The board of directors of each water company shall include at least one member who is a resident of the area served by such company and who is not an officer or employee of the company; provided, in lieu of this requirement, such company may establish an area advisory council, consisting of three or more members who are residents of the area served by the company and who are not officers or employees of the company. The members of the advisory council shall be appointed as follows: (1) If the service area contains three or more municipalities, the chief elected official of each municipality shall appoint one member to the council, (2) if the service area contains two municipalities, the chief elected official of each municipality shall appoint one member and the local legislative body shall appoint one member, and (3) if the service area contains one municipality, the chief elected official shall appoint two members and the local legislative body shall appoint two members. Such company shall report to the Public Utilities Regulatory Authority, within thirty days after appointment, the names and towns of residence of such appointees. Each company having such a council shall, through its officers and board of directors, consult and advise with the council on matters of local interest.