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May 9, 2019

CT Water's 1Q profits climb amid renewed merger push

Photo | Contributed Killingworth Reservoir is among 253 in-state reservoirs and wells tapped to provide potable water.

Connecticut Water Service Inc., which is currently lobbying state regulators to allow its $1.1 billion tie up with a California water supplier, said its first-quarter profits flipped from red to black thanks to increased base rate revenues.

For the quarter ended March 31, the Clinton-based water utility, which has subsidiaries in Connecticut and Maine, on Wednesday reported net income of $2.2 million, or 19 cents a diluted share, up from a loss of $1.2 million, or a loss of 10 cents per share, in the first quarter of 2018.

Total revenues jumped about 5.3 percent to more than $27.8 million.

After Wednesday afternoon’s earnings release, premarket trading for Connecticut Water shares were down less than 1 percent to $69.38 as of 8:45 a.m. on Thursday.

The earnings report comes more than a week after Connecticut Water and California's SJW Group again renewed their pitch for the stalled $1.1 billion merger at a hearing held by the Public Utilities Regulatory Authority (PURA) in New Britain.

In December, PURA preliminarily denied SJW’s proposal to acquire the Clinton water purveyor over concerns the deal lacks commitments to maintain a Connecticut headquarters and protect local jobs.

In its draft decision, state regulators said the combination would leave Connecticut Water in "worse condition both financially and managerially."

The companies have since refiled their merger application, offering a second slate of commitments in an attempt to ease concerns over local control and other potential impacts.

SJW CEO Eric Thornburg, who was previously Connecticut Water’s chief executive, at last week’s PURA hearing admitted the companies didn’t fully understand the concerns raised by regulators.

The companies then detailed several legally binding commitments that freeze base rates until Jan. 2021 and prevent it from recovering merger-related costs from consumers. They also pledged to expand Connecticut Water’s assistance program, among other commitments.

In a statement Thursday, Connecticut Water CEO David C. Benoit reiterated his confidence in the proposed deal benefiting both local employees and customers.

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