1. NARUC Summer Committee Meetings Committee on Water Water Supply Planning: East, West, North and South July 17,2007

2. JULY 17, 2007 I WATER SUPPLY PLANNING United Water at a Glance 135 years in the US water market  Headquarters in New Jersey Key Highlights  Revenues $535M  Total assets $3.1B  2,200 employees  Active in 20 States  7.65 Million people served Two Business Segments: Regulated and Contract Services  26 Regulated utilities  150 O&M contracts Large Regulated Water Utility base in Northeast US $800M in Planned Capital Investment over next 5 years

3. JULY 17, 2007 I WATER SUPPLY PLANNING Water Supply Planning Master Plans for each water supply system  20 year plans updated every 5 years Competing priorities everywhere  Asset Management Approach  5-year capital plan updated every year Drivers affecting water supply planning  Population Growth >Development within franchise area >Private well failures  Wholesale Customer Growth >Neighboring municipal systems >Small system consolidation  Source Water Quality/New Regulations >Loss of supply source >Treatment improvements needed  Reliability to meet Peak Demands >Safe yield >Source reliability

4. JULY 17, 2007 I WATER SUPPLY PLANNING United Water Examples Three Large Utilities surrounding NYC  1.2M population served Large Water Supply Projects  $250M Investment Westchester County, NY  United Water New Rochelle Rockland County, NY  United Water New York Bergen/Hudson Counties, NJ  United Water New Jersey Other “northern” systems  Pennsylvania  Delaware  Connecticut  Rhode Island

5. JULY 17, 2007 I WATER SUPPLY PLANNING New York – Westchester County System Wholesale purchase of water from NYC  Aqueducts from Catskill Watershed  Connections to Croton and Catskill Aqueducts  Croton supply did not get a filtration waiver  NYC building filtration plant in NYC $50M Water supply project being delivered  Initial planning 15 years ago  Loss of supply – Treatment or alternate source needed  New source selected – Delaware Aqueduct  Project includes; >New 43 MGD Pump Station >Connection to Aqueduct >Transmission Main >Related system improvements Water Supply Project Surcharge granted by PSC  Investment surcharge every six months Future Needs  Supply reinforcements

6. JULY 17, 2007 I WATER SUPPLY PLANNING New York – Rockland County Water Supply is main priority for this utility  Population growth and peak demands  Surface and ground supplies – fully utilized (?)  Political framework – water use limitations  Commitment to deliver based on 2006 Rate Case Short Term Water Supply Program  5 year plan to maximize current supplies  $15-20M Investment  Water Supply Surcharge Long Term Water Supply Project  Initial planning >20 years ago  New Source of Supply  $80M Investment  In-Service 2015  Water Supply Surcharge

7. JULY 17, 2007 I WATER SUPPLY PLANNING New Jersey – Bergen, Hudson Counties Large System (800k served) One source of supply – surface water  200 MGD Plant Source Water Issues  Partnership with public water utility  River augmentation  Deteriorated quality Aged Infrastructure $105M investment to upgrade plant  Improve reliability  Improve water quality Future Needs  Additional Water Supply/Treatment  System reinforcements

8. JULY 17, 2007 I WATER SUPPLY PLANNING Water Supply Challenges/Opportunities Water supply projects have long timelines  Extensive governmental approvals needed  Political resistance can exist Water supply projects are expensive  High relative cost per unit volume  Future expansion projects are a bargain  Special project surcharges reduce capitalized interest Non-Revenue Water  Leakage is clearly an issue  Longer term opportunity Conservation/Peak Usage  Water is relatively cheap  Political resistance to control use  Variable rate structures have been successful Water is state owned  Sharing across borders is near impossible  Opportunity exists/Political leadership needed

9. NARUC Summer Committee Meetings Committee on Water Water Supply Planning: East, West, North and South July 17,2007