Pennichuck Water Special Committee

REPORT OF THE PENNICHUCK WATER SPECIAL COMMITTEE April 14, 2014 A meeting of the Pennichuck Water Special Committee was held on Monday, April 14, 2014, at 7:03 p.m. in the Aldermanic Chamber. Alderman-at-Large Daniel T. Moriarty, Chair, presided. Members of the Committee present: Alderman-at-Large David W. Deane Alderman Sean M. McGuinness Alderwoman Mary Ann Melizzi-Golja, Arrived at 7:05 p.m. Alderman-at-Large Lori Wilshire PUBLIC COMMENT - None COMMUNICATIONS From: John L. Patenaude, Chief Executive Officer, Pennichuck Corporation Re: Annual Meeting of Sole Shareholder – May 20, 2014 MOTION BY ALDERMAN DEANE TO ACCEPT AND PLACE ON FILE MOTION CARRIED Alderman Wilshire I thought the meeting was May 10, 2014, and this says May 20th. Alderman Deane It’s May 10th. Chairman Moriarty Now would be a good time to discuss this communication and I notice we have some guests in the audience. Mr. Leonard I am Chairman of the Board of Director’s of Pennichuck Corporation. We have Larry Goodhue, CFO, John Patenaude, CEO; and Don Ware who is the COO. Hopefully, we can answer whatever questions you might have. Chairman Moriarty Regarding the annual meeting of the Sole Shareholder, there are three documents that are part of this communication. The first one is a letter from John Patenaude that mentions the fact that there is going to be a shareholder meeting on Saturday, May 10th, at the Courtyard Marriott, 2200 Southwood Drive at 8:30 a.m. There’s the cover letter, the notice of the meeting itself, and then there is a proxy card. I believe those are the three official items. No, we have the notice, the proxy card, and the annual report to the shareholders. Those are the three items that we accepted as part of this. Overall, I think you can summarize the notice and the proxy and all this as the re-election or the re-appointment of three of the Board of Directors whose terms are currently expiring. They are being re-elected and a new appointment, Mr. Jim Dore. Pennichuck Water Special Committee -2- 04/14/14 Mr. Leonard Generally, this is an annual event. We discussed this whole process over the last year or so and I think the last time we came here we said we would present this information by May 31st and the goal is to get it to you so that you can have it for a committee meeting and if you want to ask questions, we are open to that. The process is really the same every year. Our annual meeting is sometime in the spring. This year it’s May 10th. In order to get prepared for the annual meeting, we send out this notice to the City of Nashua as our sole shareholder and this committee and the Board of Alderman decide how to actually make that one vote. Essentially what this is, is information for you to make your decision on how you want to make your vote as one shareholder. In specific response to your comment about the nominated director’s, we have a very specific process that we follow for the nomination and recommendation of director’s. We have three that are existing, what I’ll call incumbent directors, all are interested in continuing and we found that they were all were appropriate for nomination and recommendation to the shareholder for that purpose so their term would be an additional three years should the shareholder elect them. Then we have a new person, Mr. Jim Dore who is actually replacing Mayor Donnalee Lozeau because under our charter and the by-laws, the Mayor’s term ends after the first two years. So her term is up and we replace her as a director but there’s no connection to the city and that’s all by your own design, the design of the Board of Alderman and the city in the initial acquisition. That’s a quick summary. It will end up looking very routine as we go through the years but perhaps right now, it’s a little bit unfamiliar in its form. Chairman Moriarty The process that we currently have as an ordinance is set up so that we want to make sure that essentially the proxy gets a chance to show up on the agenda of the Board of Alderman an, get referred to the committee, show up on the Board of Alderman agenda a second time; and then we vote on it. There are two full board meetings remaining prior to the May 10th meeting. Is that correct? Alderwoman Melizzi-Golja There’s one. Chairman Moriarty No, there’s only full board meeting. We’ll have to struggle over whether we met that original two readings obligation because the proxy itself I don’t showed up on the agenda of the Board of Alderman at the last meeting. Alderman Deane It did not. Chairman Moriarty We only have one meeting left so we are going to have to figure out how to make sure that we comply with our rules. We may have to suspend the rules to get two readings in one meeting. Putting that aside, at the last Board of Alderman meeting we have Committee Announcements and I made a point to announce that we had this Pennichuck meeting and I asked everybody if they got their proxy card so at least there was notice that the proxy was out. We did put this on the current agenda so I am hoping that people can comment. It does not appear to be a very controversial proxy card at all, it’s worth going through them, I think at least to do due diligence and then after we talk about today we can vote on a couple of items. It might be worth making a motion to make a recommendation and then send that back. Until hands go up, I’ll go ahead and filibuster a little more. I did notice the Corporate Code of Conduct on page 4, was that always there, is it something new? Pennichuck Water Special Committee -3- 04/14/14 Mr. Leonard I believe we have always had it, yes. Chairman Moriarty The boards committees, one of which is the Communications Committee, I can’t remember if that was created since the last board meeting? Mr. Leonard You may remember that it was created as a result of the some of the comments and discussion just prior to the last annual meeting and I think we announced that we would make it a committee at the last annual meeting. The whole purpose of that is for our board to think about how we need to exchange information with you and respond to questions and specific requests that you may have. It has been in place for over a year but I think it was immediately after the last annual meeting. Chairman Moriarty I notice that you are the chair of that sub-committee? Mr. Leonard Yes. Chairman Moriarty The letters that we get, one or two a month, do those come from the full Board of Directors or is does the Communications Committee having to put those together? Mr. Leonard The letters that you get come from various parties or individuals. Sometimes it’s from John, sometimes it’s from me and it depends on the subject of the letter. Very often we discuss the content of the letter but it’s really a letter under the signature of whoever it is at the bottom of the letter. This is an unusual company in the sense of how it is owned and its present structure. For instance, we had a meeting a little while back and we were talking about how we can make sure that your full Board of Alderman and the various committee members understand what we are doing and what kind of company this is because there is a turnover from the standpoint of the Board of Alderman and these committees. You don’t have enough time to go through the thousands of pages that we have gone through. You’ll see in this notice that we have actually explained our company a little bit. We went through the Corporate Governance, we gave a very short summary of how we operate and that’s on purpose. We are trying to put it on paper so that while you might not have been able to read last night for tonight’s committee, you can go for later. It’s a reference, if you will. We also recognize that sometimes it’s easier to talk about it and our hope is that we can have those kinds of discussions. That’s what the Communications Committee is trying to figure out. We are trying to come up with a way to make sure that communication with the Board of Alderman is as good as it can be. Alderman Deane Everybody gets the communications that are sent over here. They go home in everybody’s packet. Eventually, what we are going to end up doing is everything is going to be electronic unless there is a need for paper. The distribution will be three or four people that will still receive paper and there will be eleven aldermen that will be dealing with electronics, and four aldermen that will not. I think the communication aspect is has been fine. We have been kept in the loop of everything. The original arduous process of going Pennichuck Water Special Committee -4- 04/14/14 through and appointing the people that were brought in to serve on the board initially worked out very well. We’ve got a good, well rounded group of people that had an interest and they are up for re-appointment and I think that’s a good thing to keep some continuity. After what went on, it’s nice to have a little continuity. Then you have the folks that were there previously that had their ear to the ground and their finger on the pulse of the operations. The most important thing we have is a staff on the street. That was the biggest concern I heard during this whole process. Are we going to lose our jobs? I said, what are you crazy? You’re the last people that have anything to worry about. They know where all the nooks and crannies are of the system. They are very professional and they are very good at what they do. I think what you did here Jay was very good. It abbreviates some of what we ended up reading through to help some of our newer members see some of the structure of the corporation because it is a different entity from what you would normally see. I think the communication with us is…I have been happy with it. As things start coming through, and I have to sit down with our Legislative Manager because we have a little transition where we have a program that everything is going to be scanned into. Everything is a public document unless it’s a confidential thing for a non-public session. I haven’t seen much non-public stuff coming from Pennichuck. I don’t want to see any. The one question I have was on the appointment of the Merrimack Valley Regional Water District individual. I attended a meeting in Alderman Wilshire’s absence about three weeks ago in Bedford and they have an interest in appointing somebody and they are going through the process now, after their original appointment decided to walk away from it. They are actively doing that and I helped through the process because they were having trouble making a quorum. I told them to appoint a sub-committee of the group and get three people and if any else has an interest after that, they can show up if they want. I don’t know whether or not they took my advice. Then they were going to post something and advertise and go through the review process. I haven’t heard anything from Rick Sawyer. Once we hear something… Mr. Patenaude They advertised. I saw the advertisement in the Union Leader and I think the Telegraph too. They are closing the ads on April 28th. They are taking resumes until that time. Then I presume they will do their vetting and everything else. Alderman Deane Once that’s done, I know that the communities that have paid in to that Merrimack Valley Regional Water District all had a portion of their monies refunded back to the towns. The selectmen must be happy they are getting some dough back. It wasn’t a ton of money but every little bit helps. When that appointment comes through, that comes to this board, it goes through personnel, and then the appointment is made. I believe that is how the process works. Mr. Leonard The exact process is written out in the by-laws and supported by the, what I’ll call, the testimony and history that occurred at the PUC. You bring up an interesting point because basically, there are three different points of view and I’m not sure that anybody had anticipated what is occurring now. What I mean by that is that the expectation was always that there would be a nomination that would be part of the initial Board of Directors and that just didn’t happen. The way the by-laws are, is that they call for a certain process for the initial Board of Directors and then they call for a different kind of process for the replacements thereafter. Just how this all works is a point of discussion. The City of Nashua has a point of view that I think you have expressed. The Merrimack River Water Shed Group has a point of view that is a little different than what you have expressed and I think that our board has a third point of view that while not inconsistent, is a little bit different in process. It’s something we are going to work through but I think it’s important to note that we are looking forward to anybody suggested by the Merrimack River Group – the Merrimack Valley Regional Water District. We are just waiting for them to propose someone. Pennichuck Water Special Committee -5- 04/14/14 Alderman Deane The mistake that was made of the appointment process was on the city’s side because they sat on that appointment for over a year and didn’t do anything with it. There was some reason behind not putting the name forward. That wasn’t done when the initial board was still in place so there’s never been anyone ever appointed and I don’t know the difference of opinion in having somebody appointed by them and come to the Personnel Committee and then appointed by the board to serve on the Board of Directors. I think maybe the only difference in that may be is that they might feel as though they vote and the person just goes right there and doesn’t even bother to come through our city process. If I remember correctly, once they submitted an appointment, just like all the appointments for the initial board all came through personnel and they were all voted on by this board and they were all appointed. I just don’t want it to turn into a big “bru ha ha” about little or nothing and I don’t think anyone wants to see that. Mr. Leonard I don’t have any worries, we’ll be able to figure this out. Part of the difficulty has been that we have never really discussed it. When I say “we”, I mean the three different points of view. We are happy to sit down and discuss it. I don’t know whether we should discuss it with the chairman or the president or in this committee but once we get a nomination from the Merrimack Valley Regional Water District, we are happy to talk about it. I think it’s important that we look to the documents of the transaction and to the extent possible respect what is typical in a corporate situation because that’s what we are trying to accomplish. Chairman Moriarty In reading the by-laws, it comes down to the interpretation of is this an initial appointment or is it not? The all initial appointments is pretty clear that since there was no Board of Directors, there was no process that could follow the Board of Directors. Then it says all re-appointments and then any further appointments go through the Nominating Committee. On one hand, the position is not a re-appointment because the person hasn’t been appointed in order to be re-appointed. Is it considered a new appointment like Mr. James Dore or is it an initial appointment? If it’s a new appointment like James Dore and then it goes through the Nominating Governance Committee. If it’s an initial appointment then it comes from the Board of Alderman or it’s up to us and the Merrimack Valley Regional Water District to haggle over that. If you read through to further decide if it is initial or is it a subsequent – the problem is that term, that person would have been Class B I believe or Class A, whatever it is, did that initial appointment would have expired at this point. In order to carry it through, it becomes a re-appointment. There is room for interpretation of – is it still an initial that was expired or is it new. Mr. Leonard It may not matter. I think what I’m saying is let’s let it work itself out. Once we get a nomination let’s at least sit down in an informal setting and let’s consider what’s best for all three points of view. Chairman Moriarty It ultimately only matters if there is a disagreement over the nominated person, whether that person is appropriate. Let’s lead to sort of being proactive. You picked Mr. Dore because of your looking for skills so had you at least made a list of the skills that are still outstanding that you could hand over to the Merrimack Valley Regional Water District and say if you happen to find someone with these skills, maybe we can kill two birds with one stone. Pennichuck Water Special Committee -6- 04/14/14 Mr. Leonard I think we actually posted that. We have developed skills, a list of skills and identified them. I’m not sure we have a complete 100% list but our goal has always been to look at the board as it is presently comprised and make sure that we have in our skill set all of the skills necessary for a complete business approach. We can certainly provide you with that list. Chairman Moriarty Who is our liaison to that or who is currently the member of the Merrimack Valley Regional Water District… Alderman Deane Alderman Wilshire is the number one and I am the alternate. Chairman Moriarty I’ll ask Alderman Wilshire to think about that and possibly head off any… Mr. Leonard Mr. Chair, if you think it’s appropriate, I am happy to sit down with Alderman Wilshire and go through the whole thing and explain what we have been doing. Chairman Moriarty Yes, I think that would seem to be the appropriate thing to do. I don’t need to be a part of it. Alderman Deane Their attorney, when I attended that meeting he started and I told him that we didn’t want to deal with any legal proceedings. We can sit down and hash this out and make everybody happy and move on with it. He was pulling out the PUC documents and I said I would just assume sit down with everyone and figure something out and move on. Get the appointment, however we are going to appoint the person, make everybody happy and get the person on board. I don’t want to run up legal cost. We don’t need to be bringing each other to court over appointing someone to the Board of Directors. Chairman Moriarty It may be worth paying special attention to whether that person is going to be a Class A, B, or C and just to make sure of the mechanics of the nominating process when the next term is expiring. If we have to amend the by-laws for some reason to make them a Class C and slip in then whatever. I’ll leave it up to you. Alderman Deane I believe the by-laws were part of what was accepted by the PUC so we can’t go and arbitrarily change something because of the initial oversight that was made of not having somebody appointed in the position. I’m not an attorney so I don’t know but you would think that they’d want you to follow the guidelines and I don’t think we can deviate from those. Mr. Leonard Again, I feel very confident that we can resolve this. Pennichuck Water Special Committee -7- 04/14/14 Chairman Moriarty Let’s make that a headline in tomorrow’s paper – Everyone gets Along! Alderwoman Melizzi-Golja For the sake of people that may be watching this evening, we have mentioned Mr. Dore a couple of times as the person who is the nominee to fill the spot that has been held by Mayor Lozeau. For individuals who may not have read about him, could you just summarize his vita and maybe the information that you have provided to us. Chairman Moriarty The notice of the annual meeting of shareholder, on page 7 and 8 we have the bio’s of the nominees for director, James P. Dore, Elizabeth A. Dunn, Paul A. Indeglia, and James McMahon. Mr. Leonard In a general sense, what we followed is kind of a typical corporate path and first we established a procedure within our Nominating Committee and we have talked about that in a general sense over the last couple of years. We improved that process this year and I believe Chairman Moriarty was present for one of the interviews with Mr. Dore. The short story is that it starts out with a non-public interview, it then becomes a public interview where we notify the members of this committee and in particular, the chairman of the committee should you have questions. We go through that public process and come up with a recommendation. The way we arrived at this particular nominee was that we advertised for the position, we received 21 resumes, we focused on those with the skills that we were seeking, we went through the interview process and selected and recommended Mr. Dore. When I say recommended, what happens is the committee makes a recommendation to the full board, that individual is available to the full board, goes to meeting of the full board, and the full board makes a formal recommendation to the shareholder who is the City of Nashua. That was our process and there is a summary in the notice of the annual meeting. I think that answers your question. That is our process and I know that the chairman was present at the public hearing. Alderwoman Melizzi-Golja Thank you for explaining the process but I was wondering if you could summarize this bio for individuals who may not be familiar with Mr. Dore since he is the only one who is a new nominee. Mr. Leonard Sure. The individual who is nominated and recommended in addition to the present incumbent directors, is Mr. James P. Dore. Mr. Dore has been the Chief Financial Officer of Marlborough Software Development Holdings, Inc. which is a software developer and marketer of publishing and browsing software products and technologies since March, 2012. He was the Chief Financial Officer of Bitstream, Inc. from March, 2003 to March, 2012, and Corporate Controller from June, 1999 to March, 2003. He was the Chief Financial Officer of Celertiy Solutions, Inc. from April, 1999 to June, 1999, and Corporate Controller from January, 1997 to March, 1999. Mr. Dore has experience in both publicly traded and privately held companies. Mr. Dore is a Certified Public Accountant. Mr. Dore holds a Bachelor of Science degree, with distinction, from Clarkson University. Alderwoman Melizzi-Golja In looking at the four nominees, and looking at the standing committees, do you anticipate that people will just stay on those committees? Do you think it will stay the same and Mr. Dore will fill Mayor Lozeau’s spot? Pennichuck Water Special Committee -8- 04/14/14 Mr. Leonard No. The committees were indicated in our summary for your information. The process for that is, again, in a typical corporate manner, I, as chairman, will appoint the members of the committee and that occurs annually. The goal is to match individual skills with committee assignments and at the same time, we do have one piece of juggling that we have to do in that we have to make sure that our Nominating Committee has individuals who are not going to be up for re-nomination. Taking those considerations into mind, I’ll make some appointments at the May meeting. It isn’t an automatic replacement, it’s much more about matching skills with needs. Chairman Moriarty I wish had taken notes from when I did visit. In general, I am favorable towards Mr. Dore. I am trying to think of a specific example of what I liked about his interview. It was clear to me that he’d studied for it and I don’t know if this is exactly the way I remember it but this is an example of the sort of thing that he seemed to understand, for instance, in the general public, we sometimes confuse the distinction between the rate payer and the shareholder. In many cases the rate payers and the shareholders is the same person but structurally they are very different things. The shareholder’s of Nashua is anybody who is a resident of Nashua. Being a resident of Nashua they vote and are part of the political process of voting and they own it. A rate payer is anybody who consumes water of Pennichuck. He seemed to get that. Those are the types of subtleties amongst the fact that that what makes Pennichuck special in the world in that it’s a private company owned by a public entity and there certain things that are different that go along with that and it seemed like he understood that. He downplayed his understanding of it though. Mr. Leonard He was clearly prepared and had gone to great lengths to prepare and we could tell. Chairman Moriarty I think he might have asked about a document on the website and he had read it and knew it well enough that he was able to quote out of the document. I was impressed. One thing that popped out with Elizabeth Dunn was that she was the Assistant Attorney General for the State of New Hampshire back in 2001 to 2007. Very impressive. Paul Indeglia has a Ph.D. in Toxicology and I guess that’s certainly useful if you are a water company. Mr. McMahon currently works for Black & Veatch Management Consulting which is a consulting firm advising utility executives on a range of strategic, financial and transactional matters. He has a Juris Doctor degree from the College of William and Mary. They are clearly different individuals but their resumes speak for themselves. Alderman Deane We have some good people. Chairman Moriarty I think we do. I don’t think we need to dig into the Annual Report to the Shareholder which is the third item in that communication, especially considering at our last meeting, I thought we had a really good overview of the finances. The numbers are slightly different but they make a little more sense. One thing I noticed is that the revenues from 2012 and 2013 were almost identical within three digits - $37.8 million versus $37.7 million. Was that on purpose? Mr. Leonard It was coincidence. Pennichuck Water Special Committee -9- 04/14/14 Mr. Leonard Let me make one comment because it’s not obvious. One of the things that we, as Pennichuck do, is try to act like a corporation and in this particular case, we try to act like a public corporation in the sense that the Board of Directors hires an audit company to audit our books. That audit is the result of an audit by the Board of Directors, not by the people who are doing the work. In fact, it is independent of them. They have to give information but the audit is at the direction of the Board of Directors so you can be assured of independence and accuracy. Chairman Moriarty Of course the PUC gets involved. Mr. Leonard The PUC does an audit – there’s a second report and very detailed down to the penny type of thing. From: Larry D. Goodhue, Chief Financial Officer, Pennichuck Corporation Re: Request to Approve Resolution for New Line of Credit (R-14-016) MOTION BY ALDERMAN WILSHIRE TO ACCEPT AND PLACE ON FILE MOTION CARRIED Chairman Moriarty It’s technically not R-14-016. Mr. Goodhue This is a renewal of our existing line of credit which was arranged for at the time of the transaction. Prior to the city owning us, we had a line of credit that expired at the time of the transaction and a new line was put in place effective with the city’s ownership in 2012. That line of credit had a limited term set to expire on June 30th of this year so we began the process of seeking a replacement for that line of credit at the same pre- existing level - $10 million. The line of credit is there for short-term working capital needs and is very much what a normal corporation would have in place. The only difference here is that we are looking at moving this to a different bank but it’s at the same basic terms and it’s for a two-year period of time. Chairman Moriarty What inspired you to change the bank? Mr. Goodhue A couple of the costs are a little bit more favorable and the process of looking at our needs. Chairman Moriarty So, it ultimately saves money. Mr. Goodhue Yes. Pennichuck Water Special Committee -10- 04/14/14 Mr. Leonard There’s a slightly better interest rate. From: Larry D. Goodhue, Chief Financial Officer, Pennichuck Corporation Re: Request to Borrow Funds from the State Drinking Water Revolving Loan Fund Program (R-14-017) MOTION BY ALDERMAN WILSHIRE TO ACCEPT AND PLACE ON FILE MOTION CARRIED Mr. Goodhue This is actually an add on to the request we brought to the committee last time around. After we brought that to you and gotten approval for borrowing the funds, it was brought to our attention that there was additional work in the city of Nashua and Amherst that was being pursued that we needed to be able to follow along. We talked about sewer work and water line water work happening in the same trench. There’s was extra work, about $1 million of extra work. Fortunately, at the same time, there was extra capacity in the state revolving fund to be able to finance that extra work at very favorable interest rates in terms as the other approval. This is just an addition to the approval that we brought to the committee last time around. Chairman Moriarty My understanding is that the costs associated with this are PUC looks at that and on the balance sheet and that allows you to adjust the rates so that the balance sheet is even. Can you find out whether they agree with it in advance so taking loans out… Mr. Goodhue We have a financing petition that is in process with the PUC parallel to this course and that is on-going. We are awaiting final approval on that. Chairman Moriarty Do you actually wait until they give you approval before you take the loan out. Mr. Goodhue Yes. We have to get an order issued. It will have a 30-day cure period for us to then close on the loans. We are looking at June 5th. Chairman Moriarty Will Street - I am pleased so far that the trees are still standing in Merrimack but I was wondering if you could update us? Mr. Leonard We’re still in the process. Our job continues to be the same as before and that is to come up with the best business decision for the company. We continue to look at options. We’re looking at leasing options; we’re looking at buying options. We’re going to need to make a decision in the fairly near future, but right now we’re still receiving information. It’s an important decision for a number of reasons, not the least of which is that the PUC wants to watch our process and wants to make sure that we are being fair to our full constituency of ratepayers as opposed to just the City of Nashua. One of the things that we have to be very mindful of is that overall corporate benefit and the corporate decision that this is good for the full business not just the City of Pennichuck Water Special Committee -11- 04/14/14 Nashua. We’re working hard at that and we’re making sure that we do our homework. We will have a good decision for you but it’s not here yet. Chairman Moriarty I will admit that I have made a couple of phone calls to try to let people know that this is going on, especially people who happen to have warehouses that are looking for things to do with them. I don’t think that’s breaking any rules by working in way. The second question, I don’t even know if this is relevant, but the PUC we sort of assume that the mystical PUC from New Hampshire, are they appointed by the Governor with what their qualifications are, who and how that process goes, but the fact that they are considering having PSNH sell off that power plant in Bow, what does that have to do with the water company, but I just think that’s a terrible idea which makes me suddenly doubt sort of the PUC’s credibility, for lack of a word. Is there anything that they could come in and say okay you guys need to sell off all this stuff because we decided as the PUC you need to do this a certain way? It’s kind of an open-ended question and hard for you to predict what they might come in and do but in general let me simplify it. You operate your company well. Can the PUC come in and stick their fingers and say we want to change the way you’re doing things and then you suddenly disagree? Mr. Patenaude Typically not. The PUC has bought into the whole structure doing here during the acquisition process. Remember within the PUC there’s the electric division, there’s the water division, and the gas division. The staff there are different for each of the divisions. I feel we have a good rapport with the staff on the water side and the structure is not changing. Ten years from now? Who knows. I would never predict that, but as of today I don’t see it. Remember, Alderman Deane, when we had the acquisition there was a ruling that if the city were to buy the assets of Pennichuck Water Works that they would have to put up a lot of money for the other entities that survived. They view it more as a complete package so-to-speak because there are advantages of our structure relative to all of our customers sharing in the workforce and administration, customer service and the whole thing. They wouldn’t try to go to increase rates to the detriment of the ratepayer is my understanding, but that’s my personal opinion. Alderman Deane You can summarize it like this with what’s happening with PSNH: don’t give them a reason. PSNH gave them a reason. The other thing that Mr. Patenaude hit on is when we look outside of the city’s limits, we may have to appear before the PUC for different items but there’s lots of times PUC comes knocking on Pennichuck door too when there’s small water companies in trouble. They look for a way to solve the problems. You wouldn’t think that they would want to come in and do something that would be detrimental to a card that they hold on occasion and the phone they pick up to look at solving problems. I don’t think they are in that position. When some of these small companies had problems, they came calling to Pennichuck to help them out because the people were depending on the water and the company failed. It’s kind of an ace in the hole to them especially with the people that are employed there that know what they are doing. We’re as much of an asset to them as they are to us, I would imagine, but that’s just my opinion. Chairman Moriarty Mr. Ware, you’ve been pretty quiet; I thought I’d put you on the spot. Can you offer us any words of wisdom? Mr. Ware In regards to what? Pennichuck Water Special Committee -12- 04/14/14 Chairman Moriarty Anything, now is your chance. Alderman Deane Why does my water meter squeak when it goes counter-clockwise? Mr. Ware You want me to answer that question? It’s not supposed to go counter-clockwise. I think one of the challenges we face is still having people understand that the operations are run by the company. I know that the Mayor’s Office takes a lot of calls directly. We’re trying encourage people and through folks like Patti Rogers, who is great, and the Mayor to say call us first. If you’re not satisfied with the service that we’re giving you then please elevate it to the level of the Mayor. Since the acquisition there’s a lot of calls that go directly to the Mayor’s Office. But again we have a great line of communication with Patti, and work with herself and other folks in the Mayor’s Office to get the answers that people are looking for. Chairman Moriarty That sort of alludes to the difference between the shareholder and the ratepayer. You don’t call the Mayor’s Office unless you have a shareholder question. Please call Pennichuck if you have a ratepayer question, a service question. Alderman Deane Absolutely. The water company is still there. They are running the business; the Mayor’s Office isn’t running it. Like you said, if you have a shareholder question that’s one thing. If it has to do with your service or whatever, part of your water supply system, call Pennichuck. You don’t call city hall. There was a lot of confusion, a lot of reporting. I can understand it. People they want answers and they are going to seek out where they think they should be calling. Patti does an excellent job; she’s an asset to the city. She’s very good with a lot of people. Thank you, Mr. Chairman. Mr. Ware If folks have not seen in the paper, seen it on our website, seen it in your bill, for the next 8 weeks we are in the process of nighttime flushing. Alderman Deane I see it flowing by my house. Mr. Ware If you’re interesting in when flushing is going to happen in your ward, if you go to our website there is a section about flushing. Hopefully all the maps are up there. At least for the next couple of weeks the areas that we will be flushing week by week, we flush between 10:00 p.m. and generally taper off at about 5:00 a.m. The goal of night flushing is not to be disruptive to people’s normal activities. We want people to be aware of that. Again if people have issues or problems or concerns with what’s going on with the flushing, they should give us a call. Pennichuck Water Special Committee -13- 04/14/14 Alderman Deane Are you going to be flushing hydrants down Daniel Webster Highway this year? Mr. Ware Yes. Alderman Deane Someone is going to call Taggart Ice before they do it? Mr. Ware Yes. We have a list of businesses. It’s always a growing process. When I came in 1995, the company did not do flushing. The net result was is that every summer when the first high flows came up because of the nature of the materials of construction of the pipe and also the natural magnesium in the water, there would always be colored water instances in the middle of the day upsetting businesses, upsetting or creating problems. We started the flushing process done at night, but there are businesses that operate at night. Overtime we’ve developed a list of customers who we notify in advance and coordinate with them our activities so we don’t disrupt their businesses so Tiger Ice isn’t producing ice on the night that we are doing their particular area. We will coordinate with them. We try to structure it around a time when they say this works best for us. Flushing does follow a very orderly process so you can’t go from the left hand side to the right hand side, if I got that correct, you have to work right down the line. Sometimes that can be difficult with customers. We had communication today with the Mayor about somebody who wanted to be notified the day that their area was being flushed. Because it’s not an exact science and we go through the system and stay with it as long as it takes to clear it up, sometimes work progresses quickly, sometimes it doesn’t progress so quickly, so trying to predict weeks in advance the exact day that we’re going to be in front of a home can be difficult. Again, we work with a few people who have unique needs and ask them to put us on your call list. When you see it’s your list, we’ll work closely with you to make sure that you know the night that we’re going to be in your particular neighborhood. There may be dialysis in use or other things. It is a very comprehensive process. It takes a long time, 8 – 9 weeks, but very important to maintain the water quality. Our goal again is to be as non- disruptive as possible. UNFINISHED BUSINESS – None NEW BUSINESS – RESOLUTIONS R-14-016 Endorser: Mayor Donnalee Lozeau APPROVING THE PROPOSAL OF PENNICHUCK CORPORATION TO BORROW UP TO TEN MILLION DOLLARS ($10,000,000) UNDER A REVOLVING LINE OF CREDIT WITH TD BANK, N.A. MOTION BY ALDERMAN WILSHIRE TO RECOMMEND FINAL PASSAGE ON THE QUESTION Alderman Deane I think we got a good explanation from the folks from Pennichuck earlier. I did anyways. Thank you. MOTION CARRIED Pennichuck Water Special Committee -14- 04/14/14 R-14-017 Endorser: Mayor Donnalee Lozeau APPROVING THE PROPOSAL OF PENNICHUCK CORPORATION TO GIVE PENNICHUCK WATER WORKS, INC. AUTHORITY TO ENTER INTO A LONG TERM LOAN FROM THE STATE DRINKING WATER REVOLVING LOAN FUND PROGRAM MOTION BY ALDERMAN WILSHIRE TO RECOMMEND FINAL PASSAGE MOTION CARRIED NEW BUSINESS – ORDINANCES – None PUBLIC COMMENT – None REMARKS BY THE ALDERMEN Chairman Moriarty Now might not be a bad time to create a motion somehow to send this proxy back to the full Board with a recommendation of what to do. We have a proxy, there’s only one proposal. One to elect James Dore, Elizabeth Dunn, Paul Indeglia and James McMahon as directors, each for a three-year term, and until their successors are elected and qualified. It says the board of directors recommends a vote for each of the nominees. They allowed us four separate boxes. In the past, I remember last time, it was sort of an all. We complained amongst ourselves and it sounds like they are listening and they broke it out. So what should we do? Alderman Deane I think we should vote to recommend the appointments of the four individuals and send that back to the full Board of Aldermen. MOTION BY ALDERMAN DEANE TO RECOMMEND TO THE BOARD OF ALDERMEN THE VOTE FOR JAMES P. DORE, ELIZABETH A. DUNN, PAUL A. INDEGLIA AND JAMES MCMAHON MOTION CARRIED Alderman Deane I’ll speak with Sue Lovering tomorrow about this, and we’ll put it together for the next full Board meeting. Like you said with the way our ordinances are, we’re supposed to skip a meeting but I guess we can take our chances and attempt to suspend the rules to allow for a second reading so it makes the timeline. The other thing, I had talked to Mr. Patenaude about those two pieces of legislation because it is construction season and they are wanting to get out. I did mention the two pieces of legislation, Alderman Wilshire, to the Merrimack Valley Regional Water District about some of the work they were doing up in Amherst, just to keep them in the loop. I don’t know if you want to drop them an e-mail and tell them the Pennichuck Water Special Committee sent along a favorable recommendation and it will be before the full Board at our next meeting. But I will talk to Sue about this, and we will put something together for our next full Board meeting. Chairman Moriarty Thank you. Please do. Alderman Wilshire After the discussion tonight and having the Board President from Pennichuck, the CEO, the CFO, and the COO, I’d just like to say that I was on the Board when we first started the discussions to acquire Pennichuck. It was always my intent as an alderman never to interfere with the business of running that water company because it’s a Pennichuck Water Special Committee -15- 04/14/14 well run business. I like the fact that we keep our distance, that we allow them to do what we’ve asked them to do and that is to continue to run a good business for the city. Just my thoughts. Thank you. Alderman McGuinness I did attend about a month ago one of their board meetings, and I would second Alderman Wilshire’s sentiments. It’s very, very well run. At some point I did have to leave because it was non-public, but I found them to be very, very professional and serious about their business; very impressed. POSSIBLE NON-PUBLIC SESSION ADJOURNMENT MOTION BY ALDERMAN WILSHIRE TO ADJOURN MOTION CARRIED The Pennichuck Water Special Committee meeting was adjourned at 8:12 p.m. Alderman Sean M. McGuiness Committee Clerk