NASHUA — City officials this week will review a request from Pennichuck Corp. to borrow nearly $3.4 million for numerous water infrastructure upgrades.
Pennichuck Corp. is hoping to establish five loans with the New Hampshire Drinking Water Revolving Loan Fund Program. The money will be used to replace three major water mains, and to upgrade the existing Timberline Booster Station in Nashua and the Hardwood Booster Station in Windham.
The water company must seek approval from city officials before it borrows money or incurs debt, as the city is the sole shareholder of Pennichuck Corp.
The water mains in need of replacing include about 7,000 linear feet in the Nashua Core Water System in Nashua and Amherst, about 6,000 linear feet of the Winwood/Monroe section of the Locke Lake Water System in Barnstead and about 8,500 linear feet of the W&E Community Water System in Windham.
The Pennichuck board of directors has already approved the five loans to finance the various projects for Pennichuck Water Works Inc. and Pennichuck East Utility Inc., subsidiaries of Pennichuck Corp. Along with city officials, the New Hampshire Public Utilities Commission must also approve the loans before they can be authorized.
"Pennichuck Corp. and its Board of Directors have determined that the capital projects to be financed by the (state revolving fund) program loans will allow PWW and PEU to continue to provide safe, adequate and reliable water service to their customers on a cost-effective basis," says a letter to Stephen Bennett, city attorney, from Larry Goodhue, the company's chief financial officer.
According to Goodhue, the terms of the financing through the revolving loan program are favorable compared to alternatives. Those terms — for 20 years at a current interest rate of 2.72 — will results in lower financing costs that will ultimately be passed on to customers, said Goodhue.
He said the New Hampshire Drinking Water Revolving Loan Fund, which is administered by the state Department of Environmental Services, provides public and private water systems the opportunity to borrow funds at favorable terms with interest rates below commercial rates.
"The corporate parent, Pennichuck, will provide an unsecured corporate guaranty of the repayment of the loans," added Goodhue.
Tonight, the Board of Aldermen will be presented with the proposed resolution, which will be assigned to an aldermanic committee for further review and analysis before a final recommendation is made to the board.
Pennichuck Water Works provides water service to about 27,000 customers in 11 communities, while its subsidiaries provide water service to about 7,000 customers in 19 communities.
Recently, Pennichuck Corp. spent about $5.3 million in 2011 and about $6.4 million in 2012 to replace aging water infrastructure, according to Pennichuck officials.
During Pennichuck's annual meeting last year, the company's chief operating officer, Don Ware, stressed the need to replace water infrastructure throughout New Hampshire, not just in the southern portion of the state."This business is about serving our customers," Ware said at the time, noting it is important to update generators, water mains and information technology and distribution equipment to ensure clean and safe water.
Tonight's meeting of the Board of Aldermen begins at 7:30 p.m. at Nashua City Hall.