Board of Aldermen Page 12
November 9, 2016
announced that the Pennichuck system is requesting a 19.5% increase. Before | proceed | want to thank
Alderman Moriarty for setting up a public meeting and also setting it up so that citizens are allowed to ask
questions directly of Pennichuck management. | want to alert the rate payers of the Pennichuck Water
system that on December 1* there will be a public meeting where you can come in and register your feelings
and concerns associated with this 19.5% increase proposal. | think it’s a little bit much. | have some
concerns on the oversight of this entity. One of the things is the stewardship of the system. Pennichuck
announced a volunteer water ban for outdoor watering. That was the extent of the stewardship of the system
in one of the worst drought seasons that this region has experienced in a long time. The request from
Pennichuck was made at the end of the watering season. What does that say about the stewardship of our
system during one of the worst drought periods that we have experienced in a long time? It doesn’t too
much good, does it? | looked at the minutes of the Pennichuck Board of Directors’ meetings and | went
back, and by the way there are so many groups of minutes of meetings with Pennichuck so | did a
Control/Find and | could not find one mention of water rate increases. | checked six weeks ago and there
was not one mention of a water rate increase being discussed. | Know that this is the sole shareholder and
there are meetings that you folks have but they are sort of infrequent. There is not one mention of water rate
increases from the Pennichuck management to the sole shareholder different organization meetings, not one
that | could find and if | am wrong tell me. What does that say? Then all of a sudden in the Telegraph we
find out that Pennichuck wants to increase the water rates by 19.5% and that’s unacceptable and not right.
Now we also find out, | found this out through the grapevine that the expansion of the present customer base
is going to take place in other communities because of contaminated wells with PFOA contamination. There
is no information or discussion pertaining to the present systems capability and capacity to actually expand
into other areas, especially considering that we could be in a prolonged drought period. How will that
expansion affect the water quality of the present customers and what will it cost? Is that why we are getting
the 19.5% increase? | think it is.
President McCarthy
That one is not. If there were a rate increase associated with that it would have to be after that work is done
because of the way the regulation works. Pennichuck can only ask for rate increases to pay back
construction that has already been completed.
Mr. Sullivan
Well, regardless, what about the capacity of this present system? Is it expandable?
President McCarthy
There is a substantial amount of debt that the corporation was carrying when it was a private corporation
which was basically in the form of interest only loans with balloon payments. Typically what they do is to
replace some of that debt with additional equity by increasing the amount of stock that they have outstanding
every few years and then do a rate case to true everything up and then move on with whatever debt they
have. Under the current municipal ownership they can’t do that so the balloon debt has to be converted into
standard debt that will be paid back both principal and interest and a lot of that, which Is improvements to the
system that have been made in the wastewater treatment plant, etc., which we are now paying for is the
basic reason for the 19%. Pennichuck filed at least two different rate cases with the PUC, one with the
current ownership model and one with if they had continued as a publicly traded corporation what the rate
case would have looked like and it was more substantial than the one that they are applying for.
Mr. Sullivan
Yeah, | don’t know if | buy that stuff. If we didn’t sell the company this is what the increase would be because
who is to say that the previous owners would have built a new building for millions of dollars. Vho is to say
that the previous owners would be enacting and implementing expenses similar to these people, we don’t
know.
