Current News

For Immediate Release:
March 1, 2006

Contact: Donald L. Correll, President and CEO
Phone: 603-913-2301 Ext. 2301

Merrimack and Milford Officials Share Grave Concern About City of Nashua's Attempt to Take Over Pennichuck Water Works
Merrimack chairman of Board of Selectmen and Milford's Director of Public Works file testimony with the PUC opposing Nashua's attempted takeover of water company

Merrimack, NH (NASDAQ: PNNW) - Across the state, many citizens are worried about the effects of eminent domain. In southern New Hampshire, the towns of Merrimack and Milford are facing the threatened takeover of the local water utility, Pennichuck Water Works (PWW), by the City of Nashua. These two towns are now voicing their concern about what might happen if Nashua is successful in its attempt. In testimony recently filed with the New Hampshire Public Utilities Commission (PUC), both towns, which obtain drinking water from PWW, made clear that they oppose such a takeover. Merrimack's chairman of the Board of Selectmen stated that Nashua's proposal is of "grave concern" to his town, while Milford's Director of Public Works testified he doesn't believe Nashua's takeover of Pennichuck would provide any advantages to his community.

The testimony filed with the PUC last month blasts Nashua's attempt to acquire Pennichuck, raising concerns that the towns of Merrimack and Milford and their residents would sustain a negative impact and a downturn in service should Nashua acquire the water utility.

"What is presently known is that PWW is a well-managed water utility with reasonable rates," testified Richard Hinch, chairman of the Merrimack Board of Selectmen. "What is unknown is whether a municipal utility, heavily weighted by Nashua's municipal interests, is a viable replacement for a known quantity…There is the additional question of whether Nashua or the Merrimack Valley Regional Water District will have the wherewithal financially to even equal PWW's performance."

The testimony speaks to the heart of the eminent domain case: whether Nashua's acquisition of Pennichuck is in the public interest. That issue will be decided at the PUC sometime in 2007. Pennichuck has submitted extensive expert testimony demonstrating that the value of the assets that Nashua is seeking to take is nearly $250 million, while Nashua claims that the value is about one-third that amount. The issue of how much Nashua must pay Pennichuck, however, would be moot if the PUC were to determine that such a taking is not truly "in the public interest."

Both Chairman Hinch and Milford's Director of Public Works, William Ruoff, laid out why they believe Nashua's taking of Pennichuck would hurt citizens in their communities, identifying an overarching theme: would towns beyond Nashua that are currently well served by Pennichuck receive the same attention, service and priority if Nashua ran the water system?

In his testimony, Hinch pointed out that Merrimack accounts for 20 percent of Pennichuck's average daily water flow, and that that water is vitally important to Merrimack's citizens and businesses, noting that the town's prime industrial zone (which includes major companies such as Anheuser-Busch and BAE Systems) receives its water from Pennichuck. Hinch said he is concerned that replacing Pennichuck will compromise the quality of the town's water service and water rates, and noted that Merrimack citizens have not had an opportunity to weigh in on the future of their water system.

"Merrimack's citizens have not voted for municipalization of the water system, and we are not comfortable with Nashua voters and elected officials making decisions that would directly affect Merrimack water customers," said Hinch in his testimony.

In Milford, while Pennichuck does not supply water directly to residents, the town regularly relies on Pennichuck for its back-up water supply. During emergencies when a pump on the primary system breaks down and must be shut down, the town uses Pennichuck water, said Ruoff. In other cases, Pennichuck's water supply offers coverage when Milford performs routine maintenance on its wells or when the town requires supplemental water during periods of high demand.

"In 2005, Milford relied on water from Pennichuck during every month of the year, using a total of approximately 47 million gallons of Pennichuck's water," Ruoff testified, expressing his concern about a clause in the town's contract with Pennichuck that the agreement would end if the company were taken over by eminent domain.

"So, if Nashua acquired all of the Pennichuck assets or even a significant portion of those assets, the agreement would terminate. In fact, because all of Pennichuck's water flows through its water treatment plant in Nashua, acquisition of that asset alone could result in termination of the agreement," said Ruoff. The result, he added, would be the immediate loss of the town's back-up water supply.

The PUC has scheduled the first public hearing on the eminent domain case for January 2007.

Pennichuck Corporation is a holding company located in Merrimack, New Hampshire with three wholly owned operating subsidiaries involved in regulated water supply and distribution throughout southern and central New Hampshire; non-regulated, water-related services conducted through Pennichuck Water Service Company; and real estate investment and development activities conducted through The Southwood Corporation.

Pennichuck Corporation is traded on the NASDAQ Stock Market under the symbol "PNNW."