<PAGE>

                                                                    Exhibit 4.30

                       REIMBURSEMENT AND CREDIT AGREEMENT

                           DATED AS OF AUGUST 1, 2004

                                 BY AND BETWEEN

                          THE CONNECTICUT WATER COMPANY

                                       AND

                          CITIZENS BANK OF RHODE ISLAND

================================================================================

                        CONNECTICUT DEVELOPMENT AUTHORITY
               $4,550,000 WATER FACILITIES REFUNDING REVENUE BONDS
             (THE CONNECTICUT WATER COMPANY PROJECT - 2004B SERIES)

================================================================================

<PAGE>

                                                                    Exhibit 4.30

      REIMBURSEMENT AND CREDIT AGREEMENT (this "Agreement"), dated as of August
1, 2004, by and between THE CONNECTICUT WATER COMPANY, a corporation duly
organized and existing under the laws of the State of Connecticut with an office
at 93 West Main Street, Clinton, Connecticut 06413 (the "Borrower"), and
CITIZENS BANK OF RHODE ISLAND, with an office at One Citizens Plaza, Providence,
Rhode Island 02903 (the "Bank").

      WHEREAS, the Borrower has requested financing from the Connecticut
Development Authority (the "CDA") to finance the Project as defined in the
Indenture of Trust dated as of August 1, 2004 between the CDA and U.S. Bank
National Association, as Trustee (the "Trustee") (the "Indenture").

      WHEREAS, the CDA has determined that it will issue $4,550,000 Water
Facilities Refunding Revenue Bonds (The Connecticut Water Company Project -
2004B Series) (the "Bonds") in order to lend funds to the Borrower pursuant to
the terms of the Indenture;

      WHEREAS, the Bonds are to be secured by a irrevocable direct pay letter of
credit to be issued by the Bank for the account of the Borrower pursuant to the
terms of this Agreement in the form of Exhibit A hereto (the "Letter of
Credit");

      WHEREAS, in order to induce the Bank to issue the Letter of Credit, the
Borrower has executed and delivered this Agreement to the Bank to provide for
the repayment to the Bank of (i) any payment made under the Letter of Credit,
(ii) any other payment made hereunder and (iii) certain other fees and expenses
of the Bank in connection with the Letter of Credit; and

      WHEREAS, the Bank is willing, subject to the terms and conditions
contained herein, to issue the Letter of Credit;

      NOW, THEREFORE, in consideration of the foregoing recitals and the
covenants contained herein, and in order to induce the Bank to enter into this
Agreement and to issue the Letter of Credit, the parties agree as follows:

SECTION 1.  DEFINITIONS.

      1.01 Certain Defined Terms. Certain accounting and other terms used herein
shall have the meanings set forth below. Unless otherwise defined in this
Agreement, all capitalized terms used herein which are defined in the Indenture
shall have the meanings ascribed to them in Section 1.1 of the Indenture.

            "Account" or "Accounts" means, as the case may be, each or all of
the accounts established in Section 5.1 of the Indenture.

            "Affiliate" as applied to any person or entity, means any other
person or entity directly or indirectly through one or more intermediaries
controlling, controlled by, or under common control with, that person or entity.
For the purposes of this definition, "control" (including with correlative
meanings, the terms "controlling", "controlled by" and "under common control
with"), as applied to any person or entity, means the possession, directly or

<PAGE>

                                                                    Exhibit 4.30

indirectly, of the power to direct or cause the direction of the management and
policies of that person or entity, whether through the ownership of voting
securities or by contract or otherwise.

            "Base Rate" means a variable rate per annum equal to the LIBOR Rate.

            "Borrower Documents" means, collectively, this Agreement, the Demand
Note and any and all other agreements, instruments, certificates, or other
documents now or hereafter given or executed or assumed by the Borrower to
evidence, guarantee or secure any of the Borrower's Obligations under any of the
foregoing documents.

            "Borrower's Counsel Opinion" shall have the meaning given in Section
3.01(h) hereof.

            "Business Day" means any day (a) that is not a Saturday or Sunday;
(b) that is a day on which banks located in Hartford, Connecticut and New York,
New York are not required or authorized to remain closed; (c) that is a day on
which banking institutions in the cities in which the principal offices of the
Trustee, the Bank, the Paying Agent and the Remarketing Agent are located and
are not required or authorized to remain closed and (d) that is a day on which
the New York Stock Exchange, Inc. is not closed; (e) when such term is used to
describe a day on which a payment, prepaying, or repaying is to be made, any day
which is: (i) neither a Saturday or Sunday nor a legal holiday on which
commercial banks are authorized or required to be closed in New York City; and
(ii) a London Banking Day; and (f) when such term is used to describe a day on
which an interest rate determination is to be made, any day which is a London
Banking Day.

            "CDA" means the Connecticut Development Authority, a body corporate
and politic constituting a public instrumentality and political subdivision of
the State of Connecticut created pursuant to Section 32-11a of the Connecticut
General Statutes.

            "Code" means the Internal Revenue Code of 1986, as amended.

            "Commitment Letter" means that certain commitment letter from the
Bank to the Borrower dated May 21, 2004 and accepted by the Borrower on May 26,
2004.

            "Contractual Obligation" of a Party means any debt or equity
security issued by that Party, and any indenture, mortgage, deed of trust,
contract, undertaking, instrument or agreement (written or oral) to which such
Party is a party or by which it is bound, or to which any of its assets is
subject.

            "Credit Facility Provider Bonds" means all Bonds at any time
purchased, in whole or in part, with the proceeds of a draw on the Letter of
Credit upon tender of each such bond to the Trustee by the Bondholder pursuant
to the Indenture, until sold by the Bank.

            "Date of Issuance" means the date on which the Letter of Credit is
issued by the Bank and delivered to the Trustee.

                                      -2-

<PAGE>

                                                                    Exhibit 4.30

            "Debt to Capitalization Ratio" shall have the meaning ascribed
thereto in Section 5.03(k) hereof.

            "Default" means any of the events specified in Section 6 as causing
an Event of Default, whether or not any requirement for the giving of notice,
the lapse of time, or both, or any other condition, has been satisfied.

            "Default Rate" means a rate of interest equal to the Base Rate, plus
four hundred (400) basis points per annum.

            "Demand Note" means the demand promissory note of the Borrower in
favor of the Bank in the form of Exhibit B.

            "Drawing" shall mean any of an A-Drawing, B-Drawing or C-Drawing as
described in the Letter of Credit.

            "EBIT to Interest Ratio" shall have the meaning ascribed thereto in
Section 5.03(l) hereof.

            "ERISA" means the Employee Retirement Income Security Act of 1974,
as amended from time to time.

            "Event of Default" shall have the meaning ascribed thereto in
Section 6 hereof.

            "Facilities" shall mean all of the real property, grounds and
improvements thereon of the Borrower.

            "Financing Expenses" means all fees, charges and expenses required
to be paid by the Borrower to the Bank, the Trustee, the Remarketing Agent and
the Paying Agent and all other Parties in connection with the issuance,
reissuance, sale, replacement, redemption or transfer of the Bonds.

            "First Mortgage Bonds" means any bonds issued under the First
Mortgage Indenture.

            "First Mortgage Indenture" means the Indenture of Mortgage and Trust
by and between the Borrower and The Connecticut Bank and Trust Company, as
trustee (predecessor in interest to U.S. Bank National Association), dated as of
June 1, 1956, as amended.

            "Fund" or "Funds" means, as the case may be, each or all of the
Funds, and the Accounts therein established in Section 5.1 of the Indenture
shall have the meaning ascribed to it in the Indenture.

            "GAAP" means generally accepted accounting principles consistently
applied.

                                      -3-

<PAGE>

                                                                    Exhibit 4.30

            "Indenture" means the Indenture of Trust, dated as of August 1,
2004, between the CDA and the Trustee, pursuant to which the Bonds are to be
issued by the CDA, as the same may from time to time be amended or supplemented
by supplemental indentures.

            "Interest Component" has the meaning assigned thereto in the Letter
of Credit.

            "Interest Periods" (a) initially, the period beginning on (and
including) the date on which a draw is made on the Letter of Credit and is not
reimbursed the same day pursuant to Section 2.04 hereunder and ending on (but
excluding) the day which numerically corresponds to such date one month
thereafter (or, if such month has no numerically corresponding day, on the last
Business Day of such month; and (b) thereafter, each period commencing on the
last day of the next preceding Interest Period and ending one month thereafter;
PROVIDED, HOWEVER, that if such Interest Period would otherwise end on a day
which is not a Business Day, such Interest Period shall end on the next
following Business Day unless such day falls in the next calendar month, in
which case such Interest Period shall end on the first preceding Business Day
and no Interest Period may end later than the termination of this Agreement.

            "Legal Action" means any action, suit, investigation, proceeding or
arbitration, at law or in equity, or before or by any foreign or domestic court
or other government entity.

            "Legal Requirement" applicable to any property or person means (a)
all decisions, statutes, ordinances, rulings, directions, rules, regulations,
orders, writs, decrees, injunctions, permits, certificates, or other
requirements of any court or other governmental or public entity in any way
applicable to or affecting such property or such person or its business,
operations, or assets, (b) such person's certificate of incorporation and
bylaws, and (c) all other material Contractual Obligations of any nature
applicable to or affecting such property or such person. As to the Facilities,
such term includes, without limitation, all legal requirements relating to
acquisition, development, ownership, use, occupancy, possession, operation,
maintenance, alteration and repair of the Facilities, as well as all related
permits, easements, covenants, restrictions and similar items.

            "Letter of Credit Fee" means the fee payable quarterly to the Bank,
for maintenance of the Letter of Credit, which amount is payable by the Borrower
to the Bank in accordance with Section 2.03 hereof.

            "Letter of Credit Termination Date" means the earlier of: (a)
September 1, 2009 or (b) the date upon which the Letter of Credit shall expire
or terminate pursuant to its terms or (c) the issuance of a Substitute Letter of
Credit, made in accordance with the Indenture and this Agreement; provided,
however, Letter of Credit Termination Date may be extended, from time to time,
either by extension or renewal of the existing Letter of Credit in accordance
with Section 2.10 hereof.

            "LIBOR Rate" shall mean the offered rate for deposits of U.S.
Dollars in an amount approximately equal to Drawing or Drawings under this
Agreement for a term coextensive with the designated Interest Period which the
British Bankers' Association fixes as

                                      -4-

<PAGE>

                                                                    Exhibit 4.30

its LIBOR rate and which appears on the Telerate Page 3750 as of 11:00 a.m.
London time on the day which is two London Banking Days prior to the beginning
of such Interest Period.

            "Licenses and Permits" shall mean all material licenses, permits,
authorizations and agreements issued by or agreed to by any governmental
authority, or by a private party pursuant to a Permitted Encumbrance, and
including, but not limited to, building permits, occupancy permits and such
special permits, variances and other relief as may be required pursuant to Legal
Requirements which may be applicable to the Facilities.

            "Loan Agreement" shall mean the Loan Agreement between the CDA and
the Borrower, dated as of August 1, 2004, as the same may be time to time
amended or supplemented.

            "London Banking Day" shall mean a day on which dealings in US dollar
deposits are transacted in the London interbank market.

            "Material Adverse Effect" a material adverse effect on (a) the
business, operations, property or condition (financial or otherwise) of the
Borrower, (b) the ability of the Borrower to perform the obligations of the
Borrower under this Agreement or the Letter of Credit, or (c) the validity or
enforceability of this Agreement, the Letter of Credit or the rights or remedies
of the Bank hereunder or thereunder.

            "Obligations" means all obligations of the Borrower owed to the Bank
under this Agreement and the Letter of Credit.

            "Original Stated Amount" means Four Million Six Hundred Six Thousand
Eight Hundred Seventy-Five and no/100 Dollars ($4,606,875) or, if less, the
amount available to be drawn under the Letter of Credit as of the Date of
Issuance, as set forth in the Letter of Credit.

            "Other Accrued Amounts" means the sum of all amounts accrued or
deferred under the Borrower Documents and payable by Borrower to the Bank for
the period commencing with and including the Date of Issuance and ending with
and including the day preceding the date on which payment is made.

            "Party" and "Person" each shall include all individuals, companies,
limited liability companies, firms, associations, partnerships, joint ventures,
unincorporated trade and business enterprises, trusts, estates, governments
(whether national, regional or local) and agencies, instrumentalities and
officials thereof, and all other persons and entities, of whatever nature or
form.

            "Payment Obligations" means all obligations of the Borrower owed to
the Bank under Section 2 hereof.

            "Permitted Encumbrances" shall be those encumbrances listed on
Exhibit C.

            "Permitted Indebtedness" means (i) existing indebtedness described
in numbers 1 through 5 on Exhibit C; (ii) indebtedness for borrowed money from
the Bank in connection with

                                      -5-

<PAGE>

                                                                    Exhibit 4.30

the Bonds; (iii) indebtedness incurred pursuant to this Agreement, (iv)
indebtedness constituting purchase money mortgages and/or purchase money
security interests; (v) indebtedness to the CDA, Connecticut Water Service, Inc.
or Borrower's Affiliates related to new money bonds to be issued through the CDA
prior to March 4, 2006 not exceeding Fifteen Million Dollars ($15,000,000) in
the aggregate; (vi) indebtedness, in addition to the indebtedness described in
Subsection (v), to Connecticut Water Service, Inc. or Borrower's Affiliates not
exceeding Six Million Dollars ($6,000,000) in the aggregate; and (vii) any other
indebtedness for which the Borrower has provided to the Bank prior to issuing
such indebtedness an officer's certificate demonstrating that (a) Borrower's
Debt to Capitalization Ratio for the most recent period would not have exceeded
70% assuming the incurrence of such debt at the beginning of the period and (b)
the EBIT to Interest Ratio for the most recent period would have been at least
2:1 assuming the incurrence of such debt at the beginning of the period.

            "Plan" means any plan described in ERISA.

            "Principal Component" shall have the meaning assigned thereto in the
Letter of Credit.

            "Related Documents" means, collectively, the Borrower Documents, the
Bonds, the Indenture, the Letter of Credit and any other agreement, instrument
or other document relating to or executed in connection with the transactions
contemplated by this Agreement, each as amended in connection herewith and from
time to time hereafter.

            "Remarketing Agent" shall have the meaning ascribed to it in the
Indenture.

            "Remarketing Draw" means a Drawing under the Letter of Credit
pursuant to a draft accompanied by a certification in the form of Certificate A
to the Letter of Credit for the purchase price of the Bonds tendered for
purchase pursuant to the Indenture.

            "Stated Amount" means the Original Stated Amount, as reduced from
time to time in accordance with the terms of the Letter of Credit.

            "Substitute Letter of Credit" means a letter of credit issued to
replace the Letter of Credit in accordance with the terms of the Indenture.

            "Trustee" means U.S. Bank National Association, and any banking
corporation resulting from or surviving any consolidation or merger to which it
or its successors may be a party and any successor trustee appointed and at the
time serving as successor trustee pursuant to the Indenture.

            "Uniform Customs and Practice" means the Uniform Customs and
Practice for Documentary Credits (1993 Revision), International Chamber of
Commerce Publication No. 500.

      1.02 Other Definitional Provisions. Accounting terms used herein that are
not otherwise defined in this Agreement will have the meanings assigned to them
in accordance with

                                      -6-

<PAGE>

                                                                    Exhibit 4.30

GAAP. For all purposes of this Agreement, except as otherwise expressly provided
herein or unless the context otherwise requires, generally accepted accounting
principles will be consistently applied throughout the periods involved. Words
used in the singular will include the plural and vice versa; words of any gender
will include the other gender and the neuter; and references to dollars will be
to United States dollars. Reference to "Sections", "Subsections", "Paragraphs",
"Subparagraphs", "Appendices", "Recitals", and "Exhibits" shall be to Sections,
Subsections, Paragraphs, Subparagraphs, Appendices, Recitals, and Exhibits of
this Agreement unless otherwise specifically provided. Any of the terms defined
in Section 1.01 may be used in singular or plural form. Except as otherwise
provided herein, references to any document or instrument defined in Section
1.01 may be used in singular or plural form. Except as otherwise provided
herein, references to any document or instrument defined in Section 1.01 are to
such document or instrument as amended or supplemented from time to time with
the Bank's consent or as otherwise permitted by this Agreement. References made
herein to consents, approvals, elections or other decisions to be made in the
Bank's "judgment", at the Bank's "discretion", to the Bank's "satisfaction" or
"satisfactory to the Bank", shall be deemed to entitle the Bank to exercise such
decision-making capacity in its discretion, in good faith, except as otherwise
expressly set forth herein.

             SECTION 2. TERMS OF LETTER OF CREDIT AND REIMBURSEMENT

      2.01 The Letter of Credit. At the request of the Borrower, the Bank
agrees, on the terms and conditions hereinafter set forth, to issue the Letter
of Credit, in the form of Exhibit A attached hereto, in the Original Stated
Amount for the account of the Borrower and deliver the Letter of Credit to the
Trustee. The Letter of Credit is to be used by Borrower solely to provide
liquidity and credit enhancement for the Bonds. The Letter of Credit shall
expire on the Letter of Credit Termination Date. The Bank shall make payments on
the Letter of Credit from the Bank's own funds.

      2.02 Issuing the Letter of Credit. The Letter of Credit shall be issued
upon fulfillment of the conditions set forth in Section 3 hereof.

      2.03 Commitment Fee and Letter of Credit Fee. The Borrower has paid at or
prior to the Date of Issuance a commitment fee of Fifteen Thousand Dollars
($15,000.00), which is the commitment fee for both this Letter of Credit and the
letter of credit for the $5,000,000 Water Facilities Refunding Revenue Bonds
(The Connecticut Water Company Project - 2004A Series). The Borrower hereby
agrees to pay to the Bank in advance the Letter of Credit Fee on a quarterly
basis in an amount equal to 50 basis points of the Stated Amount of the Letter
of Credit per annum, unless the Borrower has a downgrade by any of Moody's
Investors Services, Standard & Poor's or Fitch Rating to Baa1, BBB+ or BBB+,
respectively, or lower, in which case the Letter of Credit Fee will be an amount
equal to 60 basis points of the Stated Amount of the Letter of Credit per annum.
Such Letter of Credit Fee shall be calculated on the basis of the actual number
of days elapsed in a year of 365 days and be payable quarterly in advance on
each January 1, April 1, July 1 and October 1, with the initial payment covering
the period from the Date of Issuance through September 30, 2004 due on the Date
of Issuance.

                                      -7-

<PAGE>

                                                                    Exhibit 4.30

      2.04 Reimbursement and Other Payments.

            (a) The Borrower hereby agrees to reimburse or pay to the Bank (to
the extent not already paid) immediately and on the same Business Day on which
the Bank shall be required to pay any draft presented under the Letter of Credit
with respect to any Drawing a sum equal to (i) the amount paid by the Bank under
the Letter of Credit and (ii) the amount of any taxes, fees, charges or other
costs and expenses incurred by the Bank in connection with any payment made by
the Bank under or with respect to the Letter of Credit. Notwithstanding the
provisions of the immediately preceding sentence, in the event that any draw
under the Letter of Credit is a Remarketing Draw, outside the control of the
Borrower and such event is not an Event of Default, the Bank agrees that the
Borrower will not be obliged to repay any such amounts drawn down until the
earlier to occur of (i) demand upon the occurrence of an Event of Default, (ii)
upon receipt of the proceeds from the resale of Bonds acquired under the
Remarketing Draw or (iii) the Letter of Credit Termination Date. Interest shall
accrue on all such amounts drawn down at the rate of the Base Rate plus one
hundred (100) basis points and shall be paid monthly in arrears on the first
Business Day of each month. In the event that the Bonds remain nonmarketable for
longer than 180 days, interest shall accrue on all such amounts at the rate of
the Base Rate plus one hundred and fifty (150) basis points and shall be paid
monthly in arrears on the first Business Day of each month.

            (b) Whenever an Event of Default shall have occurred under this
Agreement, the Bank shall have the option to increase the rate of interest on
the unpaid principal to the Default Rate, and if it does so, the Borrower agrees
to pay interest on the unpaid principal at a rate per annum equal to the Default
Rate. The Borrower also agrees that if the entire amount of any Obligation
hereunder is not paid in full within ten (10) days of the date when due, the
Borrower shall pay to the Bank a late fee equal to thirty-five dollars ($35.00).

            (c) If after the date of issuance of the Letter of Credit, any
change in any law or regulation or in the interpretation thereof by any court or
administrative or governmental authority charged with the administration thereof
shall impose, modify or deem applicable any reserve, special deposit or similar
requirement which would impose on the Bank any additional costs (i) generally
upon the issuance or maintenance of so called letters of credit by the Bank, or
(ii) specifically in respect of the Letter of Credit documents or the Letter of
Credit, and the result of such imposition or additional costs upon either clause
(i) or (ii) above shall be to increase the cost of the Bank of issuing or
maintaining the Letter of Credit (which increase in cost shall be the result of
the Bank's reasonable allocation of the aggregate of such cost increases
resulting from such events), then (x) the Bank shall so notify Borrower and (y)
upon receipt of such notice from the Bank, accompanied by a certificate as to
such increased costs, Borrower shall pay as of the effective date of such change
or interpretation all additional amounts which are necessary to compensate the
Bank for such increased costs incurred by the Bank. The Borrower may review and
comment on the Bank's reasons for, and calculation of, the increased costs,
which comments the Bank shall consider in good faith in making its final
certification. However, the final certification of the Bank as to such increased
costs shall be conclusive (absent manifest error) as to the amount thereof. For
purposes of this Section 2.04(c), all references to the "Bank" shall be deemed
to include any participant in the Letter of Credit; provided, however, that in
the case of a participation, such amount shall not exceed the amount that the
Borrower would have had to pay

                                      -8-

<PAGE>

                                                                    Exhibit 4.30

under this Section 2.04(c) if the Bank had not sold the participation but had
retained such participation for the Bank's own account. The Bank will furnish
the Borrower with notice of any change of law or regulation or interpretation
thereof referred to above promptly after having actual knowledge of the
application thereof or promptly upon its receipt of written notice with respect
thereof from any participant.

            (d) The Borrower hereby agrees to pay to the Bank a fee of $150.00
upon each drawing under the Letter of Credit.

            (e) The Borrower shall execute and deliver to the Bank a Demand Note
evidencing amounts due under paragraphs (a) or (b) above, such Demand Note to be
substantially in the form of Exhibit B attached hereto, but in the absence of
any such Demand Note, the obligation of the Borrower to repay amounts due
thereunder shall be conclusively evidenced hereby and by the Bank's records of
disbursements and payments.

            (f) Any payments the Borrower makes to the Bank pursuant to the
terms of any Purchased Bonds (as defined in the Indenture) shall reduce amounts
owed hereunder and corresponding amounts under the Demand Note.

      2.05 Payments and Computations. (a) Payments received by the Bank from the
Trustee pursuant to Sections 2.7(E), 5.3(E) and 12.1 of the Indenture shall be
treated as payments made by the Borrower hereunder. To the extent the Bank has
not received payments from the Trustee under Sections 2.7(E), 5.3(E) and 12.1 of
the Indenture sufficient to cover a draw on the Letter of Credit, and in all
other instances where reimbursement payments are required hereunder, the
Borrower shall make each payment hereunder not later than 12:00 noon (New York
City time) on the day when due in lawful money of the United States of America
and in immediately available funds to the Bank at the Bank's office specified in
Section 9. Funds received after such time shall be deemed received on the next
succeeding Business Day. All computations of interest hereunder shall be made by
the Bank on the basis of a year of 360 days and the actual number of days
elapsed. All computations of Letter of Credit Fees hereunder shall be made by
the Bank on the basis of a year of 365 days and the actual number of days
elapsed.

            (b) All sums payable by the Borrower hereunder, whether of
principal, interest, fees, expense or otherwise, shall be paid in full, without
any deduction or withholding whatsoever. In the event that the Borrower is
compelled by law to make any such deduction or withholding, then the Borrower
shall pay to the Bank such additional amount as will result in the receipt by
the Bank of a net sum equal to the sum it would have received had no such
deduction or withholding been required to be made. In the event such law,
regulation or condition shall be revoked, rescinded, declared invalid or
inapplicable or otherwise rescinded, the Bank shall forthwith refund to the
Borrower any and all amounts repaid to it upon or after such rescission which
are attributable to payments made by the Borrower to the Bank pursuant to this
Section.

            (c) In the event any fees payable under the terms hereof are not
paid on or before the date the same are due and payable, the payment of such
fees shall be accompanied by interest thereon, at the Default Rate, from the
date such payment becomes due until paid in full.

                                      -9-

<PAGE>

                                                                    Exhibit 4.30

      2.06 Payment on Non-Business Days. Whenever any payment to be made
hereunder shall be stated to be due on a day that is not a Business Day, such
payment shall be made on the next succeeding Business Day, and interest and any
applicable fees other than late fees shall accrue during such extension through
and including the date of payment.

      2.07 Obligations Absolute. The Obligations of the Borrower under this
Agreement shall be primary, unconditional and irrevocable, and shall be paid
strictly in accordance with the terms of this Agreement notwithstanding:

            (a) any lack of validity or enforceability of this Agreement, the
Letter of Credit, the Indenture or any other Related Document;

            (b) any amendment or waiver of or any consent to or actual departure
from all or any of the Related Documents;

            (c) the existence of any claim, set-off, defense or other right
which the Borrower, any entity owned (directly or indirectly) by the Borrower or
any entity that owns (directly or indirectly) any interest (whether equitable,
beneficial or otherwise) in the Borrower may have at any time against the CDA,
the Trustee or any other beneficiary or any transferee of the Letter of Credit
(or any persons or entities for which the Trustee or any such beneficiary or any
such transferee may be acting), the Bank, or any other person or entity, whether
in connection with this Agreement, the transactions contemplated herein or in
the Related Documents, or in any unrelated transaction;

            (d) any statement or any other document presented under the Letter
of Credit proving to be forged, fraudulent, or insufficient in any respect or
any statement therein being untrue or inaccurate in any respect, provided that
the Bank's liability (if any) therefor shall be determined in accordance with
Section 9.05(b) hereof;

            (e) any breach of contract or other dispute between the Borrower and
any Person;

            (f) any payment by the Bank under the Letter of Credit against
presentation of a sight draft or certificate which does not comply with the
terms of the Letter of Credit, provided that the Bank's liability (if any)
therefor shall be determined in accordance with Section 9.05(b) hereof;

            (g) any delay, extension of time, renewal, compromise or other
indulgence agreed to by the Bank, with or without notice to or approval by the
Borrower in respect of any of the Borrower's indebtedness to the Bank under this
Agreement;

            (h) any other circumstance or happening whatsoever, whether or not
similar to any of the foregoing; provided, however, that this Section 2.07 shall
not prevent the assertion by the Borrower of a claim, if any, under Section
9.05(b) hereof but the assertion of any such claim shall in no event be made as
a set-off, counterclaim or defense to the Borrower's obligations hereunder.

                                      -10-

<PAGE>

                                                                    Exhibit 4.30

      2.08 The Uniform Customs and Practice and Modification Consent. (a) The
Uniform Customs and Practice shall be binding on the Borrower and the Bank with
respect to the Letter of Credit, except as otherwise provided in the Letter of
Credit, and except to the extent otherwise from time to time agreed to by the
Bank and the Borrower in writing. With regard to the Bank, the Borrower assumes
all risks of the acts or omissions of the beneficiary of the Letter of Credit
with respect to the Letter of Credit. In furtherance of, and not in limitation
of the Bank's rights and powers under the Uniform Customs and Practice, but
subject to all other provisions of this Section 2.08, it is understood and
agreed that the Bank shall not have any liability for and that the Borrower
assumes, with regard to the Bank, all responsibility for: (i) the genuineness of
any signature; (ii) the form, sufficiency, accuracy, genuineness, falsification
or legal effect of any draft, certification or other document required by the
Letter of Credit or the authority of the person signing the same; (iii) the
failure of any instrument to bear any reference or adequate reference to the
Letter of Credit or the failure of any persons to note the amount of any
instrument on the reverse of the Letter of Credit or to surrender the Letter of
Credit; (iv) the good faith or acts of any person other than the Bank and its
agents and employees; (v) the existence, form, sufficiency or breach of or
default under any agreement or instrument (other than the Letter of Credit) of
any nature whatsoever; (vi) any delay in giving or failure to give any notice,
demand or protest; and (vii) any error, omission, delay in or nondelivery of any
notice or other communication, however sent, provided, however, that the Bank is
and remains responsible for any of the above caused solely by its own gross
negligence or willful misconduct. The determination as to whether the required
documents are presented prior to the expiration of the Letter of Credit and
whether such other documents are in proper and sufficient form for compliance
with the Letter of Credit shall be made by the Bank in its sole discretion,
which determination shall be prima facie evidence of compliance. Any negative
determination as to proper and sufficient form for compliance with the Letter of
Credit shall be promptly stated to the Borrower in order to provide an
opportunity to cure (if such cure meets each and all of the terms and conditions
of the Letter of Credit). It is agreed that the Bank may honor, as complying
with the terms of the Letter of Credit and this Agreement, any documents which
appear on their face to be in accordance with the terms and conditions of the
Letter of Credit, and signed or issued by the beneficiary thereof, provided that
the Bank's liability (if any) therefor shall be determined in accordance with
Section 9.05(b) hereof. Any action, inaction or omission, or payment or failure
to pay, on the part of the Bank under or in connection with the Letter of
Credit, drawings thereon or reinstatement thereof, if in good faith and in
conformity with such laws, regulations, usage of trade or commercial or banking
customs as may be applicable, shall be binding upon the Borrower, shall not
place the Bank under any liability to the Borrower, and shall not affect, impair
or prevent the vesting of any of the Bank's rights or powers hereunder or the
Borrower's obligation to make full reimbursement, provided such act or omission
did not arise due to the gross negligence of the Bank.

            (b) If the Borrower, either in writing or orally (confirmed by
either party in writing), requests or consents to any modification or extension
of the Letter of Credit or waives failure of any draft, certificate or other
documents to comply with the terms of the Letter of Credit, the Bank shall be
deemed to have relied and be entitled to rely on such request,

                                      -11-

<PAGE>

                                                                    Exhibit 4.30

consent or waiver with respect to any action taken or omitted by the Bank
pursuant to any such request, consent or waiver, and such extension,
modification or waiver shall be binding upon the Borrower.

      2.09 Reinstatement of Letter of Credit.

            (a) After any A-Drawing, the Principal Component shall be reinstated
upon delivery of a certificate in the form of Annex 2 to the Letter of Credit.

            (b) With respect to a C-Drawing made in respect of interest payable
on an Interest Payment Date as a scheduled periodic payment of interest on the
Bonds or as a portion of the purchase price of Bonds being purchased with the
proceeds of an A-Drawing pursuant to Section 2.10, 2.11, 2.12, 2.15 or 2.16 of
the Indenture, if the Trustee has not received, within ten (10) calendar days
after any payment in respect of a C-Drawing, notice from the Bank to the effect
that (1) an Event of Default hereunder has occurred and is continuing, and (2)
the Letter of Credit will not be reinstated as of the date thereof, then the
Interest Component will automatically be reinstated, as of the close of business
on such tenth (10th) calendar day, and shall be equal to forty-five (45) days
accrued interest (computed at the rate of ten percent (10%) per annum on the
basis of a 360-day year notwithstanding the actual rate of interest borne from
time to time by the Bonds) on the then applicable Principal Component. The
Interest Component will not be reinstated for any C-Drawing made to pay interest
except as specified in the preceding sentence.

      2.10 Extension of the Letter of Credit Expiration Date. The Letter of
Credit shall terminate at the Termination Date, as defined in the Letter of
Credit, provided, however, that the Letter of Credit may be renewed for a period
of one year (or such other period to which the Bank may agree, in its sole
discretion) from such Termination Date (or any future extended expiration date)
if (i) a written request for renewal is received by the Bank between September
2, 2007 and 180 days prior to the Termination Date (or at least 180 days prior
to any future extended expiration date) and (ii) the Bank, in its sole
discretion, elects to grant the request for renewal in writing prior to such
Termination Date (or prior to any future extended expiration date). The Bank
agrees to use its best efforts to reply to a request for extension in writing
within sixty (60) days of the request.

      2.11 Application of Funds. Upon the occurrence and during the continuance
of any Event of Default, any payment received hereunder or pursuant to any of
the Related Documents may be applied by the Bank to such Obligations of the
Borrower and in such order (without any duty to marshal), as the Bank may elect
in its sole and absolute discretion, so long as such applications are not in
conflict with the terms of the Indenture or the First Mortgage.

      2.12 Substitute Letter of Credit. At the request of the Borrower made in
compliance with the provisions of the Loan Agreement, the Indenture and Section
2.13, the Bank shall cooperate in order that a Substitute Letter of Credit may
be obtained and substituted for the Letter of Credit, and the Bank take such
actions as reasonably requested by the Borrower or the Trustee with respect
thereto (at the sole expense of the Borrower). The Letter of Credit Fee paid to
the Bank shall accrue and be payable through the end of the quarter in which the
substitution is made as if no substitution had taken place.

                                      -12-

<PAGE>

                                                                    Exhibit 4.30

      2.13 Optional Termination of the Letter of Credit. Borrower has the
option, in its sole discretion, to terminate the Letter of Credit, without
penalty, by notifying the Bank and the Trustee, in writing, sixty (60) days
prior to the date it wishes to terminate the Letter of Credit. If the
termination is due to a downgrade of the Bank's credit rating, the Bank shall
have the right to provide a confirming letter of credit within sixty (60) days
of the downgrade, with a financial institution with a credit rating at least
equal to the rating prior to the downgrade. If no such confirmation is provided,
Borrower may terminate the Letter of Credit without penalty.

                        SECTION 3. CONDITIONS PRECEDENT.

      3.01 Execution and Delivery of Closing Documents. On or before the Date of
Issuance, the Bank shall have received and approved the following documents,
each of which shall be in form and substance reasonably satisfactory to the Bank
and duly executed (and acknowledged where necessary) and delivered by the
appropriate parties thereto (issuance by the Bank of the Letter of Credit to be
conclusive evidence of the Bank's receipt and approval):

            (a) This Agreement

            (b) Demand Note;

            (c) Indenture;

            (d) Loan Agreement;

            (e) Remarketing Agreement;

            (f) All documents relating to the formation, existence and
governance of Borrower;

            (g) Evidence that the Borrower has taken all necessary action to
authorize it to execute, deliver and be bound by the documents to which it is a
signatory, including, without limitation, certified resolutions authorizing such
execution and delivery, with incumbency certificates attached;

            (h) An opinion of Bond Counsel, and if appropriate, a supplemental
opinion of Bond Counsel, substantially in the form required by the CDA and the
Bank, in each case dated the Date of Issuance and either addressed to the Bank
or accompanied by a letter satisfactory to the Bank entitling the Bank, and any
of its successors or assigns to rely on such opinion to the same extent as if
addressed to such persons;

            (i) Payment of legal fees and disbursements of Bank's counsel;

                                      -13-

<PAGE>

                                                                    Exhibit 4.30

            (j) An opinion of counsel for the Borrower ("Borrower's Counsel
Opinion") dated the Date of Issuance and addressed to the CDA, the Bank and the
Trustee with respect to such matters as the Bank may reasonably request; and

            (k) Such other documents and instruments as the Bank may reasonably
require including, without limitation, corporate documentation.

      3.02 Other Requirements. On or before the Date of Issuance:

            (a) No legislation, rule, order or decree shall, in the opinion of
counsel for the Bank, reasonably purport to prohibit or restrain the issuance of
the Letter of Credit;

            (b) The Borrower's representations and warranties contained herein
shall be correct in all material respects and the Borrower shall be in
compliance in all material respects with all covenants and agreements contained
herein and applicable to the Borrower;

            (c) No material adverse change shall have occurred in the financial
condition, business, affairs, operations or control of the Borrower since the
date of its financial statements most recently delivered to the Bank, taking
into account seasonal fluctuations in the Borrower's income stream;

            (d) All real estate taxes, personal property taxes and other
municipal charges relating to the Facilities shall be current;

            (e) The Borrower shall have secured and delivered (i) all Borrower
Documents duly executed and in form and substance satisfactory to Bank, (ii)
other documents ancillary to the Borrower Documents required by the Bank, and
(iii) all consents, waivers, acknowledgments and other agreements from third
persons which Bank may deem necessary or desirable in order to effectuate the
provisions of the Borrower Documents;

            (f) Except as permitted by the Bank, any and all other conditions
contained in the Commitment Letter shall have been satisfied to the satisfaction
of the Bank.

                               SECTION 4. SECURITY

      4.01 Additional Bonds. If the Borrower issues additional First Mortgage
Bonds or bonds are issued to refund any of the Borrower's existing bonds or new
bonds are issued which in either case are secured, this Agreement and the Letter
of Credit will be secured on parity with such bonds issued. The Borrower shall
provide to the Bank notice of any proposed bonds at least thirty (30) days prior
to the pricing of such bonds. The Borrower shall also provide to the Bank within
five (5) days, or when available, any information related to any such bond
closing that the Bank reasonably requests. The relevant bond documents shall
contain provisions regarding and acknowledging the Bank's parity status. In
addition, the Bank and the Borrower shall also execute an amendment to this
Agreement and the Borrower shall execute such additional

                                      -14-

<PAGE>

                                                                    Exhibit 4.30

documents, in forms approved by the Bank, adding and evidencing such security to
secure the obligations of the Borrower to the Bank under this Agreement.

                     SECTION 5. REPRESENTATIONS, WARRANTIES
                          AND COVENANTS OF THE BORROWER

      5.01 Representations and Warranties. As a material inducement to the Bank
to issue the Letter of Credit hereunder, the Borrower hereby represents,
warrants and covenants to Bank, as of the date hereof, the following, and all
representations, warranties and covenants contained in this Agreement shall
survive until the later of (i) (A) the Letter of Credit Termination Date, or (B)
payment in full of all amounts due and owing or payable to the Bank under this
Agreement and the other Borrower Documents, and (ii) the release of the Bank to
its sole satisfaction of all obligations under the Letter of Credit, unless the
Bank otherwise expressly consents in writing:

            (a) No Violation. Borrower is and shall remain in compliance in all
material respects with all federal, state and local laws and regulations,
including, without limitation, the American with Disabilities Act of 1990, all
federal, state and local laws and ordinances related to access and all rules,
regulations and orders issued pursuant thereto, including without limitation,
the Americans with Disabilities Act Accessibility Guidelines for Buildings and
Facilities. The payment and performance by the Borrower of the Obligations of
the Borrower hereunder or under any other Related Documents do not constitute a
violation of any law, order, regulation, material contract, or material
agreement to which the Borrower is a party or by which the Borrower or the
Borrower's property may reasonably be bound; and do not require any filing or
registration with, or any permit, license, consent, or approval of, any
governmental agency or regulatory authority other than those that have been
obtained.

            (b) No Litigation. There is no litigation or arbitration pending or,
to the best of the Borrower's knowledge, threatened against the Borrower which,
if adversely decided, could materially impair the ability of the Borrower to pay
and perform Obligations of the Borrower under any Related Document.

            (c) Entity Matters. The Borrower is and shall remain a duly
organized, validly existing corporation and shall have all requisite corporate
power and authority to conduct its business and to own its property as the same
is and shall be conducted or owned, and is and shall remain qualified to do
business in all jurisdictions where the nature and extent of its business is or
may be such that qualification is required by law, except where the failure to
so qualify would not have a material and adverse effect on the Borrower, its
properties or business, provided, however, that the Borrower may merge with any
of its Affiliates or with any regulated water utility, without the Bank's
consent, as long as the surviving entity shall have all of Borrower's
obligations under the Related Documents. The execution of the Borrower Documents
by the Borrower does not require any consent(s) which have not otherwise been
obtained, whether of the Borrower's creditors or otherwise; and does not violate
Borrower's certificate of incorporation, by-laws or similar documents or
agreements of creation, governance, or management.

                                      -15-

<PAGE>

                                                                    Exhibit 4.30

            (d) Borrower Documents and Related Documents Enforceable. The
Borrower Documents were duly authorized, executed, and delivered by the Borrower
and are legal, valid, and binding instruments, enforceable against the Borrower
in accordance with their respective terms, except as such enforceability may be
limited by applicable bankruptcy, reorganization, moratorium, insolvency or
other similar laws affecting the enforcement of creditors' rights generally and
except as limited by general equitable principles.

            (e) No Default. The Borrower is not in default in the payment of any
monies borrowed from or otherwise owed to any third party. The Borrower is not
in default under any order, award, or decree of any court, arbitrator, or
governmental authority which may materially adversely affect the ability of the
Borrower to carry on its business as presently conducted or to perform its
Obligations under any Related Document.

            (f) No Notice of Violations. The Borrower has no knowledge and has
not received any notice or communication (i) from any governmental authority
that the Facilities do not comply, in all material respects, with zoning or that
there exists any condition which violates any municipal, state, or federal law,
rule, or regulation that has not been remedied; (ii) from any insurance carrier
insuring the Facilities or any other party regarding any dangerous, illegal, or
other condition requiring corrective action that has not been corrected; (iii)
regarding any litigation or proceeding, pending or specifically threatened in
writing, against or relating to the Facilities or the Borrower, other than
immaterial litigation or proceedings, except as otherwise disclosed in writing
to the Bank; or (iv) regarding any taking, condemnation, or assessment, actual
or proposed, with respect to the Facilities.

            (g) Financial Statements. All financial statements of the Borrower
delivered to the Bank by the Borrower or its accountants fairly present, in all
material respects, the financial position of the Borrower as of such date and
the results of its operations for such period, in accordance with GAAP.

            (h) Licenses and Permits. The Borrower has obtained all Licenses and
Permits and private approvals of every nature whatsoever, if any, as may be
reasonably required to conduct or transact its business or to own, lease or
operate its property, and no violations with respect thereto, except where the
failure to do so, or such violations, would not have a Material Adverse Effect.

            (i) Full Disclosure. The representations and warranties made by
Borrower in this Agreement do not contain any untrue statement of a material
fact, and do not omit to state a material fact necessary to make the statements
contained in such representations and warranties not misleading, in light of the
circumstances under which they were made.

            (j) Environmental Matters. To the best of Borrower's knowledge:

                  (i) None of the Facilities contains or has previously
contained, any hazardous or toxic waste or substances or underground storage
tanks, except to the extent the same are in compliance with applicable laws and
regulations.

                                      -16-

<PAGE>

                                                                    Exhibit 4.30

                  (ii) The Facilities are in compliance in all material respects
with all applicable federal, state and local environmental standards and
requirements affecting such real property, and there are no environmental
conditions which could interfere with the continued use of the Facilities.

                  (iii) The Borrower has not received any notices of any
material violations or advisory action by regulatory agencies regarding
environmental control matters or permit compliance.

                  (iv) Hazardous waste has not been transferred from any of the
Facilities to any other locations except in compliance with all applicable
environmental laws, regulations or permit requirements.

                  (v) With respect to the Facilities, there are no proceedings,
governmental administrative actions or judicial proceedings pending or
contemplated under any federal, state or local law regulating the discharge of
hazardous or toxic materials or substances into the environment, to which the
Borrower is named as a party.

            (k) Governmental Authority Consents.

                  (i) The Borrower represents, warrants and covenants that the
Borrower possesses or is the beneficiary of all material permits, licenses,
authorizations, approvals and consents of governmental or public bodies or
authorities, federal, state and local, including, without limitation, all
material licenses, authorizations and permits relating to environmental matters
(hereinafter referred to collectively as the "Governmental Consents") necessary
for: (i) the activities and business of the Borrower as currently conducted and
as proposed to be conducted, and (ii) the ownership, use, operation and
maintenance by the Borrower of its properties and assets, and such Governmental
Consents are the only Governmental Consents required for the foregoing purposes
where failure to obtain such consents would have a Material Adverse Effect.

                  (ii) The Borrower represents, warrants and covenants that the
Borrower has received all of such Governmental Consents with respect to its
assets, properties and operations, and (ii) all of such Governmental Consents
have been duly and validly granted by the governmental authorities in the
jurisdictions where its operations are located, are in full force and effect and
have not been amended, modified, rescinded, revoked or assigned, except to the
extent no Material Adverse Effect would in each case be caused thereby.

                  (iii) To the best of the Borrower's knowledge, no condition
exists or event has occurred that, in itself or with the giving of notice or
lapse of time or both, would result in the suspension, revocation, impairment,
forfeiture, non-renewal of any Governmental Consent applicable to any operations
owned or operated by the Borrower or the Borrower's participation in any
government programs, and there is no claim that any such Governmental Consent,
participation or contract is not in full force and effect.

                                      -17-

<PAGE>

                                                                    Exhibit 4.30

            (l) The Borrower has good and marketable title or valid rights in
and to all of the properties and assets reflected on the balance sheets and
financial statements of Borrower.

            (m) None of the proceeds of the Bonds shall be used directly or
indirectly for the purpose of purchasing or carrying any margin stock in
violation of any of the provisions of Regulation U of the Board of Governors of
the Federal Reserve System ("Regulation U"), or for the purpose of reducing or
retiring any indebtedness which was originally incurred to purchase or carry
margin stock or for any other purchase which might render the loan by the CDA to
the Borrower a "Purpose Credit" within the meaning of Regulation U.

      5.02 Affirmative Covenants. In addition to, and not in limitation of, any
other obligations of the Borrower, whether under this Agreement or otherwise:

            (a) Timely Payment and Performance. The Borrower will duly and
punctually pay all Obligations becoming due to the Bank and will duly and
punctually perform all things on its part to be done or performed under this
Agreement, or pursuant to any of the Related Documents.

            (b) Books and Records. The Borrower, at all times, will keep proper
books of account in which full, true and correct entries will be made of its
transactions in accordance with GAAP.

            (c) Inspection Rights. The Borrower hereby covenants and agrees to
permit the Bank, through its authorized attorneys, accountants, architects,
engineers, and representatives, to examine the books, records, accounts,
computer tapes and disks, ledgers, and assets of every kind and description of
the Borrower at all reasonable times during Borrower's weekly business hours,
and upon reasonable notice, and without material disruption to the Borrower's
business in the absence of an Event of Default, and to contact the Borrower's
accountants directly upon prior written notice to the Borrower. The Bank shall
abide by the Borrower's established security procedures during such inspections.

            (d) Reporting. The Borrower, from time to time, will furnish the
Bank or cause to be furnished to the Bank such information and statements as the
Bank may reasonably request. Without limiting the generality of the foregoing
the Borrower will furnish or cause to be furnished to the Bank the following:

                  (i) All financial reports as and when required to be furnished
to the Trustee or the CDA under the Indenture or the Loan Agreement.

                  (ii) Within one hundred and twenty (120) days after the end of
each fiscal year, the financial statements of the Borrower prepared in
accordance with GAAP, audited by PricewaterhouseCoopers LLP or other independent
certified public accountants selected by the Borrower and reasonably acceptable
to the Bank, and any management letters. At the time it delivers the financial
statements described herein, the Borrower shall deliver a certificate of an
Authorized Officer stating that (i) to the best of such officer's knowledge,
such Borrower during such period has observed or performed all of its covenants
and other agreements, and satisfied

                                      -18-

<PAGE>

                                                                    Exhibit 4.30

every condition, contained in this Agreement and the other Borrower Documents to
be observed, performed or satisfied by it, and (ii) no Default or Event of
Default has occurred and is continuing except as specified in such certificate.

                  (iii) Within forty-five (45) days of the end of the fiscal
quarter, the Borrower's quarterly internal financial statements. At the time it
delivers the financial statements described herein, the Borrower shall deliver a
certificate of an Authorized Officer stating that (i) to the best of such
officer's knowledge, such Borrower during such period has observed or performed
all of its covenants and other agreements, and satisfied every condition,
contained in this Agreement and the other Borrower Documents to be observed,
performed or satisfied by it, and (ii) no Default or Event of Default has
occurred and is continuing except as specified in such certificate.

                  (iv) Within thirty (30) days prior to the start of the fiscal
year, the annual budget for Connecticut Water Service, Inc., with supporting
detail, for the upcoming fiscal year.

                  (v) Within one hundred and twenty (120) days after the end of
each fiscal year, the financial statements of Connecticut Water Service, Inc.
prepared in accordance with GAAP, the Form 10K and any management letters.

                  (vi) Within forty-five (45) days of the end of the fiscal
quarter, the quarterly Form 10Q of Connecticut Water Service, Inc.

                  (vii) Prompt written notice if: any obligation (other than an
Obligation under this Agreement) of the Borrower for borrowed money or for the
deferred purchase price of any property, in either case in excess of $250,000,
is declared or shall become due and payable prior to its stated maturity, the
holder of any note, or other evidence of indebtedness, certificate or security
evidencing any such obligation, has the right to declare such obligation due and
payable prior to its stated maturity, or to the knowledge of any officer of the
Borrower, there shall occur a Default or an Event of Default.

                  (viii) Prompt written notice of: (a) any citation, summons,
subpoena, order to show cause or other order naming the Borrower a party to any
proceeding before any governmental body which if adversely determined would have
a Material Adverse Effect on the business, financial condition or operations of
the Borrower, and include with such notice a copy of such citation, summons,
subpoena, order to show cause or other order, (b) any lapse or other termination
of a license, permit or other authorization issued to the Borrower by any
governmental authority or person, which lapse or other termination would have a
Material Adverse Effect on the property, business, profits or conditions
(financial or otherwise) of the Borrower, (c) any refusal by any governmental
authority or person to renew or extend such license, permit or other
authorization which would have a Material Adverse Effect, and (d) any suit
between the Borrower and any governmental authority or person or formal demand
made upon the Borrower by any governmental authority or person which if
adversely determined would have a Material Adverse Effect on the property,
business, profits or conditions (financial or otherwise) of the Borrower.

                                      -19-

<PAGE>

                                                                    Exhibit 4.30

                  (ix) Promptly after the filing thereof, copies of each annual
report required to be filed pursuant to ERISA and copies of any other reports
required to be filed with respect to any Plan with the Department of Labor or
the Internal Revenue Service.

                  (x) Promptly upon request therefor, such other information and
reports relating to the financial condition and operations of the Borrower as
the Bank at any time or from time to time may reasonably request.

            (e) Entity Existence and Legal Compliance Generally. The Borrower
will maintain its existence as a corporation duly organized and existing under
the laws of the State of Connecticut, provided, however, the Borrower may merge
with any of its Affiliates or any regulated water utility, without the Bank's
consent, as long as the surviving entity shall have all of Borrower's
obligations under the Related Documents, and will comply with all laws and
regulations of the United States and of any state or states thereof (to the
extent applicable), of any political subdivision thereof and of any governmental
authority and of any securities exchange which may be applicable to the Borrower
or to the Borrower's business.

            (f) Accounts. The Borrower agrees that it shall maintain its primary
operating account with the Bank or its Affiliate.

            (g) Maintenance. The Borrower will put and maintain its properties
in good repair, working condition and order, and from time to time, make all
needful and proper repairs, renewals and replacements.

            (h) Insurance. The Borrower will maintain insurance at all times,
covering such risks and in such amounts as are required in Exhibit D.

                  (i) Payment of Obligations to Others. The Borrower will make,
prior to the expiration of any applicable grace period, all payments and perform
all other material obligations which may be required of it with respect to any
material indebtedness (whether for money borrowed, goods purchased, services
rendered or however such indebtedness may otherwise arise) owing to persons,
firms or corporations other than the Bank, including, without limitation,
indebtedness which may be secured by a security interest in assets of the
Borrower or property of the Borrower, and all obligations under the terms of any
material lease in which the Borrower is the lessee.

            (j) ERISA. The Borrower shall fund each Plan maintained by the
Borrower so that each Plan meets the minimum funding standards of ERISA and all
applicable regulations thereto and requirements thereof, and of the Code.
Borrower will not permit the occurrence of a "Prohibited Action" or "Reportable
Event" (as both terms are defined by ERISA) with respect to any Plan or any
event with respect to any Plan that could result in material liability to the
Borrower or any of its successors or assigns, or to the entity which provides
funds for such Plan.

            (k) Additional Bonds. The Borrower shall perform all requirements
described in Section 4 of this Agreement.

                                      -20-

<PAGE>

                                                                    Exhibit 4.30

            (l) Notice of Breaches. Upon learning of any action or event which
constitutes, or with the giving of notice or the passage of time, or both, would
constitute, an Event of Default under this Agreement or an "Event of Default"
under any Borrower Document or any other Related Document, the Borrower
immediately shall give written notice thereof to the Bank.

      5.03 Negative Covenants

            (a) Fundamental Changes. Borrower will not wind up, liquidate or
dissolve itself, merge or consolidate or be merged or consolidated with or into
any other corporation or entity without the prior written consent of the Bank,
provided that, upon the request of the Borrower, the Bank shall promptly notify
the Borrower in writing whether such consent shall be granted or withheld for
any such contemplated transaction. Notwithstanding anything in this Agreement to
the contrary, Borrower shall be able to merge with any and all of its Affiliates
and with any regulated water utility, without the Bank's consent, as long as the
surviving entity shall have all of Borrower's obligations under the Related
Documents.

            (b) Sales of Assets. Except as otherwise provided in this section,
Borrower will not sell or dispose of any of its assets material to the operation
of its business, unless the prior written consent of the Bank has been obtained.
The Bank shall provide such consent if the Borrower (i) certifies to the Bank
that such assets have become inadequate, worn out, unprofitable or unnecessary
for the Borrower's operations, or certifies to the Bank that such assets shall
be alienated, transferred, assigned, sold or otherwise disposed of at not less
than one hundred percent of the greater of the full book value or fair market
value thereof; and (ii) certifies to the Bank that such alienation, assignment,
transfer, sale or disposal will not materially impair the ability of the
Borrower to operate its normal programs and services and will not impair the
ability of the Borrower to make full and timely payments when due under this
Agreement. Borrower may sell or dispose of the following assets, without the
Bank's consent: (A) obsolete assets no longer useful in the ordinary course of
its business; (B) assets which constitute personalty, and are not any of (i)
fixed assets or fixtures or (ii) realty; (C) real property sold or donated to
public entities for conservation purposes, provided the Borrower's operations
are not materially impaired by any such sale or donation; (D) assets acquired
after the date of this Agreement by a purchase money mortgage or purchase money
security interest; and (E) assets transferred in the Borrower's merger with an
Affiliate or a regulated water utility, as long as the surviving entity shall
have all of Borrower's obligations under the Related Documents. Also, only while
the First Mortgage Indenture is in effect, the Borrower may sell or dispose of
the assets permitted to be transferred under Article 10 of the First Mortgage
Indenture, without the Bank's consent, as long as all restrictions and
conditions in the First Mortgage Indenture shall apply to such transfer and if
Borrower is selling or exchanging any assets pursuant to Section 10.4 of the
First Mortgage Indenture, then in addition to meeting all of the conditions in
the First Mortgage Indenture, Borrower shall also provide to the Bank:

            (i) A resolution authorizing such sale or exchange;

                                      -21-

<PAGE>

                                                                    Exhibit 4.30

            (ii) A certificate signed and sworn to by the President or a Vice
            President of the Borrower and by an engineer who, if the cost of the
            properties (when first devoted to the public service) for the sale
            or exchange of which request is made exceeds $25,000, shall be an
            independent engineer.

                  (A) describing the property to be sold or exchanged and
            stating that in the opinion of the signers the sale or exchange will
            be of benefit to the Company and will not affect the payment of the
            Bonds;

                  (B) stating that the Borrower has sold or exchanged, or
            contracted to sell or exchange, the property for consideration
            representing in the opinion of the signers its full value to the
            Borrower;

                  (C) stating the amount and nature of such consideration and
            that it consists, or will consist, solely of one or more of the
            following: cash, property additions and properties which upon such
            exchange will constitute property additions;

                  (D) stating either that the property to be sold or exchanged
            does not constitute or include all or substantially all of the fixed
            property of the Borrower, or, if it does constitute or include all
            or substantially all of such fixed property, stating that from the
            cash consideration received or to be received therefrom, as
            increased by any other moneys in the hands of the Trustee available
            for the redemption of Outstanding Bonds, there will be moneys
            sufficient in amount to pay all of the expenses and charges due the
            Bank, the Trustee, the Paying Agent and to redeem all Outstanding
            Bonds;

                  (E) if any property additions or properties which on
            acquisition will become property additions are included in such
            certificate, briefly describing them, and stating that the signers
            have examined and inspected the same and that their construction or
            acquisition is desirable from the standpoint of the Borrower and the
            Bondholders, and if from the opinion of counsel responsive to (v) of
            this Section it appears that the same are subject to any
            encumbrances, that such encumbrances do not impair the use of the
            property to which they pertain for the purposes for which such
            property is held or to be held by the Borrower;

            (iii) A certificate signed and verified by the President or a Vice
      President and the Treasurer or an Assistant Treasurer of the Borrower,
      dated as of the date upon which the resolution referred to in (i) above
      was adopted, stating that the Borrower is not in default hereunder and
      stating the original cost of the property to be sold or exchanged;

            (iv) All moneys stated in the certificate responsive to (ii) of this
      Section to be or to have been received in consideration for the property,
      or to the extent that such moneys constitute the consideration for
      property subject to an underlying mortgage, which, by its terms, are
      required to be paid to or deposited with its mortgagee or trustee, a
      receipt by such mortgagee or trustee for such moneys, the Borrower
      covenanting, agreeing and directing that upon the satisfaction or release
      of such underlying mortgage any such money remaining in the possession or
      control of such mortgagee or trustee, to which the Borrower may be
      entitled, after Borrower has complied with the provisions of the First
      Mortgage Indenture, shall forthwith be deposited with the Trustee and
      Borrower

                                      -22-

<PAGE>

                                                                    Exhibit 4.30

      shall direct the Trustee to make a redemption in the amount deposited with
      the Trustee on the next available redemption date;

            (v) An opinion of counsel stating:

                  (A) that all of the property received in exchange will, upon
            such acquisition, be subject to no liens, except Permitted
            Encumbrances;

                  (B) if any part of the consideration for the property has been
            or is to be paid to or deposited with the mortgagee or trustee of an
            underlying mortgage, that such consideration is required by such
            underlying mortgage to be paid to or deposited with such mortgagee
            or trustee;

            (vi) Either (A) a certificate constituting evidence of the
      authorization, approval or consent of any governmental body at the time
      having jurisdiction in the premises to the sale or exchange of the
      property, the consideration to be received therefor and the acquisition of
      any property constituting any part of such consideration, together with an
      opinion of counsel that the same constitutes sufficient evidence thereof
      and that the authorization, approval or consent of no other governmental
      body is required; or (B) an opinion of counsel that no authorization,
      approval or consent of any governmental body is required.

            (c) Liens. Except for Permitted Encumbrances, liens securing
Permitted Indebtedness and the mortgage under the First Mortgage Bonds, Borrower
will not create, incur, make, assume, grant or suffer to exist any assignment,
mortgage, pledge, title retention agreement, security interest, lien, charge or
encumbrance with respect to any of its property or assets, tangible or
intangible, whether now owned or hereafter acquired, or subject any of such
assets to the prior payment of any indebtedness, or transfer in any manner any
of such assets with the intent or purpose, directly or indirectly, of subjecting
such assets to the payment of indebtedness, that results in the Bank having a
lesser priority interest within its class of the Borrower's creditors.

            (d) Business. Borrower will not engage in any business other than
the businesses in which it is currently engaged or other businesses reasonably
related to a public water company.

            (e) Indebtedness; Guaranties. Except for Permitted Indebtedness,
Borrower will not incur any indebtedness. Furthermore, Borrower will not
guaranty or otherwise become liable for obligations of any other person, firm or
corporation, in an amount at any time in excess of $100,000.

            (f) Loans. Borrower shall not make any loan, advance or payment,
other than with respect to Permitted Indebtedness, except for loans to
Connecticut Water Service, Inc. or Borrower's Affiliates not exceeding Six
Million Dollars ($6,000,000) in the aggregate.

                                      -23-

<PAGE>

                                                                    Exhibit 4.30

            (g) Actions under Related Documents. The Borrower shall not request
or enter into any modification, amendment, consent or waiver of or pertaining to
the terms of the Related Documents to which the Borrower is a party without the
Bank's prior written consent. Borrower shall comply with all terms of the
Related Documents to which the Borrower is a party that are the responsibility
of the Borrower.

            (h) Substitute Credit Facility. Borrower shall not replace the
Letter of Credit with a Substitute Letter of Credit unless simultaneously
therewith Borrower shall cause the Letter of Credit to be cancelled and shall
repay in full all Obligations and liabilities to the Bank under the
Reimbursement Agreement and the Letter of Credit.

            (i) Transactions with Affiliates. Except in the ordinary course of
and pursuant to the reasonable requirements of the Borrower's business and upon
fair and reasonable terms no less favorable to the Borrower than would obtain in
a comparable arms' length transaction with a Person not an Affiliate, Borrower
shall not enter into any transaction, including, without limitation, the
purchase, sale, or exchange of property or the rendering of any service, with
any Affiliate.

            (j) ERISA. Borrower shall not (i) terminate any Plan so as to result
in any material liability to the Borrower, or (ii) engage in or permit any
Person to engage in any "Prohibited Transaction" involving any Plan which would
subject the Borrower to any material tax, penalty or other liability.

            (k) Debt to Capitalization. The Borrower shall not exceed a Debt to
Capitalization ratio ("Debt to Capitalization Ratio") of 70%. Such ratio shall
be measured quarterly as of the close of each fiscal quarter. "Debt" shall mean
the sum of all notes payable and other short-term obligations (including current
maturities of long-term debt and capital lease obligations), plus long-term debt
(including capital lease obligations). "Capitalization" shall mean total capital
of the Borrower.

            (l) EBIT to Interest. Borrower shall not permit the EBIT to Interest
ratio ("EBIT to Interest Ratio") to be less than 2:1, tested quarterly as of the
close of each fiscal quarter on a rolling four-quarter basis. "EBIT" shall mean
the Borrower's earnings before interest and taxes, calculated by taking the
pre-tax profit of the Borrower and adding back total Interest. "Interest" shall
mean all charges which the Borrower has paid on all its debt.

            (m) Negative Pledge Notwithstanding anything herein to the contrary,
Borrower shall not create, incur, assume or suffer to exist, any lien (except
for Permitted Encumbrances, liens permitted under the First Mortgage listed in
Exhibit E and as otherwise permitted by this Section 5.03) on and shall not
sell, assign or otherwise transfer any of the Borrower's fixed assets or realty,
whether now owned or hereafter acquired, except to the extent any such lien is
in favor of the Bank (except for Permitted Encumbrances, liens permitted under
the First Mortgage listed in Exhibit E and as otherwise permitted by this
Section 5.03).

                                      -24-

<PAGE>

                                                                    Exhibit 4.30

      5.04 Incorporation by Reference. Each warranty, representation and
covenant made by the Borrower in favor of the Bank in the Borrower Documents is
true and accurate, and is incorporated herein by reference.

                          SECTION 6. EVENTS OF DEFAULT

      6.01 The occurrence of any of the following events shall be an "Event of
Default" hereunder:

            (a) The Borrower shall fail to make any payment to the Bank or the
Trustee required by Sections 2.03, 2.04, or 2.05 of this Agreement within ten
(10) days of when due.

            (b) The Borrower shall fail to make any other payment to the Bank or
the Trustee required by this Agreement within ten (10) days of the Bank's demand
therefor.

            (c) The Borrower shall fail to observe or perform any other covenant
or agreement contained in this Agreement for a period of thirty (30) days after
written notice to it; provided, however, that if the Default stated in the
notice cannot be cured within the cure period the Bank shall not withhold its
consent to an extension of the cure period if in the Bank's sole determination,
reasonably exercised, (i) the Default is capable of being cured by the Borrower
within a reasonable period of time and (ii) corrective action has been
instituted by the Borrower during the cure period and continues to be diligently
pursued until such default is cured.

            (d) Any warranty, representation or statement made or furnished to
the Bank by or on behalf of the Borrower proves to have been false in any
material respect when made or furnished.

            (e) The Borrower shall (i) default in any payment of any
indebtedness for borrowed money, individually or in aggregate in excess of Two
Hundred Fifty Thousand Dollars ($250,000), beyond the grace period, if any,
provided in the instrument or agreement under which such indebtedness was
created other than for amounts contested in good faith by the Borrower, of which
the Borrower has given written notice to the Bank and for which the Borrower has
established reasonably adequate reserves; or (ii) default in the observance or
performance of any other agreement or condition relating to any such
indebtedness or contained in any instrument or agreement evidencing, securing or
relating thereto or any other event shall occur or condition exist, in each case
the effect of which default or other event or condition is to cause or permit
the holder or holders of such indebtedness (or a trustee or agent on behalf of
such holder or holders) to cause such indebtedness to become due prior to its
stated maturity other than for agreements or conditions contested in good faith
by the Borrower, of which the Borrower has given written notice to the Bank and
for which the Borrower has established reasonably adequate reserves.

            (f) Any levy, seizure, or attachment with a value in excess of Two
Hundred Fifty Thousand Dollars ($250,000) of any property of the Borrower, which
the Borrower fails to

                                      -25-

<PAGE>

                                                                    Exhibit 4.30

satisfy or cause the removal or return of within sixty (60) days of the date of
the levy, seizure or attachment.

            (g) Dissolution, termination of existence (except as otherwise
provided for herein), insolvency, or business failure of the Borrower.

            (h) (i) Any license, permit, certificate, consent, approval or
authorization granted by any federal authority or by any state or local
commission or authority, whether presently existing or hereafter granted to or
obtained by the Borrower that is, in the reasonable judgment of the Bank,
material to the operations of the Borrower shall expire without renewal or shall
be suspended or revoked, or (ii) the Borrower shall become subject to any
injunction or other order prohibiting it from operating under any such material
license, permit, certificate, consent, approval, authorization or agreement, or
(iii) the Borrower shall fail to apply for any license, permit, certificate,
consent, approval or authorization that is, in the reasonable judgment of the
Bank, material to the operations of the Borrower within thirty (30) days of the
later of (x) the date required to be obtained or (y) the date written notice
thereof is delivered to the Borrower.

            (i) (i) The Borrower shall commence any case, proceeding or other
action (A) under any existing or future law of any jurisdiction, domestic or
foreign, relating to bankruptcy, insolvency, reorganization or relief of
debtors, seeking to have an order for relief entered with respect to it, or
seeking to adjudicate it a bankrupt or insolvent, or seeking reorganization,
arrangement, adjustment, winding-up, liquidation, dissolution, composition or
other relief with respect to it or its debts, or (B) seeking appointment of a
receiver, trustee, custodian or other similar official for it or for all or any
substantial part of its assets, or the Borrower shall make a general assignment
for the benefit of its creditors; or (ii) there shall be commenced against the
Borrower any case, proceeding or other action of a nature referred to in clause
(i) above which (A) results in the entry of an order for relief or any such
adjudication or appointment or (B) remains undismissed, undischarged or unbonded
for a period of sixty (60) days; or (iii) there shall be commenced against the
Borrower any case, proceeding or other action seeking issuance of a warrant of
attachment, execution, distraint or similar process against all or any
substantial part of its assets which results in the entry of an order for any
such relief which shall have not been vacated, discharged, or stayed or bonded
pending appeal within sixty (60) days from the entry thereof; or (iv) the
Borrower shall take any action in furtherance of, or indicating its consent to,
approval of, or acquiescence in, any of the acts set forth in clause (i), (ii)
or (iii) of this subsection; or (v) the Borrower shall generally not, or shall
be unable to, or shall admit in writing its inability to, pay its debts as they
become due.

            (j) The rendition by any court of a final judgment or judgments
against the Borrower in excess of Two Hundred Fifty Thousand Dollars
($250,000.00) in the aggregate, not covered by insurance, which shall not be
satisfactorily stayed, discharged, vacated, bonded or set aside within sixty
(60) days of the making thereof; or the attachment of any property of the
Borrower in excess of Two Hundred Fifty Thousand Dollars ($250,000.00) securing
such final judgment or judgments which has not been released or provided for to
the satisfaction of the Bank within sixty (60) days after the making thereof.

                                      -26-

<PAGE>

                                                                    Exhibit 4.30

            (k) The adoption of any resolution by the Borrower, to authorize any
action or event that would constitute an Event of Default hereunder or under any
instrument, document or agreement made or entered in connection herewith.

            (l) There shall occur an "Event of Default," as defined in the
Indenture or the Loan Agreement or the Note issued thereunder.

            (m) The validity or enforceability of any obligation for the
reimbursement of any draw on the Letter of Credit shall be contested or denied
by the Borrower.

            (n) The Borrower has a downgrade by any of Moody's Investors
Services, Standard & Poor's or Fitch Rating to Ba1, BB+ or BB+, respectively, or
lower.

            The Borrower acknowledges and agrees that each and every Event of
Default described above shall be of equal weight and significance, and equally
and fully shall allow Bank to exercise its rights and remedies hereunder. The
Borrower acknowledges and agrees that the Bank has relied on each such Event of
Default, and been induced thereby, to enter into this Agreement and that the
Bank would be irreparably harmed if the Bank, in any way, were unable to
exercise its rights and remedies on the basis that certain Events of Default
(for example, Events of Default not relating to payment) were of less weight or
significance than certain other Events of Default (for example, Events of
Default relating to payment).

                              SECTION 7. REMEDIES.

      7.01 Notice to Trustee. Upon the occurrence of an Event of Default, the
Bank shall, at its option, and in its sole discretion, have the right to notify
the Trustee of the occurrence of such Event of Default and, in its sole
discretion, to request that the Trustee require a redemption of the Bonds in
accordance with Section 8.2 of the Indenture or require the Trustee to pursue
any and all remedies available under the Loan Agreement and the Indenture. Upon
the occurrence of any Event of Default, whether or not the Bank notifies the
Trustee of such Event of Default and whether or not the Trustee draws upon the
Letter of Credit to redeem the Bonds as a result thereof, (a) the Bank shall
have the option to declare (i) all sums then owing to the Bank hereunder or
under any of the other Borrower Documents, plus (ii) a sum equal to the then
Stated Amount of the Letter of Credit (which sum, upon receipt thereof by the
Bank, shall be held by the Bank as collateral security for the reimbursement of
any drawings under the Letter of Credit and the payment of any other amounts due
and payable hereunder or under any of the other Borrower Documents and as
collateral security for the Trustee for the benefit of the Bondholders for the
repayment by the Borrower of principal and interest on the Bonds), immediately
due and payable by the Borrower to the Bank, without presentment, demand,
protest, or notice of any kind; provided that upon the occurrence of any Event
of Default described in Section 6.01(i) the above-described sums shall
automatically become immediately due and payable without the necessity of any
such declaration by the Bank; (b) the Bank shall have all the rights and
remedies provided herein, in the other Related Documents, at law, in equity or
otherwise, including, without limitation, the right to enforce any liens granted
under this Agreement, subject to the

                                      -27-

<PAGE>

                                                                    Exhibit 4.30

mortgage of the First Mortgage Bonds and (c) the Bank may cause the Borrower to
take action to enforce the Borrower's rights under the Related Documents.

      7.02 Defaults under Other Documents. The Bank shall have the right to cure
any default under any of the Related Documents but shall have no obligation to
do so and any action to so cure a default shall not be deemed to make the Bank
liable for any other obligations of the Borrower.

                      SECTION 8. OTHER ACTIONS BY THE BANK

      8.01 Right to Advance or Post Funds. The Bank, in addition to its other
rights granted by this Agreement or otherwise, shall have the right to advance
or post funds. In the event of the occurrence of an Event of Default or Default
under any of the Related Documents, the Bank may advance or transfer, as
applicable, funds from any account provided hereunder to cure such default and
may thereafter advance its own funds for the account of the Borrower to correct
such event or condition, as the Bank deems proper, without prejudice to the
Borrower's rights, if any, to recover such funds from the party to whom paid.
Such advances may be pursuant to such agreements as the Bank deems proper. All
sums so advanced by the Bank from its own funds to cure any such default or to
correct any such event or condition, or which are agreed to be paid pursuant to
any such agreement, shall be for the account of the Borrower. Any amounts
advanced by the Bank to pay such accrued amounts hereunder shall constitute
Other Accrued Amounts and shall be reimbursed to the Bank. The Bank shall give
notice to the Borrower of any action it takes pursuant to this Section 8, but
the Bank's failure to give notice to the Borrower of any actions permitted by
this Section 8 shall not affect the Bank's right to take any such action or the
Borrower's reimbursement obligation for any amounts advanced or paid by the Bank
hereunder. Nothing in this Agreement shall be construed as imposing under any
circumstances any obligation upon the Bank to cure any default of the Borrower
under this Agreement or under any of the Borrower Documents or other Related
Documents, or otherwise to advance any funds or perform any of the Obligations
of the Borrower hereunder or thereunder.

      8.02 LIBOR Rate Lending Unlawful. If the Bank shall determine (which
determination shall, upon notice thereof to the Borrower be conclusive and
binding on the Borrower) that the introduction of or any change in or in the
interpretation of any law, rule, regulation or guideline, (whether or not having
the force of law) makes it unlawful, or any central bank or other governmental
authority asserts that it is unlawful, for the Bank to make, continue or
maintain any LIBOR Rate loan as a LIBOR Rate loan of a certain duration, then
until the Bank shall notify the Borrower that the circumstances causing such
suspension no longer exist, interest on all Drawings outstanding shall bear
interest at the Bank's Prime Rate beginning at the end of the then current
Interest Periods with respect thereto or sooner, if required by such law or
assertion.

      8.03 Substitute Rate. If the Bank shall have determined that: (a) US
dollar deposits in the relevant amount and for the relevant Interest Period are
not available to the Bank in the London interbank market; (b) by reason of
circumstances affecting the Bank in the London interbank, adequate means do not
exist for ascertaining the LIBOR Rate applicable hereunder to

                                      -28-

<PAGE>

                                                                    Exhibit 4.30

Drawing, or (c) LIBOR no longer adequately reflects the Bank's cost of funding
loans; then, upon notice from the Bank to the Borrower, then until the Bank
shall notify the Borrower that the circumstances causing such suspension no
longer exist, interest on all Drawings outstanding shall bear interest at the
Bank's Prime Rate.

      8.04 Increased Costs. If on or after the date hereof the adoption of any
applicable law, rule or regulation or guideline (whether or not having the force
of law), or any change therein, or any change in the interpretation or
administration thereof by any governmental authority, central bank or comparable
agency charged with the interpretation or administration thereof, or compliance
by the Bank with any request or directive (whether or not having the force of
law) of any such authority, central bank or comparable agency: (a) shall subject
the Bank to any tax, duty or other charge with respect to its LIBOR Rate loans
or its obligation to make LIBOR Rate loans, or shall change the basis of
taxation of payments to the Bank of the principal of or interest on its LIBOR
Rate loans or any other amounts due under this agreement in respect of its LIBOR
Rate loans or its obligation to make LIBOR Rate loans (except for the
introduction of, or change in the rate of, tax on the overall net income of the
Bank or franchise taxes, imposed by the jurisdiction (or any political
subdivision or taxing authority thereof) under the laws of which the Bank is
organized or in which the Bank's principal executive office is located); or (b)
shall impose, modify or deem applicable any reserve, special deposit or similar
requirement (including, without limitation, any such requirement imposed by the
Board of Governors of the Federal Reserve System of the United States) against
assets of, deposits with or for the account of, or credit extended by, the Bank
or shall impose on the Bank or on the London interbank market any other
condition affecting its LIBOR Rate loans or its obligation to make LIBOR Rate
loans; and the result of any of the foregoing is to increase the cost to the
Bank of making or maintaining any LIBOR Rate loan, or to reduce the amount of
any sum received or receivable by the Bank under this Agreement with respect
thereto, by an amount deemed by the Bank to be material, then, (x) the Bank
shall so notify Borrower and (y) upon receipt of such notice from the Bank,
accompanied by a certificate as to such increased costs, Borrower shall pay as
of the effective date of such change or interpretation all additional amounts
which are necessary to compensate the Bank for such increased costs incurred by
the Bank. The Borrower may review and comment on the Bank's reasons for, and
calculation of, the increased costs, which comments the Bank shall consider in
good faith in making its final certification. However, the final certification
of the Bank as to such increased costs shall be conclusive (absent manifest
error) as to the amount thereof.

      8.05 Official Statement. Within five (5) business days of the Borrower's
written request, the Bank shall either confirm or update disclosure information
regarding the Bank, in the form currently contained in Appendix F of the
Official Statement of the CDA, dated August 27, 2004.

                         SECTION 9. GENERAL PROVISIONS.

      9.01 Amendment and Waiver. The Borrower Documents may only be amended,
terminated, extended, or otherwise modified by a writing signed by each party
thereto. In no event whatsoever shall any oral agreements, promises, actions,
inactions, knowledge, course of conduct, course of dealing, or the like be
effective to modify, terminate, extend, or otherwise amend any Borrower
Document. ANY ACTION, INACTION, ORAL STATEMENTS,

                                      -29-

<PAGE>

                                                                    Exhibit 4.30

COURSE OF CONDUCT OR DEALING, OR ANY OTHER NON-WRITTEN WAIVERS, MODIFICATIONS,
OR AMENDMENTS TO THE BORROWER DOCUMENTS ARE EXPRESSLY UNAUTHORIZED AND SO THE
BANK MAY NEVER BE BOUND THEREBY. ACCORDINGLY, AS THE BORROWER IS HEREBY BEING
ADVISED THAT ANY SUCH ACTIONS BY AN OFFICER, AGENT, OR EMPLOYEE ARE NOT
AUTHORIZED BY THE BANK, RELIANCE THEREON SHALL BE CONSIDERED TO BE PER SE
UNREASONABLE.

      9.02 Notices. All notices, requests and demands to or upon the respective
parties hereto to be effective shall be in writing (which writing may be in the
form of a facsimile transmission provided that a copy thereof is delivered by
other permitted means), and, unless otherwise expressly provided herein, shall
be deemed to have been duly given or made when delivered, or five days after
being deposited in the mail, postage prepaid, or, in the case of facsimile
notice, when received, addressed as follows, or to such other address as may be
hereafter notified by the respective parties hereto:

           If to the Borrower: The Connecticut Water Company
                               93 West Main Street
                               Clinton, Connecticut 06413
                               Attention: David Benoit, Chief Financial Officer
                               Tel.: (860) 669-8630 x 3030
                               Fax: (860) 669-9326

           with copies to:     Murtha Cullina LLP
                               185 Asylum Street
                               Hartford, CT 06103
                               Attention: Paul McCary, Esq.
                               Tel.: (860) 240-6037
                               Fax: (860) 240-6150

             If to the Bank:   Citizens Bank
                               One Citizens Plaza
                               Providence, RI 02903
                               Attention: Mr. James M. Hagerty
                               Tel: (401) 282-7226
                               Fax: (401) 282-3691

                               and

                               209 Church Street
                               New Haven, CT 06510
                               Attention: Mr. Anthony Castellon
                               Tel: (203) 821-2405
                               Fax: (203) 821-2476

             with copies to:   Shipman & Goodwin LLP

                                      -30-

<PAGE>

                                                                    Exhibit 4.30

                               One Constitution Plaza
                               Hartford, CT 06103
                               Attention: Bruce A. Chudwick, Esq.
                               Tel: (860) 251-5114
                               Fax: (860) 251-5212

provided that any notice, request or demand to or upon the Bank pursuant to
Section 2 shall not be effective until received.

      9.03 No Waiver; Cumulative Remedies. No failure to exercise and no delay
in exercising, on the part of any party hereto, any right, remedy, power or
privilege hereunder or under the Borrower Documents shall operate as a waiver
thereof; nor shall any single or partial exercise of any right, remedy, power or
privilege hereunder preclude any other or further exercise thereof or the
exercise of any other right, remedy, power or privilege. The rights, remedies,
powers and privileges herein provided are cumulative and not exclusive of any
rights, remedies, powers and privileges provided by law.

      9.04 Survival of Representations and Warranties. All agreements,
representations and warranties made in this Agreement and the other Borrower
Documents and in any related certificates shall survive the execution and
delivery of this Agreement and the issuance and expiration of the Letter of
Credit, and shall continue until any and all sums payable under this Agreement
and all Obligations shall have been paid and performed in full.

      9.05 Payment of Expenses and Taxes; Indemnification. (a) The Borrower
agrees (i) to reimburse the Bank for its reasonable out-of-pocket costs, fees
and expenses paid or incurred in connection with the development, preparation,
negotiation and execution of, and any amendment, supplement or modification to,
the Commitment Letter, this Agreement and the other Borrower Documents and any
other documents prepared in connection herewith or therewith, and the
consummation and administration of the transactions contemplated hereby and
thereby, including, without limitation, the reasonable fees and disbursements of
counsel to the Bank or accountant's fees and including without limitation a fee
of Two Hundred Fifty Dollars ($250.00) for any amendment to the Letter of
Credit, all taxes and assessments, recording fees, the letter of credit transfer
fee and the fees of any third party consultants which provide services to the
Bank performing services as may, from time to time, be required by the Bank,
provided that attorney's fees related to the development, preparation,
negotiation and execution of the Commitment Letter, this Agreement and other
documents related to the initial transaction shall not exceed $25,000, (ii) to
reimburse the Bank for all its reasonable costs and expenses incurred in
connection with the enforcement or preservation of any rights under this
Agreement, the Related Documents and any such other documents, including,
without limitation, the reasonable fees and disbursements of counsel to the
Bank, (iii) to indemnify and hold the Bank harmless, from, any and all recording
and filing fees and any and all liabilities with respect to, or resulting from
any delay in paying, stamp, excise and other taxes, if any, which may be payable
or determined to be payable in connection with the execution and delivery of, or
consummation or administration of any of the transactions contemplated by, or
any amendment, supplement or modification of, or any waiver or consent under or
in respect of, this Agreement or the Related Documents and any such other
documents with respect to such Borrower, and (iv) to indemnify

                                      -31-

<PAGE>

                                                                    Exhibit 4.30

and hold the Bank (and its respective affiliates, directors, officers, agents
and employees (collectively, the "Indemnified Parties") harmless from and
against any and all other liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, out-of-pocket expenses or disbursements of any
kind or nature whatsoever arising from or in connection with the execution,
delivery, enforcement, performance and administration of this Agreement, the
Related Documents and any such other documents, including but not limited to (A)
any breach by Borrower of any representation, warranty or covenant made in or
pursuant to this Agreement; (B) any failure by Borrower to comply with any
applicable Legal Requirement or federal or state laws or regulations pertaining
to the offer and sale of the Bonds; or (C) any failure by Borrower to comply
with any applicable Legal Requirement or the laws or regulations of any
jurisdiction (all the foregoing in this clause (iv), collectively, the
"Indemnified Liabilities"), provided, that such Borrower shall have no
obligation hereunder to any Indemnified Party with respect to Indemnified
Liabilities arising solely from such Indemnified Party's gross negligence or
willful misconduct. Nothing contained herein is intended to limit the Borrower's
obligations under Section 2.04.

            (b) Neither the Bank nor any of the officers, directors, employees
or agents of the Bank shall be liable or responsible for: (i) the use made of
the Letter of Credit or for any acts or omissions of the Trustee or any Letter
of Credit beneficiary; (ii) the validity, sufficiency or genuineness of any
documents, or endorsements, even if such documents should in fact prove to be in
any or all respects invalid, insufficient, fraudulent or forged, (iii) payment
by the Bank against presentation of documents which do not comply with the terms
of the Letter of Credit, including failure of any documents to bear adequate
reference to the Letter of Credit; or (iv) any other circumstances in making
payment under the Letter of Credit in accordance with its terms provided,
however, the Bank shall be liable to the extent of any direct damages suffered
by the Borrower as a result of the Bank's (y) willful misconduct or gross
negligence in determining whether documents presented under the Letter of Credit
comply with the terms thereof, or (z) the Bank's willful failure to pay under
the Letter of Credit after presentation to it by the Trustee of a draft and
certificate complying with the terms and conditions of the Letter of Credit. The
determination of whether a draft has been presented under the Letter of Credit
prior to the Letter of Credit Termination Date or whether a draft drawn under
the Letter of Credit or any accompanying document or instrument is in proper and
sufficient form shall be made by the Bank in its sole discretion, which
determination shall be conclusive and binding upon the Borrower, absent manifest
error. The Borrower hereby waives any right to object to any payment made under
the Letter of Credit against a draft with accompanying documents in the forms
provided for in the Letter of Credit but varying in punctuation, capitalization,
spelling or similar matters of form. IN NO EVENT SHALL THE BANK EVER BE LIABLE
FOR CONSEQUENTIAL OR PUNITIVE DAMAGES, ANY RIGHT OR CLAIM THERETO BEING
EXPRESSLY AND UNCONDITIONALLY WAIVED.

            (c) The Borrower agrees that it does not have any claims or causes
of action against any disclosed or undisclosed officer, director, employee,
trustee, shareholder, partner, principal, parent, subsidiary or other affiliate
of Bank (collectively, the "Bank's Affiliates") arising out of or in connection
with this Agreement or the transactions contemplated

                                      -32-

<PAGE>

                                                                    Exhibit 4.30

hereby. The Borrower agrees to look solely to the Bank and its assets for the
satisfaction of any liability or obligation arising out of or in connection with
this Agreement or the transactions contemplated hereby, and further agrees not
to sue or otherwise seek to enforce any personal obligation against any of
Bank's Affiliates with respect to any matters arising out of or in connection
with this Agreement or the transactions contemplated hereby.

            (d) Without limiting the generality of the foregoing, the Borrower
hereby unconditionally and irrevocably waives any and all claims and causes of
action of any nature whatsoever it may now or hereafter have against Bank's
Affiliates, and hereby unconditionally and irrevocably releases and discharges
Bank's Affiliates from any and all liability whatsoever which may now or
hereafter accrue in favor of the Borrower against Bank's Affiliates arising out
of or in connection with this Agreement or the transactions contemplated hereby
except for the Bank's gross negligence or willful misconduct.

            (e) The provisions of this Section 9.05 shall survive the issuance
of the Letter of Credit, the performance of the Obligations of the Borrower
hereunder, and the termination of this Agreement.

      9.06 Successors and Assigns; Participations. (a) This Agreement is a
continuing obligation and shall be binding upon the Bank and the Borrower, and
their respective successors, transferees and assigns, and shall inure to the
benefit of and be enforceable by the Bank and the Borrower, and their respective
successors, transferees and assigns; provided, however, that the Borrower may
not assign all or any part of this Agreement without the prior written consent
of the Bank, except that Borrower may assign any and all of its obligations to
an entity it merges with as provided herein. This is intended to be a
restriction on both the right and the power to assign, and any purported
assignment not consented to by the Bank as herein required shall be void, shall
confer no rights on the purported assignee and need not be recognized by the
Bank.

            (b) The Bank may, without notice to or the consent of any party,
sell, assign or otherwise dispose of all or any portion of its rights under the
Borrower Documents to one or more parties which are banks, other than banks with
no United States office or United States or state license, so long as such
actions do not adversely affect any rating then borne by the Bonds or subject
them to redemption or otherwise impair any of Borrower's rights under the Bonds.
In the event all of such rights, remedies, powers, privileges, and duties are
transferred to another person or entity (including, without limitation, any
trustee or other fiduciary) where the Bonds retain their rating as of the time
of such transfer, then such party shall succeed to and become vested with all
rights, remedies, powers, privileges, and duties of the Bank under the Borrower
Documents and, upon written notice thereof to the Borrower, the Bank shall
thereupon be discharged and relieved from its duties and obligations hereunder
and thereunder. The Borrower shall accord full recognition to any such
assignment, and all rights and remedies of the Bank in connection with the
interest so assigned shall be as fully enforceable by such assignee as they were
by the Bank before such assignment.

            (c) The Bank may, without notice to or the consent of any party sell
its interest in the Letter of Credit, in whole or in part, provided Borrower's
rights under the Commitment Letter, the Borrower Documents or the documents
evidencing the Bonds will not be modified thereby and provided no downgrade of
the Bonds shall occur as a result thereof. Borrower hereby agrees to provide the
Bank with reasonable cooperation it may require in the sale of

                                      -33-

<PAGE>

                                                                    Exhibit 4.30

participations in the Letter of Credit, including but not limited to, supplying
financial statements and other financial information and the documentation
pertaining to the issuance of the Letter of Credit. Borrower hereby gives the
Bank the right to provide potential participants with any and all information
pertaining to Borrower and the Letter of Credit which may be required by the
participant in evaluating the purchase of a loan participation. The terms and
conditions at which participations are to be sold are to be determined at the
Bank's sole discretion.

            (d) In connection with a sale or assignment pursuant to subsection
(b) or (c) above, the Borrower hereby authorizes the Bank to disclose to any
prospective or actual participants or transferees (each, a "Transferee") any and
all financial information in the Bank's possession concerning the Borrower which
has been delivered to the Bank by or on behalf of the Borrower pursuant to this
Agreement or which has been delivered to the Bank by or on behalf of the
Borrower in connection with the Bank's credit evaluation of the Borrower prior
to becoming a party to this Agreement, provided that the proposed transferee
agrees to keep such information confidential.

      9.07 Set-Off. In any proceeding by the Bank or its Affiliates against the
Borrower for a right of set-off of liabilities arising hereunder upon and
against any and all instruments, documents, policies and certificates of
insurance, securities, goods, accounts receivable, choses in action, chattel
paper, cash, property and the proceeds thereof owned by the Borrower or in which
the Borrower has an interest, which now or hereafter are at any time in
possession or control of the Bank or an Affiliate or in transit by mail or
carrier to or from the Bank or an Affiliate or in the possession of any third
party acting in the Bank's behalf, without regard to whether the Bank received
the same in pledge, for safekeeping, as agent for collection or transmission or
otherwise or whether the Bank has conditionally released the same, Borrower
agrees to waive its statutory defenses and rights against said set-off.

      9.08 Power of Attorney. The Borrower hereby irrevocably constitutes and
appoints the Bank, during the continuance of an Event of Default hereunder, as
its true and lawful attorney-in-fact with full irrevocable power and authority
in the place and stead of the Borrower to take any and all appropriate action
and to execute any and all documents and instruments that may be necessary or
desirable to accomplish the purposes of the Borrower Documents. The powers
conferred on the Bank hereunder are solely to protect the interests of the Bank
and shall not impose any duty upon the Bank to exercise any such power.

      9.09 Conflicts. This Agreement and the Letter of Credit are intended to
govern the entire relationship between the parties with respect to the Letter of
Credit and the terms and provisions hereof and thereof expressly supplement the
other Borrower Documents as fully as if set forth therein. In the event of a
conflict between the rights of the Bank under any of the Borrower Documents,
then the Bank may elect, at its sole discretion, to exercise any such rights in
such order and combinations as it deems appropriate. However, if after giving
effect to such interpretive guidelines a conflict still exists between the terms
and provisions of this Agreement and any other Borrower Document, then this
Agreement shall govern.

      9.10 Severability. Any provision of this Agreement which is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such

                                      -34-

<PAGE>

                                                                    Exhibit 4.30

prohibition or unenforceability without invalidating the remaining provisions
hereof, and any such prohibition or unenforceability in any jurisdiction shall
not invalidate or render unenforceable such provision in any other jurisdiction.

      9.11 Integration; Confidentiality. (a) This Agreement and the Borrower
Documents represent the agreement of the Borrower and the Bank with respect to
the subject matter hereof, and there are no promises, undertakings,
representations or warranties by Bank relative to subject matter hereof, not
expressly set forth or referred to in this Agreement or in the Borrower
Documents.

      (b) The Borrower hereby acknowledges that the Bank and its Affiliates
(collectively, the "Bank Parties") may be providing debt financing, equity
capital or other services (including financial advisory services) to other
companies in respect of which the Borrower may have conflicting interests
regarding the transactions described herein and otherwise. The Bank Parties will
not use confidential information obtained from the Borrower by virtue of the
transactions contemplated by this Agreement or their other relationships with
the Borrower in connection with the performance by each of the Bank Parties of
services for other companies, and each of the Bank Parties will not furnish any
such information to other companies. The Borrower also acknowledges that no Bank
Party has any obligation to use in connection with the transactions contemplated
by this Agreement, or to furnish to it, confidential information obtained from
other companies.

      9.12 No Fiduciary Relationship. The Borrower acknowledges and agrees that
its dealings with the Bank are solely in the nature of a debtor/creditor
relationship and that in no event shall the Bank be considered to be a partner
or joint venturer of the Borrower. Borrower agrees to hold the Bank harmless
from any damages and expenses resulting from the construction of the
relationship of the parties as partner or joint venturer, except for any damages
and expenses arising solely from the Bank's gross negligence or willful
misconduct. Also, the Borrower represents and warrants that it has independently
evaluated the business transaction and has not relied upon, nor will it rely
upon, the expertise, advice or other comments or statements of the Bank
(including agents of the Bank), if any, in deciding to pursue such undertaking.
As the Borrower is experienced in business, in no event shall the Bank owe any
fiduciary or similar obligations to it in connection with the subject
transaction.

      9.13 Certificate of Status. Within fifteen (15) days after the Bank's
written request, the Borrower shall provide a certificate of confirmation as to
the current Obligations including, without limitation, confirmation (i) of the
amounts outstanding under the Borrower Documents; (ii) if true, that no
defenses, offsets, claims, or counterclaims exist to the punctual performance of
all Obligations and the full payment of all amounts due under the Borrower
Documents; (iii) if true, that the Borrower Documents are valid and enforceable
in accordance with their terms, except as such enforceability may be limited by
applicable bankruptcy, reorganization, moratorium, insolvency or other similar
laws affecting the enforcement of creditors' rights generally and except as
limited by general equitable principles; (iv) if true, the Borrower Documents
have not been modified or amended, either by express agreement, course of
conduct, course of dealing, or otherwise; and (v) any other matter reasonably
requested by the Bank. To the extent that Borrower cannot confirm the statements
contained in clauses (ii), (iii) or (iv)

                                      -35-

<PAGE>

                                                                    Exhibit 4.30

above, it shall provide detailed information to the Bank describing the extent
to which such statements are untrue. The failure of the Borrower to timely
provide such a certificate or describe in detail the basis for any disagreement
shall be conclusively binding upon the Borrower as establishing the validity and
accuracy of any statements contained in the Bank's written request therefor as
of the date thereof.

      9.14 GOVERNING LAW. THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE
PARTIES HEREUNDER SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF CONNECTICUT, WITHOUT REGARD TO ITS
CONFLICT OF LAWS PRINCIPLES.

      9.15 Submission to Jurisdiction; Waivers. The Borrower hereby irrevocably
and unconditionally:

            (a) submits for itself and its property in any legal action or
proceeding to which the Bank is a party relating to this Agreement and the other
Borrower Documents to which it is a party, or for recognition and enforcement of
any judgment in respect thereof, to the non-exclusive personal jurisdiction in
the State of Connecticut;

            (b) consents that any such action or proceeding may be brought in
such courts and waives any objection that it may now or hereafter have to the
venue of any such action or proceeding in any such court or that such action or
proceeding was brought in an inconvenient court and agrees not to plead or claim
the same;

            (c) agrees that service of process in any such action or proceeding
may be effected by mailing a copy thereof by registered or certified mail (or
any substantially similar form of mail), postage prepaid, to the Borrower at its
address set forth in Section 9.02 or at such other address of which the Bank
shall have been notified pursuant thereto;

            (d) agrees that nothing herein shall affect the right to effect
service of process in any other manner permitted by law or shall limit the right
to sue in any other jurisdiction; and

            (e) waives, to the maximum extent not prohibited by law, any right
it may have to claim or recover in any legal action or proceeding referred to in
this subsection any special, exemplary, punitive or consequential damages.

      9.16 No Further Credits. The Bank shall not be obligated to issue any
further credits to cure any defaults under the Borrower Documents and/or the
other Related Documents or otherwise, or in any other manner to extend any
financial consideration to Borrower except as expressly provided in this
Agreement or in any other written agreement with the Bank.

      9.17 Compliance with Usury Laws. Notwithstanding any other provision of
this Agreement, it is agreed and understood that in no event shall this
Agreement or any other instrument of indebtedness executed by Borrower or any
other person be construed as requiring the Borrower or such person to pay
interest and other costs or considerations that constitute

                                      -36-

<PAGE>

                                                                    Exhibit 4.30

interest under any applicable law which are contracted for, charged or received
pursuant to this Agreement in an amount in excess of the maximum amount of
interest allowed under any applicable law. In the event of any acceleration of
the Obligations of the Borrower, that portion of any interest payment in excess
of the maximum legal rate of interest, if any, provided for in this Agreement or
related documents shall be canceled automatically as of the date of such
acceleration, or if theretofore paid, credited to the principal amount. The
provisions of this Section 9.17 shall prevail over any other provision of this
Agreement.

      9.18 Descriptive Headings, Context. The captions in this Agreement are for
convenience of reference only and shall not define or limit any provision.
Whenever the context so requires, reference in this Agreement to the neuter
gender shall include the masculine and/or feminine gender, and the singular
number shall include the plural, and, in each case, vice versa.

      9.19 Counterparts. This Agreement may be executed by one or more of the
parties to this Agreement on any number of separate counterparts (including by
facsimile transmission), and all of said counterparts taken together shall be
deemed to constitute one and the same instrument.

      9.20 WAIVERS OF JURY TRIAL. THE BORROWER AND THE BANK HEREBY IRREVOCABLY
AND UNCONDITIONALLY WAIVE TRIAL BY JURY IN ANY LEGAL ACTION OR PROCEEDING
RELATING TO THIS AGREEMENT OR ANY OF THE RELATED DOCUMENTS AND FOR ANY
COUNTERCLAIM THEREIN.

      9.21 CONNECTICUT PREJUDGMENT REMEDY WAIVER. THE BORROWER ACKNOWLEDGES THAT
THE TRANSACTIONS REPRESENTED BY THIS AGREEMENT ARE COMMERCIAL TRANSACTIONS AND
HEREBY VOLUNTARILY AND KNOWINGLY WAIVES ANY RIGHTS TO NOTICE OF AND HEARING ON
PREJUDGMENT REMEDIES UNDER CHAPTER 903A OF THE CONNECTICUT GENERAL STATUTES OR
OTHER STATUTES AFFECTING PREJUDGMENT REMEDIES, AND AUTHORIZES THE BANK'S
ATTORNEY TO ISSUE A WRIT FOR A PREJUDGMENT REMEDY WITHOUT COURT ORDER, PROVIDED
THE COMPLAINT SHALL SET FORTH A COPY OF THIS WAIVER.

      9.22 Reasonableness. The Bank shall exercise its remedies hereunder in a
commercially reasonable manner.

                                      -37-

<PAGE>

                                                                    Exhibit 4.30

      IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed and delivered by their respective duly authorized officers and
representatives as of the date first above written.

                              THE CONNECTICUT WATER COMPANY

                              By:______________________________________________
                              Name: David C. Benoit
                              Title: Vice President Finance and Chief Financial
                                     Officer

                              CITIZENS BANK OF RHODE ISLAND

                              By:______________________________________________
                              Name: James M. Hagerty
                              Title: Senior Vice President

                                      -38-

<PAGE>

                                                                    Exhibit 4.30

                                    EXHIBIT C

1. Connecticut Development Authority $10,000,000 Water Facilities Refunding
Revenue Bonds (The Connecticut Water Company Project - 1998 Series A)

2. Connecticut Development Authority $8,000,000 Water Facilities Revenue Bonds
(The Connecticut Water Company Project - 1998 Series B)

3. Connecticut Development Authority $8,000,000 Water Facilities Refunding
Revenue Bonds (The Connecticut Water Company Project - 2003A Series)

4. Connecticut Development Authority $15,000,000 Water Facilities Refunding
Revenue Bonds (The Connecticut Water Company Project - 2003C Series)

5. The Connecticut Water Company $12,500,000 Variable Rate Taxable Debenture
Bonds dated March 4, 2004

6. Municipal taxes not yet due and payable

7. Any and all provisions of any ordinance, municipal regulation, or public or
private law.

8. Water, electric, telephone, natural gas and other utility easements,
building, building line and zoning restrictions

9. Riparian rights or littoral rights and any rights to rivers, brooks, streams,
lakes, ponds, bays or other navigable waters

<PAGE>

                                                                    Exhibit 4.30

                                    EXHIBIT D

      (a) The Borrower shall, at all times specified in the following
subparagraphs, maintain a program of insurance to cover losses arising out of
the risks identified below. The Borrower shall keep its property and all
buildings and improvements now or hereafter erected on its property insured in
the amounts and of the nature described in this Exhibit and shall comply with
any requirements of the insurance company writing such insurance.

      (b) Commercial Insurance. The Borrower shall procure and maintain or cause
to be procured or maintained commercial insurance meeting the following
requirements, subject to the exceptions provided for in subsection (d) below.

      General Liability

      General Liability shall cover actions of the Borrower and its directors,
officers, employees and volunteers and shall not exclude coverage for property
damage from explosion, collapse and underground operations. Coverage for
explosion, collapse and underground operations shall include blasting, if
necessary, or explosion, collapse of structures or structural injury due to
grading of land, excavation, filling, backfilling, tunneling, pile driving,
caisson work, moving, shoring, underpinning, raising of, or demolition of, any
structure, or removal or rebuilding of any structural support of a building or
structure. Such insurance shall further include coverage for damage to wires,
conduits, pipes, mains, sewers or other similar apparatus encountered below the
surface of the ground when such damage is caused by any occurrence arising out
of the performance of the work.

      The following policies, or formats having similar coverage features, are
acceptable.

            (1)   Comprehensive General Liability Policy (ISO 1973 policy form)
                  to include:

                  A.    premises and operations;

                  B.    blanket contractual liability insurance;

                  C.    completed operations and products;

                  D.    fellow employee claims under bodily injury;

                  E.    independent contractors;

                  F.    most current ISO broad form endorsement; and

                  G.    defense coverage in addition to liability limits.

            (2) Commercial General Liability Insurance - Occurrence Form (ISO
1986, 1988, or 1993) unrestricted.

            (3) Commercial General Liability Insurance (only if coverage under
2. above is not available) - Claims Made Form (ISO 1986) unrestricted.

<PAGE>

                                                                    Exhibit 4.30

      Insurance shall not be written for less than the following minimum
standards:

          (i)   comprehensive general liability as outlined in item 1:

                  -- combined single limit bodily injury and property
                 damage coverage (per occurrence and with no general
                 aggregate, as applicable under this policy form)
                                                                     $1,000,000

                  --  fire damage liability                          $  250,000

          (ii)   commercial general liability as outlined in items 2 and 3:

                  --  combined single limit bodily injury and property
                 damage coverage per occurrence                      $1,000,000

                  --  in the aggregate separately for the general
                 policy aggregate                                    $2,000,000

                  --  fire damage liability                          $  250,000

      Automobile Liability

      Automobile liability coverage shall include all owned, non-owned, hired,
or leased autos for a minimum of $1,000,000 combined single limit.

      Workers' Compensation

      Workers' compensation insurance shall be maintained in accordance with all
applicable statutes. Coverage shall include employers' liability with limits for
bodily injury by accident of not less than $100,000 each accident; bodily injury
by disease of not less than $100,000 each employee; and of not less than
$500,000 policy limit for disease. Such policies shall include a voluntary
compensation endorsement, and a broad form all states coverage endorsement.

      Umbrella or Excess Liability

      Umbrella or excess liability coverage following the form of applicable
general liability, employers' liability and automobile liability coverages with
a $5,000,000 combined single limit per occurrence, and if general aggregate
limits are included, a general aggregate not less than $5,000,000 is required.
All policies shall be endorsed to drop-down over any exhausted aggregate limits
applicable to underlying policies.

<PAGE>

                                                                    Exhibit 4.30

      Directors' and Officers' Liability ("D&O")

      D&O coverage for wrongful acts of persons affiliated with the Borrower
shall be maintained in the form of errors and omissions coverage with a per
occurrence and annual aggregate limit of liability of not less than $5,000,000.

      All Risk Property

      The Borrower shall procure and maintain all risk property insurance. The
policy shall be written on a 100% replacement cost basis, with an agreed amount
endorsement, no coinsurance provision, and shall cover all related property.

      The policy shall also provide a minimum of an amount equal $10,000,000
annual aggregate coverage or sublimits separately for the perils of earthquake
and, if applicable, flood.

      Business Interruption

      Business Interruption insurance shall be secured on all operations of the
Borrower covering the loss of gross earnings of the Borrower (and extra expense
incurred) by reason of the total or partial suspension of, or interruption in,
the use or occupancy of the operating assets of the Borrower caused by loss or
damage to, or destruction of, any part of said operating assets, covering a
period of suspension or interruption of a minimum of one year, in an amount not
less than the maximum debt service on the Bonds due in any bond year (principal,
plus interest), together with additional expenses of the Borrower expected to be
incurred during such period.

      (c) Deductibles and Self-Insured Retentions. The Borrower may retain risk
through deductibles and self-insured retentions on any of the commercial
insurance specified in subsection (b) above, with the exception of Business
Interruption Insurance, which may not be self-insured. However, deductibles or
self-insured retentions shall not exceed $100,000 per occurrence for an
individual contract of insurance, except as provided in subsection (d) below.

      (d) Alternative to Commercial Insurance. Except for All Risk Property,
Business Interruption, and Builder's Risk insurance, the Borrower may, with the
prior written consent of the Bank, utilize alternative risk financing programs
reasonably comparable to those described in subsection (b) above, including any
program not rated "A-, VIII" or better by A.M. Best Co. ("Best"). Such programs
may include commercial carriers with lower or no Best ratings, single-parent or
group captives, risk retention groups or qualified self-insurance trusts. Any
commercial insurance with deductibles or self-insured retentions exceeding
$100,000 per occurrence shall be considered an alternative risk financing
program and shall be subject to the provisions of this subsection.

      Should any such alternative risk financing program be used, the Borrower
shall submit to the Bank documentation regarding the financial security of the
program, as requested by the Bank. Such information may include, but not be
limited to, actuarial certification of adequate reserves, audited financial
statements, and coverage documents of the alternative risk financing program.
The use of such program shall be subject to written approval by the Bank, so
long as such approval is not unreasonably withheld. The right of the Bank to
review and approve such programs shall in no way certify or imply that such
program is financially sound, nor obligate the

<PAGE>

                                                                    Exhibit 4.30

Bank in any way to the Borrower or other third parties as to the legality or
financial solvency of such programs.

      In addition to the foregoing, before the Borrower may enter into a program
of self-insurance, as permitted herein, against any particular risk for which it
is not on the date thereof self-insuring, it must receive a certificate from an
independent insurance consultant reasonably acceptable to the Bank to the effect
that an actuarially sound claims reserve fund has been created by the Borrower
for such self-insurance program and is funded annually with the actuarially
required deposit (as determined by an independent insurance consultant)
deposited in a separate trust fund by an independent corporate trustee (which
trust fund may have separate accounts).

      (e) Insurance Policy Provisions.

      (1) All insurance prescribed by this Exhibit shall be procured from sound
and reputable insurers admitted to do business in the State of Connecticut,
rated "A-, VIII" or better by Best or otherwise approved in writing by the Bank.
Any insurers not rated "A-, VIII" or better by Best (including any such insurer
approved by the Bank) shall be considered an alternative risk financing program
subject to the provisions of subsection (d) above.

      (2) Should claims made form coverage be used to meet any of these risk
financing requirements, the following items must be provided:

      (a) retroactive date as the first effective date of claims made coverage
and prior acts or extended reporting ("tail") coverage maintained so long as any
of the obligations of the Borrower hereunder are outstanding.

      (b) an amended definition of a claim so that a claim is deemed to have
been made when any insured reports an incident likely to give rise to a claim
for damages under the policy.

      (c) provide the option of any extended reporting provision for a minimum
of twelve months should the policy be cancelled, non-renewed or the retroactive
date be advanced.

      (3) All insurance policies shall provide that the insurance company shall
give at least sixty (60) days' notice in writing to the Bank of the cancellation
or non-renewal of the policy other than for non-payment of premium and at least
ten (10) days' notice in writing to the Bank, if the reason for cancellation is
non-payment of premium.

      (4) All policies of insurance (except automobile, workers' compensation,
fiduciary and D&O) shall include the Bank, as an additional insured, as its
interests may appear.

      (f) Evidence of Compliance; Waiver or Adjustment. Certificates of
insurance and other required documentation shall be provided to the Bank prior
to the delivery of the Bonds. In addition, certificates of insurance, or
evidence of continuation of insurance coverage, which may be in the form of a
binder, shall be provided to the Bank not less than thirty (30) days prior to
the expiration of any policy period.

<PAGE>

                                                                    Exhibit 4.30

      Complete copies of insurance policies, including all declarations, terms,
conditions, endorsements and exclusions shall remain available for inspection by
the Bank at all reasonable times.

      The minimum limits and types of coverage stated in this Exhibit are
subject to written waiver or adjustment based upon commercial availability
and/or evidence of standard industry practices which may differ, from time to
time, with currently stated limits. The Bank shall have the right to increase
the minimum limits and modify the types of insurance required as reasonably
prudent business practices dictate following, if circumstances permit,
consideration or advice of an independent insurance consultant.

<PAGE>

                                                                    Exhibit 4.30

                                    EXHIBIT E

      All liens in the First Mortgage listed in the "Permitted Encumbrances"
section on pages 16 and 17, except subsection (f).