$2.7 million for the year ended December 31, 2015, and approximately $2.5 million for the
year ended December 31, 2014.
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 1 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, 2015 was approximately $81.5 million, reduced by
the non-regulated credit of approximately $4.5 million.
Aggregate amortization expense for the years ended December 31, 2015 and 2014 totaled
approximately $1,857,000 and $1,835,000, respectively.
The following table represents the total estimated amortization of MARA:
Estimated
Amortization
(in thousands) Expense
2016 $ 1,884
2017 1,917
2018 1,958
2019 2,006
2020 2,061
2021 and thereafter 67,202
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