Pennichuck asks to borrow $54.5m for new infrastructure
On Tuesday, the Nashua Board of Aldermen was presented with a proposed resolution that -- if approved -- would allow Pennichuck to borrow and issue up to $54.5 million in bonds and financing for the initiative.
The funding is intended to finance capital projects from 2013 to 2016 that maintain and replace Pennichuck Water Works' utility infrastructure, while also refinancing existing bonds with new bonds.
Larry Goodhue, chief financial officer for Pennichuck, highlighted the different projects in a letter to Attorney Stephen Bennett, corporation counsel for the city.
According to the document, the requested $54.5 million includes: about $5.1 million for capital projects completed last year, about $19.5 million for capital projects slated for 2014-2016, refinancing more than $23 million of outstanding tax-exempt bonds, possibly $5.4 million for a debt service reserve fund and costs of issuance around $1.1 million.
Pennichuck is hoping to transform its capital structure from a previously publicly-traded, investor-owned public utility holding company system into a new structure “that is better aligned with (Pennichuck's) current status as a public utility that is ultimately owned by the city of Nashua,” said Goodhue.
The city acquired Pennichuck in early 2012 for $152 million.
Last year, Pennichuck CEO John Patenaude reassured aldermen that even though a new, three-year capital plan by Pennichuck could slightly increase customer surcharges, rates under municipal ownership will continue to be lower than if Pennichuck had remained a publicly traded company.
He said previously that some of Pennichuck's aging infrastructure needs replaced, including mains, valves and hydrants.
The company's newest financial request is also being considered by the New Hampshire Public Utilities Commission.
City officials did not discuss the proposal on Tuesday, but assigned the matter to an aldermanic committee for further review and consideration.
The city is the sole corporate shareholder of Pennichuck Corporation, and under its by-laws the company must receive city approval for financial borrowing.
Pennichuck Water Works, a subsidiary of Pennichuck Corp., is a New Hampshire public utility corporation that provides retail water services to nearly 27,000 customers in Nashua, Amherst, Merrimack, Milford, Hollis, Bedford, Derry, Plaistow, Epping, Salem and Newmarket.