosed she voted for the enabling legislation while serving in the General Assembly, also supported the denial.

The transaction would have transferred Aquarion — Connecticut’s largest water utility, serving about 230,000 customers in 72 communities — from publicly traded Eversource to a nonprofit authority modeled after the New Haven-based South Central Connecticut Regional Water Authority.

Supporters, including Eversource and the Regional Water Authority, argued the deal would lower financing costs and stabilize rates by converting Aquarion to nonprofit status. Eversource announced the proposed sale in January and said during an earnings call last week it expected to complete the transaction by year’s end.

Opponents — including more than two dozen municipalities, the state attorney general, the Department of Public Health and environmental group Save the Sound — warned the move could eliminate local tax revenues, burden ratepayers with debt and reduce regulatory oversight.

The decision comes amid a leadership overhaul at PURA following the October resignation of former Chair Marissa Gillett after a turbulent five-year tenure marked by conflicts with utility companies and Republican lawmakers.

Eversource acquired the Bridgeport-based water utility in 2017. The company did not immediately respond to a request for comment on the decision.