From Profit to Polity: A U.S. Water Utility’s Transition to a Government-Shareholder Model

The Pennichuck Corporation, located in New Hampshire, U.S., provides a unique opportunity to explore the rare structural transition from investor-ownership to a government-shareholder model for a long-standing regional water utility. In early 2012, concluding a ten-year dispute, the City of Nashua leveraged its power of eminent domain to become Pennichuck’s sole shareholder not by a taking but by a stock purchase agreement transferring the entirety of the company’s regulated and unregulated assets. We draw on primary documentation and data to review the terms of the transaction and contrast the ex-ante and ex-post models. Utility operations and state economic regulation remained constant over the transition, thus controlling for their potential effects. Our descriptive analysis of time-series financial and other data provides evidence of outcomes, including the lower cost of capital and operations. This information-rich case illustrates the arduous process of public acquisition, calling into question the institutionalized policy asymmetry favoring private over public acquisitions, which undermines structural competition.