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  • Staff Photo Illustration

    City officials announced Friday their intention to purchase Pennichuck Water Works.
  • Staff photo by Don Himsel

    The light blue motors operate pumps and move what's referred to as intermediate water through Pennichuck's system. The dark blue motors operate pumps that move water out of the building into the delivery system.
  • Staff photo by Don Himsel Staff in the laboratory test Pennichuck's water regularly.
  • Staff file photo by Don Himsel

    The Pennichuck Water Works facility in Nashua has undergone an extensive construction and rehabilitation process. Water in this section of the process has had larger particulate matter removed and is headed for further treatment.
  • Staff photo by Don Himsel A generator is available to power the facility if necessary. If power is lost it will begin running in as little as 30 seconds.
  • Staff photo by Don Himsel

    The light blue motors operate pumps and move what's referred to as intermediate water through Pennichuck's system. The dark blue motors operate pumps that move water out of the building into the delivery system.
  • Staff photo by Don Himsel John Boisvert, chief engineer for Pennichuck Water Works, stands among giant pipes that send treated water from the Nashua facility to its distribution system.
  • Staff photo by Don Himsel

    Chemicals are added in the process to adjust the ph of the water before delivering it through the system.
Sunday, November 14, 2010

Water relief: City happy about deal

NASHUA – Hugs and congratulations were the order of the day in City Hall on Friday morning.

Elsewhere in the city, residents sounded notes of relief and optimism.

Relief that eight years of legal battles and closed-door negotiations finally bore fruit of a $200 million settlement, in which the city of Nashua will acquire Pennichuck Corp. through a stock transfer.

Optimism that after every “i” is dotted and “t” is crossed, city ownership of the water utility will result in lower water rates.

And there was a counter-current – seemingly small at this point – of dissent, with concern that the cost will bury the city in debt.

Nashua will buy all shares of Pennichuck stock for $29 a share, a total of $138 million, and assume $60 million in Pennichuck debt in a deal that still must be approved by the Board of Aldermen, two-thirds of Pennichuck shareholders, the state Public Utilities Commission and the federal Securities Exchange Commission.

Nashua will acquire all Pennichuck holdings, including three regulated utilities, a water services company and a real-estate holding company.

The sale ends an eminent domain fight that spanned two mayors, twice made its way to the New Hampshire Supreme Court and cost taxpayers some $5 million.

City officials say they don’t expect an immediate decrease in water rates once the city assumes ownership. However, over the long term, water customers will pay less under city ownership than they would have under Pennichuck Corp. ownership, city officials say.

That’s largely because the city doesn’t have to worry about turning a profit for shareholders, officials say.

Details of the settlement will be discussed in a public meeting Monday.

The deal was announced Friday morning before the stock market opened. In an early gauge of which way the wind of public opinion was blowing, readers’ comments from The Telegraph’s story breaking the news were strongly – but not unanimously – in favor of the acquisition.

“Now we won’t have to worry about a company in PA buying it, then selling it to a company in Europe who’ll want to use it for tax purposes and allow depreciation to the infrastructure to balance their tax accounts,” wrote a reader who goes by JanLive.

“I have to agree, water will be the next scarce resource later this century. It already is in many parts of the country. We own our watershed and distribution system, we own our landfill that will meet our cities needs for well over another decade,” Elwood wrote.

But JNPNH countered, “We now own a water company???? Who wants another $200 million being spent out of the city account. Does Nashua really NEED to own this or are the tree huggers behind this??? How soon will my property taxes go up to fund this?? … Oh ya … Our water rates will be going down … HAHAHAHA … I’m holding my breath waiting for this to happen.”

Three city officials who were close to the issues for years – and not all on the same side – voiced strong opinions when reached Friday.

“I’m very happy. I think it’s a great day in the life of the city,” former Mayor Bernie Streeter said.

“I don’t think it’s the smartest move for the city,” said another former mayor, Don Davidson.

On the other end of the spectrum from Davidson, Alderman-at-Large Barbara Pressly, a former state senator, sounded like a Red Sox fan in 2004 when she raved about the settlement.

“Can you believe it? I am so thrilled,” said Pressly, who has been a key player during the eight-year road to city ownership.

Although the city had been trying to acquire its water source at various times for decades, the process that led to Friday’s announcement started in 2002 during Streeter’s administration, when city officials and residents objected to the sale of Pennichuck to a Dutch-controlled company called Philadelphia Suburban.

Streeter launched the proceedings for the city to acquire Pennichuck Water Works through eminent domain.

The deal struck last week is good for the city, the ratepayers and the company because most of the employees won’t lose their jobs, Streeter said.

“Obviously, we won’t have the successive rate increase that Pennichuck has had over the years,” Streeter said. “Rates will be lower and any profits will be put back into the company instead of lining the shareholders’ pockets.”

The city “was ready to roll” with a similar deal during his final year as mayor, Streeter said.

“I think the (Pennichuck) administration got greedy,” he said.

Now that a deal has finally been struck, Streeter said he feels “a lot of personal satisfaction because we did it at the behest of the people who turned out at a special election on a cold January day and voted overwhelmingly, over 80 percent, to start the process.”

The city has attempted to acquire either Pennichuck Water Works or Pennichuck Corp. seven times, Streeter said. Controlling the city’s water source and its watershed has always been important to the people of Nashua, he said.

“We were so close years ago,” Streeter said. “We were very close. We made them an almost identical offer.”

But Pennichuck rejected the offer, even though it was the same as a counteroffer that Pennichuck had made to the city, Streeter said.

“In the meantime, it’s cost the ratepayers million of dollars since then, and the city itself has had to pay a tremendous amount of money, too, in legal fees,” Streeter said.

However, Streeter’s predecessor in the corner office thinks the agreement will be bad for the city overall.

Davidson has been a longtime, unwavering critic of the city’s attempts to acquire Pennichuck.

Although he says he’s keeping an open mind, Davidson said he sees nothing in this deal to dissuade him.

It’s good for neither the water utility ratepayers nor the city taxpayers, who in most cases are one and the same, Davidson said.

“I cannot believe the rates are going to go down with the $198 million in debt facing us,” Davidson said.

“We all know there are portions of the Pennichuck infrastructure that are 100 years old. How much more debt are we going to have to incur to fix the infrastructure?”

Davidson also doesn’t buy the argument that the deal will help protect the watershed. Through tough regulations, Nashua has done a good job of protecting the watershed within the city limits, he said.

The city can’t control encroachment on the watershed in other towns, such as the Heron Cove development in Merrimack that built right up to the watershed, Davidson said.

Davidson also worries about accountability.

Plans are for Pennichuck to be run by a board that would have no ties to city government after a two-year transition. After the initial board members are appointed by the mayor and confirmed by the Board of Aldermen, the board itself would appoint future members.

That structure concerns Davidson.

Currently, the Pennichuck Corp. board is accountable to shareholders, Davidson said. The new board won’t be accountable to anybody, he said.

“If they get to elect their own people, who fires them?” Davidson said.

In 2002, a time when Pressly held no public office, she became an intervenor in PUC proceedings. She remained so, and attended countless meetings in Concord, testifying before the commission to urge its approval of city ownership.

“I’ve been on the phone calling some of the original people who were involved in this and have since moved away,” a jubilant Pressly said.

Those people include Karen White, a former city planner; Andrew Singelakis, former director of the Nashua Regional Planning Commission; and former city resident and historian Alan Manoian.

Pressly said she was in City Hall at 8:30 a.m. Friday, and gave Mayor Donnalee Lozeau a big hug.

Pressly has been at odds with Lozeau over some issues, including what Pressly saw as the mayor restricting aldermen’s access to some city staff.

However, Pressly had nothing but praise for Lozeau’s work in sealing the Pennichuck deal.

“Mayor Lozeau is an extraordinary negotiator,” Pressly said. “She’s worked on this for many, many months, if not years.”

Lozeau was the chief negotiator, assisted by James McNamee, corporation counsel, and a group of consultants.

The consultants are Arthur Gottlieb and R. Wade Aust, managing directors of Boston-based C.W. Downer & Co.; attorney William Ardinger, of the Concord firm Rath, Young & Pignatelli; and transaction executive John Patenaude, of Hudson.

Pressly said she doesn’t think there will be many detractors to the deal, and she doesn’t anticipate any questions that can’t be answered.

“I don’t think there are any who can’t be overcome,” Pressly said.

The people who now operate Pennichuck’s water utilities will be retained, ensuring that the experience and expertise to run the system will remain in place, Pressly said.

“That’s what the consumers are worried about,” she said.

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