Pennichuck officials meet the shareholder
NASHUA - It was history in the making on Saturday when Pennichuck Corp. hosted its first meeting with the city of Nashua as its sole shareholder, although some city officials were not pleased with the process.
"I am disappointed. I expected there to be more of an interaction today," said Alderman Dan Moriarty, Ward 9, who was frustrated that although the public was able to speak, questions were not immediately being answered by Pennichuck officials.
Moriarty had several financial questions he wanted answered, but Jay Leonard, chairman of the Pennichuck board of directors, said the public comment period was specifically for comments.
After objections from some people in attendance, Leonard did alter some of the process and briefly answered a few of the questions at the conclusion of the meeting.
Saturday's gathering was Pennichuck's first annual meeting since the city acquired the water company at the beginning of 2012.
"This is a transition," said Leonard, describing Pennichuck as a holding company that is now owned fully by the city of Nashua. "Ours is a corporation. We are a business, and we have proprietary information."
Still, Leonard said, Pennichuck has made a commitment to the people of Nashua to be open and transparent in its business transactions and decision making.
Pennichuck Water Works Inc. provides water service to about 27,000 customers in 11 communities. Pennichuck Corp. has other subsidiaries, including Pennichuck East Utility - which provides water service to about 7,000 customers in 19 communities - and Pittsfield Aqueduct Co., Pennichuck Water Service Corp. and the Southwood Corp.
On Saturday, three people were nominated to be members of the Pennichuck board of directors: Jay Lustig, John McGrath and Preston Stanley Jr. In addition, several housekeeping items in the Pennichuck bylaws were amended.
Furthermore, the board opted to reappoint Leonard as chairman for an additional year.
City officials and Nashua residents in attendance - about 50 in total - received a brief analysis of the water company's financial status, although several people still wanted some of the items clarified at the conclusion of the meeting.
According to Larry Goodhue, the chief financial officer, Pennichuck's revenues for 2012 were nearly $37.8 million compared with revenues of $38.3 million in 2011. The operating expenses in 2012 were about $28.6 million, and the operating income was nearly $9.2 million.
Furthermore, he said, the net income in 2011 - prior to the city's acquisition - was $4.1 million compared with the net loss of $1.9 million in 2012.
The company spent about $5.3 million in 2011 and about $6.4 million in 2012 to replace aging water infrastructure, according to Pennichuck officials.
Fred Teeboom, a former alderman, questioned the financial statements provided on Saturday. With a net loss of nearly $2 million last year, Teeboom said he was concerned that ratepayers may soon see a 20 percent increase in their water rates.
"How are you going to get out of this loss situation?" he asked. "How on earth are you going to make up the difference?"
Pennichuck is a capital investment business, said Don Ware, chief operating officer, stressing the need exists throughout New Hampshire to replace about $860 million in water infrastructure.
"This business is about serving our customers," he said, noting it is important to update generators, water mains, information technology and distribution equipment to provide clean water.
Moriarty noted that the salary of John Patenaude, Pennichuck's chief executive officer, is about $190,000 a year. The alderman said that "seems a little high" for a company that has an annual revenue of about $38 million, adding Mayor Donnalee Lozeau is paid about $100,000 a year.
Alderman-at-Large Jim Donchess expressed concerns about attendees not being able to get immediate responses to their questions.
"I hope that we can set up a question session as soon as possible," said Donchess.
Leonard said such a meeting is being planned.