PURA hears Connecticut Water’s plan to acquire Shaker Heights Water, with upgrades, metering and accounting questions pending

The Public Utilities Regulatory Authority held an evidentiary hearing on the joint application of Connecticut Water Company and Shaker Heights Water Company for Connecticut Water to acquire the small Shaker Heights system and cease Shaker Heights operations.

Presiding Commissioner Jan Beecher opened the record for docket 26-01-26 and took appearances from counsel and witnesses. Connecticut Water’s witnesses said the company intends to replace several aging mains, convert 46 customers from a flat annual charge to metered billing under Connecticut Water Division tariffs after interconnection, and perform targeted capital work once the acquisition closes.

Why the acquisition and what will change
Connecticut Water said the Shaker Heights system has undersized and aging pipe — staff noted a 3-inch plastic main on Lake Road installed about 1990 and frequent breaks on West View Drive. Company witnesses testified they plan to abandon the existing small-diameter mains in place and either tie those customers to an existing 12-inch Connecticut Water main or extend the 12-inch main where needed. "We will be placing the water service from the main to the meter pit," a Connecticut Water witness said when describing the planned service renewals and meter-pit placement. The company said new mains will be ductile iron (8-inch where fire protection is requested; 6-inch without hydrants).

Customer impacts and timing
Connecticut Water confirmed it will convert customers to metered billing under its tariff after closing; if meters are not immediately installed the customers would remain on flat rates until metering occurs. The company used a 50,000-gallon-per-year consumption assumption in its illustrative cost model and projected that, under current Connecticut Water Division tariffs, a 50,000-gallon annual customer would pay roughly $790 annually once metered, though that figure depends on timing, actual use and later rate proceedings. Company counsel said the interconnection would be done via a "wet tap" and witness testimony assured the panel that the wet tap would not interrupt service during the tie-in.

Costs, funding and search-charge questions
Connecticut Water provided an initial estimate of about $611,000 for the immediate improvements it plans to make after acquisition and agreed to file late exhibits that update that total and add any costs for extending the 12-inch main to serve customers near West View Drive. Staff and commissioners pressed the company for a hypothetical search-charge calculation; the company said it did not recommend a search charge because the acquisition covers only 46 customers and other Connecticut Water customers would absorb much of the early revenue requirement until the system’s investments are depreciated, but agreed to provide a 10-year hypothetical scenario in a late-filed exhibit.

Financing options were discussed. Witnesses said the Drinking Water State Revolving Fund (SRF) 2% financing could be an option and might reduce the revenue requirement if Connecticut Water pursued SRF financing or principal forgiveness where eligible.

Accounting and rate-base treatment
Commissioners spent significant time on the company’s proposed journal entries and the negative acquisition adjustment that would reduce rate base so earnable rate base reflects the purchase price rather than gross plant. Connecticut Water said the proposed treatment would allow the company to reflect the acquisition in a future rate case while not immediately recovering the full gross plant value; the company also proposed netting certain transactional/legal costs against the negative acquisition adjustment and agreed to clarify and revise exhibits as late files.

Other operational and legal details
The panel asked about easements and rights-of-way. Connecticut Water said it will not purchase Shaker Heights’ easements because the infrastructure sits within public rights-of-way; it reported the easements would remain with Shaker Heights and could revert to adjacent homeowners. Shaker Heights witnesses said the system’s well and hydropneumatic tank will be abandoned in place; the tank would be opened, filled with sand and left underground where removal would be impractical.

Outstanding items and next steps
PURA directed Connecticut Water to file up to four late-filed exhibits by 4 p.m. on Tuesday, July 14, updating (1) the proposed list and costs of improvements (including any 12-inch main extension cost), (2) a revised RU23 cost/revenue exhibit reflecting accounting corrections, (3) a hypothetical search-charge scenario, and (4) sample customer onboarding communications. The parties also discussed scheduling a late-file hearing if needed. No final vote or formal decision was issued at the hearing; the proceeding remains open for the record and late-filed exhibits.