financial statements. During 2016 and 2015, dividends of approximately $280,000 and
$278,000, respectively, were declared and paid to the City. The dividends paid to the City
during 2016 comprised approximately $280,000 of regular quarterly dividends declared and
paid; and no special dividend was declared or paid in 2016. The dividends paid to the City
during 2015 comprised approximately $278,000 of regular quarterly dividends declared and
paid; and no special dividend was declared or paid in 2015.
Additional ongoing transactions occur in the normal course of business, between the
Company and the City, related to municipal water usage, fire protection and sewer billing
support services, and property taxes related to real property owned by the Company within
the City of Nashua. For the years ended December 31, 2016 and 2015, respectively,
approximately $3.1 million and $3.1 million were paid to the Company by the City for
municipal water consumption, fire protection charges, and sewer billing support services.
Conversely, the Company paid property taxes to the City of Nashua of approximately
$2.8 million for the year ended December 31, 2016, and approximately $2.7 million for the
year ended December 31, 2015.
Rate Stabilization Fund — Restricted Cash
As a part of the acquisition, Pennichuck agreed to contribute $5,000,000 of the proceeds
from the settlement transaction to PWW, which was used to establish a Rate Stabilization
Fund (“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
PUC Order, as discussed in Note | of these financial statements.
Municipal Acquisition Regulatory Asset (“MARA”)
Pursuant to the PUC Order, Pennichuck established a new Regulatory asset (MARA) which
represents the amount that the Acquisition Price exceeded the net book assets of Pennichuck’s
regulated subsidiaries (PWW, PEU, 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, 2016 was approximately $79.5 million, reduced by
the non-regulated credit of approximately $4.4 million.
Aggregate amortization expense for the years ended December 31, 2016 and 2015 totaled
approximately $1,884,000 and $1,857,000, respectively.
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