Connecticut regulators on November 19 rejected Eversource Energy’s proposal to sell its Aquarion Water Company for $2.4 billion, overturning a previously approved plan and creating a significant setback for the utility’s debt‑reduction strategy.
The sale had been a cornerstone of Eversource’s plan to trim its balance sheet and free capital for a $24.2 billion capital‑investment program covering grid modernization, transmission, and distribution upgrades. Prior to the decision, the company’s total debt stood at roughly $12 billion, with a debt‑to‑equity ratio of about 1.8. The $2.4 billion proceeds were expected to lower the debt load by nearly 20% and accelerate the company’s target of reducing debt by $3 billion over the next five years.
Regulators cited several concerns that made the proposed transfer untenable. The Aquarion Water Authority, a newly created quasi‑public entity, would have overlapped with the South Central Connecticut Regional Water Authority, creating a governance structure that regulators deemed “unworkable” and potentially exposing the company to fiduciary conflicts. Additional worries included the suitability of the proposed management team, the possibility of significant rate increases—projected at 6.5% to 8.35% annually through 2035—and a loss of regulatory oversight that could affect service quality and customer protection.
The rejection forces Eversource to revisit its capital‑allocation plan. Without the sale proceeds, the company may need to explore alternative financing, such as equity issuance, to meet its debt‑reduction targets and fund the $24.2 billion investment program. Investor sentiment has turned negative, reflecting concerns that the company’s ability to deleverage and invest in core infrastructure is now in jeopardy.
Aquarion, acquired by Eversource in 2017 for approximately $1.7 billion, is Connecticut’s largest water utility, serving about 695,000 customers across 59 communities. The utility also serves customers in Massachusetts and New Hampshire, covering a total of 73 municipalities. The sale’s failure underscores the challenges of divesting non‑core assets in a regulatory environment that remains highly scrutinized.
Eversource spokesperson Tricia Modifica said the outcome reflected difficulties in the legislative framework that was intended to enable a non‑profit model for water utilities. She noted that while the state expressed interest in expanding the model, the specific act made it hard for the Public Utilities Regulatory Authority to move away from an investor‑owned structure. The company remains focused on completing its capital‑investment plan and maintaining service quality for its water customers.
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