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Applicants say $2.6 billion Connecticut purchase financed with long debt; forecasting multi‑year rate increases
Summary
Petitioners told PURA at an Aug. 19 evidentiary hearing they expect roughly $2.6 billion in sources/uses to fund the Connecticut acquisition and related capital, that acquisition debt has a final maturity in year 40 but shorter average lives, and that their planning spreadsheets project multi‑percent annual rate increases starting in 2027.
Petitioners told the hearing panel they modeled the Connecticut portion of the sale with approximately $2.6 billion in sources and uses (acquisition price plus acquisition‑related financing and initial capital needs), and that the acquisition financing schedule includes a final principal maturity in the fortieth year while the average life of senior acquisition debt in the model is roughly 16.8 years.
RWA and Aquarion witnesses walked the panel through an OCC attachment (OCC 42, attachment 1) in which petitioners’ financial advisor modeled first‑year increases after acquisition: the spreadsheet the company submitted shows an initial projected increase of about 8.35% in 2027 followed by a 6.85% increase in 2028 (each increase cumulative), and a series of annual increases in the 6–9% band for the early years of the 10‑to‑15‑year financing window. Petitioners characterized the model as conservative and said it does not include some potential improvements such as refinancing assumptions or additional grants. Petitioners also said acquisition debt is expected to be a mix of tax‑exempt debt (the primary source) with a small taxable private placement for working capital; petitioners identified a $100 million private placement as part of their sources.
Company witnesses described a projected first‑rate case revenue requirement gap that Aquarion estimated at about $64 million under current ownership (Aquarion’s pre‑filed model) but that the authority model would lower. Petitioners’ advisor also produced an illustrative net‑benefit calculation (petitioners’ filings call it roughly $365 million over the modeled period) driven largely by a lower cost of capital for a tax‑exempt authority compared with Aquarion’s current investor‑owned cost of capital.
Intervenors pressed petitioners on the assumptions underlying the spreadsheets. OCC staff and counsel asked for debt amortization schedules and the detailed underlying models for the OCC 42 and OCC 44 exhibits; petitioners agreed to provide amortization tables and asked that some commercially sensitive attachments be handled as late‑file exhibits. Petitioners testified they built principal and interest payments into the projections and that principal payments begin in fiscal 2027 under the model. Petitioners also said the acquisition debt’s senior portion shows an average life of about 17 years in the current plan; the final maturity of some subordinate pieces stretches out to year 40.
The panel repeatedly asked petitioners to provide more granular supporting material. The evidentiary record shows multiple requests from intervenors for the lenders’ and advisors’ spreadsheets, the sources/uses that produce the $2.6 billion figure, and line‑by‑line amortization details; petitioners marked several items as late‑file exhibits to be produced to the record.
The parties agreed that the final cost and rate impacts will depend on financing terms, any PURA conditions on approval, and whether petitioners successfully secure low‑cost tax‑exempt financing and grants such as DWSRF programs.
