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Nashua's current projections of total Revenue Requirements over the next 20 years for the three regulated water utilities owned by Pennichuck Corporation (Pennichuck Water Works, Pennichuck East Utility and Pittsfield Aqueduct Company). The blue line (Current Ownership) assumes the Public Utilities Commission approves the current rate request from Pennichuck Corporation and that future capital investments are funded in manner consistent with past Pennichuck Corporation practice. The green line (City Ownership) assumes the City finances the transaction at a 6.5% interest rate, the maximum rate defined in the Definitive Merger Agreement, and that the NHPUC approves customer rates sufficient to cover all of the operating and debt service costs of the three regulated utilities.
Sunday, November 14, 2010

If you’re thirsty for answers

So, the city of Nashua is buying Pennichuck Corp. and taking control of the local water supply.

Maybe you’re wondering: How does this affect me?

No one can say with certainty what the company will look like a year or two down the road, but here’s what we know so far:

QUESTION: Will my water rates go down?

ANSWER: Not at first – and maybe not at all.

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 because the city doesn’t have to worry about making a profit for shareholders, city officials say.

Until the deal closes, which could take up to one year pending approval from various boards and agencies, Pennichuck might even increase rates. The company is currently asking the state Public Utilities Commission to approve a 19 percent increase, and the city doesn’t have a say in whether that goes through.

Q: Will my property taxes go up?

A: City officials say no. The city will borrow the $200 million it needs to complete the deal and use the money collected in water rates to make payments.

State law guarantees that regulated utilities recoup their costs over the long term. But any increase in revenue would have to come in the form of a rate increase – as is the case with Pennichuck – and would require approval from state regulators.

Q: Will the water quality change?

A: It shouldn’t. The same equipment will be operated by the same people in the same way.

Q: Do I get to vote on this?

A: No. Voters weighed in on the purchase during a special election on Jan. 14, 2003. By a count of 6,525-1,867, Nashua voters give the city the go-ahead to pursue buying the water company.

Now it’s up to the Board of Aldermen to vote on the deal by Feb. 8. They need a two-thirds majority for the sale to move forward. That seems likely, considering that aldermen unanimously approved the merger proposition.

Q: Whom do I call if I have a service or billing issue?

A: The same number you call now. Even after the transaction closes, the city will keep the same phone numbers.

Q: What happens to Pennichuck employees?

A: Most of the approximately 100 employees will keep their jobs, except for a few of the top executives such as CEO Duane Montopoli, who will be replaced with an interim CEO who has yet to be named. Executives will receive severance packages previously negotiated with the Pennichuck board.

Q: Pennichuck is my water company, but I don’t live in Nashua. How will this affect me?

A: It shouldn’t have any significant impact. Nashua is required by law to treat customers in other towns the same as it would Nashua customers – meaning the city can’t charge higher rates to customers outside its borders.

Q: Why does the city want to buy the water company?

A: The city first tried to buy the company in 2002 after learning that Pennichuck was poised to sell to an out-of-state company. City officials wanted to keep local control of the water supply. The city also expressed concern about Pennichuck selling off land surrounding the watershed for development, and said it wanted to own the land so it could protect the water supply.

Q: Where can I get more information?

A: Details of the settlement will be explained at a public meeting at 7 p.m. Monday in the City Hall auditorium. Similar meetings will be scheduled in other towns served by Pennichuck.

Ashley Smith can be reached at 594-6446 or