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

- 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

• 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 CanalLake Lowell

Star

Middleton

Kuna

Parma

ArrowrockBuilt 1915286,600 AFLucky Peak

Built 1957293,100 AF

Anderson RanchBuilt 1950439,200 AF

Lake LowellBuilt 1908173,000 AF

Boise Basin Water Supply History

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

• 6 - 10 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 FlowGround 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 SuccessShort 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”