Finance Committee

12.

Paycheck Protection Program Loan

Rate Covenant Test - if during any fiscal year, the EBITDA of Pennichuck Water shall not
equal at feast 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, 2020 and 2019, the Rate Covenant coverage ratio
was 3.57 and 1.98, respectively.

The aggregate principal payment requirements subsequent to December 31, 2020 are as
follows:

(in thousands) Amount

2021 § 6,018
2022 6,272
2023 7,508
2024 6,721
2025 7,013
2026 and thereafter 211,351
Total S 244,883

2019

11.

Long-Term Debt

Long-term debt as of December 31, 2020 and 2019 consisted of the following:

The Company has accumulated New Hampshire net operating losses. The New Hampshire tax
benefit of the cumulative net operating loss is approximately $1.4 million which begins to
expire in 2023 and is included in deferred income taxes in the Consolidated Balance Sheet as
of December 31, 2020.

As of December 31, 2020 and 2019, 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 following is a reconciliation between the statutory federal income tax rate and the
effective income tax rate for 2020 and 2019:

2020 2019
Statutory federal rate 21.0 % 21.0 %
State tax rate, net of federal benefits 6.1 6.1
Permanent differences (63.6) {33.9)
Amortization of investment tax credits 2.2 0.7
Effective tax rate (34.3) % (6.1) %

The temporary items that give rise to the net deferred tax liability as of December 31, 2020
and 2019 were as follows:

10.

Revenue from Contracts with Customers — Non-Regulated Entities

Revenue is recognized when control of the promised goods or services is transferred to
customers, in an amount that reflects the consideration we expect to be entitled to in
exchange for those goods or services.

Disaggregation of Revenue
For the years ended December 31, 2020 and 2019, revenue recognized for goods transferred
over time totaled $2,777,693 and $2,892,868, respectively.

For assets and liabilities measured at fair value on a recurring basis, the fair value measure-
ment by levels within the fair value hierarchy used as of December 31, 2020 and 2019 were
as follows:

December 31, 2020

(in thousands} Total Level 1 Level 2 Level 3
Liabilities:
Interest rate swap § (460) $ - $ (460) $_ -

December 31, 2019

(in thousands) Total Level 1 Level 2 Level 3
Liabilities:
Interest rate swap § (353) S$ - § (353) S$ -

Commitments and Contingencies

Operating Leases

The Company's corporate office space, as well as certain office equipment, is leased under
operating lease agreements. Total rent expense was approximately $389,800 and $385,400
for the years ended December 31, 2020 and 2019, respectively.

The remaining non-cancelable lease commitments for the corporate office space and leased
equipment as of December 31, 2020 were as follows: