DF 95-016
                     Pittsfield Aqueduct Company, Inc.
          Petition for Authority to Borrow and for Authority for
                         a Step Increase in Rates
           Order Denying Petition of the Town of Pittsfield for
                         O R D E R   N O.  22,894
                               April 7, 1998
         On December 31, 1997, the New Hampshire Public
     Utilities Commission (Commission) issued Order No. 22,811 in this
     docket (the Order) providing for an increase in the revenues and
     rates of the Pittsfield Aqueduct Company, Inc. (PAC).  This
     increase in revenues, amounting to $217,952 or 101.6% over
     current revenues, resulted primarily from PAC's construction of a
     new water treatment plant in compliance with the federal Safe
     Drinking Water Act (SDWA).  
         In the Order, the Commission approved the proposal of
     PAC to allocate the revenue increase in a manner which provided
     for an increase of approximately 155% to water customers and for
     an approximate increase of 40% to fire protection rates.  In its
     Order, the Commission noted that a cost of service study
     completed for PAC during the proceeding indicated that current
     fire protection revenues were adequate to cover the costs of
     providing such service.  However, the Commission approved an
     increase in such fire protection revenues because the level
     proposed by PAC represented 30% of PAC's revenues, a standard
     often used in the industry and other regulatory commissions.  In
     addition, the Commission pointed to testimony presented at the
     hearing which indicated the Town was to receive a substantial
     increase in property tax revenues as a result of the construction
     of the treatment plant that caused the increase in rates.
         On January 15, 1998, the Town of Pittsfield, an
     intervening party to this docket, submitted a Motion for
     Rehearing (the Motion) of the Order, indicating that it believed
     the Commission erred in granting any increase in the fire
     protection rates.  The Town averred that the Commission did not
     give proper weight to testimony which established that the
     existing fire protection rates were equal to or in excess of the
     cost of service for that rate classification.  In addition, the
     Town asserted its belief that such rate setting unfairly
     subsidizes one rate class, i.e., General Metered Service
     Customers, at the expense of another, namely the taxpayers of the
     Town of Pittsfield, the vast majority of whom, they contend,
     receive no benefit or service under the fire protection rates
     charged to the Town of Pittsfield and included in their municipal
     property tax.
         The Town also questioned the Commission's reliance on
     and the relevance of the standard adopted in Maine, of a 30%
     allocation of a utilities' revenue to fire protection, and the
     Town also questioned the appropriateness of pointing to property
     tax revenue to be derived from the new treatment plant as further
     justification for the Commission's decision.  The Town asked that
     the Commission rescind the Order as it relates to the increase in
     fire protection rates; issue a new order providing for revenues
     for the municipal fire protection classification of $76,898
     annually; amend the allocations of revenues to the remaining rate
     classifications as per the cost of service study; rescind its
     action in accepting a standard establishing that fire protection
     revenues for smaller water companies shall be 30% allocated to
     municipal fire protection; and, rescind its action in linking
     property tax revenue to be derived from new plant or improvements
     with the rates to be charged to a municipality for fire
          Having reviewed the Town's petition for rehearing in
     this matter, we believe our decision as detailed in Order No.
     22,811 is sound. We continue to believe that the benefits the
     Town receives from property tax increases should be factored into
     our analysis.  Moreover, we believe that the use of a 30%
     standard of a water utility's revenue to municipal fire
     protection revenues is appropriate under these circumstances,
     especially when considering the substantial increase in rates to
     Pittsfield residents taking service from PAC without such an
         Based upon the foregoing, it is hereby
         ORDERED, that the request for rehearing by the Town of
     Pittsfield is DENIED.
         By order of the Public Utilities Commission of New
     Hampshire this seventh day of April, 1998.
        Douglas L. Patch    Bruce B. Ellsworth        Susan S. Geiger
            Chairman           Commissioner            Commissioner
     Attested by:
     Thomas B. Getz
     Executive Director and Secretary