Pennichuck Corporation Announces Rate Increases for Two of Its Regulated Utilities
June 17 2011 - 12:59PM
Marketwired
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.
For More Information, Contact: Thomas C. Leonard
Senior Vice President and Chief Financial Officer Phone:
603-913-2300 Fax: 603-913-2305
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