United Water at a Glance

• 138 years in the US water market

• 2000: Became wholly owned subsidiary of Suez Group

• Key Highlights

Revenues $535M Total assets $3.1B 2,200 employees Active in 21 States 7.7 Million people served

• Two Business Segments:

Regulated and Contract Services

21 Regulated utilities 145 O&M contracts*

Strategy:

Develop a balanced portfolio of Regulated and Contract Services operations that generate value in line with their risk profiles

* includes 2007 Aquarion and AOS Acquisitions

NYPSC Revenue Reconciliation

• Revenue “decoupling”= Revenue Reconciliation”; Revenue Adjustment Clause (RAC)

• In use for many years for larger NY utilities

• NYPSC “rate year” concept—fully projected rate year starts on effective date of new rates (Statement of Policy)

• New tariffs approved by PSC reflect rate year revenue requirement

• Rockland and Westchester Counties—summer irrigation, summer rates 1.5x

NYPSC Revenue Reconciliation

• Seasonal rate+low fixed charge=revenue volatility

• Post rate year reconciliation—compare actual to forecast metered revenue

• Refund overcollections, surcharge undercollections based on a percentage of the bill (winter months)

• Adjustments for variable costs (purchased water, power, chemicals), change in unbilled revenue and unaccounted for water

• Allows seasonal pricing signals, but protects customers and company