Instead of a windfall, call it a waterfall.

Since 2007, Aquarion Water Co. -- the region's public water supplier -- has overpaid $29 million in taxes because of changes in federal accounting regulations, state officials announced Tuesday.

As a result, the company will cut water rates by 5.6 percent for three years beginning in January. The reduction amounts to a credit to customers for the total income tax refund, officials said.

The settlement was reached following deliberations with Connecticut's Consumer Counsel, which protects utility ratepayers, and Attorney General George Jepsen.

"This is a very positive result for Aquarion's customers," said Consumer Counsel Elin Swanson Katz. "They will see nearly $10 million in bill credits annually over the next three years, which will make a noticeable difference in customers' bills."

Aquarion President Charles Firlotte said the company remains "committed to providing our customers with the highest quality water and outstanding service."

The tax refund also means that Aquarion will be delaying its next planned general rate case, officials said.

"We are pleased to be able to delay our next scheduled application to the Public Utilities Regulatory Authority," Firlotte said. "In the interim, we will continue to make prudent investments to improve and maintain the integrity of our system's infrastructure."