1. Pharmaceuticals in Drinking Water MACRUC June 2008 Walton F. Hill, United Water

2. APRIL 2008 I Meeting the Challenges in Today’s Ratemaking Environment United Water at a Glance 139 years in the US water market Key Highlights -1869-Founded as Hackensack Water Company -1890-Listed on the New York Stock Exchange -1930-First use of charcoal filtration -1989-Nation’s largest ozone filtration plant -1994-Merger with GWC -2000-Acquisition by Suez -2002-Acquisition of US Water -2007-Acquisition of Aquarion Water Company of New York -2007-Acquisition of AOS Operating Company 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

3. APRIL 2008 I Meeting the Challenges in Today’s Ratemaking Environment United Water (and Industry) Reaction Press reports can be powerful Research by AWWA, UW, Suez and others Risk based analysis and approach—highest first Research and a methodical, science based process EPA’s CCL, UCMR to prioritize monitoring, testing and treatment

4. APRIL 2008 I Meeting the Challenges in Today’s Ratemaking Environment Public Visibility Associated Press release creates an issue for us, our customers and our regulators, so… Communication strategies for CSRs and Managers to respond to questions Participation in studies by recognized agencies: AWWARF, NJDEP, USGS labs Company efforts—Suez Environment’s R+I Alliance

5. APRIL 2008 I Meeting the Challenges in Today’s Ratemaking Environment Water Supply and Sanitation in the EU Urban Waste Water Directive (1991)—discharges Drinking Water Directive (1998)—quality and standards Water Framework Directive (2000)—Water Resource Management EU states adopt legislation in accordance with these directives

6. APRIL 2008 I Meeting the Challenges in Today’s Ratemaking Environment Suez Environment’s R+I Alliance Formed in 2005 by several SE business units, including UW To define and execute R&D programs of common interest to water and wastewater service providers  Asset Management  Energy Efficiency  Metering  Odor Control  Sludge Management  Stormwater Management  Water and Health

7. APRIL 2008 I Meeting the Challenges in Today’s Ratemaking Environment Micropollutants 2008 R+I Water and Health study includes PPCPs  Listed, naturally occuring and “emerging” compounds Notes current situation, but widespread increase in drug use Study will  Determine occurrence  Develop analysis and testing protocols to detect a wide variety of compounds  Develop and propose measurement parameters for risk assessment

8. APRIL 2008 I Meeting the Challenges in Today’s Ratemaking Environment Current activity Identify micropollutants, including PPCPs More effective analysis methods Study how these compounds move through the environment Study how they react to treatment