DF 97-225
            Pennichuck Corporation/Pittsfield Aqueduct Company
                 Petition for Approval of Merger Agreement
                          Order Approving Merger
                 R E V I S E D   O R D E R   N O.  22,843
                             January 30, 1998
         APPEARANCES: Gallagher, Callahan and Gartrell by Denis
     J. Maloney, Esq. on behalf of Pennichuck Water Works Company;
     Sulloway and Hollis by Fred L. Potter, Esq. on behalf of
     Pittsfield Aqueduct Company Inc.; Frederick Welch, Town
     Administrator on behalf of the Town of Pittsfield; and Eugene F.
     Sullivan, III, Esq. for the Staff of the New Hampshire Public
     Utilities Commission.
               On October 21, 1997, Pennichuck Corporation and its
     subsidiary Pennichuck Water Works, Inc. (Pennichuck Water Works),
     a regulated water utility in the State of New Hampshire,
     (collectively, the Petitioners) jointly filed with the
     Commission, pursuant to RSA 374:33, a Petition for Approval of
     Acquisition of Capital Stock of Pittsfield Aqueduct Company
     (PAC), a public water utility providing service to a portion of
     the Town of Pittsfield.       
               If approved, the Petition provides that Pennichuck
     Corporation would acquire all of the issued and outstanding
     capital stock of PAC and other incidental property and rights
     necessary to continue the uninterrupted operation of PAC as a
          public utility water company pursuant to an Agreement and Plan of Merger dated September 19, 1997 (Agreement).  PAC joined in the
     Petition for the purpose of evidencing its consent to the
     proposed acquisition.  
               The Agreement is conditioned upon the Petitioners'
     receiving certain assurances from the Commission with respect to
     rate base, rate of return, and level of rates.  In particular,
     the Agreement requires Order No. 22,327 (September 23, 1996) in
     DF 95-016 to remain in effect following the acquisition and
               On November 21, 1997, an Order of Notice was issued 
     scheduling a prehearing conference for December 8, 1997.  
               On November 29, 1997, the Town of Pittsfield
     (Pittsfield or Town) voted pursuant to RSA 38:3 to purchase or
     otherwise acquire the assets of PAC pursuant to the provisions of
     RSA Chapter 38.     
               At the December 8, 1997, prehearing conference
     Pittsfield moved for intervenor status in the proceeding, which
     was granted without objection.  Pennichuck, PAC, Pittsfield and
     Staff stated their positions with regard to the filing for the
     record.  In addition, Rene Pelletier, Administrator of the Water
     Supply Engineering Bureau of the Department of Environmental
     Services (DES) explained safe drinking water problems in
     Pittsfield and expressed his support of Pennichuck's acquisition
     of PAC.
               Pennichuck and PAC set forth positions supporting the
     proposed merger.  Staff also stated its support of the merger
     with certain reservations.  Pittsfield objected to Commission
     consideration or approval of the proposed merger on the grounds
     that the merger would interfere with, or undermine, its attempts
     to acquire PAC under RSA Chapter 38.
               By Order No. 22,820 (January 5, 1998), the Commission
     scheduled a hearing on the merits of the petition for January 21,
     1998.  That hearing was subsequently rescheduled for January 26,
               At the January 26, 1998 hearing, Pennichuck
     Corporation, PAC and Pittsfield presented a Letter Agreement
     resolving Pittsfield's concerns regarding the proposed merger and
     providing that any successor corporation to PAC's assets would
     take the name Pittsfield Aqueduct Company, Inc. until the Town,
     within one year from the date of the Letter Agreement, either
     completes or abandons its efforts to acquire the system.  The
     Letter Agreement provides that in consideration of Pittsfield's
     support of the merger, Pennichuck Corporation shall not challenge
     the validity or adequacy of the Town's vote to acquire PAC or the
     Town's RSA 38:6 notice to PAC of the vote.
               Staff did not object to the proposed merger.      
               The issue for our consideration is whether the proposed
     merger is in the public interest.  RSA 374:33; See also, RSA
     374:30.  Under the public interest or public good standard to be
     applied by the Commission where an individual or entity seeks to
     acquire a jurisdictional utility, the Commission must determine
     that the proposed transaction will not harm ratepayers.  Grafton
     County Electric Light and Power Co. v. State, 77 N.H. 539 (1915);
     Cf., Parker-Young Co. v. State, 83 N.H. 551 (1929)(application of
     "net benefits" test where there are competing offers to acquire). 
               Pursuant to the Agreement, Pennichuck Corporation, the
     parent company of Pennichuck Water Works, Inc., will acquire PAC
     through a stock exchange.  In the merger, PAC will merge into
     Pennichuck Acquisition Corporation, a new corporation wholly
     owned by Pennichuck Corporation.  Pennichuck Acquisition
     Corporation will subsequently be renamed Pittsfield Aqueduct
     Company, Inc. and will remain a wholly owned subsidiary of
     Pennichuck Corporation.
               The testimony revealed that Pennichuck Water Works has
     been operating and maintaining PAC's water treatment plant that
     came into service on October 9, 1997.  The testimony further
     revealed that PAC does not have the technical expertise to
     operate such a facility and has relied on the expertise of
     Pennichuck Water Works.   
               The Pennichuck Water Works' employee currently
     servicing the treatment plant would become the sole employee of
     Pennichuck Acquisition Corporation and would handle all
     operational matters on a day-to-day basis.  Pennichuck Water
     Works would provide all other services, such as billing, long
     term planning and oversight, customer relations, financial
     matters, etc.
               Pennichuck testified that it would have greater access
     to the financial markets than PAC, allowing it to significantly
     reduce the cost of capital.  Pennichuck would also have access to
     a State Revolving Fund of low interest loans and grants for water
     utilities for which PAC did not qualify.
               Pennichuck testified that the cost of service and rate
     base of the new Pittsfield Aqueduct Company would remain
     substantially the same as reflected in PAC's current books of
     account.  Thus, Pennichuck testified there would be no need to
     increase rates at this time.  In fact, testimony indicated that
     rates might decrease slightly to reflect the lower cost of
     capital available to the new corporation.  
               As was noted by Pennichuck, we have recognized the
     financial, managerial and technical expertise of Pennichuck to
     operate a water utility on numerous occasions.  See eg., Re
     Pennichuck Water Works, Inc., 75 NH PUC 224 (1990).  Based on the
     testimony, we find that the acquisition of PAC by Pennichuck
     Corporation will not only not harm ratepayers, but will be
     beneficial to ratepayers.  Thus, we will approve the acquisition. 
               Based upon the foregoing, it is hereby 
               ORDERED, that the proposed merger of Pennichuck
     Corporation and Pittsfield Aqueduct Company, with the subsequent
     creation of a new wholly owned water utility consisting of the
     assets and liabilities of Pittsfield Aqueduct Company, is in the
     public interest and is APPROVED; and it is 
               FURTHER ORDERED, that the Pennichuck Acquisition
     Corporation, to be renamed Pittsfield Aqueduct Company, Inc., is
     authorized to conduct business as a public water utility in the
     Town of Pittsfield, New Hampshire; and it is 
               FURTHER ORDERED, that all orders of this Commission in
     effect as of this date that apply to Pittsfield Aqueduct Company,
     and all of the benefits and liabilities of those orders, shall
     apply to Pennichuck Acquisition Corporation and, subsequently to
     the newly renamed Pittsfield Aqueduct Company, Inc.
                    By order of the Public Utilities Commission of New
     Hampshire this thirtieth day of January, 1998.
        Douglas L. Patch    Bruce B. Ellsworth        Susan S. Geiger
            Chairman           Commissioner            Commissioner
     Attested by:
     Thomas B. Getz
     Executive Director and Secretary