Eminent Domain Update

 

On July 25, 2008, the New Hampshire Public Utilities Commission (“NHPUC”) ruled that the City of Nashua, New Hampshire (the “City”) could take the operating assets of the Company’s Pennichuck Water Works, Inc. regulated utility subsidiary (“PWW”) under authority of eminent domain for $203 million. The NHPUC also required the City to pay an additional $40 million into a mitigation fund to protect the interests of the customers of the Company’s other two regulated utilities. We believe that in the event of an eminent domain taking pursuant to the July 2008 NHPUC order, the City would also have to compensate PWW for capital additions from and after the end of 2008 through the ultimate asset acquisition closing date.

In response to this ruling, the Company and the City filed motions for rehearing before the NHPUC and on March 13, 2009, the NHPUC issued an order denying the motions of both parties in their entirety on the basis that neither party had presented any new arguments or evidence that the NHPUC had not previously considered. Subsequently, both parties filed appeals with the New Hampshire Supreme Court (the “Supreme Court”).  The City filed its appeal brief with the Supreme Court on August 14, 2009.  The Company filed its appeal brief, and its initial reply to the City’s brief, on September 29, 2009.  Additional reply briefs were filed by the City on October 29, 2009 and by the Company on November 18, 2009.  Oral arguments before the Supreme Court have been scheduled for January 21, 2010. 

The Company’s Supreme Court appeal is principally focused on legal issues relating to the NHPUC’s “public interest” determination. The Company has also appealed the adequacy of the $40 million mitigation reserve required by the NHPUC to protect the interests of the customers of Pennichuck East and Pittsfield Aqueduct.

The City’s Supreme Court appeal focuses principally on the compensation amount for PWW’s assets, arguing that the $151 million proposed by the dissenting NHPUC Commissioner is the appropriate amount of compensation for the assets of PWW as of December 31, 2008.  The City has also appealed certain legal issues relating to the decision by the NHPUC on January 21, 2005 denying the City the right to take the assets of Pennichuck East and Pittsfield Aqueduct by eminent domain, and the size of the mitigation reserve which the City argues should be substantially reduced.

The Company expects that the Supreme Court will likely not render its decision before March or April 2010.  The outcome of the Supreme Court appeals cannot be predicted.  If the Company prevails in its public interest appeal, the NHPUC’s July 25, 2008 order could be reversed by the Supreme Court and the case could be dismissed.  On the other hand, if the City prevails in its appeals on valuation and/or the taking of Pennichuck East and Pittsfield Aqueduct, or if either party is successful in its appeal of the $40 million mitigation reserve, the Supreme Court would likely remand the case to the NHPUC for further determination.

If the City’s right to take PWW’s assets is ultimately upheld, the City’s aldermanic board would then still have to decide whether to proceed with the taking assuming the City is able to finance the purchase.  

 

For more information on this topic (including possibly more recent information), see the Company’s press releases and its annual and quarterly periodic reports filed with the Securities and Exchange Commission. The Company undertakes no obligation to update or revise eminent domain-related information on this website.