City to ask NH if it can recoup $5m
NASHUA – The city will ask state regulators for the right to recoup $5 million it has spent on eminent domain proceedings in its abandoned attempt to acquire the local water utility.
City officials and consultants updated aldermen Tuesday on the latest developments in a deal struck with Pennichuck Corp. to acquire the company through a stock transfer.
Following the update, the board and Mayor Donnalee Lozeau went into a closed session with the consultants to discuss aspects of the $200 million deal that haven’t yet been made public. As part of the deal, which officials said will take as long as a year to be finalized, the city dropped its eminent domain case.
During the open session, city financial consultant John Patenaude described a recent joint meeting that Pennichuck attorneys and Nashua consultants had with staff members of the N.H. Public Utilities Commission.
The deal to acquire Pennichuck is contingent on PUC approval. In that two-hour meeting, city and Pennichuck officials discussed the transaction in general as a way to “break the ice” with the PUC, Patenaude said.
Alderman-at-Large Barbara Pressly asked if PUC staff members gave any indication what they thought of particular details of the deal or of the deal in general.
“They held their cards close to their vest,” Patenaude responded.
The city will make a formal filing to the PUC before Jan. 18. Part of that filing will be a request for the right to be reimbursed for the $5 million in eminent domain costs, consultant Arthur Gottlieb told the board.
Pennichuck has already asked the PUC to recoup its expenses fighting eminent domain as part of a request the company filed for a rate increase before the deal with Nashua was struck.
The city wants the PUC to endorse the principle of Nashua being reimbursed; the mechanism for how Nashua would be reimbursed would be determined later, Gottlieb said.
The city could include the $5 million reimbursement as part of the 30-year bond, meaning that Pennichuck ratepayers, in essence, would pay the $5 million back to city taxpayers.
Or, it could be included in debt owed the city by the company, Lozeau said.
She said the best way to reimburse the city might not be clear until much later in the transaction.
Also, the city is asking the federal government to treat it as any other company that owns its water utility, Patenaude said.
At stake is whether the city could borrow money through tax-exempt bonds, Lozeau said. If it’s permitted to do so, ratepayers would save $100 million over the 30-year life of the bonds, she said.
Patenaude also described a series of meetings city officials and consultants have had with other towns that include Pennichuck customers. A meeting in Nashua is planned for Jan. 6.
Meetings have been held in Litchfield, Merrimack, Amherst and other communities, and more have been scheduled in the coming weeks in Hudson, Milford, Bedford, Derry, Windham, Plaistow, Pittsfield and Raymond.
Three communities, Londonderry, Barnstead and Pelham, were offered the chance to meet with the officials, but passed.
In all the meetings held so far, town officials have asked about how water rates would be impacted once Nashua runs the utility, and how the utility would be governed under city ownership.
As part of the transaction, the city would appoint a board of directors to run the utility. The membership would be submitted by Lozeau and approved by the Board of Aldermen and would include members from other towns Pennichuck serves as well as from Nashua.
City officials have said water rates would be lower once Nashua owns the company, particularly in future years if not immediately.
Patrick Meighan can be reached at 594-6518 or firstname.lastname@example.org.