Water rights battle results in 3d lawsuit

NASHUA -- Pennichuck Corp. filed a $5 million lawsuit against the city last week in Hillsborough County Superior Court, charging that the city is violating the company's civil rights by attempting to take its three waterworks subsidiaries by eminent domain.

"We have been deprived of the right to be free of abusive government power," said Donald Correll, president and chief executive officer of Pennichuck. "We have been deprived of our freedom to pursue business opportunities. We essentially have been held hostage."

The lawsuit is the third the company has filed since the beginning of this year in Hillsborough County Superior Court related to the city's efforts to municipalize its three waterworks subsidiaries, Pennichuck Water Works Inc., Pennichuck East Utility Inc., and Pittsfield Aqueduct Co. In all three cases, Pennichuck has argued the city has dragged its feet in the eminent domain proceedings and is overstepping its authority by trying to take over waterworks outside the city's borders.

Mayor Bernie Streeter called the company's most recent lawsuit "frivolous" and "foolish."

"In my opinion, it's just another attempt by Pennichuck to discredit the city and keep outrageous statements in the news," Streeter said.

Pennichuck is seeking approximately $5 million in damages from the city to cover costs the company has experienced during the city's two-year pursuit of municipalization. The figure includes $2.2 million in expenses and termination fees incurred by a failed merger with the former Philadelphia Suburban Corp., an estimated $1 million to $1.5 million in lost new business, an estimated $1 million to $1.5 million to defend against the eminent domain proceedings at the state Public Utilities Commission, $400,000 in other legal fees associated with municipalization, and $400,000 for increased operating costs.

The company also warned at a press conference last week that the city could be liable for additional expenses. Officials of the company, which is traded on Nasdaq, said shareholders may take separate legal steps to recover between $20 million and $30 million in lost share value due to the failed merger, and another $7 million or $8 million for the value of shares traded in late November, when prices varied widely after the city announced it made an offer to Pennichuck comparable in size to the Philadelphia Suburban merger.

It was the potential merger with Philadelphia Suburban that galvanized the city to pursue eminent domain, fearful of out-of-state ownership of the local company. If the city is successful with municipalization, a regional water district would run the three waterworks.