Rough Going for Pennichuck Water Co Sale

By Carolyn D'Aquila on Friday, August 16, 2002.

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The State Public Utilities Commission is reviewing the proposed sale of Nashua?s Pennichuck Corporation to an out of state water utility. Pennichuck is New Hampshire?s largest investor-owned water company?with roughly 100-thousand customers spread from Nashua to Newmarket. A wide range of individuals, communities, and environmental and planning groups are raising questions. NHPR correspondent Carolyn D?Aquila reports.

YOU MIGHT SAY THE PROPOSED SALE OF NASHUA?S PENNICHUCK CORPORATION HAS CREATED A BIT OF A SPLASH. THE 84-EMPLOYEE WATER COMPANY HAS FILED FOR STATE REGULATORY APPROVAL TO MERGE WITH PHILADELPHIA SUBURBAN CORPORATION. THAT?S THE NATION?S SECOND LARGEST PUBLICLY-TRADED WATER UTILITY. THE SALE OF THE WATER COMPANY TO AN OUT OF STATE UTILITY HAS RAISED CONCERNS ABOUT REGIONAL PLANNING AND ENVIRONMENTAL PROTECTION. IT ALSO HAS SOME WORRIED ABOUT CONTROL OF WATER RESOURCES.
TOM MCGREEVY LOCAL CONTROL AND WATER IS A NO BRAINER?IT?S OUR WATER AND WE DRINK IT.
ONE OF THE MAJOR CONCERNS IS THE PROTECTION OF 18-THOUSAND ACRES OF WATERSHED AREA. ALL PRECIPITATION DRAINS THROUGH THE WATERSHED TO REPLENISH THE RIVER?S WATER SUPPLY. CURRENTLY THE PENNICHUCK CORPORATION OWNS ABOUT 10 PERCENT OF THAT LAND. ALLAN FULLER IS PRESIDENT OF THE NEWLY FORMED PENNICHUCK WATERSHED COUNCIL. HE ISN?T SURE WHETHER HE SUPPORTS THE MERGER PROPOSAL?BUT HE INSISTS WATERSHED PROTECTION NEEDS TO BE A HIGH PRIORITY FOR WHOEVER OWNS THE LAND.
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BUT THE RIVER IS FED BY MORE THAN LOCAL RUNOFF. IT ALSO HAS A GROUNDWATER SOURCE. AND PENNICHUCK CORPORATION?S WELLS TAP INTO THAT SOURCE AND THE MERRIMACK RIVER. FORMER STATE SENATOR BARABARA PRESSLY WORRIES THAT POOR MANAGEMENT OF THE WATER SUPPLY COULD BE DETRIMENTAL FOR SURROUNDING TOWNS. FOR EXAMPLE, HOLLIS ISN?T SUPPLIED BY PENNICHUCK?BUT ITS WELLS DRAW FROM THE SAME GROUNDWATER SOURCE.
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BUT PENNICHUCK EXECUTIVE VICE PRESIDENT STEVE DENSBERGER SAYS THESE FEARS ARE, WELL, ALL WET. HE SAYS PENNICHUCK AND PSC HAVE NO INTENTION OF EXPORTING NEW HAMPSHIRE WATER.
DENSBERGER CUT ?WE?RE NOT BUILDING THE PENNSYLVANIA AQUEDUCT DOWN FROM THE WHITE MOUNTAINS?I DON?T KNOW WHERE PEOPLE ARE GETTING THAT.?
FURTHERMORE, DENSBERGER SAYS THAT STATE LAW REQUIRES ANYONE WHO WITHDRAWS GROUNDWATER NOT HAVE AN IMPACT ON ANYONE ELSE?S GROUNDWATER USE?IN THIS CASE, PRIVATE WELLS.
DENSBERGER: we?ve had cases when we?ve put in a new gravel well and people claimed their use was impaired?so we had to reduce our withdrawal?so those types of balancing acts have been going on for quite some time.
UNDER ALL THESE FEARS OF DISASTROUS MISMANAGEMENT OF THE PENNICHUCK WATERSHED LIES ONE QUESTION. IS LOCAL CONTROL THE BEST OR ONLY WAY TO RUN A WATER SYSTEM? AFTER ALL, 85% OF THE COUNTRY?S WATER SUPPLIES ARE MUNICIPALLY OWNED AND OPERATED. BUT WITHIN THE WATER UTILITY INDUSTRY, THE TREND IS TOWARD CONSOLIDATION?AND THAT DOES NOT NECESSARILY MEAN CONTROL FROM AFAR. MOSTLY, SAYS PHILADELPHIA SUBURBAN CORPORATION CHAIRMAN NICK DEBENEDICTIS, CONSOLIDATION IS A WAY OF REDUCING OVERHEAD COSTS. HE ADDS THAT THE CURRENT FACE OF PENNICHUCK WILL STAY THE SAME.
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SO, IN THE INDUSTRY, WHAT KIND OF REPUTATION DOES PHILADELPHIA SUBURBAN CARRY? IF
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THAT?S DAVE SCHANZER, AN ANALYST FOR JANNEY MONTGOMERY SCOTT, A BROKERAGE FIRM. HE ALSO SAYS PHILADELPHIA SUBURBAN?S UPPER MANAGEMENT IS EXPERIENCED IN BOTH THE PUBLIC AND PRIVATE SECTORS. OUTGOING PENNICHUCK CEO MAURICE AREL SAYS P-S-C HAS AN EXCELLENT REPUTATION FOR ENVIRONMENTAL MANAGEMENT?BUT IT?S ALSO TO THEIR BENEFIT TO PRESERVE THE WATER SUPPLY IN NEW HAMPSHIRE.
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LOCALLY, PENNICHUCK HAS DRAWN SOME FIRE FOR NOT DIRECTLY TELLING ITS CUSTOMERS ABOUT ITS PLANS TO MERGE. MAYOR BERNIE STREETER REPRESENTS PENNICHUCK?S LARGEST CUSTOMER, THE CITY OF NASHUA. IN LIGHT OF PENNICHUCK?S ESPECIALLY CLOSE RELATIONSHIP WITH THE CITY, STREETER SAYS HE WISHED HE HAD RECEIVE MORE CONSIDERATION.
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RECENTLY NASHUA?S BOARD OF ALDERMEN PASSED A PROPOSAL FOR A 100-THOUSAND DOLLAR STUDY OF PHILADELPHIA SUBURBAN CORPORATION AND THE POSSIBILITY OF NASHUA?S BUYING PENNICHUCK ITSELF. STILL, PENNICHUCK C-E-O MAURICE AREL SAYS PENNICHUCK DID EVERYTHING BY THE BOOK.
AREL CUT ?WE COULD HAVE DONE IT BETTER?BUT WE DID FOLLOW THE LAW?? pennichuck arel 7
BUT THERE?S ANOTHER TWIST IN THIS STORY. PSC?S LARGEST SHAREHOLDER IS THE DEBT-RIDDEN FRENCH CONGLOMERATE, VIVENDI. THE FRENCH GOVERNMENT HAS ALSO INVESTIGATED VIVENDI FOR ACCOUTING FRAUD. VIVENDI IS IN THE PROCESS OF SELLING OFF ITS 16% SHARE OF P-S-C STOCK TO PAY OFF SOME OF ITS DEBTS. SOME, LIKE NASHUA STATE REPRESENTATIVE HARVEY KEYE, WORRIED THAT VIVENDI?S STAKE IN PHILADELPHIA SUBURBAN CORPORATION MEANT FOREIGN CONTROL OF NASHUA?S WATER.
KEYE CUT
NOT SO. ACCORDING TO PSC CHAIRMAN NICK DEBENEDICTIS, PHILADELPHIA SUBURBAN IS AND WILL REMAIN DOMESTICALLY OWNED.
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VIVENDI?S TROUBLES HAVE HAD RIPPLE EFFECTS ON PHILADELPHIA SUBURBAN?S STOCK PRICE, THOUGH. INVESTOR UNCERTAINTY AND A FALLING STOCK MARKET HAVE SENT P-S-C?S STOCK PRICE DOWN?BUT THE VALUE OF PENNICHUCK?S ACQUISITION DEPENDS ON P-S-C?S STOCK PRICE. PENNICHUCK SHAREHOLDERS WILL EXCHANGE THEIR SHARES FOR NEW SHARES OF PSC.
THE PENNICHUCK BOARD OF DIRECTORS DECIDED AT A RECENT MEETING TO POSTPONE SCHEDULING ITS SHAREHOLDERS MEETING UNTIL THE FUTURE OF PHILADELPHIA SUBURBAN?S STOCK PRICE IS MORE CERTAIN. THE UNSTABLE MARKET SITUATION COULD ALSO PLAY AN IMPORTANT ROLE IN DETERMINING THE MERGER?S FUTURE. AS FOR THE P-U-C SCHEDULE FOR APPROVAL, THE DECISION SHOULD COME DOWN BY FEBRUARY 2003. FOR NHPR NEWS, I?M CAROLYN D?AQUILA IN NASHUA.