Western Water Issues: The Challenges of Growth NARUC Water Committee Summer Meetings July 2008, Portland, Oregon Walton Hill, United Water

United Water at a Glance 139 years in the US water market Key Highlights Founded as Hackensack Water Company Listed on the New York Stock Exchange First use of charcoal filtration Nation’s largest ozone filtration plant Merger with GWC Acquisition by Suez Acquisition of US Water Acquisition of Aquarion Water Company of New York Number two player with 8% share of private market Active in 20 states, 6.5 M population served Revenue $600M, total assets $2B 2,000 employees Two Business Segments: Regulated and Contract Services -21 regulated utilities, 138 O&M contracts -Regulated business is highly capital intensive with low risk profile -Contract Services business is not capital intensive, but has higher risk profile United Water’s strategy is to develop a well-balanced portfolio of regulated and contract service operations that can generate value in line with its risk profile

Overview A little Idaho history Existing conditions Future expectations Solutions / Strategies for success

Water Rights Debate in Idaho

Boise Nampa Caldwell Boise River Snake River New York Canal Lake Lowell Star Middleton Kuna Parma

Arrowrock Built ,600 AF Lucky Peak Built ,100 AF Anderson Ranch Built ,200 AF Lake Lowell Built ,000 AF Boise Basin Water Supply History

“Develop the West”—starting 1908 USBOR Reservoirs partially funded by selling bonds to new Irrigation Districts 40 year notes now paid off; ID’s have 40 year contracts with BOR for surface water rights Water suppliers contract (5 yr lease) with ID’s for supply, or “short term rental pool” or “water bank” for unused rights (annual lease) Cornfields or lawns—development affecting the uses of water rights

United Water Idaho 250,000 population in City of Boise and surrounding areas; 83,000 customers 16 Billion gallons delivered annually 20 MGD winter; 90 MGD summer 11” rainfall per year vs. >40” Mid-Atlantic Region 50% increase in population 1988 to 2006

United Water Idaho (cont’d.) Conservation programs commencing mid-1980’s  Public information, school education, xeriscaping program, water audit program, summer/winter rates, dual systems MGD Surface Water Treatment Plant Construction (second in 15 years) 90 wells; aquifers reaching their limit Uses of surface water rights changing

Dual Systems—1995 UW Idaho’s average residential bill = $350/yr. 70% ($250) is for summer consumption  Seasonal rates New developments pay $50/yr. for irrigation from dual system  Total bill now about $200  $150 to UW, $50 for I.D. Customers have nice lawns; UW Idaho’s summer peak (and revenue) are shaved  Peaking plants postponed, but lower revenue stream creates more need for rate cases

Meeting the Challenge Natural Surface Flow Ground Water Short Term Rental Pool Contract Storage Conservation

Strategies for Success Purchase land - obtain water rights  convert back to habitat  basin exchanges of the water Butte water rights win-win “used and useful”? “intergenerational equity”? Regulatory support for securing current and future water supply

Strategies for Success Delivery from canals (become their customers) through five year contracts Provides revenue and incentive for efficiency for IDs to improve their systems

Strategies for Success Aquifer Storage and Recovery

Strategies for Success Short term rental pool program--annual Increasing cost, decreasing reliability

Strategies for Success-United Water Idaho Conservation Program Program approved by PUC Seasonal rates Outreach and education: TV, radio, newspaper, community and municipal organizations Comprehensive approach: “conservation kits”, irrigation improvements, xeriscape classes, indoor conservation tips, rain gutter devices, low flow nozzles Costs deferred; regulatory issue of declining revenue—”decoupling”