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Thursday, September 16, 2010

Pennichuck makes case before PUC for needing money

CONCORD – Pennichuck Water Works needs money, but the reason isn’t related to the millions that the company has spent in its legal battle to prevent Nashua from acquiring the utility through eminent domain, a Pennichuck official said Wednesday.

Bonalyn Hartley, vice president of administration and regulatory affairs, said the rate hike request isn’t related to the eminent domain case. Hartley made the statement in response to a question during testimony before the state Public Utilities Commission.

Pennichuck was before the commission for a public hearing as part of the process in seeking a temporary rate increase, which if approved, would be retroactive to June 16.

The request is a prelude to a permanent 16 percent rate increase that Pennichuck plans to ask for in the spring. In company filings, however, Pennichuck cited legal fees in fighting Nashua as one factor for needing more revenue.

As a regulated utility, Pennichuck gets to operate a monopoly and also gets a guaranteed rate of return on its money in exchange for being under government oversight.

The utility needs the money because Pennichuck is currently “under earning,” company officials said.

“Primary drivers” of the company’s need for revenue are the investment the company made in a water treatment plant, a three-year reduction in water consumption and a $410,000 increase the company has paid in property taxes, said Donald Ware, president of Pennichuck Water Works.

Residential water use is down 9.3 percent, the result of weather conditions and the economy, Ware said.

Also, the company is seeing no growth in the number of its customers, officials said.

“The economy is the prime reason for that,” said Mark Naylor, director of the gas and water division of the PUC.

PUC staff supports the company’s request for a temporary rate hike, Naylor said. Also present at the hearing were representatives of the state Office of the Consumer Advocate and Anheuser-Busch InBev, whose Budweiser plant in Merrimack is the largest corporate customer of Pennichuck water.

Neither the consumer advocate nor Anheuser-Busch is taking a position on Pennichuck’s temporary rate hike request.

The hearing lasted less than an hour, and no members of the public were there to testify. The decision on whether to grant the request lies with the three PUC commissioners.

However, Pennichuck ratepayers and any member of the public can still submit testimony by e-mailing Debra Howland, the PUC executive director, puc@puc.nh.gov or writing her at NH PUC, 21 S. Fruit St., Suite 10, Concord, NH 03301.

E-mails and letters should include the case’s docket number: DW10 091.

“The proposed temporary increase in rates would increase an average annual residential bill for a single family home from $492.36 to $556.32, or by $5.33 per month, based on an average annual usage of 9,500 cubic feet,” according to the company’s filing.

Pennichuck Water Works requested the rate take effect for service in June.

The company is seeking a permanent rate increase of 16.23 percent.

According to Pennichuck officials, the temporary rates would result in an effective increase of 10.17 percent for general metered customers, 17.95 percent for private fire protection, 61.26 percent for the Anheuser-Busch plant in Merrimack and 20.43 percent in volumetric charges for Milford.

Also, volumetric charges for Hudson would decrease by 9.12 percent, and municipal hydrants would decrease by 0.24 percent, according to the company’s PUC filing.

Nashua tried for six years to seize Pennichuck by eminent domain before getting approval from the state Public Utilities Commission in 2008.

But the $243 million price set by the PUC was more than the city wanted to pay, so the takeover never happened. The city and Pennichuck are trying to negotiate a private sale.

Patrick Meighan can be reached at 594-6518 or pmeighan@nashuatelegraph.com.