PURA DOCKET 17-06-30September 22, 2017

Continued Comment from Rivers Alliance of Connecticut on the acquisition of Aquarion Water Company of Connecticut (Aquarion) by Eversource Energy from Macquarie Utilities, an investment-fund entity developed by Macquarie Bank of Australia.

Rivers Alliance is Connecticut non-profit organization founded in 1992 to protect rivers and all other state waters. Such protection necessarily involved protection of lands that affect water ways, especially public drinking-water watersheds. Our 500 members include virtually all the state river-watershed groups, as well as other environmental groups, town entities, businesses, and individuals who value the state’s most valuable resource, water.

Our first comment is that this highly consequential utility acquisition has gone forward with almost no state effort to inform the public. It appears, also, that views of state officials, including lawmakers, have not been elicited. Only one(!) member of the public had submitted comments as of yesterday. Anecdotally, I can report that almost no one seems to know about this merger, and, when informed, the reaction is usually, “What?!” often followed by, “That’s not a good idea!”

There have been no comments from the Department of Public Health (DPH) or the Department of Energy and Environmental Protection (DDEP), the two agencies with the greatest responsibilities for water and energy. The Office of the Attorney General did not submit comments until this morning.

This merger will affect 197,000 Aquarion customers and 3.7 million Eversource customers in Connecticut.

We ask, therefore, that, before PURA makes a decision on this matter, there be reasonable opportunities for public discussion of the pros and cons of the proposal.

CONSISTENCY WITH STATE PLANNING. At this time, there are four statewide plans in draft form concerning water and energy. None of them address the implications of a unique merger of the state’s largest power provider and one of its largest water companies. These plans are:

The State Conservation and Development Policies Plan (state POCD)

The comprehensive statewide water plan for all water resources (state Water Plan) headed by the Water Planning Council.

The Comprehensive State Energy Plan.

The statewide water supply plan under development in the regional Water Utility Coordinating Committees (WUCCs), headed by water companies and DPH. The part of WUCC planning given priority so that it will be ready at the same time as the draft state Water Plan is the creation of exclusive service areas across the state for all water utilities. Aquarion’s controlled or claimed exclusive service areas dominate most of western Connecticut.

The state has yet to develop a defined policy on the desirability of water monopolies (publicly owned or otherwise) or water-supply centralization, much less a policy on monopoly ownership of a joint water-power utility. This new utility structure should be analyzed for consistency with state policy plans. .

PUBLIC INTEREST. Proponents of the proposed merger point to the desirability of returning Aquarion to domestic ownership. In the abstract, this makes sense, but, in reality, Macquarie has so little involvement in other Connecticut resources that Aquarion was fairly independent. But, in the proposed acquisition, Aquarion will be controlled by a very much larger, politically well-connected, not-publicly owned corporation that has multiple points of cross-interest with Aquarion’s water supply operation. Such points include water supply for power plants, hydro impoundments that diminish downstream groundwater (well) supplies, and land-management and sales practices. For customers, there are numerous unknowns, but I will cite one. Under current interpretation of WUCC law, any person wishing to start a new venture that would require a water supply serving the public must first go to the local WUCC for approval and must use the form of water supply approved by the WUCC (with DPH having an override authority). Such new ventures can be schools, subdivisions, restaurants, senior centers, and so forth. In my experience, water companies sometimes are rather strict, appropriately so, in setting high standards for new-water supply infrastructure. Will they feel pressure (even more than now exists) to approve less than ideal infrastructure to hold down costs or otherwise support the development.

Moreover, Eversource’s recent management practices have not been friendly to the environment as compared to their customs in the past. For example, they used to negotiation with Audubon for environment friendly transmission easements. No more. Now they clear cut and install large concrete platforms. [Continued] Several years ago, when the state and major land-conservation groups attempted to negotiate a land-conservation agreement with Eversource, the results were disappointing.

We request that any approval of this acquisition include additional, specific conditions for the enhanced protection of the state’s trust in water and land, and that the public be informed of, and have an opportunity to comment on, such conditions.

FINANCIAL BENEFITS AND RISKS. One thing that most members of the public know about Eversource and Aquarion is that both companies need more money, or at least they make that case repeatedly. So, what is the advantage to the public and the companies of combining two somewhat shaky public-service organizations? Which company will shore up the other? How? Does the merger ensure improved delivery of service? How? Will the merger mean higher rates? How high and for whom? Both companies need and want to upgrade infrastructure -- will this merger help in that respect? A quick look suggests that Eversource overpaid for Aquarion -- why? (Note, “merger” may not be the technically correct term but it’s easy to understand.) There seems to be a vague promise that there will be new employment opportunities at Eversource, but surely we have learned that such promises must be written in stone to have even a chance of coming to fruition. If service is unsatisfactory, who will be responsible?

So much of the financial information has been redacted that it’s hard to see the present rationale for the merger or how it will play out in connection with protecting water and protecting citizens’ interests. One guess is that, from the corporate perspective, the merged entity will have the advantage of being: Too big to regulate. Too big to fail.

We request that PURA provide the public with adequate detail on the finances of the two companies and the projected results of their merger such that the public will be able assess the likely benefits and risks of the deal. We have all learned that when large corporations get in trouble, the public may be asked to come to their rescue. The public should have an opportunity to help shape a financial arrangement that so directly affects the basic needs for water and electricity.

In conclusion, we believe that neither PURA, nor other state agencies, nor the public have adequate information to approve, disapprove, or to set prudent conditions on this merger. It creates a new utility structure at the very moment that the state is trying to finalize its policy planning for utilities.

Margaret Miner, Executive Director

Rivers Alliance of Connecticut, ; 860-361-9349 4:45 p.m., 9//22/17