Nashua aldermen plan public meeting on Pennichuck water rate hike
NASHUA – The 19.5 percent rate hike that Pennichuck Water Works seeks is generally in line with what the city expected when it acquired Pennichuck in 2012 and would be higher if the utility remained a private company, aldermen President Brian McCarthy said Wednesday.
“Do I want to see rates go up? Of course not,” said McCarthy, an alderman-at-large. “The fact is that they are going up, and I believe what the company is asking for is reasonable.”
The utility that provides water to roughly 27,600 customers – including those in Nashua, Merrimack, Amherst, Hollis and Milford – notified the state Public Utilities Commission on Aug. 17 that it will see a full rate increase of 19.5 percent.
For the average customer, this would result in their monthly bill rising by $9.77 to $59.91, Pennichuck CEO and spokesman Larry Goodhue has said.
“What they are asking for in a rate increase is less than what they would ask for as a private company,” McCarthy said.
While aldermen have no authority over setting water rates, McCarthy and
Alderman-at-Large Dan Moriarty said they plan to call a meeting at which Pennichuck management can explain to the public their reasons for the proposed rate hike and answer questions.
“I spoke with the CEO (Goodhue), and he explained his reasoning (for the hike), and it seemed justifiable based on the math,” said Moriarty, who chairs the aldermen’s Pennichuck Water Special Committee.
Moriarty noted that Pennichuck essentially operates as a nonprofit organization in that it makes no profit and has no cash holdings.
The Pennichuck Water Special Committee likely would host the public meeting.
“That would give the committee and the public the opportunity to discuss the proposed rate hike,” Moriarty said.
The meeting likely would be held after Pennichuck files its full rate case with supporting documents to the PUC, the aldermen said. PUC regulations require rate cases to be submitted 30 to 60 days after filing a notice of intent of a proposed rate change. In this case, Pennichuck has from Sept. 19 to Oct. 19 to submit its case.
Pennichuck Water Works is one of five utilities owned by Pennichuck Corp., which the city acquired in 2012 when it bought all of its 4.7 million shares for $137.8 million.
Had the city not bought the utility and Pennichuck remained a shareholder corporation, Goodhue estimated, it would have sought a 35.4 percent rate increase – 82 percent more than the current request. This would result in customers paying an average $17.75 more a month, he said.
In their last rate case two years ago, Pennichuck requested a 0.2 percent increase as a city-owned utility, whereas it would have sought 9.2 percent hike had it still been privately owned, McCarthy said, citing the company’s PUC filings.
Pennichuck last sought PUC approval for a full rate hike in 2010, when it still was privately owned, Goodhue has said. The PUC granted it a 11.95 percent hike in 2011.
The main components of the current proposed rate increase are operating expenses – which include salaries, benefits and the costs of physically operating the water system – increased capital investment and infrastructure improvements, and rising property taxes that the 14 communities in which the utility operates charge Pennichuck, according to McCarthy and Goodhue.
Pennichuck borrowed about $40 million since 2013 to replace and repair infrastructure, Goodhue said.
These improvements resulted in the assessed value of Pennichuck’s property increasing and, as a result, further increased the property taxes it must pay, McCarthy said.
In addition, the utility borrowed a total of $39.5 million in 2014 and 2015 – $23.2 million in 2014 and $16.2 milion in 2015 – to refinance existing debt with long-term bonds better suited to being under city ownership as opposed to a shareholder corporation. The refinancing also resulted in reducing interest on outstanding debt by about 1 percent, Goodhue has said.
“We do own the company. We have to make sure that it stays solvent,” McCarthy said, adding that the city’s acquisition of the Pennichuck gave it “control over the resources, and the rates are not going up as fast as they would have had we not (bought) it.”
Editor’s Note: This story has been changed to reflect the total $39.5 million Pennichuck borrowed to refinance debt and notes the utility has from Sept. 19 to Oct. 19 to submit its case to the PUC.
Kathryn Marchocki can be reached at 594-6589, firstname.lastname@example.org or @Telegraph_KMar.