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Saturday, April 28, 2012

Pennichuck board questions corporate structure under municipal ownership

NASHUA – When your largest shareholder is a municipality, how should a corporate board of directors run its meetings?

Pennichuck’s 10-member board mulled over that question Friday, now that roughly 4.7 million of the company’s shares have been sold to the city of Nashua.

Friday’s meeting consisted of more than three hours of presentations about the water company’s financials, energy consumption, assets and liabilities, and land ownership.

In that sense, it was not unlike a city board meeting, in which employees update officials on the status of various projects, provide updates on the city’s financial picture, and discuss ways the city can use its land.

With the once-private water company now considered municipally owned, the meeting was also open to the public, like any municipal meeting, though no members of the public sat in on Friday’s meeting.

But Pennichuck is not a municipality, the board emphasized Friday. Therefore, it should conduct its meetings in a corporate nature, as was done prior to the city’s closing on acquiring Pennichuck for more than $200 million Jan. 25.

“As a corporation, and given all that you heard this morning, we still want to operate as a corporation,” Pennichuck CEO John Patenaude said Friday. “We know that we have the right to know rules and we abide by those, but typically providing a comment period is not something a corporation would do. I think corporations get letters from shareholders and they respond to those either in letters or in commentary.”

Allowing people to come in and give public testimony would move Pennichuck closer towards a definition as a municipality and away from its status as a corporation, Patenaude said.

“My thoughts are similar to John’s, in that the original structure was set up so that we would be a business, run by a board, independent of the city,” Board Chairman Jay Leonard said. “There are a whole set of arguments why that’s a good idea, so that has to kind of be the context of how we conduct our meetings. We want to be as open as we can reasonably be, but we have to keep in mind that really our first task was to run it like a business.”

Board members agreed that if shareholders have issues with the way Pennichuck handles things, that they should put those problems in writing.

“It seems to me that part of this is that residents who are taxpayers of Nashua want to have some information about whether or not their investment is doing well, or being well-tended, and how it’s looking,” board member Elizabeth Dunn said. “And I think that can be accomplished by looking at the public documents and coming to public meetings and so forth.”

Pennichuck’s board meeting agendas and minutes are posted on their corporate website, and upcoming meetings are posted on the city calendar at www.gonashua.com.

Friday’s meeting, held at Pennichuck’s Manchester Street headquarters near the watershed, was the fourth the board has held since it took over in January.

The new group is four-for-four when it comes discussing business nonpublicly during their sessions, as they again closed the doors on their meeting Friday, citing state statute that permits nonpublic sessions when considering acquisition, sale, or lease of property.

The meeting minutes of all prior nonpublic sessions this year are still sealed.

During the discussion about meeting structure, board member Paul Indeglia questioned whether Pennichuck’s inquiries from shareholders had changed at all since the company had changed hands.

“I haven’t seen any major changes in the amount of calls or the types of calls, month over month since the acquisition,” Patenaude said.

Most calls to the company pertain to questions of service, such as customers asking how to pay a water bill, or asking why their water was shut off if bills were not paid, he added.

Mayor Donnalee Lozeau, who is sitting on the board for two years during the transition, said she had been emailed by one Pennichuck customer asking about a water bill spike, but that the problem – a leaky toilet – was referred to and solved by Pennichuck’s customer service department.

“I guess I would say, for those of us that are more noticeably on the board than others … I think people might think of us in that typical board sense, and so the points that are being made I think are important points,” Lozeau said.

Leonard said some of the shareholders who write him are looking for information that would best be handled by a public relations person.

Ultimately the board decided to keep its meetings running under a formal corporate structure, and discussed plans to issue a company status update each month for the public to read and learn more about Pennichuck’s operations.

Along with local water utility Pennichuck Water Works, Nashua acquired regulated utilities Pennichuck East and Pittsfield Aqueduct in the deal, as well as Pennichuck Water Service Corp. and Southwood Corp., Pennichuck’s real-estate subsidiary.

Maryalice Gill can be reached at 594-6490 or mgill@nashuatelegraph.com. Also, follow Gill on Twitter (@Telegraph_MAG).