DE 98-131
        Great Bay Water Company, Inc./Pennichuck Water Works, Inc.
                         Transfer of Water System
              Order NISI Authorizing Transfer of Water System
                         O R D E R   N O.  23,044
                             October 26, 1998

         APPEARANCES: Gallagher, Callahan and Gartrell by Dodd
     S. Griffith, Esq, and David A. Garfunkel, Esq. for Pennichuck
     Water Works, Inc.; Forman and Bernier by Fred J. Forman, Esq. for
     Great Bay Water Company, Inc.; and Eugene F. Sullivan III, Esq.
     for the Staff of the New Hampshire Public Utilities Commission.
         Pennichuck Water Works, Inc. (Pennichuck) filed on July
     15, 1998, a petition pursuant to RSA 374:22, 374:26 and 374:30 to
     acquire the assets of the water supply and distribution system
     and franchise rights of Great Bay Water Company, Inc. (Great
     Bay).  The water supply and distribution system provides service
     to 87 customers in a residential subdivision known as Schanda
     Farm or Turkey Ridge located in a limited area of the Town of
     Newmarket.  The petition also requested permission to charge
     Pennichuck's core system rates therein and provide service under
     the terms and conditions of the tariff currently in effect for
     the core system.  On July 27, 1998, Great Bay filed a
     complementary petition for approval of the transfer and for
     permission to discontinue business in the franchise area pursuant
     to RSA 374:28.
         The water supply system consists of three wells, a pump
     station and the distribution system.  The franchise was granted
     to Great Bay in 1988.  Re Great Bay Water Company, Inc., 73 NH
     PUC 64 (1988).  Under the proposed transfer agreement Pennichuck
     would pay $10,000 to Great Bay in exchange for the assets of the
     water system, applicable easements and franchise rights.  The
     current book value of the system is approximately $9,200 based on
     the records of Great Bay on file with the Commission. 
         Great Bay currently bills quarterly with a fixed
     customer charge of $2.65 and a consumption charge of $0.29 per
     hundred gallons, or $2.175 per hundred cubic feet.  Pennichuck
     generally bills satellite systems on a quarterly basis with a
     fixed customer charge of $23.67 per quarter and a consumption
     charge of $1.33 per hundred cubic feet.  Records of the two
     utilities indicate that the average customers annual bill will
     increase from approximately $201 to $212.
         On September 3, 1998, the Commission issued an Order of
     Notice setting a prehearing conference for September 29, 1998. 
     The Order of Notice was required to be published on or before
     September 11, 1998; it was published in newspapers of general
     circulation distributed in the Newmarket area on September 15,
     1998.  At the prehearing conference, the Commission approved the
     late-filed publication.  A copy of the Order of Notice was also
     provided to each customer and the Town of Newmarket via first
     class mail pursuant to the requirements of the Order of Notice.  
         Pennichuck, Great Bay, and Commission Staff were
     present at the September 29, 1998, prehearing conference.  At the
     outset of the hearing, Commission Staff and the parties noted
     that Staff did not require an opportunity to conduct discovery
     into the proposed transfer.  Staff stated it believed the
     transfer was in the public interest based on the information
     contained in the petitions and the operational histories of
     Pennichuck and of Great Bay.  No other parties or customers
     appeared at the hearing. 
         Staff noted its familiarity with the operational
     deficiencies with this utility under current management as
     demonstrated in DF 90-110, DR 94-185 and DE 96-369 wherein the
     Commission, inter alia, fined Great Bay for failure to file its
     annual reports, reduced rates to reflect the poor quality of
     service provided to customers, and established reporting
     requirements and specific procedures to be taken and followed by
     the utility to ensure adequate service was provided to customers. 
     See eg., Re Great Bay Water Company Inc.,76 NH PUC 121 (1991); Re
     Great Bay Water Company Inc., 80 NH PUC 233 (1995); Re Great Bay
     Water Company Inc., 82 NH PUC 695 (1997).  
         Staff and the parties also provided letters from
     customers, including a unanimous vote by the Schanda Farms
Community Association in November, 1997, submitted in docket DE
96-369, requesting that the Commission approve the proposed
transfer of the system to Pennichuck.
     Based on this information, Staff concluded that the
transfer of the system from Great Bay to Pennichuck would be in
the public interest because it would result in safe and adequate
service to customers.  Staff further concluded that the rates to
be charged by Pennichuck appeared to be just and reasonable
considered in the context of average rates.
     Pursuant to RSA 374:30 we must determine whether the
proposed transfer would be for the public good and whether the
core rates are just and reasonable under RSA 378 as applied to
this system.   
       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).  Based on this standard we find
that the acquisition of the Schanda Farms system by Pennichuck
Corporation will not only not harm ratepayers, but will be
beneficial to ratepayers.  Thus, we will approve the acquisition. 
     Pennichuck serves over 20,000 customers in its Nashua
core system and various stand-alone systems and has a history of
competent and reliable service.  This Commission has repeatedly
found that Pennichuck has the operational, managerial and
technical expertise to operate water utilities.  See eg., Re
Pennichuck Corporation/Pittsfield Aqueduct Company, Inc., Order
No. 22,843 (January 30, 1998); Consumers New Hampshire Water
Company, Order No. 22,880 (March 23, 1998).
     Moreover, we find the rates to be charged customers
under the proposed transfer just and reasonable for the reasons
set forth in Order No. 22,883 (March 25, 1998). 
     Based upon the foregoing, it is hereby 
     ORDERED NISI, that the proposed transfer of the Schanda
Farms water supply and distribution system and its appurtenant
easements and franchise rights from Great Bay Water Company, Inc.
to Pennichuck Water Works, Inc. is in the public good and is
approved; and it is
     FURTHER ORDERED, that Pennichuck Water Works, Inc. is
granted authority pursuant to RSA 378 to charge its core rates in
the Schanda Farms franchise; and it is

     FURTHER ORDERED, that Great Bay Water Company, Inc. is
granted permission to discontinue service in the franchise
pursuant to RSA 374:28; 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 the Newmarket area, and
shall send a copy of same to each Schanda Farms customer, by
first class mail, such actions to be no later than November 2,
1998 and to be documented by affidavit filed with this office on
or before November 9, 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 November 16, 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 November 23, 1998; and it is
     FURTHER ORDERED, that this Order Nisi shall be
effective November 25, 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 a
compliance tariff with the Commission on or before November 9,
1998, in accordance with N.H. Admin. Rules, Puc 1603.02(b).
     By order of the Public Utilities Commission of New
Hampshire this twenty-sixth day of October, 1998.

 Douglas L. Patch      Susan S. Geiger       Nancy Brockway
     Chairman            Commissioner         Commissioner

Attested by:

Thomas B. Getz
Executive Director and Secretary