City Selects French-Owned Company to Operate Water System; Veolia Is Same Company City Expressed Concerns about Four Years Ago.

MERRIMACK, N.H. -- In an ironic move, the mayor and board of aldermen last night voted unanimously to select a French-owned company to potentially operate the city's water system if the City is ultimately successful in its four year battle to take the system from Pennichuck Water Works. At the same time, the mayor and aldermen selected a second consultant to oversee the one it plans to hire to operate the system.

Veolia Water Systems was selected to potentially operate the water utility despite concerns expressed by some aldermen that anxiety about a foreign company running the city's water system was what started the eminent domain battle in 2002.

"It's absurd that after spending more than a million taxpayer dollars the city is now selecting the very same foreign company that the mayor and aldermen so adamantly opposed four years earlier," said Donald L. Correll, CEO of Pennichuck Corporation. "If the Mayor and Board of Aldermen's efforts weren't costing taxpayers and the company so much money, their recent actions could almost be viewed as comical. Unfortunately, this isn't funny, and taxpayers should be outraged."

The vote came just days after Pennichuck filed a motion with the New Hampshire Public Utilities Commission (PUC) in Concord for summary judgment to dismiss the City of Nashua's petition to take Pennichuck Water Works through eminent domain. The motion said that the city has failed to show that it has the managerial and technical capability to operate the water system.

The City had testified that it did not plan to run the water system and would instead hire an outside company to do so. For more than 17 months since the city filed its case to take Pennichuck by eminent domain, however, the city has failed to provide any details regarding its plan to operate the water utility.

Prior to last night's vote on a system operator, the city's own consultant, George Sansoucy, told the mayor and aldermen it was important to make a decision on an operator soon because it is essential to be able to demonstrate to the PUC that the city is capable of taking over the water system. Correll said this lends further proof to the company's contention that the city has failed to demonstrate that capability to date. "A year and a half after filing their case, the City is still trying to evolve their plan," said Correll.

Pennichuck Corporation is a holding company involved principally in the supply and distribution of potable water in southern and central New Hampshire through its three regulated water utilities. Its non-regulated, water-related activities include operations and maintenance contracts with municipalities and private entities in New Hampshire and Massachusetts. The Company's real estate operations are involved in the ownership, management and development of real estate in the greater Nashua, New Hampshire area. Pennichuck Corporation's common stock trades on the Nasdaq NMS under the symbol "PNNW". The Company's Web site is at www.pennichuck.com.

This news release contains certain forward-looking statements with respect to the financial condition, results of operations and business of Pennichuck Corporation. Forward-looking statements are based on current information and expectations available to management at the time the statements are made, and are subject to various factors, risks and uncertainties that could cause actual results to differ materially from those expressed or implied by such forward-looking statements. These factors include, but are not limited to, timing and results of eminent domain proceedings before the New Hampshire Public Utilities Commission, and the impact thereof on consolidated business operations; timing and amount of regulated water utility rate relief; changes in general economic conditions, legislation or regulation and accounting factors affecting Pennichuck Corporation's financial condition and results of operations; the timing and impact of acquisitions and new service contracts; and the impact of weather. Investors are encouraged to access Pennichuck Corporation's annual and quarterly periodic reports filed with the Securities and Exchange Commission for financial and business information regarding Pennichuck Corporation, including a more detailed discussion of these and other risks and uncertainties that could affect Pennichuck Corporation's forward-looking statements.