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15. Segment Reporting

For the years ended December 31, 2021 and 2020, and as of those dates, the following
financial results were generated by the segments of the Company:

(in thousands}
Operating Revenues:
Pennichuck Water
Pennichuck East
Pittsfield Aqueduct
Subtotal Regulated Segment
Service Corporation
Other

Total Operating Revenues

Depreciation and Amortization Expense:
Pennichuck Water
Pennichuck East
Pittsfield Aqueduct
Subtotal Regulated Segment
Service Corporation
Other
Total Depreciation and Amortization Expense

Operating Income:
Pennichuck Water

Pennichuck East
Pittsfield Aqueduct
Subtotal Regulated Segment
Service Corporation
Other
Total Operating Income

Interest Expense:
Pennichuck Water
Pennichuck East
Pittsfield Aqueduct
Subtotal Regulated Segment
Service Corporation
Other

Total Interest Expense

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$

2021 2020
38,024 36,688
9,818 9,805
810 808
48,652 47,301
3,339 2,778
13 12
52,004 50,091
7,920 7,341
1,238 1,212
116 116
8,874 8,669
{123) (120)
8,751 8,549
8,346 8,961
988 1,148
71 80
9,405 10,189
251 119
18 21
9,674 10,329
7,193 4,903
765 777
40 40
7,998 5,/20
1 2
5,903 6,174
13,902 11,896

(continued)

(continued)

{in thousands} 2021 2020
Income Taxes Provision (Benefit):
Pennichuck Water $ 1,192 § 1,728
Pennichuck East 185 738
Pittsfield Aqueduct 20 21
Subtotal Regulated Segment 1,397 2,487
Service Corporation 77 34
Other (1,663) (2,014)
Total Income Taxes Provision (Benefit) $ (189) $ 507
Net Income (Loss):
Pennichuck Water $ 198 §=$ 2,409
Pennichuck East 38 (361)
Pittsfield Aqueduct 13 19
Subtotal Regulated Segment 249 2,067
Service Corporation 173 84
Other (4,121) (4,135)
Total Net Income (Loss) $ (3,699) $ (1,984)
Total Net Assets:
Pennichuck Water S 298,304 §$ 298,004
Pennichuck East 65,183 61,881
Pittsfield Aqueduct 2,912 3,056
Subtotal Regulated Segment 366,399 362,941
Service Corporation 151 (12)
Other (17,318) (15,631)

Total Net Assets $ 349,232. § 347,298

Total Liabilities:

Pennichuck Water $ 200,536 $ 194,433
Pennichuck East 57,107 53,757
Pittsfield Aqueduct 1,370 1,402

Subtotal Regulated Segment 259,013 249,592
Service Corporation 43 (31)
Other 93,640 97,325

Total Liabilities $ 352,696 $ 346,886

(continued)

4?

16.

(continued)

(in thousands} 2021 2020
Total Long-Term Debt (less current portion
and unamortized debt insurance costs):

Pennichuck Water S 105,875 5 103,019
Pennichuck East 24,124 21,023
Pittsfield Aqueduct 132 136
Subtotal Regulated Segment 130,131 124,178
Service Corporation : -
Other 96,932 99,627

Tota] Long-Term Debt $ 227,063 $ 223,805

Rate Cases

Pennichuck Water

On October 21, 2021, Pennichuck Water filed an emergency tariff sheet request for approval
with the NHPUC. The Company’s emergency tariff filing was on behalf of a single customer,
the Merrimack Village District (MVD), and would allow this customer to purchase bulk water
at Pennichuck Water’s variable cost of production. The initial rate to be billed will be $0.67
per cubic feet. This would allow MVD access to Pennichuck Water’s bulk water supply in late
2021 and during 2022, while MVD’s water supply systems are brought into compliance with
water quality regulations for PFAS contaminants.

On November 12, 2021, the NHPUC issued Order No. 26,552, with an effective date of
November 20, 2021, approving Pennichuck Water’s request for an emergency tariff filing on
behalf of a single customer, the MVD. This emergency tariff is on a temporary basis and must
not exceed a term longer than six months from the effective date.

In conjunction with this, Pennichuck Water also opened a docket under DW 21-134 for the
approval of a special contract for these emergency rates, in order to bring those rates into
full force and effect (preceding and succeeding the emergency rate tariff), upon approval, for
the time period from which the emergency usage of this water was initiated on October 20,
2021, for a period not to exceed a termination date of December 31, 2022.

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Pennichuck East

On November 24, 2020, Pennichuck East filed a request with the NHPUC for a rate increase
of 21.05% over its current rates for the test year 2019, effective December 24, 2020, for which
15.00% of this increase is related to a request for a temporary rate increase effective for
services rendered on or after December 24, 2020, The temporary rate increase is subject to
approval by the Commission which is separate and distinct from the final rate increase
approval, as the Commission’s final determination on the permanent rate increase request is
processed to completion. The 15.00% temporary rate increase would be inclusive of a 2.98%
Qualified Capital Project Adjustment Charge (QCPAC) surcharge which was approved on
December 6, 2019 in Order No. 26,313 and a 1.97% QCPAC surcharge which is currently
pending in DW 20-019.

On August 16, 2021, the NHPUC issued Order No. 26,508 approving temporary rates at
14.03% effective on a service rendered basis as of December 24, 2020. The temporary rate
increase was inclusive of a QCPAC surcharge of 2.98% which was approved in 2019 within
order No, 26,313.

In addition to the rate increase requested, Pennichuck East requested certain modifications
to its ratemaking structure which were similarly approved for Pennichuck Water on July 24,
2020 by NHPUC Order No. 26,383. These modifications would include:

e creating a Material Operating Expense Factor (MOEF), an expense factor on top of its
material operating expenses to cover inflationary increases between rate filings, as a
component of that portion of its allowed revenues in determining permanent rates;

e inclusion of actual NHBET cash payments in its revenue requirement calculation;
e reprioritizing the use of Debt Service Revenue Requirement (DSRR) 0.1 funds;

® recovery of State Revolving Loan Fund and Drinking Water Groundwater Trust Fund
debt issuance costs; and

e re-establishment of imprest levels of the components of the RSF account and the
retention of a previously approved reconciliation mechanism.

Final approval by the NHPUC on new permanent rates and the requested modifications to its
ratemaking structure for PEU, was expected to be approved early 2022 (see footnote 18).

Pittsfield Aqueduct

On November 16, 2020, PAC filed a request with the NHPUC for a rate increase of 11.18%
over its current rates for the test year 2019, effective December 17, 2020. The overall rate
increase is subject to the normal regulatory filing process with the NHPUC, as followed for all
prior rate case filings, and as such, the final permanent rate increase granted would be
effective retroactive back to the filing date.

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The request for the overall permanent rate increase, as filed was based upon increased PAC
operating expenses since the last allowed rate increase in 2014 (for the 2012 test year), and
to provide sufficient revenues to pay for investments made in its treatment systems to ensure
its continued compliance with the Safe Drinking Water Act.

In addition to the rate increase requested, PAC is requesting certain modifications to its
ratemaking structure which were similarly approved for Pennichuck Water on November 7,
2017 by the NHPUC in Order No. 26,070 and July 24, 2020 by Order No. 26,383. These
modifications would include:

e use of a five-year trailing average of revenues and expenses as a test period;

e creating a “three bucket” RSF structure, comprised of: a Material Operating Expense
Revenue Requirement (MOERR) RSF, a DSRR RSF, and a City Bond Fixed Revenue
Requirement Rate Stabilization Fund (CBFRR) RSF to provide rate stabilization and
cash flow coverage for operating expenses, debt service, and the CBFRR portion of
revenues, between permanent rate filings;

e creating three “buckets” of allowed revenues comprising the allowed revenues for
the Company, in their component levels, including:

o Operating Expense Revenue Requirement (OERR)
= Comprised of the MOERR and the Non-material Operating Expense
Revenue Requirement (NOERR)

o DSRR
=" Comprised of the DSRR 1.0 and DSRR 0.1

o CBFRR
= Which already existed in PAC’s rate structure, but is being redefined as an
overall component in determining allowed revenues;

® creating a MOEF, an expense factor on top of its test year material operating
expenses, in defining the overall value of the MOERR portion of allowed revenues,
and to cover inflationary increases between rate filings, as a component of that
portion of its allowed revenues in determining permanent rates;

e inclusion of actual NHBET cash payments in its revenue requirement calculation; and

e the establishment of a revenue requirement structure, and the mechanics and
methodology for its approval, resetting and funding, inclusive of the RSFs and allowed
revenue “buckets” shown above, which is the same as approved for Pennichuck Water
by NHPUC Order Nos. 26,070, and 26,383.

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17.

On November 9, 2021, the NHPUC issued Order No. 26,544 approving an overall permanent
rate increase of 5.45%, which became effective with services rendered back to December 17,
2020. In addition, the Order approved the requested modifications to its ratemaking structure.

Qualified Capital Project Adjustment Charge

Pennichuck Water

On February 19, 2020, Pennichuck Water filed a petition with the NHPUC for a 3.83% QCPAC
surcharge on all capital improvements completed and placed in service by Pennichuck Water
in 2019.

On December 9, 2021, the NHPUC issued Order No. 26,555 approving a QCPAC surcharge of
3.90% for capital projects placed in service in 2019. This order became effective with services
rendered back to April 23, 2020 and allows for recovery in the form of a monthly recoupment
surcharge, to be collected over a twelve-month period from the date of the order.

Pennichuck East

On February 13, 2020, Pennichuck East filed a petition with the NHPUC for a 1.97% surcharge
on all capital improvements completed and placed in service by Pennichuck East in 2019. The
Commission has not issued an Order approving this requested surcharge. When the
Commission issues the Order the surcharge will become effective retroactively on services
rendered basis back to November 23, 2020. The Order will allow recoupment of the surcharge
from all its customers based on their actual bills incurred between November 23, 2020 and
the final effective date of the Order. However, on September 23,2021 the NHPUC issued
Order No. 26,525 which approved Pennichuck East’s subsequent request to embed the
surcharge into the current rate case in pendency (see footnote 18). Final approval by the
NHPUC on this QCPAC surcharge, combined with new permanent rates and the requested
modifications to its ratemaking structure for PEU, was expected to be received in early 2022
(see footnote 18).

COVID-19 Pandemic impact

In March 2020, the World Health Organization (“WHO”) recognized COVID-19 as a global
pandemic and the President of the United States of America declared the COVID-19 outbreak
in the United States a national emergency. This prompted many national, regional, and local
governments to implement preventative or protective measures, such as travel and business
restrictions, temporary business closures, and wide-sweeping quarantines and stay-at-home
orders.

Si

18.

During the COVID-19 pandemic, the Company’s services have generally been considered
essential in nature and have not been materially interrupted. As the situation continues to
evolve, management is closely monitoring the impact of the COVID-19 pandemic on all
aspects of the Company’s business, including how it impacts customers, subcontractors,
suppliers, vendors, and employees, in addition to how the COVID-19 pandemic impacts the
Company's ability to provide services to customers. We believe the ultimate impact of the
COVID-19 pandemic on operating results, cash flows and financial condition is likely to be
determined by factors which are uncertain, unpredictable, and outside of our control. The
situation surrounding COVID-19 remains fluid, and if disruptions do arise, they could
materially adversely impact our business.

Subsequent Events

The Company has evaluated the events and transactions that have occurred through March
23, 2022, the date that these consolidated financial statements were available for issuance.

Pennichuck East Utility Rate Case

On February 18, 2022, the NHPUC issued Order No. 26,586 approving a permanent rate
increase of 16.79%, becoming effective with services rendered as of December 24, 2020 for
its customers.

In this Order, the Commission also approved modifications to its current ratemaking structure
which include:

e the creation of a MOEF of 4%;

e inclusion of actual NHBET cash payments in its revenue requirement calculation;
® reprioritizing the use of DSRR 0.1 funds;

e recovery of debt issuance costs; and

® re-establishment of the prescribed imprest levels of the components of the RSF
accounts.

PPP Loan
On February 2, 2022, the SBA determined that the Company was ineligible for forgiveness of
the $2.5M PPP Loan which was established as part of the CARES Act.

The PPP loan is payable over two years from the initial approval date of the loan, at an interest

rate of 1%. Monthly payments on this obligation begin on February 18, 2022, with a final
maturity date of May 7, 2022.

52

APPOINTMENTS BY THE MAYOR

APRIL 12, 2022

Cultural Connections Committee

Deepa Mangalat (reappointment)
18 Wild Rose Drive
Nashua, NH 03063

Term to Expire: February 28, 2025

| respectfully request that these appointments be confirmed.
Jim Donchess, Mayor

Proposed Amendments made at Joint Cte on Infrastructure and PEDC AMENDED
03-31-2022 O-22-008

ORDINANCE

RELATIVE TO SEASONAL ROAD CLOSURES AND ELIMINATION OF CERTAIN
ON-STREET PARKING FOR EXTENDED OUTDOOR DINING AND OTHER NON-
VEHICULAR USE

CITY OF NASHUA

In the Year Two Thousand and Twenty-Two

The City of Nashua ordains that Part I “General Legislation”, Chapter 320 “Vehicles and
Traffic “of the Nashua Revised Ordinances as amended, is hereby further amended by adding the
new underlined article as well as the italicized language as follows :

“ARTICLE XVII
Seasonal Road Closures and Modifications

§ 320-92. Effective Dates and Plan.

Effective from 12:01 A.M. May 1° through midnight October 15" in years 2022, 2023

and 2024, the roads and on-street parking shown on Plan 320-92 are modified as shown
on said plan. Such modifications include but may not be limited to partial closing of a
street to vehicular traffic. elimination of on-street parking spaces, changes to parking time

limits, changes to cost of parking spaces, including making them free, and handicap
parking spaces relocated or created. The modifications are to accommodate non-
vehicular traffic and uses by the public or outdoor dining.

§ 320-93. Plan Amendments.

Upon recommendation of the Director of Public Works and the Parking Manager, and
with the approval of the Committee on Infrastructure, the Mayor may_adiust locations of
barriers, parking spaces. fees for narkinz. time for parking spaces, and location of parking
spaces _as circumstances warrant. In such cases, a new plan shall be published at least 14
calendar days prior to the adjustments.

§ 320-94. Conflicts.

During the time periods set forth in Section 390-92, this Article supersedes any
inconsistent ordinances or parts of ordinances.”

That extended dining by use of the barriers only be allowed directly in front of the businesses
using them and.that two spaces in front of Glorious Possibilities would be available and would
allow businesses to extend laterally with the approval of the business being encroached upon or

the abutter
To allow two parking spots in front of Glorious Possibilities

To paint the barriers a light red brick color (pantone smart 18-1350 tcx burnt brick or
equivalent) with a white reflective strip

To defer fees for one'year and amend the ordinance to reflect:years two and three will be
tentatively approved pending the development of a fee agreement for land use by the restaurants

which require final approval by the board of aldermen

To shorten the length of the barriers on the northwest corner of factory street and main street by
twenty (20) feet from the north side

To accept map 4 and by accepting map 4 being it the last map of this program, we accept all
maps as amended and voted on

That the effective dates the barriers will be from May |* to the Friday before Mother’s Day until
the first Sunday in October

This legislation shall take effect upon passage.