SOURCE: Pennichuck Corporation

Pennichuck Corporation

June 17, 2011 13:59 ET

Pennichuck Corporation Announces Rate Increases for Two of Its Regulated Utilities

Orders Result in Permanent Annualized Revenue Increase of $3.0 Million

MERRIMACK, NH--(Marketwire - Jun 17, 2011) - Pennichuck Corporation (NASDAQ: PNNW) today announced that the New Hampshire Public Utilities Commission (the "NHPUC") has issued permanent rate orders approving rate settlement agreements in effect between the staff of the NHPUC and two of the Company's regulated utility subsidiaries, Pennichuck Water Works, Inc. ("Pennichuck Water") and Pittsfield Aqueduct Company, Inc. ("Pittsfield"). Taken together, these orders make effective a permanent annualized increase in revenues of approximately $3.0 million based on 2009 water usage volumes.

The Pennichuck Water order, which was issued June 9, 2011, provides for an annualized increase in revenues of approximately $2.9 million, or 11.95%, for service rendered from June 2010, and replaces a temporary annualized increase of $2.6 million, or 10.8%, that has been in effect for service rendered from October 2010. The one-time recoupment of revenues back to June 2010 will be recorded in the current quarter.

This rate increase, which is the result of a rate filing initiated in May 2010, relates primarily to (a) capital improvements made by Pennichuck Water since its last rate case, (b) the revenue loss which resulted from water usage volume declines in 2008 and 2009, and (c) increased state utility taxes and local property taxes. Water usage volumes declined in 2008 and 2009 due to the combined effects of the economic recession, cool and wet weather affecting peak summer usage and continued customer conservation efforts related to water saving appliances and the like.

In the order, the NHPUC also approved a pilot Water Infrastructure and Conservation Adjustment ("WICA") mechanism that will allow Pennichuck Water to recover, through a rate surcharge between rate cases, certain costs of replacing and rehabilitating aging water infrastructure assets as they are placed into service. This new program is expected to, (i) speed up the replacement of aging infrastructure, (ii) reduce deterioration of allowed returns between rate case orders, and (iii) spread required rate increases more gradually over time for the benefit of water system customers. The WICA charge will allow Pennichuck Water to increase its rates, based on approved in-service projects, up to a maximum of 2% per year and 7.5% in total between rate cases. The WICA program will begin in 2012 with the first rate adjustment to become effective in April 2013.

As part of the settlement with the staff of the NHPUC, Pennichuck Water has agreed to stay its request to recover approximately $5.4 million in eminent domain defense costs pending the completion of the acquisition of Pennichuck Corporation by the City of Nashua. In the event the acquisition is not completed, Pennichuck Water will seek to recover these costs in accordance with the terms of the stay order.

The Pittsfield order, which was issued June 8, 2010, provides for an annualized increase in revenues of approximately $125,000, or 20.63%, for service rendered from June 2010, and replaces a temporary annualized increase of $61,000, or 10%, that has been in effect for service rendered from October 2010. This rate increase is primarily associated with higher property taxes and insurance costs. Pittsfield has also been granted a WICA surcharge mechanism similar to that granted to Pennichuck Water.

Pennichuck Corporation is a holding company involved principally in the supply and distribution of potable water in New Hampshire through its three regulated water utilities. Its non-regulated, water-related activities include operations and maintenance contracts with municipalities and private entities in New Hampshire and Massachusetts. The Company's real estate operations are involved in the ownership, management and commercialization of real estate in southern New Hampshire.

Pennichuck Corporation's common stock trades on the Nasdaq Global Market under the symbol "PNNW." The Company's website is at www.pennichuck.com.

Forward-Looking Statements

This news release may contain certain forward-looking statements with respect to the financial condition, results of operations and business of Pennichuck Corporation. Forward-looking statements are based on current information and expectations available to management at the time the statements are made, and are subject to various factors, risks and uncertainties that could cause actual results to differ materially from those expressed or implied by such forward-looking statements. These factors include, but are not limited to, a future judicial or regulatory determination that events prior to the November 11, 2010 effective date of our merger agreement with the City of Nashua constituted a final determination of the price to be paid under RSA 38:13 and triggered the statutory 90-day period within which the City was required to decide whether to take, by eminent domain, the assets of our Pennichuck Water Works, Inc. subsidiary; the expiration of said 90-day period without the City having made any such decision; whether the merger transaction is approved by the NHPUC; whether the merger transaction is ultimately consummated; the outcome of requests for rate relief from the NHPUC from time to time; changes in governmental regulations; legislation and/or regulation and accounting factors affecting Pennichuck Corporation's financial condition and results of operations; the availability and cost of capital, including the impact on our borrowing costs of changes in interest rates; and, the impact of weather. Investors are encouraged to access Pennichuck Corporation's annual and quarterly periodic reports filed with the Securities and Exchange Commission for financial and business information regarding Pennichuck Corporation, including a more detailed discussion of these and other risks and uncertainties that could affect Pennichuck Corporation's forward-looking statements. We undertake no obligation to update or revise publicly any forward-looking statement.

Contact Information

  • For More Information, Contact:
    Thomas C. Leonard
    Senior Vice President and Chief Financial Officer
    Phone: 603-913-2300
    Fax: 603-913-2305