Steele_sw.doc

December 2, 1999

James Steele
1701 Ridgecliff Lane
Boise, ID 83702

Dear Mr. Steele:

The Commission is in receipt of your letter of October 27, 1999 wherein you voice your protest regarding the terms of the proposed merger of United Water with Suez Lyonnaise des Eaux, specifically the treatment of preferred stock shareholders. It is my understanding that as a preferred stockholder, your return on investment and shareholder rights are contractual. Please be advised that under Idaho law the proposed merger does not require a Company application or Commission approval.

The scope of this Commission’s jurisdiction and authority regarding the utilities that we regulate is limited and dictated by statute. Reference Idaho Code, Title 61. In broad terms this Commission is concerned with the viability of United Water, the adequacy and efficiency of its service, its customer relations and the rates that it charges for its service. The relief you request runs counter to what this Commission would expect of United Water, i.e., that the Company minimize its costs of capital. Although your voice may be diluted as this water company continues to grow from a local to a trans-national company, it is nevertheless with the Company and its board of directors that your concerns must be lodged.

Regarding the rates that you pay for water, please be advised that United Water has filed with this Commission a notice of intent to file a general rate case. An application is expected on or prior to January 31, 2000. Your name will be added to the interested parties’ list.

Sincerely,

Scott D. Woodbury
Deputy Attorney General

bls/L:steele_sw