HARTFORD, Conn.—As western Connecticut’s population has grown with the expansion of New York City’s suburbs, independent water systems that serve hundreds of communities have struggled to keep up with demand.

To improve access to running water and reduce operation costs, a large water company has been buying up smaller companies that serve rural communities a move encouraged by Connecticut regulators.

Aquarion Water Co. has acquired 57 water systems in Connecticut many in the
western part of the state during the past 18 months, said Charles V. Firlotte,
the company’s president and chief executive officer.

“Small systems are not able to keep up. They don’t have the muscle to really do the job that needs to be done,” he said.

The population of Danbury, the largest city in the area, grew 8% between 2000 and 2010, and outlying towns have seen big increases as the circle of New York City suburbs widens. MetroNorth reports commuter rail ridership up 5% between 2000 and 2011 on the region’s Harlem line.

With fast-growing populations, local communities have found a need for more
efficient water systems.

Brookfield, which has grown from a farm community to a suburb since the 1960s, did not even have fire hydrants, instead requiring developments to install water tanks, said First Selectman Bill Davidson. In the long term, water tanks are costly and ineffective, he said.

Aquarion stepped in, buying and consolidating water systems. Brookfield completed its first major water line two years ago and is building another in a
commercial area, Mr. Davidson said.

“This heavily fragmented system is going away,” he said.

Aquarion, part of Macquarie Bank of Sydney, Australia, with Connecticut headquarters in Bridgeport, spends up to $50 million annually on capital
investments in the state, Mr. Firlotte said. The company expects to spend “several millions of dollars” in acquisitions in western Connecticut, he said.

In many cases, smaller companies are looking to leave the business, which requires large investments of capital for pumping, storage, treatment and
equipment. The state Public Utilities Regulatory Authority has invited larger
companies to “take a look” at smaller businesses that have been looking for the exit, said John W. Betkoski III, vice chairman of the state agency.

Regulators do not have a policy that officially seeks to draw in larger companies to acquire smaller companies, he said. But the agency will notify large companies of buying opportunities, he said.

The agency’s primary function is to examine prospective buyers to make sure
the companies have the managerial, financial and technical ability to provide

During the past 15 years, consolidations have reduced the number of private, investor-owned water companies from 30 to 22 just in western Connecticut,
primarily along the Route 7 corridor, Mr. Betkoski said.

—Copyright Associated Press 2012