Board Of Aldermen

Rate Covenant Test - If during any fiscal year, the EBITDA of Pennichuck Water shall not
equal at least 1.1 times all amounts paid or required to be paid during that year
(“Amounts Paid”}, then the Company shall undertake reasonable efforts to initiate a rate-
making proceeding with the NHPUC, to rectify this coverage requirement in the
succeeding fiscal years. Thereby, the ratio of EBITDA to Amounts Paid must be equal to
or greater than 1.1; as of December 31, 2021 and 2020, the Rate Covenant coverage ratio

was 2.19 and 3.57, respectively.

Short-term borrowing activity under Pennichuck East’s FALOC for the years ended
December 31, 2021 and 2020 was:

2021 2020
Established line as of December 31, 5 3,000 S 3,000
Maximum amount outstanding during period 1,171 1,106
Average amount outstanding during period 909 1,022
Amount outstanding as of December 31, 757 306
Weighted average interest rate during period 2.13% 2.80%
Interest rate as of December 31, 2.09% 2.15%

12.

Lines of Credit

As of December 31, 2021 and 2020, the Company had a $2.3 million and $2.5 million,
respectively, interest rate swap which qualifies as a derivative. This financial derivative is
designated as a cash flow hedge. This financial instrument is used to mitigate interest rate
risk associated with our outstanding $2.3 million loan which has a floating interest rate
based on the three-month London Interbank Offered Rate (“LIBOR”) plus 1.88% as of
December 31, 2021. The combined effect of the LIBOR-based borrowing formula and the

Rate Covenant Test - If during any fiscal year, the EBITDA of Pennichuck Water shall not
equal at least 1.1 times all amounts paid or required to be paid during that year
(“Amounts Paid”), then the Company shall undertake reasonable efforts to initiate a rate-
making proceeding with the NHPUC, to rectify this coverage requirement in the
succeeding fiscal years. Thereby, the ratio of EBITDA to Amounts Paid must be equal to
or greater than 1.1; as of December 31, 2021 and 2020, the Rate Covenant coverage ratio
was 2.19 and 3.57, respectively.

The aggregate principal payment requirements subsequent to December 31, 2021 are as
follows:

(in thousands} Amount

2022 $ 9,149
2023 7,853
2024 7,080
2025 7,338
2026 7,659
2027 and thereafter 203,375
Total $ 248,454

2020

11.

Long-Term Debt

Long-term debt as of December 31, 2021 and 2020 consisted of the following:

As of December 31, 2021 and 2020, it is estimated that approximately $476,000 and
$476,000, respectively, of cumulative federal alternative minimum tax credits may be carried
forward indefinitely as a credit against our regular tax liability.

The temporary items that give rise to the net deferred tax liability as of December 31, 2021
and 2020 were as follows: