DF 98-035
TILTON & NORTHFIELD AQUEDUCT COMPANY, INC.
Petition for Authority to Issue Securities and Increase Rates
Order NISI Approving Financing and Stipulation
O R D E R N O. 22,908
April 28, 1998
The Petitioner, Tilton & Northfield Aqueduct Company,
Inc. (TNA or the Company), was authorized by the New Hampshire
Public Utilities Commission (Commission) in dockets DF 95-185 and
DF 96-210 to issue securities in an amount not to exceed
$4,159,889 pursuant to RSA 369. The funds were expended to
construct gravel packed wells in Northfield, a new transmission
system, reservoirs and other plant to comply with the Surface
Water Treatment Rule of the Safe Drinking Water Act (SDWA). The
use of the funds was found to be prudent by the Commission.
Order No. 21,876 (October 24, 1995) and Order No. 22,296 (August
27, 1996).
On December 31, 1997, Phase I of the project was
completed and the new wells and transmission system were placed
in service. Those system improvements resulted in slightly
increased water pressure which caused numerous failures in
"cement-tin" mains located in the Towns of Tilton and Northfield
which were installed one hundred years ago. The main failures
were not determined to be an engineering risk during the planning
phase of the SDWA compliance project, and have resulted in
customers in the affected areas being without water for
substantial periods of time.
On February 11, 1998, TNA filed a petition with the
Commission, pursuant to RSA 369, requesting authority to borrow
an additional $2,319,439 to replace the cement-tin mains and to
upgrade a substantial amount of undersized mains, thereby
improving system reliability. By letter dated March 18, 1998,
the Company decreased its requested borrowing authority to
$1,230,000 to target only those mains in most immediate need of
replacement. The revised request covered replacement of only the
cement-tin mains and 2 inch mains located on Watson Street and
Route 132 in Northfield.
TNA has filed an application with the New Hampshire
Department of Environmental Services (NHDES) requesting State
Revolving Loan Fund (SRF) financing for the main replacement
project. The Company is on the funded portion of the NHDES list
of projects to receive SRF financing at a twenty year fixed rate
of 4.216%, subject, in part, to the prior approval by the
Commission to issue the securities and to increase rates to
service the resultant debt.
On April 10, 1998, TNA and Staff executed an Agreement
resolving all of the issues in this proceeding. The Agreement
stipulates that the proposed use of the funds is in the public
interest and prudent, and further provides that TNA shall receive
the necessary funds to service the resultant debt once the
proposed plant is placed in service. The Agreement also concurs
in the terms of the financing; however, as of the date of the
Agreement, the terms and conditions were recommendations of the
New Hampshire Business Finance Authority and were not yet
finalized. The Company agrees to submit the final terms to the
Commission as soon as they are available. TNA's March 18, 1998
letter also indicated that it had been identified as a
"disadvantaged water company" which makes it eligible to receive
principal reduction payments of between 15% to 30% of the loan
amount.
Staff has reviewed the proposed terms and conditions of
the financing as they currently are proposed and finds them to be
just and reasonable and in the public interest. Staff has also
reviewed the proposed use of the funds and believes such use to
be prudent. Based upon Staff's review and the Agreement, we find
the proposed use of the funds to be prudent and in the public
interest and the terms and conditions of the loan just and
reasonable.
We believe the Company should vigorously pursue the
principal reduction and any other avenues that will assist it in
reducing its cost of debt and, therefore, rates to its customers.
The Company shall keep the Commission informed of all such
efforts. If the final terms and conditions of the SRF financing
vary materially from those outlined in the Agreement; however, we
reserve the right to revisit any borrowing authority provided
under this order.
Based upon the foregoing, it is hereby
ORDERED NISI, that, pursuant to RSA 369, TNA is
authorized to borrow up to $1,230,000 under the terms and
conditions set forth in the Stipulation and the forgoing order;
and it is
FURTHER ORDERED, that the proposed use of these funds
is prudent as presented; and it is
FURTHER ORDERED, that pursuant to N.H. Admin. Rules,
Puc 1604.03 or Puc 1605.03, the Petitioner shall cause a copy of
this Order Nisi to be published once in a statewide newspaper of
general circulation or of circulation in those portions of the
state where operations are conducted, such publication to be no
later than May 5, 1998 and to be documented by affidavit filed
with this office on or before May 12, 1998; and it is
FURTHER ORDERED, that all persons interested in
responding to this petition be notified that they may submit
their comments or file a written request for a hearing on this
matter before the Commission no later than May 19, 1998; and it
is
FURTHER ORDERED, that any party interested in
responding to such comments or request for hearing shall do so no
later than May 26, 1998; and it is
FURTHER ORDERED, that this Order Nisi shall be
effective May 28, 1998, unless the Commission provides otherwise
in a supplemental order issued prior to the effective date; and
it is
FURTHER ORDERED, that the Petitioner shall file an
accounting with this Commission, each January 1 and July 1, duly
sworn to by its Treasurer, showing the disposition of the
proceeds of this financing, until said proceeds are fully
expended.
By order of the Public Utilities Commission of New
Hampshire this twenty-eighth day of April, 1998.
Douglas L. Patch Bruce B. Ellsworth Susan S. Geiger
Chairman Commissioner Commissioner
Attested by:
Claire D. DiCicco
Assistant Secretary