DR 98-120
                                     
                     Pittsfield Aqueduct Company, Inc.
                                     
                        Petition to Decrease Rates
                                     
               Order Reducing Rates and Approving Financing
                                     
                         O R D E R   N O.  23,081
                                     
                             December 8, 1998

         APPEARANCES: Sulloway and Hollis by Martin L. Gross,
     Esq. for Pittsfield Aqueduct Company, Inc.; and Eugene F.
     Sullivan III, Esq. for the Staff of the New Hampshire Public
     Utilities Commission.
     
     I.   PROCEDURAL HISTORY
               On July 17, 1998, Pittsfield Aqueduct Company,
     Inc.(Company) filed with the New Hampshire Public Utilities
     Commission (Commission) a petition, testimony and exhibits
     supporting a 3.89% decrease in rates.  The filing was made in
     accordance with representations made to the Commission as part of
     Pennichuck Corporation's acquisition of Pittsfield Aqueduct
     Company, Inc. in Docket No. DE 97-225.  Order No. 22,843
     (January 30, 1998).
               On October 1, 1998, the Commission issued an order of
     notice scheduling a prehearing conference for October 28, 1998.  
     No motions to intervene were filed prior to the prehearing
     conference.  On September 4, 1998, however, the Town of
     Pittsfield indicated by letter that it would appreciate any
     action on the part of the Commission to grant some measure of
     rate relief to the citizens and ratepayers of Pittsfield.  
               On October 28, 1998, the Commission held the duly
     noticed prehearing conference.  There being no intervenors or
     opposition to the proposed rate reduction, the Company and Staff
     proffered a stipulation designed to resolve all issues presented
     by the petition.
               Following the hearing, the Commission received a
     resolution from the Selectmen of the Town of Pittsfield dated
     October 27, 1998, supporting the Stipulation between the Company
     and Staff and requesting that the Commission act expeditiously in
     implementing the rate reduction.
     II.  POSITIONS OF THE PARTIES AND STAFF
               The Stipulation generally provided that the proposed
     rate decrease resulted in just and reasonable rates on the
     property of the utility used and useful in service to the public
     and that the refinancing that resulted in the rate reduction was
     in the public interest.
               Specifically, the stipulation and the testimony in
     support thereof provided, in relevant part, that the Company had
     refinanced an existing long term debt obligation totaling
     $1,144,000 having a fixed annual interest rate of 10% with a debt
     obligation to the Company's parent, Pennichuck Corporation, at
     the annual interest rate of 6.5%.  The savings that resulted from
     this refinancing were then offset by certain capital expenses and
     annual increases in operating expenses made to improve the
     operation of the water supply and distribution system.  These
     increased expenses, all determined by the Staff to have been
     prudently incurred, result in a proposed rate decrease of 3.89%.  
               At the hearing, the Company requested that the rate
     decrease be reflected in January bills and further requested that
     the Company be authorized to bill monthly instead of quarterly.
     III. COMMISSION ANALYSIS
               The issues before us are the reasonableness of the
     proposed rate reductions and whether the refinancing of the
     Company's existing debt obligation with Pennichuck Corporation is
     for the public good.
               We find that the proposed rate decrease will result in
     just and reasonable rates to customers, and is consistent with
     the representations of Pennichuck Corporation in DE 97-225.  We
     note, however, that there was some confusion expressed at the
     hearing regarding the accounting treatment and rate treatment of
     a water filtration grant received by the Company from the State
     Department of Environmental Resources.  Staff and the Company
     should meet to determine the appropriate accounting treatment of
     this grant.
               Staff and PAC also requested that the rate decrease be
     effective on a bills rendered rather than a service rendered
     basis.  PAC testified it bills customers in arrears, but that the
     rate decrease should be effective retrospectively because the
     savings achieved through refinancing had been recognized during
     this billing period.
               Pursuant to N.H. Admin. Rule, Puc 1203.05 (b), all rate
     changes must be implemented on a service rendered basis unless
     the Commission waives the provision of the rule.  N.H. Admin.
     Rule, Puc 201.05 authorizes the Commission to waive the
     provisions of any rule where the waiver serves the public
     interest and does not disrupt the orderly proceeding of the
     Commission.  In the case at hand, we believe a waiver is in the
     public interest and therefore should be granted, because the
     savings that will be passed on to ratepayers pursuant to this
     filing were achieved during the period when service was rendered
     in the billing period at issue.
               With regard to the refinancing of the existing debt
     obligation by the Company's parent, the record reveals that there
     is in fact no formal note documenting this debt.  We do not
     believe such informality is appropriate in these circumstances. 
     The Company and its parent should reduce the terms and conditions
     of the note to writing and file the note with the Commission
     within one month of the date of this order.  We find the
     refinanced debt to be in the public interest based on the new
     rate of interest, but we will reserve our right to revisit this
     conclusion once we have reviewed the terms and conditions of the
     note after it has been filed with the Commission for our approval
     under RSA 369.
               The Commission will issue a separate order addressing
     the issue of switching from quarterly to monthly billing.
               Based upon the foregoing, it is hereby 
               ORDERED, that the proposed rate reduction of 3.89% is
     APPROVED; and it is
               FURTHER ORDERED, that the debt obligation entered into
     between Pittsfield Aqueduct, Inc. and Pennichuck Corporation is
     consistent with the public interest subject to our review of the
     terms and conditions of the new note; and it is
               FURTHER ORDERED, that the formal note shall be filed
     with this Commission within one month of the date of this order; 
     
     and it is
               FURTHER ORDERED, that the provisions of Puc 1203.05
     requiring all changes in rates to be implemented on a service
     rendered basis are waived pursuant to Puc 201.05 and the rate
     decrease shall be implemented on a bills rendered basis; and it
     is
               FURTHER ORDERED, that Pittsfield Aqueduct Company, Inc.
     shall file properly annotated tariff pages in compliance with
     this Order no later than 15 days from the issuance date of this
     order, as required by N.H. Admin. Rules, Puc 1603.
               By order of the Public Utilities Commission of New
     Hampshire this eighth day of December, 1998.
     
     
     
     
                                                                  
       Douglas L. Patch     Susan S. Geiger       Nancy Brockway
           Chairman           Commissioner        Commissioner
     
     
     Attested by:
     
     
                                      
     Thomas B. Getz
     Executive Director and Secretary