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Bedford. This project was initiated in 2018, and was completed during 2019, bringing water to
approximately 90 new customers in that community.

The Company was once again asked by the NHDES to design a further buildout for SGPP in
Litchfield to bring public water to an additional 30 residences in Litchfield, due to this
contamination site. SGPP entered into another contract with the Company for the expansion of
the Company’s water system in that area, construction of which was completed between 2019
and early 2020, and was fully paid for by SGPP, and included in CIAC assets at such time as that
project was completed.

As of March 20, 2018, SGPP and NHDES entered into a Consent Decree. Under the Consent
Decree, SGPP needed to fulfill their obligations by November 2019 on all of these identified
activities, and/or request an extension of time to fulfill their obligations, due to circumstances
outside of their control, including the availability of qualified contractors to complete the
buildout of the public water system in the impacted areas.

A similar effort on behalf of Textiles Coated International, Inc. (“TCI”) in the town of Amherst,
due to PFOA contamination related to their previous existence as a manufacturer in that town,
was also undertaken at the request of the NHDES. The Company was contracted to do design
services for the expansion of the public water system in that area of Amherst, by TCI, and
construction of the expansion of that part of the system began in 2017, and was fully completed
in 2018. Once again, the entire cost of this project was borne by TCI, and has become part of the
Company’s owned infrastructure as CIAC assets.

The Company continues to work with the NHDES as it relates to PFAS issues that are continuing
and expanding in southern NH. This includes situations that have evolved in municipal systems
immediately adjacent to the Company’s service areas, in the communities of Hudson and
Merrimack, as well as communities for which the Company owns the public water franchise,
such as Londonderry. The overall impact and build-out of the public water distribution system,
how that will be constructed, who will ultimately own or supply water into those systems, and
the overall cost and timing for those systems to be designed, bid and built, is yet to be
determined.

Company Goals — 2022

The Company’s main goals for 2022 were/are as follows:

@ Complete Pennichuck East Utility Rate Case for test year 2019, with new permanent rates
expected late Q2 2022 (Order received in QI 2022)

¢ File annual Pennichuck Water Works and Pennichuck East Utility QCPAC cases (filed in
February 2022)

e@ File Pennichuck Water Works rate case (2021 test year)

@ Complete Bond issuance reimbursement financing in April for Pennichuck Water Works
2021 Capex

@ Complete CoBank term loan financing in Q2/Q3 for Pennichuck East Utility 202] Capex
reimbursement/refinance

@ Seek additional funding sources (loans or grants) from NH DWGTF, SRF, or other, for
planned capital projects

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e Continued roll-out and implementation of company-wide Customer Security Program, to the
benefit and safety of customers and employees

e Continued training, mentoring and succession planning throughout the organization, including
impending retirements occurring in 2022 and 2023 for certain key roles

e Continue to promote customer education through newsletters and social media

e Complete upgrades to the Bowers Dam spillway, including replacement of the spillway gate
and the construction of an auxiliary spillway

e Amend process monitoring in systems treating for the removal of manganese to ensure
compliance with the proposed NHDES primary drinking water MCL

e Continue to collect and process all necessary compliance samples to ensure compliance with
NHDES and EPA MCLs

e Work with external engineering consultants to evaluate improvements to the Water Treatment
Plant to achieve optimal PFAS removal, chemical feed and storage, and improved monitoring
at the plant

e Continued participation in multiple educational outreach efforts within the Company’s customer
coverage radius

e Continual enhancement and review of cybersecurity needs, risks and tools

e Comprehensive review of Emergency Action Plan conducted during Internal Control Review
process

e Cityworks (CMMS application)

¢ Refinement of Operational Insights assessment of the Nashua core, and extension of
that assessment to other Pennichuck Water Works and Pennichuck East Utility CWS

¢ Incorporation of vertical assets into Operational Insights
° Asset Management

e Incorporate operations data (flows, pressure, water quality) into dashboards accessible
by “point and click” in GIS

e Implementation of Source Water Protection Plans for Locke Lake and the Merrimack River
® Continued monitoring and response to COVID-19 pandemic, including but not limited to:
© Timing of possible resumption of “full normal” operating activities
© Ongoing monitoring and protection of customers and employees served
e Continued monitoring and response to financial impact on the Company of the pandemic
© Compliancy with OSHA ETS, if upheld and enforceable

Sincerely,

Larry. Goodhue
Chief Executive Officer and
Chief Financial Officer

PENNICHUCK:?

VIA HAND DELIVERY

March 30, 2022

Ms. Lori Wilshire, President
Board of Aldermen

City of Nashua

229 Main Street

Nashua, NH 03060

Dear President Wilshire:

25 WALNUT STREET
PO BOX 428
NASHUA, NH 03061-0428

(603) 882-5191
FAX (603) 913-2305

WWW. PENNICHUCK.COM

Enclosed, for your information, is a copy of Pennichuck’s Audited Consolidated Financial

Statements for the years ended December 31, 2021 and December 31, 2020.

Please contact me if you have any questions.

Regards, A
or LEAL,
Larry L. Goodhue

Chief Executive Officer
and Chief Financial Officer

ce. Mayor James Donchess
Board of Aldermen
Steven Bolton, Corporation Counsel
John Griffin, Chief Financial Officer

Item No.

2019 Unit
Price

$25.00

$95.00

$70.00

$70.00

$70.00

$45.00

$18.00

$1,000.00

2022 Unit
Price

$30.00

$110.00

$79.00

$79.00

$79.00

$45.00

$18.00

$1,000.00

% Increase

20%

16%

13%

13%

13%

0%

0%

0%

City of Nashua, New Hampshire
Division of Public Works

Schedule of Values - 2022 Asphalt Testing

Item Description Additional Total Price
Units P Quantity in figures
EA
Bulk Density Test (Cores will be collected by the Paving Contractor)
85 $ 2,550.00
EA Theoretical Maximum Density Test (Cores will be collected by the
Paving Contractor)
85 S 9,350.00
HR Asphalt Pickup (from DPW Office)
30 $ 2,370.00
HR HMA Plant Technician for Plant Inspection and Testing (Including
Mileage)
500 $ 39,500.00
HR Field Technician for On-Site Concrete Testing and Testing of
Reclaimed Roads (Including Mileage)
100 S 7,900.00
Day Density Gage Daily Rental Fee
5 $ 225.00
EA Compressive Strength Cylinder
50 S 900.00
Lump Sum Project Manager Oversight
1 $ 1,000.00
Total Change Order in Figures $ 63,795.00

V2 PENNICHUCK:

PENNICHUCK CORPORATION AND SUBSIDIARIES

Consolidated Financial Statements
December 31, 2021 and 2020

(With Independent Auditors’ Report Thereon)

CONTENTS

Independent Auditors’ Report

Consolidated Balance Sheets

Consolidated Statements of Income (Loss)

Consolidated Statements of Comprehensive Income (Loss)

Consolidated Statement of Changes in Stockholder’s Equity (Deficit) Current Year

Consolidated Statement of Changes in Stockholder’s Equity Prior Year

Consolidated Statements of Cash Flows

Notes to the Consolidated Financial Statements

at]

12

@ MELANSON

INDEPENDENT AUDITORS’ REPORT

Board of Directors and Stockholder
Pennichuck Corporation and Subsidiaries

Opinion

We have audited the accompanying consolidated financial statements of Pennichuck Corporation
and Subsidiaries, which comprise the consolidated balance sheets as of December 31, 2021 and 2020,
and the related consolidated statements of income (loss), comprehensive income (loss), changes in
stockholder’s equity (deficit), and cash flows for the years then ended, and the related notes to
the consolidated financial statements.

In our opinion, the accompanying consolidated financial statements present fairly, in all material
respects, the financial position of Pennichuck Corporation and Subsidiaries as of December 31,
2021 and 2020, and the results of their operations and their cash flows for the years then ended
in accordance with accounting principles generally accepted in the United States of America.

Basis for Opinion

We conducted our audits in accordance with auditing standards generally accepted in the United
State of America (GAAS). Our responsibilities under those standards are further described in the
Auditors’ Responsibilities for the Audit of the Financial Statements section of our report. We are
required to be independent of Pennichuck Corporation and Subsidiaries, and to meet our other
ethical responsibilities, in accordance with the relevant ethical requirements relating to our
audits. We believe that the audit evidence we have obtained is sufficient and appropriate to
provide a basis for our audit opinion.

Responsibilities of Management for the Financial Statements

Management is responsible for the preparation and fair presentation of the consolidated
financial statements in accordance with accounting principles generally accepted in the United
States of America, and for the design, implementation, and maintenance of internal control
relevant to the preparation and fair presentation of consolidated financial statements that are
free from material misstatement, whether due to fraud or error.

Merrimack, New Hampshire

Andover, Massachusetts

Greenfield, Massachusetts

Ellsworth, Maine 800.282.2440 | melansoncpas.com

& MELANSON

In preparing the consolidated financial statements, management is required to evaluate whether
there are conditions or events, considered in the aggregate, that raise substantial doubt about
Pennichuck Corporation and Subsidiaries’ ability to continue as a going concern for one year after
the date that the consolidated financial statements are available to be issued.

Auditors’ Responsibilities for the Audit of the Financial Statements

Our objectives are to obtain reasonable assurance about whether the consolidated financial
statements as a whole are free from material misstatement, whether due to fraud or error, and
to issue an auditors’ report that includes our opinion. Reasonable assurance is a high level of
assurance but is not absolute assurance and therefore is not a guarantee that an audit conducted
in accordance with GAAS will always detect a material misstatement when it exists. The risk of
not detecting a material misstatement resulting from fraud is higher than for one resulting from
error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the
override of internal control. Misstatements are considered material if there is a substantial
likelihood that, individually or in the aggregate, they would influence the judgment made by a
reasonable user based on the consolidated financial statements.

In performing an audit in accordance with GAAS, we:

e Exercise professional judgment and maintain professional skepticism throughout the
audit.

e l|dentify and assess the risks of material misstatement of the consolidated financial
statements, whether due to fraud or error, and design and perform audit procedures
responsive to those risks. Such procedures include examining, on a test basis, evidence
regarding the amounts and disclosures in the consolidated financial statements.

e Obtain an understanding of internal control relevant to the audit in order to design audit
procedures that are appropriate in the circumstances, but not for the purpose of
expressing an opinion on the effectiveness of Pennichuck Corporation and Subsidiaries’
internal control. Accordingly, no such opinion is expressed.

e Evaluate the appropriateness of accounting policies used and the reasonableness of
significant accounting estimates made by management, as well as evaluate the overall
presentation of the consolidated financial statements.

e Conclude whether, in our judgment, there are conditions or events, considered in the
aggregate, that raise substantial doubt about Pennichuck Corporation and Subsidiaries’
ability to continue as a going concern for a reasonable period of time.

800.282.2440 | melansoncpas.com

@ MELANSON

We are required to communicate with those charged with governance regarding, among other
matters, the planned scope and timing of the audit, significant audit findings, and certain internal
contral-related matters that we identified during the audit.

MoDanser

Merrimack, New Hampshire
March 23, 2022

800.282.2440 | melansoncpas.com

PENNICHUCK CORPORATION AND SUBSIDIARIES

Consolidated Balance Sheets
As of December 31, 2021 and 2020
(in thousands, except share data)

2021 2020
ASSETS

Property, Plant and Equipment, net S$ 245,197 S 242,469

Current Assets:
Cash and cash equivalents 1,493 310
Restricted cash - RSFs and Restricted Accounts 11,619 8,611
Restricted cash - CIAC 1,037 274
Restricted cash - Bond Project Funds 255 237
Accounts receivable - billed, net 3,576 4,297
Accounts receivable - unbilled, net 6,277 4,473
Accounts receivable - other 16 16
Inventory 733 598
Prepaid expenses 506 507
Prepaid property taxes 925 1,290
Total Current Assets 26,437 20,613

Other Assets:

Deferred charges and other assets 12,516 17,014
Acquisition premium, net 65,082 67,202
Total Other Assets 77,598 84,216
TOTAL ASSETS S 349,232 S 347,298

The accompanying notes are an integral part of these consolidated financial statements.

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