Nashua, Pennichuck may head to NH high court

CONCORD – The seven-year eminent domain battle between the city of Nashua and its private water utility company looks to be headed for the New Hampshire Supreme Court.

Barring an eleventh-hour private settlement, the last remaining step before that milestone was exhausted Friday when the New Hampshire Public Utilities Commission denied appeals from both sides.

The feud between Nashua and Pennichuck Water Works dates back to 2002, with both sides clashing over the years in court, before state utilities officials and during private settlement discussions.

Nashua has argued it wants to protect the water supply from nearby development and can operate the system at a lower cost. Pennichuck says a history of political infighting makes that unlikely, and points to its more than 150-year history here.

In July, the PUC ruled in favor of Nashua by allowing a hostile city takeover for $243 million. Pennichuck promptly appealed, citing legal errors in the decision. The city followed days later with objections to the price. The two went back in forth in the following months objecting to one another’s objections.

But the PUC dashed most of those dreams Friday, issuing a 27-page order rejecting both parties’ original motions for reconsideration, which were filed in August, and virtually all of the subsequent objections.

Neither Pennichuck Corp. Chief Executive Officer Duane Montopoli nor Nashua Mayor Donnalee Lozeau could be reached for comment on the decision early Friday evening.

Among the claims in Pennichuck’s appeal were that the PUC failed to meet the legal standard for condemning a public utility, failed to define “public interest,” and unfairly placed the burden of proof on Pennichuck by presuming a city takeover was in the public interest.

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Pennichuck also pointed out that it would have no recourse to reclaim the company later if the city failed to live up to its promises.

“This is a corporate death penalty case where the gallows have been placed before conviction,” the appeal read.

The PUC struck down all those arguments, saying it acted legally, accurately and within its authority in issuing the decision.

Nashua’s primary objection said the PUC erred in calculating the price by assuming there was a competitive market of nonprofit buyers for the utility. The city placed the actual value closer to $85 million.

Nashua also said the PUC made a mistake in not allowing Nashua to acquire Pennichuck’s sister water companies.

Pennichuck Water Works is a subsidiary of larger, investor-owned Pennichuck Corp., which owns two other water companies in New Hampshire, a water management firm and a real-estate enterprise. The PUC’s ruling only applies to Pennichuck Water Works.

However, the PUC rejected those arguments too, saying they were considered after the public hearings but found not to be persuasive.

Presumably, the eminent domain case is now headed for the New Hampshire Supreme Court. Pennichuck officials have said they would file an appeal there if the PUC attempt were unsuccessful.

However, neither Pennichuck nor the city is ruling out the possibility of a private settlement. Pennichuck stockholders have encouraged such a deal in light of the company’s falling stock prices, and company officials have said they’re open to settlement negotiations.

The city has not announced plans to work out a settlement, but Mayor Donnalee Lozeau also has not championed the eminent domain takeover as did her predecessor, Bernie Streeter.

Settlement discussions between the two parties in 2007 broke down after more than six months. The city’s purchase of company stock emerged as one possible option.

The case went back before the PUC that fall, which heard 12 days of testimony before issuing the 2008 decision.

Pennichuck Water Works operates water systems in Nashua, Merrimack, Milford, Hollis and Amherst, serving about 24,000 customers.

Ashley Smith can be reached at 594-6446 or asmith@nashuatelegraph.com.