Connecticut regulators signal OK for Aquarion transfer
Connecticut regulators signaled plans to approve Eversource Energy’s $1.6 billion takeover Aquarion Water and its parent company Macquarie Utilities, which if finalized would expand New England’s largest utility’s services into water supply in addition to electricity and natural gas transmission.
Aquarion traces its history through the Bridgeport Hydraulic Company to 1857, with the company serving 625,000 people throughout the state via 3,100 miles of water mains. The company maintains eight reservoir systems and accompanying water treatment plants, as well as wells and pumps to source water from underground aquifers.
The state Public Utilities Regulatory Authority issued a draft decision this week approving the deal announced in June, with a final decision still pending. In the document, PURA stated the combination is in the public interest, that the companies have complementary profiles and that Eversource “possesses the requisite financial, technological and managerial suitability and responsibility to operate a public service company and provide safe, adequate and reliable service to the public.”
PURA noted the deal also ensures that control of Aquarion will remain in Connecticut, PURA noted. Aquarion is based in Bridgeport, with Eversource managing its New England operations from corporate offices in both Hartford and Boston. Eversource committed to providing Aquarion employees a compensation package that is “market based and competitive” in the words of PURA, and to undertake no major revisions to pensions.
Connecticut Attorney General George Jepsen had also given an OK on the transaction, in part on grounds Eversource’s size allows it to borrow money at lower interest rates to fund water system improvements than can Aquarion. In July, an Eversource executive indicated the company plans to do just that, whether through upgrades or by purchasing smaller water companies. Eversource profits totaled $494 million in the first six months of 2017, with the company’s cash, receiveables and other liquid assets topping $2.3 billion as of June.
Aquarion had net income of $4.7 million in the first quarter of 2017 and $50 million in liquid assets. The value of the company’s total assets was more than $1.1 billion as of March.
“In terms of the operations and the assets of Aquarion, they are a very well-run, well-respected organization (and) have a No. 1 (position) in JD Power scores for their category,” said Lee Olivier, an Eversource executive vice president, speaking on a conference call. “We’re focused on growing the business, so I think there are growth opportunities that do exist in the water business.
“The small, distressed systems (locally) are a growth opportunity that currently exist,” Olivier added at the time. “You have a business ... that has some potentially significant growth opportunities as we move forward with aging infrastructure and the like.”
The acquisition had met resistance from the Rivers Alliance of Connecticut, the Norwalk River Watershed Association and others who raised concerns about a single corporate entity controlling both electricity and water utilities; and possible ramifications for water quality and flows. On the latter front, the state Department of Energy and Environmental Protection and Department of Public Health determined water supplies would not be affected by the sale of Aquarion.
Alex.Soule@scni.com; 203-842-2545; @casoulman