Board Of Aldermen

The following table presents reclassifications out of accumulated other comprehensive
income for the years ended December 31, 2017 and 2016:

Amounts Reclassified Affected Line Item in

Details about Accumulated Other from Accumulated Other the Statement Where
Comprehensive Income Components Comprehensive Income Net Income is Presented
(in thousands) 2017 2016
Gain (loss) on cash flow hedges

Interest rate contracts $ 77 = § 123 Interest expense

(31) (49) Tax expense

Amounts reclassified from accumulated

Short-term borrowing activity under this revolving credit loan facility for the years ended
December 31, 2017 and 2016 was:

(in thousands) 2017 2016

Established line as of December 31, $ 6,000 $ 10,000
Maximum amount outstanding during period 5,574 1,118
Average amount outstanding during period 228 73
Amount outstanding as of December 31, 5,574 -

Weighted average interest rate during period 3.01% 2.22%
Interest rate as of December 31, 3.10% 2.251%

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 NH Public Utilities Commission, 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,

The aggregate principal payment requirements subsequent to December 31, 2017 are as
follows:

(in thousands) Amount

2018 $ 5,576
2019 5,911
2020 6,169
2021 8,450
2022 6,343
2023 and thereafter 175,260
Total $ 207,709

2016

(in thousands) Principal

Unsecured note payable to City of Nashua, 5.75%,

due 12/25/2041 $
Unsecured senior note payable due to an insurance company

7.40%, due March 1, 2021

Note 9— Debt

Long-term debt as of December 31, 2017 and 2016 consisted of the following:

Investment tax credits resulting from utility plant additions are deferred and amortized. The
unamortized investment tax credits are being amortized through the year 2033.

The Company had a regulatory liability related to income taxes of approximately $9,955,000
and $760,000 as of December 31, 2017 and 2016, respectively. This represents the estimated
future reduction in revenues associated with deferred taxes which were collected at rates
higher than the currently enacted rates and the amortization of deferred investment tax
credits.

The temporary items that give rise to the net deferred tax liability as of December 31, 2017
and 2016 were as follows:

tax years beginning after December 31, 2017; and (4) changing rules related to limitation of
interest expense deductions. Certain of TCJA’s provisions require interpretation, which may
be clarified through issuances of guidance by the U.S. Treasury Department, regulations, or
future technical corrections.

FASB ASC 740 requires companies to recognize the effects of tax law changes in the period
of enactment, which for the Company is for the year ended December 31, 2017, even though
the effective date of most provisions of TCJA is January 1, 2018.

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 3 1, 2017 and 2016 were
as follows:

December 31, 2017

(in thousands) Total Level I Level 2 Level 3
Liabilities:
Interest rate swap $ (374) §$ - $ (374, §$ -

December 31, 2016

(in thousands) Total Level 1 Level 2 Level 3
Liabilities:
Interest rate swap $ (453) §$ - $ (453) $ -