December 27, 2018

Eversource rides CT Water deal to the end

Photo | Contributed
Photo | Contributed
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.

With a key regulatory decision looming that could make or break Connecticut Water's $1.1 billion deal with a California company, spurned suitor Eversource remains very much in the mix.

The Public Utilities Regulatory Authority (PURA) on Thursday morning had not yet made a decision on whether to accept new terms offered in California-based SJW Group's proposed $1.1 billion acquisition of Connecticut Water Service.

Earlier this month, PURA commissioners issued a preliminary decision to block the deal citing concerns it would not have enough public benefit and would leave Connecticut Water in "worse condition both financially and managerially."

PURA is continuing its deal review, following a move by the two companies several weeks ago to sweeten the pot for Connecticut ratepayers, including offering a rate freeze and local employment pledges.

The choice now before PURA is whether or not to admit the new information and pledges into the record, as requested by Connecticut Water and its suitor. The decision, though procedural, is seen as a key step for the acquisition to proceed.

"The reopened record, with some new evidence and additional process, will provide the necessary basis for a PURA decision without requiring a wholly new application," the Office of Consumer Counsel wrote in a recent filing that urged PURA to reopen the record.

Eversource, which previously made its own offers to buy Connecticut Water, is urging PURA not to reopen the record in the proceeding.

In a PURA filing dated Dec. 17, Eversource and its recently acquired subsidiary Aquarion Water said the offered concessions fail to remedy "the underlying, fatal defects of the transaction."

Eversource, which previously submitted several bids to buy Connecticut Water, charged that Connecticut Water and SJW Group resisted making firm commitments in their initial applications and are now offering concessions only because PURA has indicated it may scuttle the deal.

It called the move an attempt to set up an "open-ended negotiation" with PURA in response to its draft decision.

"If [PURA] sanctions this tactic by granting the motion to reopen, it will render meaningless its prior directive and will also set a precedent confirming that, in Connecticut, a failure to address customer interests in merger petitions is not only accepted, but constitutes a valid strategy to identify the minimum concessions necessary to gain PURA's approval for the proposed transaction," Eversource wrote.

"If allowed, the applicants' approach will cement a flawed process in which PURA can never be sure whether it is reviewing the best and final proposal," the company added.

Connecticut Water, which previously accused Eversource of spearheading a "disinformation campaign" related to the drawn-out deal proceedings, said just after noon on Thursday that it disagreed with Eversource's latest filing and said Connecticut Water is "disappointed that they continue to try to attempt to interject themselves in the PURA proceeding."

"Connecticut Water and SJW Group were pleased to filed additional information for PURA's consideration that we believe demonstrates the benefits of the merger for all stakeholders and is in the public interest," a spokesman said. "Our filing provides evidence on the additional steps taken by SJW related to financing the transaction since the record on the PURA docket was closed and substantial new merger commitments that provide tangible customer benefits."

Connecticut Water added that it and SJW "are eager to demonstrate the tangible customer benefits of the transaction and our willingness to formalize and be legally bound to deliver those benefits."

Eversource did not immediately provide an answer to a reporter's question as to whether the company is still interested in trying to acquire Connecticut Water.

However, in an early November earnings call, Eversource CFO Philip J. Lembo said the company continues to see opportunities in water acquisitions, particularly in smaller rollups of distressed or local companies.

An earlier version of this story has been updated to include comment from Connecticut Water

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