Aquarion Company

views updated

Aquarion Company

835 Main Street
Bridgeport, Connecticut 06604-4995
U.S.A.
Telephone: (203) 335-2333
Fax: (203) 336-5639
Web site: http://www.aquarion.com

Wholly Owned Subsidiary of Kelda Group plc
Incorporated: 1857 as Bridgeport Hydraulic Company
Employees: 568
Sales: £104.2 million (2006 est.)
NAIC: 221310 Water Supply and Irrigation Systems

Aquarion Company is New England's largest privately owned water company, with a reach that extends to more than 700,000 customers. The company is a wholly owned subsidiary of Bradford, England-based Kelda Group plc, itself one the world's ten largest water and wastewater firms. Beyond its corporate office in Bridgeport, Connecticut, Aquarion maintains several regional service centers throughout the northeastern United States. The company's New England locations include centers in Greenwich and Mystic, Connecticut; Portland, Maine; Hampton, New Hampshire; and Nor-well and Millbury, Massachusetts. Aquarion also has three New York locations in Rye, Newcastle, and Sea Cliff.

19TH-CENTURY ORIGINS

The developments that led to Aquarion's formation can be traced to 1818, when the Reverend Elijah Waterman built Bridgeport's first water delivery system—a hollowed log pipeline that carried water from his property atop Bridgeport's Golden Hill to a trough on the community's waterfront, providing fresh "running" water to sailors and merchants.

Following the involvement of local resident Lewis C. Segee in 1823, the renamed Waterman-Segee pipeline was eventually purchased by a band of entrepreneurs who secured a $10,000 grant from the Connecticut legislature and established the Bridgeport Golden Hill Aqueduct Company The Great Fire of 1845 did extensive damage to Bridgeport's business district and made it clear that the young city did not have an adequate water delivery system in place.

Under the guise of the city's Common Council, a Pequonnock Mills agent named Nathaniel Green formed the Bridgeport Water Company in 1853 with $160,000 in capital. According to an early newspaper article, Green and his associates were granted "the exclusive privilege of laying down water pipes in the public streets, on condition they should furnish the city and the inhabitants with a full supply of pure water for domestic, mechanical and all ordinary uses both public and private."

Progress began the following year, when a new reservoir was constructed in North Bridgeport. Supplied by Factory Pond, the masonry tank reservoir distributed water via new pipes that were laid through the city's main streets. In addition, the company also completed Bunnell's Lower Reservoir, formed by an earthen dam on the Pequonnock River. An economic depression, however, soon contributed to Bridgeport Water's demise. By 1855 the company had defaulted on its bonds and fallen into foreclosure.

FORMATIVE YEARS: 1857–99

A special act of the Connecticut General Assembly led to formation of the Bridgeport Hydraulic Company (BHC) in 1857. The new company was owned by Bridgeport Water's bondholders, including Nathaniel Green, William S. Knowlton, J. H. Washburn, and Joseph Richardson, the company's first president.

Because of the Civil War, BHC's first substantial expansion of its distribution system was delayed until the 1870s. Eventually, the company was able to more than its triple reservoir capacity with the completion of the Island Brook Supply System in 1876.

In 1877 the legendary circus promoter Phineas T. Barnum—a Bridgeport resident who had served as the city's mayor in 1875—was named BHC's second president. Barnum personally oversaw the construction of additional reservoirs that added much-needed water pressure to Bridgeport's water system. These included the Trumbull Pond and Horse Tavern Reservoirs. Barnum also oversaw construction of Easton No. 1, a reservoir built by Citizens Water, of which he also was president.

Between 1879 and 1889 Bridgeport's population mushroomed from 22,000 to 70,000 as the city became industrialized. Amidst this growth, Barnum left BHC for a circus tour of London. Upon his departure in 1886, he was succeeded by William D. Bishop as president. That year BHC expanded by acquiring Citizens Water. Many other mergers and acquisitions followed as BHC began absorbing the multitude of small water companies that had formed in an attempt to capitalize on Bridgeport's rapid growth. These included West Stratford Water, Southport Water, and the Unquowa Water and Light Company.

Before the 19th century came to a close, the company's reservoir system had grown to serve Bridgeport, as well as the communities of Fairfield and Stratford. Among the new reservoirs that were added to support the burgeoning population were Bunnell's Upper (Pinewood Lake), Samp Mortar, Beaver Dam, Canoe Brook, and Easton No. 2. Leading the company into the 1900s was Charles Sherwood, who was named president in 1889.

PREPARING FOR THE FUTURE: 1900–13

At the turn of the century, BHC's water system was comprised of two distribution tanks and 14 reservoirs with a three billion gallon capacity. While it may have been hard for some to envision, this system was far from adequate to support the growth that lay in store for the Bridgeport area over the first decades of the 20th century.

Fortunately, BHC's leadership team included strong visionaries whose foresight allowed them to guide the company with much success. The first of these executives was Dr. Ira DeVer Warner, who was named president in 1903. Another key figure was Samuel P. Senior, who had joined BHC as engineer and superintendent in 1901 and would remain with the company for 61 years. Senior was placed in charge of the company's planners, and he personally oversaw a major overhaul and expansion of BHC's infrastructure. Old 4- and 6-inch pipe was replaced with a new standard 8-inch size, new reservoir locations were identified that were located away from urban areas, and the massive Trap Falls Reservoir, which had a capacity of 2.3 billion gallons, was brought online in 1905.

In 1905 the company suffered a setback when the earthen dam at Bunnell's Lower Reservoir collapsed during a storm, causing flooding and property damage. While a number of lawsuits were filed against the company, the courts ultimately ruled that the disaster was "an act of God," and no fault of BHC. A new masonry dam was constructed the following year. Operations continued at a steady pace into the early 1910s. An important development occurred in 1913 when DeVer H. Warner succeeded his father as company president.

COMPANY PERSPECTIVES

Aquarion's roots in the water utility field are nearly 150 years deep, dating back to the creation of Bridgeport Hydraulic Company in 1857—but we haven't rested on our laurels: our water, wastewater, and engineering services are on the 21st century's cutting edge.

GROWING THROUGH WORLD WARS: 1914–56

DeVer H. Warner was at the company's helm when World War I erupted in 1914, and he led the company through and beyond that conflict. While the war presented the nation with many challenges, for BHC it meant a massive demand for water. Bridgeport was dubbed the "Arsenal of America" at the time. War contracts were plentiful, and from 1914 to 1916 some 60,000 people came to the city in search of employment. Much water was needed for personal and industrial purposes. In fact, by the war's end in 1918, Bridgeport required a massive 13 billion gallons of water per year.

To meet heightened demand for water during and after the war, the Aspetuck-Hemlocks Supply System was brought online, along with a number of smaller reservoirs. Samuel P. Senior, whose vision had been of untold value to the company, was named president in 1920. During the first decade of his tenure, Senior went about shuttering older, low-elevation reservoirs. This property was sold, and the proceeds were earmarked for future growth.

In 1926 the Easton Lake Reservoir was finished, adding capacity of 5.8 billion gallons. In addition, BHC began purchasing land for what was to be its largest and most ambitious undertaking to date: construction of the 11.9-billion-gallon Saugatuck Reservoir. Just as things were on a roll, along came the Great Depression. Although Bridgeport did not suffer as badly as other areas of the United States, this time of economic difficulty temporarily put the brakes on expansion for BHC.

In 1931 Bunnell's Lower Reservoir was given to the City of Bridgeport, and the site was converted into Beardsley Park Pond. By 1935 BHC had acquired roughly 4,500 acres of land for the Saugatuck Reservoir. Over the next five years the company obtained all of the necessary rights-of-way and land needed to begin construction. Completion of the massive Saugatuck Reservoir soon became an urgent matter. World War II brought Bridgeport wartime contracts to produce everything from uniform buttons to submarines and fighter planes. As it did during World War I, the Bridgeport-area population swelled, this time reaching 200,000.

The Saugatuck dam was finished in January 1942, and after the reservoir had filled, the new facility was brought online during the summer of that year. Virtually doubling's the company surface water supply, the Saugatuck project was truly impressive. In addition to four new bridges, six miles of new roadways, and pipelines that connected the Aspetuck Reservoir to the Saugatuck Reservoir, some 80,000 cubic yards of concrete had been used to build the dam.

After the war, BHC continued expanding to meet the trend of suburban growth. New water mains and pipelines were installed, but demand for land made it impractical to build more giant reservoirs. Therefore, the company turned its attention to underground water sources called aquifers, and opened the Housatonic Well Field in Shelton, Connecticut. In 1955 Sam Senior ended his long career with the company, which included a 35-year stint as chief executive. In his honor, the Saugatuck Reservoir dam was renamed the Samuel P. Senior Dam. DeVer C. Warner took the reins from Senior for a one-year term, until Frederick B. Silliman was named president in 1956.

A SECOND CENTURY BEGINS: 1957–72

Silliman was at BHC's helm when the company reached an important milestone: its 100th anniversary. By this time, BHC served approximately 270,000 customers, easily meeting their daily water requirements of 45 million gallons. In fact, the company's supply was such that when a major drought affected the Bridgeport area between 1962 and 1966, BHC was able to supply water to other nearby utilities.

KEY DATES

1853:: Bridgeport Water Company is established with $160,000 in capital.
1857:: A special act of the Connecticut General Assembly leads to the formation of the Bridgeport Hydraulic Company (BHC).
1968:: A holding company named the Hydraulic Company is created to serve as BHC's parent and allow for the expansion into non-water utility businesses.
1969:: The Hydraulic Company acquires BHC in a share-for-share exchange of common stock.
1991:: Hydraulic changes its name to Aquarion Company.
1996:: BHC merges with its three wholly owned subsidiaries—Ridgefield Water Supply, Stamford Water, and New Canaan Water—and continues operations as BHC Company.
2000:: Aquarion is acquired by the United Kingdom's Kelda Group plc, in a deal valued at $596 million, and becomes a subsidiary of Kelda.
2006:: Kelda announces agreement to sell Aquarion to Australia's Macquarie Bank for $860 million, pending regulatory approval.

BHC continued to grow during the early 1960s. The company expanded into Litchfield County when it acquired five smaller water companies there. In 1963 three communities in the lower Naugatuck River Valley fell into BHC's service area when the Seymour Water Company was acquired. In 1966, when the drought finally ended, BHC's sales reached $7.29 million, up from $7.02 million the previous year. Net income totaled $1.45 million that year, down slightly from $1.57 million in 1965.

An important organizational change occurred during the late 1960s. In October 1968, a holding company named the Hydraulic Company was formed in Delaware, in order to serve as BHC's parent and allow for the expansion into non-water utility businesses. On August 15, 1969, the Hydraulic Company acquired BHC in a share-for-share exchange of common stock. The 1970s began with the company's acquisition of Conntech Products Corporation on July 15, 1970, for 5,700 shares of convertible preferred stock.

EXPANDING FOCUS AND CONTINUED GROWTH: 1973–99

BHC's leadership changed hands in 1973, when William S. Warner succeeded Frederick B. Silliman as president. On December 31 of that year, Seymour Water was merged into BHC. Warner led the company into a new era of government regulation, which came in the form of the Safe Drinking Act of 1974. This federal legislation was adopted by the Connecticut Department of Health Services and its strict standards also became BHC's.

During the latter half of the 1970s BHC was forced to begin construction of a new treatment plant, situated on ten acres of land, in order to bring its Trapp Falls Reservoir into compliance with the new government standards. The company rounded out the decade with the formation of a new timber enterprise named Timco Inc. in 1979.

The 1980s proved to be an interesting decade for the Hydraulic Company and BHC, marked by a continued focus on health and safety. In January 1981 BHC completed its Trapp Falls treatment plant. At $18 million, the project proved to be the most costly capital effort in the company's history. In an effort to avoid the necessity for more such treatment plants, BHC put great emphasis on reservoir management programs, with a goal of protecting its 18,000 acres of watershed. BHC's efforts were recognized when, in a statewide competition, the company was named Outstanding Conservationist of the Year in 1981.

The 1980s also were a time of growth and acquisition. Pittsfield Box & Lumber Company Inc. was acquired in October 1981 for $5.9 million. In March 1984, Stamford Water was purchased for approximately $7.3 million. In 1988 the company established Hydrocorp Inc. and obtained a quarter of the outstanding voting equity in SRK Holding Inc. Finally, on July 28, 1989, the outstanding common stock of Industrial and Environmental Analysts Inc. was acquired in a $5.5 million deal.

The flurry of acquisition activity that began during the 1980s continued during the 1990s. A North Billerica, Massachusetts-based environmental testing lab named Eastern Analytical Laboratory Inc. was acquired in July 1990 by the company's Hydrocorp Inc. subsidiary. Two other acquisitions followed that year, with Miramar, Florida-based AC Laboratories Inc. being acquired in November for $4.75 million, followed by all remaining shares of SRK Holding Inc. in December.

On April 23, 1991, the Hydraulic Company changed its name to Aquarion Company, reflecting its expanding activities outside the water supply business, namely in the area of water testing. Trading on the New York Stock Exchange under the ticker symbol WTR, Aquarion's water utility interests still included BHC, as well as the Stamford Water Company. By early 1992 Aquarion had sold most of SRK Holding Inc.'s non-laboratory assets to Dedham, Massachusetts-based Bird Corporation in an $8 million cash deal.

Acquisitions continued in the second half of the 1990s. In a $60,000 cash deal, BHC acquired Kent Water in June 1995. Four months later, BHC obtained the Ridgefield Water Supply Company and the New Canaan Water Company for $2.83 million. In May 1996, the Sea Cliff Water Company was acquired from Emcor Group Inc. in a $2.6 million cash deal.

BHC then merged with its three wholly owned subsidiaries—Ridgefield Water Supply, Stamford Water, and New Canaan Water—on December 31, 1996. Following the merger, Bridgeport Hydraulic continued operations as BHC Company. The company's new Eastern Division was comprised of the former operations of BHC, and the other firms made up its Western Division.

During the late 1990s, Aquarion's level of capital spending stood at approximately $17 million. Since the late 1980s, the company had devoted some $100 million to water quality projects alone. Examples included the William S. Warner Water Treatment Plant in Fair-field, one of four such facilities constructed to comply with the Safe Drinking Water Act. In addition, the Torrington Interconnection Pipeline was completed, allowing the supply of 200,000 gallons from Litchfield to Torrington, Connecticut.

With Richard K. Schmidt as president and CEO, Aquarion recorded net income of $15 million in fiscal year 1997, on revenues of $107.1 million. The company sold its environmental testing laboratory business, Industrial and Environmental Analysts Inc., for $10 million on March 25, 1997. By late 1998, Aquarion's employee base totaled 399 workers.

THE KELDA YEARS: 2000–PRESENT

On January 7, 2000, Aquarion was acquired by the United Kingdom's Kelda Group plc in a deal valued at $596 million, including about $141 million in debt. Aquarion became a subsidiary of Kelda, but retained its domestic identity and management. Aquarion's water utility business soon doubled when it acquired four water suppliers—Connecticut-American Water, New York American Water, Massachusetts-American Water, and Hampton Water—and a finance company from American Water Works.

Following the $118 million deal, the new subsidiaries were all rebranded under the Aquarion banner. BHC was merged with Connecticut-American Water as the Aquarion Water Company of Connecticut Inc. In a similar move, the other firms became Aquarion Water Company of New York Inc.; Aquarion Water Company of New Hampshire Inc.; and Aquarion Water Company of Massachusetts Inc. In June 2003, Charles "Chuck" V. Firlotte succeeded Richard K. Schmidt as president and CEO, upon the latter's retirement.

A major development took place in February 2006 when Kelda announced it had agreed to sell Aquarion to Australia's Macquarie Bank for $860 million, pending regulatory approval. While a number of uncertainties came with the prospect of new ownership, the demand for Aquarion's water supply remained unchanged. After almost 150 years of operation, the company was well positioned to continue supplying its 700,000 customers with water.

Paul R. Greenland

PRINCIPAL SUBSIDIARIES

Aquarion Water Company of Connecticut Inc.; Aquarion Water Company of Massachusetts Inc.; Aquarion Water Company of New Hampshire Inc.; Aquarion Water Company of New York Inc.; Aquarion Water Company of Sea Cliff Inc.