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Friday, December 17, 2010

City still has water hurdles to cross in Pennichuck buy

MERRIMACK – The ripples caused by Nashua’s new water service won’t flow far into Merrimack. But they will reach one of the town’s largest employers.

The Pennichuck Corp. water company, recently purchased by the city of Nashua, serves fewer than 5 percent of Merrimack water users with the rest falling under the Merrimack Village District supplier, according to town figures.

But among its roughly 300 users, the utility company does serve the Anheuser-Busch plant on Daniel Webster Highway, making the acquisition of vital interest to parts of the Merrimack community, Town Councilors told Nashua officials Thursday night.

City officials, addressing the $198 million sale with surrounding towns, brought the matter Thursday before the Town Council.

“We’re not a huge user, but we do have one of your larger customers in Anheuser-Busch,” Merrimack Council chairman Tom Koenig told city officials. “So we are very concerned about this, how it’s going to operate.”

The pending acquisition, announced last month, still has some hurdles to jump before it’s completed, likely next year, John Patenaude, the city’s transaction executive told the Merrimack board.

The two sides have agreed to the sale in principle, the matter still needs approval from the Nashua Board of Aldermen, the state Public Utilities Commission and at least two-thirds of Pennichuck shareholders.

If any of those votes were to fail, “we’d be prohibited from going after the company … for at least two years,” Patenaude said.

Such a block, however, is unlikely, Mayor Donna Lee Lozeau assured the board. Nashua’s Board of Aldermen, conducting an initial vote, has already offered its unanimous support, and the Public Utilities Commission and company shareholders are just as likely to offer their approval, Lozeau said.

“We’re happy to see this happen,” she said.

Once the sale is formally approved, the new water service will be governed by a new board of directors.

The board, ranging from seven to 12 members, will include at least five representatives from Nashua, Patenaude said. The rest will come from Merrimack and other surrounding towns.

Beyond Nashua, Pennichuck and its subsidiary companies – Pennichuck East, Pittsfield Aqueduct and two others – serve thousands of customers in Amherst, Bedford, Hollis and Litchfield, and other towns.

Litchfield town officials, considering the matter earlier in the week, questioned the Nashua-heavy makeup of the Pennichuck board.

“That means we don’t have any direct representation. … You guys could raise our rates without us having any more input,” Selectman George Lambert told Nashua officials.

Merrimack councilors raised no such questions.

Water rates are going to rise, Lozeau warned the council Thursday. But company officials will work to limit any increases to inflation, interest and some capital costs, which will amount to less than under the previous ownership, she said.

“Rates are going to increase. They’re just not going to increase under the same rates they would have under the current ownership,” Lozeau said.

The Mayor’s assurances weren’t enough to satisfy some critics of the deal, however. Merrimack Councilor Dan Dwyer closed the discussion by chiding the city officials for their prior attempts to take the company by eminent domain.

In 2008, the Public Utilities Commission ruled that Nashua could take the company by eminent domain for $203 million. But the city determined the price was too high.

“You took a perfectly good running private company, … and made a hostile bid at a takeover,” Dwyer said. “I always thought it was a bad deal from the beginning.”

Jake Berry can be reached at 594-6402 or jberry@nashuatelegraph.com.