Rate Stabilization Fund — Restricted Cash
As a part of the acquisition, the Company agreed to contribute $5,000,000 of the proceeds
from the settlement transaction to Pennichuck Water, which was used to establish an RSF,
allowing for the maintenance of stable water utility rates and providing a mechanism to
ensure the Company’s continued ability to meet its obligations under the promissory note to
the City, in the event of adverse revenue developments. Restricted cash consists of amounts
set aside in the RSF account and is adjusted monthly as required in the NHPUC Order, as
discussed in Note 1 of these financial statements.
Municipal Acquisition Regulatory Asset (“MARA”)
Pursuant to the NHPUC Order, the Company established a new Regulatory asset (MARA) which
represents the amount that the Acquisition Price exceeded the net book assets of the
Company’s regulated subsidiaries (Pennichuck Water, Pennichuck East, and PAC) at
December 31, 2011. The initial amount of the MARA was approximately $89 million for the
regulated companies, offset by a non-regulated amount of approximately $4.8 million. The
MARA is to be amortized over a thirty (30) year period in the same manner as the repayment
of debt service for the City’s acquisition bonds. The balance in the MARA at December 31, 2021
was approximately $68.9 million, reduced by the non-regulated credit of approximately $3.8
million.
Aggregate amortization expense for the years ended December 31, 2021 and 2020 totaled
approximately $2,119,000 and $2,061,000, respectively.
The following table represents the total estimated amortization of MARA:
Estimated
Amortization
(in thousands) Expense
2022 Ss 2,183
2023 2,253
2024 2,328
2025 2,409
2026 2,498
2026 and thereafter 53,411
Total $ 65,082
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