Connecticut Water to Acquire Middlebury's Municipal Water System.

Business Editors

CLINTON, Conn.--(BUSINESS WIRE)--Feb. 8, 2001

Connecticut Water Service, Inc., a Clinton, Connecticut based holding company with subsidiaries in water related businesses, has announced that The Connecticut Water Company, its largest subsidiary, will acquire the Town of Middlebury's municipal water system.

Connecticut Water has operated the Middlebury system for several years under a management contract.

According to the terms of the agreement, the 180 residential, commercial, and industrial customers of the Middlebury water system will become Connecticut Water customers, pending approval of the acquisition by the Connecticut Department of Public Utility Control. The ownership of the existing water system, partially funded with state grants and other public funds, will be retained by the Town, and when fully depreciated in 61 years, will be transferred to Connecticut Water. Connecticut Water will be responsible for operating, maintaining, repairing, and replacing the system until ownership is transferred. Middlebury customers will continue to pay the rates established by the Middlebury Water Commission.

Connecticut Water plans to install a 7, 700-foot water main extension and booster pump to interconnect its existing Naugatuck water system with the Middlebury system at an approximate cost of $750,000. The interconnection will permit Connecticut Water to provide a reliable supply of high quality water to meets the needs of Middlebury's residential, commercial, and industrial customers. Middlebury currently purchases water for its system from the City of Waterbury.

Marshall T. Chiaraluce, Chairman, President and CEO of Connecticut Water, says the agreement provides for the efficient expansion of public water service in Middlebury. Mr. Chiaraluce states, "Connecticut Water has the water and financial resources to make public water service available to more people and businesses. Our Naugatuck system has the available water supply and the treatment capacity to meet the demand for a reliable supply of high quality water for Middlebury in addition to customers in the Naugatuck Valley."

Edward St. John, Middlebury's First Selectman, says the deal makes a lot of sense. He states, "We have established a good working relationship with Connecticut Water over the years and know that they are committed to providing high quality water and service to Middlebury customers. In addition, Connecticut Water has the resources to meet the needs of current and future customers in Middlebury."

The acquisition of the Middlebury system and the construction of a water main extension and booster pump station will require the approval of state regulators. The Middlebury Board of Selectman, the Town's Water Commission, and Middlebury residents have already approved the deal.

The Middlebury agreement is the second acquisition announced by Connecticut Water in the last two months. Last December, Connecticut Water announced that it had reached an agreement to purchase the Barnstable Holding Company in Hyannis, Massachusetts. Barnstable Holding Company is the parent of the Barnstable Water Company, and BARLACO, a real estate company with holdings in the Hyannis area. Barnstable Water Co. has about 7,700 customers in Hyannis.

The Barnstable acquisition is the first outside of the State of Connecticut for Connecticut Water. A closing on the Barnstable acquisition is expected during the first quarter of 2001.

Connecticut Water Service, Inc. is a non-operating holding company whose income is derived entirely from its subsidiaries. The principal business is water service to an estimated population of 220,000 residential, commercial, industrial and municipal customers throughout 35 towns in Connecticut. CTWS provides water service to more Connecticut towns than any other Connecticut water company. The company was founded in 1956 and its subsidiary, The Connecticut Water Company, has water distribution experience dating back to 1866. CTWS is one of the 12 publicly-traded investor-owned water utility stocks in the U. S.