DE 98-186
     Pennichuck Corporation/PENNICHUCK EAST UTILITY, INC./
                  PENNICHUCK WATER WORKS, INC.
   Petition to Transfer the Souhegan Woods Water System from
 Pennichuck East Utility, Inc. to Pennichuck Water Works, Inc.
                    Order Approving Transfer
                    O R D E R   N O.  23,171
                         March 23, 1999
       APPEARANCES:  Stephen Densberger for Pennichuck
     Corporation, Pennichuck East Utility, Inc. and Pennichuck Water
     Works, Inc.; Nancy Boucher and Robert Pratt, pro se; and Eugene
     F. Sullivan, III, Esq. for the Staff of the New Hampshire Public
     Utilities Commission.
               On October 20, 1998, Pennichuck Corporation filed with
     the New Hampshire Public Utilities Commission (Commission) a
     request to transfer the Souhegan Woods water system, currently a
     part of rate group GM-B in the Pennichuck East Utility, Inc.
     (Pennichuck East) tariff, to Pennichuck Water Works, Inc.,
     (PWW)(collectively the Pennichuck Companies) which has a
     consolidated, single rate tariff.  As a result of the
     Commission's decision in DE 96-227, the Souhegan Woods water
     system was effectively transferred from Consumers New Hampshire
     Water Company to the newly formed Pennichuck East in early 1998. 
     Order No. 22,778 (October 30, 1997).  The water system serves a
     residential community of approximately 120 customers located in
     the Town of Amherst situated on the border with the Town of
               Following a November 16, 1998, prehearing conference
     the Commission issued Order No. 23,071 (November 30, 1998) which
     granted the petitions to intervene of Nancy Boucher and Robert
     Pratt, residents of Souhegan Woods, set a procedural schedule to
     govern the Commission's investigation into the Petition and set
     forth the initial positions of the Parties and Staff.
                    A.   Pennichuck Companies  
               The Pennichuck Companies testified that it proposed to
     transfer the water system from Pennichuck East to PWW for a
     number of reasons.  The subdivision known as Souhegan Woods
     actually lies in both Amherst and Merrimack.  The portion of the
     subdivision which lies in Merrimack is served by the Merrimack
     Village District (MVD), while Pennichuck provides service to the
     Amherst portion.  The current water rate for the MVD is $1.25 per
     100 cubic feet while the Pennichuck East rate is $4.289 per 100
     cubic feet.  Moreover, the rest of Amherst is served by PWW at
     the rate of $1.33 per 100 cubic feet.  Thus, these customers are
     effectively an island of high rates as compared to their
     neighbors in both the Merrimack portion of the subdivision and
     the rest of Amherst.  The Pennichuck Companies also testified
     that it believed the PWW rate would adequately cover the cost of
     service to these customers.
               The Pennichuck Companies also requested that PWW be
     allowed to charge these customers a purchased water rate if it
     was necessary to supplement the wells and storage systems in
     place to provide water service during certain peak periods of
     irrigation in the summer.     
                    B.   Nancy Boucher and Robert Pratt
               Ms. Boucher and Mr. Pratt concurred in the position of
     the Pennichuck Companies with regard to the transfer of the water
     system to PWW but objected to the proposed purchased water rate.
                    C.   Staff
               Staff did not object to the transfer of the system, but
     noted that it did not appear the new rate would cover the cost of
     service to this system on a stand-alone basis.  Thus, the Nashua
     core would be forced to subsidize the rates of these customers.
               Pursuant to RSA 374:30, we must determine whether the
     proposed transfer would be for the public good and whether the
     PWW 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 when one utility 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 cannot conclude that the
     proposed transfer of the system would harm Pennichuck East or PWW
     ratepayers.  Moreover, we believe the transfer will result in
     just and reasonable rates to these Souhegan Woods customers,
     rates that are more in-line with the rates throughout the rest of
     the town of Amherst which is served by PWW, and the rest of the 
     Souhegan Woods subdivision. 
               With regard to the issue of the purchased water rates,
     the Parties and Staff stipulated that this was an issue that
     could be addressed in a separate proceeding.  Thus, we will
     establish a docket to address the issue. 
               Based upon the foregoing, it is hereby 
               ORDERED, the proposed transfer of the Souhegan Woods
     community water system from Pennichuck East Utility, Inc. to
     Pennichuck Water Works, Inc., with its attendant rates and
     conditions of service, is GRANTED; and it is
               FURTHER ORDERED, that a separate proceeding shall be
     established to address the issue of purchased water clauses for
     community water systems that require supplemental supplies.
               By order of the Public Utilities Commission of New
     Hampshire this twenty-third day of March, 1999.
           Douglas L. Patch       Susan S. Geiger     Nancy Brockway
               Chairman           Commissioner          Commissioner
     Attested by:
     Thomas B. Getz
     Executive Director and Secretary