Pennichuck earnings hit by legal costs

The legal battle over control of Pennichuck Waterworks is not just costing city taxpayers — it continues to take its toll on Pennichuck shareholders.

The Nashua-based Pennichuck Corp. – parent company of the waterworks — spent $711,000, or 10 cents a share, last quarter in its fight to block the city’s effort to take over its subsidiary, according to a third-quarter earnings report released Monday.

Legal costs cut the company’s net income to $592,000, or 14 cents a share, a slight decrease from the same quarter in 2004, when the company spent $242,000 on legal costs.

All told, the company has spent $1.6 million on the eminent domain battle year to date. None of these costs were charged to its three utilities, said Donald L. Correll, president and CEO.

If it wasn’t for that battle, Pennichuck would be doing rather well. Operating income increased to $2.1 million, or 31 percent for the same quarter of the previous year. Correll attributed the improvement to “rate relief, an improvement in weather conditions and continued management of operating expenses.”

Nashua Mayor Bernie Streeter – who’s leading the takeover fight — questions whether shareholders are bearing the entire brunt of the company’s legal cost, arguing that ratepayers also are contributing. He said that if the utility’s media campaign were counted in the takeover fight, the company has spent a minimum of $3.5 million, compared to the city’s total cost of $1.1 million since 2002.

“If I were a member of the board of directors of PWW, I’d question the value of their legal expenditures,” Streeter told NHBR Daily. “We have won every single legal battle to date.” – BOB SANDERS