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December 11. 2012 9:44PM

Nashua officials question potential water surcharges

NASHUA - A city alderman is questioning the need for a water infrastructure and conservation plan by Pennichuck Corp. that could increase customer surcharges by a maximum of 2 percent.

Alderman Arthur Craffey of Ward 4 asked fellow board members on Tuesday to summon the Pennichuck Board of Directors and chief executive officer to the aldermanic chambers to discuss the matter.

"The citizens of Nashua, as well as the other customers and town officials, were told that their water rates would grow at a slower rate and be lower with (Pennichuck) under the City of Nashua control," Craffey wrote in a letter to Brian McCarthy, president of the Board of Aldermen. "This now appears to be incorrect with (Pennichuck's) current BOD and senior leadership seeking an emergency rate hike less than a year after the acquisition."

The city of Nashua acquired Pennichuck at a cost of $220 million at the beginning of the year.

Craffey said Tuesday that he has concerns about the requested infrastructure improvements, which he said were not revealed as part of the acquisition negotiations.

"Did the transition manager and team not adequately complete its due diligence on behalf of the city?" asked Craffey, also questioning the need to push the improvements through when he believes it was covered under capitalization borrowing and bonding.

Stressing that the current BOD has been in place for less than a year, Craffey said he is uncertain about the need to file a three-year plan for infrastructure-related project expenses for 2013-2015 to the New Hampshire Public Utilities Commission for review and approval by the end of this year.

He formally requested that the Board of Aldermen - as the sole stakeholder of the company and a representative of the citizens of Nashua and Pennichuck customers - require the BOD and senior leadership team meet with aldermen to publicly discuss the need for an emergency request for a rate hike.

While four of his fellow aldermen supported Craffey's request for a meeting, the motion was ultimately rejected by the board.

"The citizens of Nashua deserve an answer," Craffey wrote in his letter, which was presented to aldermen on Tuesday and previously forwarded to Pennichuck officials.

In its fall newsletter, Pennichuck announced that as part of its most recent rate proceedings, the PUC granted approval for the company to implement a Water Infrastructure and Conservation Adjustment surcharge to recover the costs of replacing aging infrastructure.

"WICA covers the replacement of water mains, valves and hydrants that have either reached the end of their useful life, or are negatively impacting water quality or service reliability," says the newsletter. "The benefits of this program to our customers are that it provides for more consistent replacement of aging infrastructure, which in turn increases reliability of service."

The announcement goes on to state that the program will also provide for smaller rate increases by permitting recovery of the expenses between rate cases, therefore protecting water assets while providing continued water quality. The surcharge, which could be seen on water bills around April of 2014, is limited to a maximum 2 percent increase in a year, and a maximum increase of 7.5 percent in a three-year period, according to the newsletter posted online.

Mayor Donnalee Lozeau, a member of the Pennichuck BOD, described the situation as unfortunate, saying there is some confusion about the matter.

"WICA was a settlement with Pennichuck and the PUC prior to us taking over the company," she said, stressing the need to replace underground pipes that are as old as the Civil War era. The maximum 2 percent increase is a limit, she said, explaining it isn't the rate. The actual numbers, she said, are likely going to be closer to .39 cents a month, or about $7 a year.

"I don't see a big increase coming down. I don't see anything we didn't anticipate," Lozeau reassured aldermen.

In addition, Lozeau said Pennichuck officials are expected to discuss this matter at their next meeting, and will be happy to provide further explanation to aldermen.

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Kimberly Houghton may be reached at khoughton@newstote.com.


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